1.

0 Organizational Summary
1.1 Organization Name and Type
Ceylon Cold Stores was initially started as the Colombo Ice Company in 1886, and after the organisations merger with Union Ice
Company in 1941 the name was changed to Ceylon Cold Stores. The organization is known from its most famous brand Elephant House
which was first used in 1883. Elephant brand was used first in selling aerated water and now the brand has expanded to carbonated soft
drinks, caffeine based beverages and frozen confectionery
The organisations history expands over 150 years and the organisation is currently listed on the main board of the Colombo stock
exchange as Ceylon Cold Stores PLC. The organisations Elephant House brand is the market leader in Sri Lanka’s carbonated soft
drinks and ice cream markets and also has the widest reach across Sri Lanka, for this report the author will be considering Elephant Soft
Drinks
1.2 Size of Organization
Financial Analysis 2016/2017
During the financial year, the price of CCS share increased by 89% from Rs. 430.00
Group profit after tax Rs. 3.55bn
Market capitalisation Rs. 77.08bn to Rs. 81 1.00, with a market capitalisation of Rs 77.1 billion as at 31st March 2017.
Dividend per share Rs. 32.00 CCS is amongst the top 10 corporates in terms of market capitalisation and accounts
Total taxes, levies and Rs. 5.6bn for 3% of the total market capitalisation of the Colombo Stock Exchange and
duties paid
occupies this position alongside multinationals, conglomerates and banks.
Increase in share price 89%
Number of employees 4,116 Consolidated profit before tax increased to Rs. 5.1 billion maintaining its growth
Total payments to Rs. 35.8bn course supported by strong cashflows, efficient management of working capital and
suppliers
increasing value of investment properties
Total assets Rs. 22.5bn
Revenue for 16/17 Rs. 43.5bn
1.3 Product Portfolio
Elephant Soft Drinks have achieved Superbrand status in Sri Lanka because the products offered by the organization was able to
penetrate into the market effectively this was a result of the organization investing heavily in the organisations brands and repositioning
them to cater to the consumer needs. Ginger Beer, which is produced using essences extracted from natural ginger, and is marketed and
sold as EGB. Soda is advertised as the King of The Chase, Necto as a children’s drink, Lemonade as a sports drink and Cream Soda as
the must-have for teens. The company has been able to strategically position these brands, which were previously considered traditional
products by consumers, by consistently investing in them. The company is also focused on innovation and intends to introduce New
Age beverages which include sports drinks, fruit juices, isotonic and energy drinks, to its range of products in the future. The product
distribution is given below,
Carbonated Elephant Ginger Beer Bitter Lemon Cream Soda EGB Light Soda
Orange Barley Orange Crush Apple Soda Ginger Ale Necto
Twistee Peach Twistee Apple Lemonade Tonic
Caffeine Based Wild Elephant
1.4 Customer base
Sri Lankan spending patterns resemble those in Western countries, with a rising consumer preference for lifestyle products and
aspirational luxury goods. This disparity can be attributed in part to a lack of a strong savings culture in Sri Lanka, which leaves
households with more money to spend on non-essential items. In the fast-moving commercial goods segment.
The customer base of CCS includes both B2C and B2B customers, The B2C customers include all most every retail shop in the country
and supplying these shops across Sri Lanka is possible due to the extensive distribution network of CCS. CCS has been able to reach
directly to customers (B2C) through their vending machines. The B2C customers are segmented depending on the customers age.
Current 1.5 Competitor base
Born Age %
Boomers I 1946-1954 60-70 1% Ceylon Cold Stores is currently the market leader in Carbonated Soft Drinks
Boomers II 1955-1965 49-59 9%
industry in Sri Lanka surpassing the tough competitors in the likes of PEPSI
Generation X 1966-1976 38-48 15%
Generation Y 1977-1994 20-37 30% COLA & COCA-COLA. The current market share of CCS is 43% Coca Cola
Generation Z 1995-2012 03'-22 45% 40% Pepsi Cola 10% others 7%.

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2.0 Situational analysis (Where are we now)
2.1 Macro Environment
Tax policies -import and excise duties Rupee depreciation
Political Economic
Trade restrictions Increased trade deficit
Environmental policies and laws Fluctuating Interest Rates
Influence derived from the FDA (Food and Drug Fluctuating Inflation rates
Admin) Increase in freight and import taxes
Standards imposed by the state
Global Political issues
Technological Technology gap – shrink caffeine, phosphoric acid
Social Shift towards in healthier life styles
levels
Increased aging population
CCS yet to launch Earth Friendly Bottling Technology
Sugar content level
Traditional Bottle crates used
Pressure from medical groups
High Calorie content
Environmental Water Usage Legal Adhering to the local / International laws
Material used for packaging / distribution Advertising and labelling related laws
Improper Waste Management Highly volatile legal environment - locally
Use of Plastic packaging Legal issues -environmental and health concerns

2.2 Micro Environment

2.2.1 Porter’s Five Forces

The Bargaining Low The individual buyer no pressure on CCS

Power of Buyers: pressure Large retailers, like Cargills , have bargaining power because of the large order quantity, but the bargaining
power is lessened because of the end consumer brand loyalty.
The Bargaining Low The main ingredients for soft drink include carbonated water, phosphoric acid, sweetener, and caffeine.
Power of Suppliers: pressure The suppliers are not concentrated or differentiated. CCS is likely a large, or the largest customer of any of
these suppliers.
Threat of Medium There are many kinds of energy drinks/soda/juice products in the market. There’s increased pressure from
Substitute to High more health oriented products by other competitors
Products: pressure
Rivalry Among High Currently, the main competitors are Coca Cola and Pepsi Cola which also has a wide range of beverage
Existing Firms Pressure products under its brands. All CCS, Coca-Cola and Pepsi are the predominant carbonated beverages and
committed heavily to sponsoring outdoor events and activities.
There are other soda brands in the market that become popular, like MyCola, because of their unique
flavors. These other brands have failed to reach the success that CCS, Pepsi or Coke have enjoyed.
Threat of New Medium Entry barriers are relatively low for the beverage industry: there is no consumer switching cost and zero
Entrants Pressure capital requirement. There is an increasing number of new brands appearing in the market with similar
prices than CCS products
Elephant Soft Drinks is seen not only as a beverage but also as a local brand. It has held a very significant
market share for a long time and loyal customers are not very likely to try a new brand.

2.2.2 Stakeholder Analysis (Mendelow’s Matrix)

Level of Interest According to the Mendelow matrix, the stakeholders in grid A are those who
LOW HIGH have low levels of interest in the organization's operations and only a limited
LOW A - Minimal B - Keep Satisfied power to influence the organization's activities. These people, thus, require
Effort only minimal effort by the organization. Grid B, is populated by individuals
Power Media Suppliers
with a high level of interest but a low level of power over the organization.
HIGH C - Keep D - Key Player
Informed These stakeholders do not have the ability to influence an organization's
Employees Government strategy, but they may lobby and influence the views of other, more powerful
Customers
Share Holders stakeholders, and, so the organization has to, at the very least keep them well
Religious Pressure informed.
Groups
Alternatively, stakeholders in grid C have a high degree of power to influence strategy, but only low levels of interest in organizational
activities, therefore, these stakeholders must be treated with caution, as they may develop an interest in the organization, thus making
them important to organizational strategy and success. These stakeholders, should, thus be kept satisfied. Grid D, on the other hand,
represents stakeholders with a high interest in organizational activities and a high degree of power to influence operations. These are,
thus, the key players, and the organization's strategy must be at least acceptable to them.

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2.2.3 Consumer Behaviour
Sri Lankan spending patterns resemble those in Western countries, with a rising consumer preference for lifestyle products and
aspirational luxury goods, in sharp contrast to other South Asian and South-east Asian countries. This disparity can be attributed in
part to a lack of a strong savings culture in Sri Lanka, which leaves households with more money to spend on non-essential items. In
the fast-moving commercial goods segment. With incomes rising and interest rates still favourable, purchases of white goods,
electronics and automobiles are also on the rise. Further the consumers are increasingly becoming more health and environmental
cautious when purchasing products.
2.2.4 Competitor Analysis (Hooley et al 2008)

Key Success Factors Elephant Coca Cola Pepsi

Product Quality -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Product Taste -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Appearance -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Price Benefit -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Brand Recognition -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Purchasing Convenience -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Customer Satisfaction -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Health Cautious -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Sugar Level -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Advertising -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
8 7 3
Even though the major competitor brands like Coca Cola and Pepsi which are global dominating brands Elephant Soft Drinks has been
able to be the market leader in the domestic market which is a highly rare situation in the global soft drinks industry where a local brand
has the higher market share than Coca Cola or Pepsi Cola. Elephant Soft Drinks has been able to achieve this by better understanding
the domestic market and offering a different set of flavoured carbonated drinks over its competitor offering
2.3 Internal Environment
2.3.1 The Cultural Web (Johnson & Scholes)

Stories History of over 150 years offering customers with different flavoured carbonated drinks
Rituals and Working hours 8.30am-5.00pm, corporate events and parties, Annual family trips, Overseas training and outbound training
Routines programs to enhance employee knowledge and team work
The organisation logo consists of the letters ELEPHANT in green and white which enables the customers to recognise the brand
Symbols in any situation
Organizational The organisational structure is a traditional hierarchical structure however the organization encourages new ideas and
Structure innovation from employees
Control systems Offers centralised services in Legal, Finance, Human Resources and Administrative services
Chairman, Managing Director, Board of directors, Top Management, Departments Heads, Brand Managers, Assistant managers,
Power Structure Senior and Junior executives, Operational Employees
2.3.2 Porters Value Chain
Primary Activities - Inbound Logistics (Suppliers)
Some of CCS most notable suppliers include Access Water, Pellawatte Sugar, IBM, Keells and Piramal Glass Ceylon. These companies
provide CCS with materials such as ingredients, packaging and machinery. In order to ensure that these materials are in satisfactory
condition, CCS has put certain standards in place which these suppliers must adhere to (The Supplier Guiding Principles). These include:
compliance with laws and standards, laws and regulations, freedom of association and collective bargaining, forced and child labour,
abuse of labour, discrimination, wages and benefits, work hours and overtime, health and safety, environment, and demonstration of
compliance
Operations
CCS core operations consist of Company-owned concentrate and syrup production, According to CCS website, some of the main
environmental impacts of their business occur further along the value chain through system's bottling operations, distribution networks,
and sales and marketing activities. Management of these operations across the business value chain tends to be more challenging outside
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of the core operations. According to CCS, they address this by working with their partners to reduce the effects at every level of the
manufacturing process by enlarging their comprehension of the complete environmental impact of their business through the entire
lifecycle of their products from ingredient procurement to production, delivery, sales and marketing, and post-consumer recycling
Outbound Logistics (Buyers/ Customers)
The activities required to get finished products to customers include warehousing, order fulfilment, transportation, and distribution
management. CCS has the Sri Lankas largest distribution system. They own, lease, and operate in over 6 plants around the country. The
30 beverage products which CCS market reach consumers in more every geographic location in Sri Lanka and Maldives. Grocery stores
such as Cargills, fast food restaurants such as Maxis and vending machines are just a few of the distribution units used to ultimately
reach consumers. CCS have implemented the Elephant System in which CCS work cohesively with their partners in order to develop
strategies aimed to meet the needs of all their customers.
Marketing and Sales
Out of approximately 30 products, CCS markets four of the Sri Lankas top sales drink brands. Although the industry is relatively small
and they only directly compete with two companies, creativity and innovation is a vital marketing strategy to CCS. CCS ultimate goal
is to deepen their brands connection with consumers. As a result, they have to constantly reinvent their product. The marketing strategy
CCS use is directly linked to the consumer; from advertising, to point of sale, to ultimately opening and consuming a Elephant beverage.
Techniques which they have used to achieve this include developing new products and brands, changing the design of their packaging,
and designing various new advertising campaigns
Service
Activities that maintain and enhance a product value include customer support, repair services, installation and training. Elephant
customers range from large international retailers and restaurants to smaller independent businesses and vendors. As a result, CCS
provide services tailored to meet their customer’s needs. Elephant also supports their customer by providing them with the training
necessary to help their businesses become more effective and profitable. They have established Customer Development and Training
Center.
Support Activities - Procurement
The management of vendors and the procurement of the raw material on a timely basis is where procurement comes in. CCS sources all
required raw materials through associated organisations and individuals
Technology development
No product can survive if the company does not keep it updated as per the latest technology. CCS currently uses modern technology in
bottling its products and is building two new unique bottling plants which will increase the organisations capacity over 50%
Human resource management
The right people in the right place can make all the difference for the company and hence the HR department is a support activity most
important for the firm. The recruitment process of CCS involves three stages where potential employees undergo different situations
relating to the business. And individuals who score highest are offered employment. Also CCS has an extensive reward system where
the organisation recognise and motivate employees
Firm infrastructure
Without a proper infrastructure, and lack of government handling or legal support, a firm might face a big hurdle. Similarly,
administration department will help in maintenance of the facilities in a firm.

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2.3.3 Product Onion towards NPD

Core Product Refreshment/ Festivity/ meetups/ conversation At the augmented stage CCS can target the health cautious customers
Basic Product Glass Bottles/ Plastic Bottles who would like to consume a soft drink which is low on sugar and calorie
Expected Product Products Packaged with Cans
levels, CCS could introduce a diet range to its current product offering to
target these customers Also CCS could introduce a fruit based product to
Augmented Product Drinks according to Sugar levels
cater to the customer base who prefer a fruit drink over carbonated drinks.
Potential Product Sugar Free/ Fruit Based
2.3.4 Brand Equity Analysis (Keller 2003)
Identify (Who are You) Salience Enjoyment/Free time/ renewed/ distribution/ Pleasure
Meaning Performance Refreshment/Exclusive flavour/ satisfy Thirst / light Sugar
(what are you) Imagery Food/Moments/ fun / social/ happiness
Response Judgement Good Quality/ Brand loyalty/ Market Leader/ Innovative Products
(What about you) Feeling Festivity/ fun / Active/ Sporty
Relationships (what about you and
me) Resonance Being a brand wining Sri Lankan appreciation over the years achieving Super-brand status.
2.3.5 Resource based View of Strategy
Easy to imitate Difficult to Imitate
Threshold Resources Unique Resources
Resources Plant & Machinery, Bottle, Can, Labels, Brand identity, Patents, Financial Stability, Organisational Diversity
Threshold Competencies Core Competencies
competency Production, Distribution, Planning, Implementation Unique Taste, Product Portfolio, Advanced Technology, Manufacturing Skills
2.3.6 Marketing Assets towards New Product Development

Tangible
The manufacturing facility and office premises comprised with the CCS owned warehouse facilities will contribute to
Physical Resources
research and developments done for new product development.
The organisation showed increase in its profitability showed a 24% increase YOY from 2.8b in 15/16 to 3.5b in 16/17
Financial Resources
which shows that the organisation can invest more towards research and development
CCS is equipped with modern bottling plants which enable them to test and manufacture products in less time than its
Technological Resources
competitors
Organizational Resources ERP systems and MIS system to recognise competences within the organisation and plan new products accordingly
Intangible
Experienced management to identify changing customer demands and manufacture and introduce new product according
Human Assets & Intellectual Capital
to consumer needs
Brand Image, Reputational Assets and Business experience over 150 years in soft drinks manufacture and an extensive distribution network makes new products
Relationships more approachable to CCS customers
Organizational Culture & Incentive Company has a culture that supports innovation and also incentives are given according to the number of sales made
systems from the new product.
2.3.7 Competitive Advantage Diamond (Source Diasz, 2012)
Leverage Points of differentiation – Pricing advantages, Purchasing Convenience, Widespread distribution, Brand recognition
The Unique taste offering and the variety of products made according to advanced technology and manufacturing skills to satisfy customer
Core Competencies
demands with an extensive distribution network to reach every town in the country
Sustain Patents & experienced employees will help sustain the core competencies
Market research analysis, Competitor Analysis, Legal and Industry Analysis activities are conducted on a regular basis to be more
Fit with the Environment
competitive and profitable in the market
Disproportionate Profits The identification of a producing a low sugar free soft drinks will make sure that the company will generate higher profits
Invest Large investments are being to make sure that the company can priorities situations and stay ahead of competition
The two new bottling plants will increase the production by more than 50% which will enable to organisation to supply heavily to the
Create entry barriers
market making a barrier for competitors
2.3.7 Gap Analysis towards New Product Development
With the PESTEL analysis conducted above it was evident that the society is moving more
Market Share

Final Objective towards a more health cautious products in every aspect of their lives, and also with new
New Product regulations and taxes on sugar based consumer products it’s important that Elephant
Soft Drinks introduce a range of low or no sugar product range to their current product
Current
offering, this will enable the organisation to secure its current market share and also
increase the market share with time making the organisation a dominant force in the
Time
soft drinks industry

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2.4 SWOT Analysis
Strengths in the SWOT of Elephant Soft Drinks
Brand Equity – SuperBrands awarded Elephant Soft Drinks with the highest brand equity award. Elephant Soft Drinks with its vast
presence in Sri Lanka and unique brand identity is definitely one of the costliest brands with the highest brand equity.
Company valuation – One of the most valuable companies in the Sri Lanka, Elephant Soft Drinks is valued around 500 billion Rupees.
This valuation includes the brand value, the numerous factories and assets spread out across Sri Lanka and the complete operations
cost and profit of Elephant Soft Drinks.
Vast Sri Lankan presence – Elephant Soft Drinks is present in every district across Sri Lanka. Chances are, any Town that a customer
go to, they will find Elephant Soft Drinks present in that market. This vast presence of Elephant Soft Drinks has also contributed to the
building of the mammoth brand name.
Largest market share – There are only 2 Big competitors in the beverage segment except for Elephant Soft Drinks – Pepsi and Coca
cola. Out of these 3, Elephant Soft Drinks is the clear winner and hence has the largest market share in Sri Lanka with 43%. Amongst
all beverages, EGB, Cream Soda, Lemonade, Orange Barley, Necto, Soda are the growth drivers for Elephant Soft Drinks.
Fantastic marketing strategies – Elephant Soft Drinks unlike Pepsi And Coca Cola always tries to win peoples heart. Where Pepsi’s
target is continuously changing, and is targeted towards youngsters, Elephant Soft Drinks targets people of all ages. The targeting is
also done by celebrities who are well liked both in Cinema and Sports
Customer Loyalty – With such strong products, it is natural that Elephant Soft Drinks has a lot of customer loyalty. The products
mentioned above like EGB and Cream Soda have a huge fan following. People will prefer these soft drinks over others. Because of the
good taste of Elephant Soft Drinks, finding substitutes becomes difficult for the customer.
Distribution network – Elephant Soft Drinks has the largest distribution network in Sri Lanka because of the demand in the market for
its products. On the other hand, due to this successful distribution network, Elephant Soft Drinks has been able to command such a
high market presence.
Weaknesses in the SWOT of Elephant Soft Drinks
Competition with Coca Cola – Elephant Soft Drinks would have been the clear market leader had it not been for Coca Cola. The
competition in these two brands is immense and Coca Cola will not give up easily to a domestic brand.
Product Diversification is low – Where Coca Cola has made a smart move and diversified into the snacks segment with products like
Minute Maid and Etc, Elephant Soft Drinks is missing from that segment. The segment is also a good revenue driver for Coca Cola
and had Elephant Soft Drinks been present in this segment, these products would have been an additional revenue driver for the
company.
Absence in health beverages – Obesity is a major problem affecting people nowadays. The business environment is changing and
people are taking measures to ensure that they are not obese. Carbonated beverages are one of the major reasons for fat intake
Elephant Soft Drinks is the largest manufacturer of Carbonated beverages. The inference is that the consumption of beverages in
developed countries might go down as people will prefer a healthy alternative.
Water management – Elephant Soft Drinks has faced flak in the past due to its water management issues. Several groups have raised
lawsuits in the name of Elephant Soft Drinks because of their vast consumption of water even in water scarce regions. At the same
time, people have also blamed Elephant Soft Drinks for mixing pesticides in the water to clear contaminants. Thus water management
needs to be better for Elephant Soft Drinks.
Opportunities in the SWOT of Elephant Soft Drinks
Diversification – Diversification in the health and food business will improve the offerings Elephant Soft Drinks to their customers.
This will also ensure that they get better revenue from existing customers by cross selling their products. The supply chain which is
distributing their beverages can also distribute these snacks thereby sharing the load of Supply chain costs.
Developing nations – Although developed nations have a high presence of Coca cola, these countries are slowly moving towards
healthy beverages. However, developing countries are still being introduced to the delight of carbonated drinks and soft drinks.
Countries like India which are developing and have a hot summer, find the consumption of cold drinks almost doubled during
summers. Thus, the higher consumption in developing environments can be a good opportunity to capitalize for Elephant Soft Drinks.
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Packaged drinking water – With hygiene becoming a major factor in the consumption of water, Packaged drinking water has found its
way into people’s mind. Elephant Soft Drinks could have a presence in the packed drinking water segment.
Supply chain improvement – Supply chain can be a major cost sink hole with the transportation costs always rising. Coca cola’s
complete business is based on transportation and distribution. There will always be possible improvements in this area. Thus, Coca
cola should keep strict watch on its Supply chain and keep improving to bring the cost down.
Market the lesser selling products – In the product portfolio of Coca cola, there are several products which have not found acceptance
in the market. Coca Cola needs to concentrate on the marketing of these products as well. It is understood that Coca cola has made
several expenses to launch these products. Thus, the marketing and subsequent rise of sale of these products will help revenue of Coca
cola.
Threats in the SWOT of Elephant Soft Drinks
Raw material sourcing – Water is the only threat to Elephant Soft Drinks. The weakness of Elephant Soft Drinks was the suspected
use of pesticides or vast consumption of water. However, the threat here is that water scarcity is on the rise. With the climate
changing, and regions of various countries facing scarcity of water, sooner or later someone might raise fingers on beverage
companies. Thus, Water sourcing is an axe which can fall anytime on the head of Elephant Soft Drinks. If water is limited or rationed,
Elephant Soft Drinks can experience a major downfall in their revenue and capacity of distribution. The same can affect its rivals
Pepsi ad Coca Cola as well.
Indirect competitors – Coffee chains like Starbucks, Java, Coffee Bean and Tea Leaf, Iced Tea Products, Black Tea are on the rise.
These chains offer a healthy competition to Elephant Soft Drinks carbonated drinks. They might not be a big competition for Elephant
Soft Drinks, but they do give a dent to its beverage market. Similarly, health drinks like Real and Tropicana as well as energy drinks
like Red bull and Gatorade are stealing away the market share indirectly.