A company synonymous with strong branding and ubiquitous availability, The Coca-Cola Company is one of the leading corporations in the world. Its products can be found in nearly every country (excluding North Korea and Cuba) with its familiar red-and-white branding.
In this article, we jump into the Strengths, Weaknesses, Opportunities and Threats of one of the world’s largest beverage manufacturers, The Coca-Cola Company.
1. The Coca-Cola Company has one of the world’s largest brand identities and brand valuations.
Wherever you travel in the world, you will no doubt spot the ubiquitous red-and-white logo of The Coca-Cola Company. Branding and advertising campaigns of Coca-Cola have taken over World Cup tournaments, capitalized on the festivities of Christmas, and driven one of the strongest advertising rivalries in the marketing world.
The Coca-Cola Brand is valued at $84 billion. (Statista)
2. The Coca-Cola Company enjoys a commanding lead in market share in North America.
Coca-Cola remains an industry benchmark, with many imitation products cropping up over time. Regardless, its customers continue to seek the original taste of its main product, Coca-Cola, and that of its main product offerings. This authenticity buffers itself from its competitors to some level. However, this does not hinder indirect competition from health drinks, bottled water and hot drinks from impacting its market share.
Coca-Cola commands 35% of the North American soft drink market. (Statista)
3. One of the most recognizable brands, The Coca-Cola Company’s brand equity is one of the strongest in the world.
Brand loyalty of The Coca-Cola Company and its perceived quality reinforce the image of The Coca-Cola brand. The company has remained in its position for more than a century. To achieve this, it has had to ensure that its marketing and advertising is at the top of its game and continues to be as the world’s refreshment needs change. Even though the packaging and corporate identity of The Coca-Cola Company have changed many times over the years, the lineage remains exceptionally strong.
Coca-Cola spends $280 million on advertising every year. (Statista)
4. Beverages from The Coca-Cola Company are available in over 200 countries around the world.
With the exception of North Korea and Cuba due to political sanctions, products from The Coca-Cola Company can be found across the world. The distribution network has been known to include some of the most innovative and localized methods of distribution to penetrate its products into some of the most remote areas in the world.
More than 1.9 billion servings of products from The Coca-Cola company are served every day in 200 countries around the world. (Coca-Cola)
5. As The Coca-Cola Company has such wide market penetration, its distribution system is one of the most efficient and refined in the world.
Getting a product to market is possibly one of the most cost-intensive aspects of a product life cycle, and with Coca-Cola, it is no different. The company relies on an incredible local partner network to ensure expediency and efficiencies when it comes to its distribution system. Resilience is key to the success of this system, as products from The Coca-Cola Company are distributed into some of the most remote and hostile environments on the planet.
Coca-Cola operates 900 bottling plants worldwide. (The Coca-Cola Company)
6. Due to its size, The Coca-Cola Company can react to the market through acquisitions and buy-outs.
Should the market position of The Coca-Cola Company come under increased pressure from direct or indirect competition, it can (and has) asserted itself by performing strategic acquisitions. An example of this is The Coca-Cola Company’s acquisition of Costa Coffee in order to gain exposure in the market of Tea and Coffee, a segment that is seen as an indirect competitor. This strategy has exposed Coca-Cola to not only the Tea and Coffee segment, but bottled water through its acquisition of Dasani juices and energy drinks.
The Coca-Cola Company purchased Costa Coffee for $5.1 billion. (Investopedia)
1. The Coca-Cola Company fails to demonstrate sustainable practices.
The Coca-Cola Company’s reliance on single-use plastics has led to it being considered one of the world’s worst polluters. This, coupled with its heavy reliance on water, is bad for its image. There is an opportunity for The Coca-Cola Company to strengthen its commitment to sustainable production, which would greatly benefit its brand.
45.2% of Coca-Cola’s product line is packaged in PET plastic bottles. (Statista)
2. The Coca-Cola Company faces stiff competition.
The Coca-Cola Company faces direct competition in the carbonated soft drink category, as well as indirect competition in the form of hot drinks, bottled water and nutritional drinks. Furthermore, The Coca-Cola Company continues to counter competitive action from its largest institutional competitor, The Pepsi-Co. This rivalry has earned its own name, The Cola Wars.
Pepsi-Co has a market capitalization of $188.6 billion, while The Coca-Cola Company has a market capitalization of $185.8 billion. (Investopedia)
3. Although Coca-Cola has a wide range of beverages available, it has not diversified into any other market segment.
Unlike its primary competitor, The Coca-Cola Company has had few attempts at entering into industries other than that of beverages. Competitors have gone into various industries, such as Pepsi-Co’s entrance into the snack market, a move which has helped it diversify its offerings away from the carbonated beverages industry. Moving beyond beverages could help Coca-Cola reinforce its position as a market leader.
The Coca-Cola Company owns more than 500 beverage brands worldwide. (The Coca-Cola Company).
4. The nutritional value of products from The Coca-Cola Company is a leading reason for customers to move away from the company.
The Coca-Cola Company has indeed attempted to produce Cola-type products that include less sugar, no sugar and sugar replacement products, but its image is still strongly entrenched as one of an unhealthy product. These attempts have led to the creation of products like TAB and Coke Life, which replace sugar with Stevia, which is seen as healthier. Interestingly, these brands are among the brands that The Coca-Cola Company decided to discontinue recently in order to streamline its operations.
One 12-ounce serving of Coca-Cola contains ten teaspoons of sugar. (Very Well Fit).
5. In order to penetrate all corners of the world, The Coca-Cola Company has high distribution costs.
In order to ensure that its products are available in the 200 countries that sell Coca-Cola products, the company maintains an exceptionally intricate supply chain system. The Coca-Cola Company’s business model revolves around independent bottling companies that add carbonated water to a syrup that is supplied by The Coca-Cola Company. The filled bottles are then distributed to customers and regions in order to fill orders. In this model, the actual bottling process is completed by the bottling partners, while the syrup production and distribution of the final product are executed by the company itself.
The Coca-Cola Company distributes over 3,500 different beverage options to over 200 countries. (Market.US)
6. Water is a key input for Coca-Cola, and this is becoming increasingly valued.
Water is identified as a key national resource, and one of strategic importance for many countries. The production of Coca-Cola products is incredibly water-intensive, with one hundred liters of the product requiring ninety-one liters of water to produce. As ecological impacts of water usage and environmental resilience gain increasing importance, The Coca-Cola Company will need to address its water usage in its manufacturing processes.
The Coca-Cola Company uses 295 billion liters of water in its operations per year. (Statista)
1. The Coca-Cola Company can focus more of its marketing efforts on emerging markets.
There has been a massive growth in net income per capita in large parts of the world, in territories where Coca-Cola had not previously focussed its expansion efforts. This offers the opportunity for expansion in underexposed markets in emerging economies. Expansion into the European, Middle East and African markets poses a great opportunity to Coca-Cola.
The Europe, Middle East and Africa markets represent 16.8% of The Coca-Cola Company’s revenue. (Statista)
2. The Coca-Cola Company can introduce non-beverage items into its product line.
Following on from the diversification strategies of its competitors, The Coca-Cola Company can diversify its range of offerings into products beyond its legacy products of beverages. This strategy has proven to be an effective way of mitigating the risk of downturns in product-specific markets, such as carbonated beverages. Furthermore, The Coca-Cola Company can leverage its vast and efficient distribution network for products in a similar segment to that of carbonated beverages, such as snacks.
It costs an estimated $71 million to introduce a new product into a market within the beverages and snack segment. (Signals Analytics)
3. Continued innovation in Coca-Cola’s supply chain can open up new opportunities.
As global supply chains continue to develop and innovate, this offers The Coca-Cola Company the opportunity for further efficiencies in its distribution strategies. The Coca-Cola Company is seen to be taking advantage of these technological advances, with the adoption of blockchain technology in its supplier and distribution technological infrastructure. The use of cryptocurrencies such as Ethereum will further contribute to the efficiencies, effectiveness and accountability of the company’s networks.
The Coca-Cola Company’s supply chain processes 160,000 orders per day. (All Things Supply Chain)
4. The Coca-Cola Company can focus more of its product range on health drinks.
The global trend toward a healthier existence, as well as the continued health pandemic manifesting itself in obesity, diabetes and other diet-related health concerns, is driving the market away from sugary, carbonated drinks toward alternatives that are perceived to be healthier. These include smoothies, bottled water, teas and coffees. The Coca-Cola Company has recently entered into the market for hot beverages through the acquisition of Costa Coffee. Furthermore, they have representation in bottled water through their stake in Dasani. However, there is further potential for expansion into this segment.
The global health drinks industry is estimated at $478 billion. (Cision US Inc)
5. Recycled plastic is an environmental imperative for the future.
Conscious consumption is becoming an incredibly important corporate value for consumers worldwide. The Coca-Cola Company is currently seen as one of the world’s greatest contributors to plastic pollution. Single-use plastic is still very much a part of The Coca-Cola Company’s supply chain. This offers the opportunity to change its image by setting itself targets of reducing not only single-use plastics in their product lines, but reducing plastic altogether. Targets have been set for 100% recycled plastic by 2030; however, a return to glass packaging offers an even greater opportunity.
60% of The Coca-Cola Company’s plastic is recycled. (The Coca-Cola Company)
6. Cost-cutting measures can reinforce The Coca-Cola Company’s position as a top beverage producer.
Due to its intricate, costly supply chain, The Coca-Cola Company has the opportunity to refine its operations to a more efficient operation. The company has started improving this operation by getting rid of products that do not contribute to its bottom line, as well as outsourcing its bottling operations to third parties. The Coca-Cola Company has seen reduced revenues in the 2010s; however, they have retained a growth in profitability due to cost-cutting and efficiency-seeking pursuits.
The Coca-Cola Company will cut 2,200 jobs globally. (eMedia Holdings Company)
1. It may be unable to grow its customer base over the long term.
The Coca-Cola Company’s marketing efforts have been so successful in the markets that it has concentrated on, a level of market saturation has been reached, where it has become difficult to attract new customers to its legacy offerings. This phenomenon presents itself not only to The Coca-Cola Company, but also to its competitor, The Pepsi-Co.
The Coca-Cola Company net operating revenue decreased by a third between 2012 and 2018. (Statista)
2. Many of The Coca-Cola Company’s products are outdated and not very profitable.
The vast majority of The Coca-Cola Company’s product lines contribute to a very small percentage of the company’s sales. This exposes the company to significant market-related risks, which may affect its few volume-based brands.
Half of The Coca-Cola Company’s brands contribute only 2% of the overall sales. (Nasdaq)
3. Customers of The Coca-Cola Company are increasingly seeking more nutritious choices in their beverage consumption.
Without the further development of its own health-focused brands, or further acquisitions of established brands that offer a healthier alternative to carbonated sugary drinks, The Coca-Cola Company will experience a decrease in sales of its core, volume-based product lines.
The carbonated soft drink consumption of the average North American has experienced a 19% year-on-year drop. (M3 USA Corporation)
4. Water is becoming an increasingly more valuable resource, and water is a big input of The Coca-Cola Company.
As worldwide freshwater resources become increasingly threatened, The Coca-Cola Company will experience an increased cost of its main production input: water. The company will need to refine its production process in order to cut down on the amount of water required in its operations in order to remain profitable and in operation.
The Coca-Cola Company uses 91 liters of water to produce 100 liters of product. (The Coca-Cola Company)
5. The beverage industry is one of the most competitive industries in the world.
The Coca-Cola Company has faced some of the fiercest competition in its existence. The so-called Cola Wars between The Coca-Cola Company and Pepsi-Co has led to the establishment of two behemoths in the beverage space. This mutually identified competition ensures a strategy of continuous innovation to ensure survivability.
29% of The Coca-Cola Company’s sales were that of low or no-calorie drinks. (Statista)
6. The Coca-Cola Company’s use of single-use plastics could become legally restricted or illegal.
Pressure is mounting from the market, supply chains, as well as government regulation against the incorporation of single-use plastics in The Coca-Cola Company’s manufacturing process. An alternative packaging solution will need to be sourced in order for the company to continue to supply at its current levels. Its current reliance on single-use plastics is not sustainable.
The Coca-Cola Company produces three million tons of plastic packaging a year. (BBC)
While consumers move to more conscious nutrition, can Coca-Cola maintain its market position? Through its current marketing strategy, effective cost-cutting measures, and a finger on the pulse of the market, Coca-Cola will remain in a strong position moving forward. There are great opportunities available to the company to increase competitiveness and drive growth.
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