COCA-COLA SWOT ANALYSIS

STRENGTHS:

Largest Market Share

The only competitor of Coca Cola in beverage industry today is Pepsi. But truth be
told, Coca-Cola has a greater market share. According to Beverage Digest, Coca-
Cola controls 42% of the total carbonated soft drink market, compared with Pepsi's
30%.
This obviously adds to Colas strengths as anywhere you go, you will find Cola in
that market, thus building a huge brand name and winning customer loyalty as well.

Strong Brand Equity

The Coca Cola Company is one of the brand that is recognized by everyone around
the globe and Coca-Cola is one of major product of this company, hence clearly
enjoys this strong brand name. Vastly known for its authenticity and consistency in
delivering good quality products, the Coca Cola Company was awarded highest
brand equity award by Interbrand in 2011.
Making a presence in 200 countries with 3500 different products in its portfolio
definitely makes The Coca Cola Company, one of the oldest, costliest brands with
highest brand equity.

Robust & Extensive Distribution Network

The Coca-Cola Company has highly extensive distribution network that enables the
sales of 2 billion unit cases if 500 different brands across 20 countries. Its ability to
utilize independent bottlers, company-owned/controlled distributors, wholesalers
and retailers has no competition. This robustness enables the company to rapidly
introduce new items into the market, react to customer requirements and place a
strong foot on various geographic locations.
Apart from promoting sales and increasing revenues, this distribution network
involving 2500 independent manual distribution centers across Africa, have created
jobs for more than 11000 people and also, contributed more than $500 million in
annual revenue.

Marketing & Advertising Strategies:

The Coca-Cola Company turned out to be the worlds largest advertiser in beverage
industry in 2015.

Company Marketing Total % of total

expenses revenue revenue

The Coca-Cola Company 6.8 44.294 15.4%

PepsiCo Inc. 3.9 63.056 6.2%

Dr Pepper Snapple Group 3.8 6.282 61.2%

Inc.

Nestl S.A. 20.3 89.772 22.6%

Advertising Expenses-2015 (USD $billions) | Coca-Cola and its competitors

Company 2013 2014 2015

The Coca Cola Company 3.266 3.499 3.976

PepsiCo Inc. 2.4 2.3 2.4

Dr Pepper Snapple Group Inc. 0.486 0.473 0.473

Advertising Expenses-2015 (USD $billions) | Coca-Cola and its competitors
This large advertising budget provides many competitive advantages like:

Introduce new items into the marketplace

Product and brand promotion across various geographies
informing consumers about the products features
communicating brands message to the public
increasing sales.
Diversified brand portfolio
Coca Cola being worlds leading beverage company, is continuously putting efforts
in providing customers with refreshing brands.
The Coca-Cola Companys portfolio in nonalcoholic beverages category is one of the
strongest in the industry, offering 500 brands to consumers in 200 different
countries. Out of these, almost 20 brands earn at least $1 billion USD in annual
sales. Such a strong portfolio is unbeatable and hence serves as one of the greatest
strengths of Coca-Cola Company.

Customer Loyalty
Brand Loyalty comes when consumer prefers to buy products of the same brands
repeatedly instead of other brands being present in the market.
Undoubtedly, Coca-Cola is very successful in earning loyal customers. Coke,
undoubtedly has enjoyed a huge fan following and people always prefer this over
others. Earning so many loyal customers is one of its biggest strengths, as at the
end of the day, it is the customers you are running your company for.

Weakness:

Water Management Issues

The Coca Cola Company has faced huge criticism in the past due to water
management issues. There have been multiple lawsuits filed against the company
due to its vast consumption of water even in water scarce regions.
Taking India for example, there have been numerous public protests throughout the
country, involving several non-governmental organizations and thousands of
citizens. Districts like: Kala Dera, near Jaipur, Rajisthan; Mehdiganj, near Varanasi;
Thane district in Maharashtra; and Shivaganga in Tamil Nadu have been some of the
major protesting centers against the company.
Despite all these protests, water consumption is still too high as it is the main
ingredients in Coca-Colas core manufacturing process.
Adding to this, Coca-Cola has also faced many controversies for mixing pesticides in
water to clear contaminants. Thus, Coca-Cola really need to work on improving the
whole process around Water Management.

Low Penetration in Health Drinks Segment

Obesity is a major problem affecting people these days and most of us with
changing environment, are taking measures to control intake of products that lead
to Obesity. Carbonated drinks are one of the major fat intake source and Coca-Cola
is one of such drinksThere are chances that in coming future, consumption of such
drinks might go down owing to health reasons and prefer health drinks instead.
Thus, KO needs to spend some efforts in entering Health Drinks market to continue
capturing the largest market share.

Source

Foreign Currency Fluctuation

The Coca-Cola Companys business is expanded across 200 countries and its
financial operations, revenues etc. involve currencies other than the USD, like the
euro, the yen etc. As per the data, in 2014, 70 different currencies were involved in
business other than US, and a net of $26.2 billion revenue was collected from
operations outside United States.
Involvement of so much different currencies affect net operating revenue of the
company, considering the relative value of USD against other currencies. Also,
strengths of some currencies might be liquidated by weakness of others, thus not
giving a clear picture of earned revenue.
Moreover, derivative financial instruments employed by KO, cannot fully analyze the
impact of such fluctuations in foreign currency exchange rates.
Low Product Diversification
Pepsi, being one of strongest rival of Coca Cola, has made a smart move by entering
into snacks segment, KO missing from that segment though. With products like
Lays, Kurkure; Pepsi is earning a good revenue and had KO been present in this
segment, it would have added to the revenues of the company.
References:
http://www.coca-colacompany.com/brands/the-coca-cola-company

Clinton, B. (2009) Harvard Business Review, Available at:

https://hbr.org/2009/09/creating-value-in-an-economic-crisis
http://www.nasdaq.com/article/coke-vs-pepsi-by-the-numbers-
cm337909#ixzz4WHBQ0q14 http://www.righttowater.info/rights-in-
practice/legal-approach-case-studies/case-against-coca-cola-kerala-state-
india/
http://www.coca-colacompany.com/investors/investors-info-reports-and-
financial-information