This essay describes history, products, markets, philosophy, mission and vision of the Coca Cola Company and focuses on the threats that the Company faces. Several recommendations are given concerning the most critical aspects for the financial welfare as well as for the brand as a whole. According to the Annual Report Coca Cola has been operating at the beverage market for more than 126 successful years. It was found in 1886 in Atlanta where John Pemberton, a pharmacist, created caramel-colored liquid that presently has 1,7 billion sales each day. Consumers could purchase the Company’s products in more than 200 countries all over the world.
Coca Cola brand is ubiquitous brand. The Company’s beverage nonalcoholic brands include near 500 titles that are presented in the form of sparkling beverages, juices, waters, juice drinks, sports drinks enhanced waters, teas, coffees, energy drinks. The most famous brands are Coca Cola, Fanta, Sprite, Diet Coke, Simply, Vitaminwater, Minute Maid, Powerade and Del Valle. Coca Cola’s largest logistics and distribution network includes “Company-owned or controlled bottling and distribution operations, bottling partners, distributors, wholesalers and retailers” (Annual Report of the Coca Cola Company 1). The Company aims to satisfy customers’ needs, desires and life style applying the most competitive assets such as well-known brands, financial stability, unrivaled extensive logistics system, global presence, talent of management and great commitment of each employee.
Globally, the Company is a leader in providing sparkling beverages, juices and ready-to-drink coffees. According to the Annual Report of the Coca Cola Company it owns 4 the most successful brands existing worldwide in the beverage industry. As on December 2011, the number of Coca Cola’s associates ammounted to more than 146,000 entities worldwide. The Company offers more than 3500 products to its target audience. The mission of the Company is stated as refresh the world, inspire moments of optimism, create value and make a difference.
Regarding the financial figures, in 2011 Coca Cola increases the volumes of sales by 5 percent to 26,7 billion unit cases. The growth of operating income accounted for 20 % and resulted in $10,2 billion. It is noteworthy, that 80 percent of the total volume of sales and more than 55 percent of the net operating revenues were created at the foreign markets not at the domestic market of North America. It proves the fact that the Coca Cola Company is a legendary company that brings positive, joy and feelings of holiday that are the milestones of Company’s vision of doing business.
Challenges for Coca Cola Company
The above-mentioned strengths of the Coca Cola Company guarantee stable and strong financial positions of the Company. However, highly competitive environment is constantly changing and the Company must address new challenges. Changing attitude to the health issues with the shift on more consciousness in choosing of food and beverage is one of the most crucial threats for the Company. Extensive anti campaigns appealing to the low nutritional value and numerous harms to health of Coca Cola’s products including a campaign “to stop killer code” damage the image of the Company’s brand. It is not a secret that Coca Cola’s beverages contain a high level of sugar, as well as caffeine, phosphoric acid, caramel, some extract and carbonic acid (Seegert). The author argues that government forced Coca Cola to change their secret formula of caramel flavoring in such a way that reduces chemical 4-methylimidazole contain, a dangerous substance which according to studies related to the occurrence of cancer in mice. Moreover, numerous studies proved the negative impact of Coca Cola’s beverages on teeth, stomach, and pancreas. It contains also ethylene glycol, an anti-freeze substance. All these facts are communicated through the social media, affecting negatively the image of Coca Cola brand.
The war between PepsiCo and Coca Cola
Another fact to which the company should pay due attention is the shift in PepsiCo production and marketing policies towards healthier beverages. Brooker stated in her report that PepsiCo developed a new strategy “better-for-you products”. Instead of promoting and stimulating sales of traditional coke which is increasingly associated with adverse health effects including obesity, PepsiCo began to focus more on juices, water, teas and sports drinks. PepsiCo’s understanding of the changed lifestyles of its target consumers implemented new marketing campaign promoting such brands as Aquafina, Gatorade, Lipton and Tropicana. With the help of such a long-term strategy, the main competitor of Coca Cola expects to obtain $30 billion in revenues by 2020.
Coca Cola did not react to such changes of its main competitor. The main recommendation for the Company is to analyze the new trends in the industry especially taking into consideration that the total volume of Coke’s sales is reducing. The consumers prefer more useful beverages. The issues of sugar overconsumption especially by children due to the easy access to the point-of-sales with Coca Cola products near each school raised numerous complaints about the increased number of cases relating to obesity, diabetes and other health disorders.
The second challenge that the Company has to cope with is the enhanced marketing activity of the biggest and the most influential player in the beverage industry – PepsiCo. Brown stated that “Coke also faces pressure from turnaround efforts by PepsiCo, which earlier this year said it would refocus on its core soda brands to reclaim lost U.S. market share”. PepsiCo invests more in its marketing campaigns, tries to position its products as more useful and providing more benefits to consumers.
Coca Cola should analyze changing tastes and preference of modern well informed and conscious about its healthy eating and drinking habits society. With the aim not to lose the captured market share and experience decrease in sales, the Coca Cola Company should address its production and marketing efforts to this dominant threat and develop new directions of its operating activity with the focus on healthier beverages’ contain. Moreover, its main market rival – PepsiCo – has been walking this path already. Applying aggressive advertising campaign that addresses the most crucial issues such as health of present and future generations, beverages benefits PepsiCo according to Brooker will win the war between PepsiCo and Coca Cola.
Presently, consumers are used to refreshing taste of Coca Cola, associate its products with celebration and feeling of happiness, creativity and passion. Despite of this fact, its popularity eventually will drop due to a massive wave of discontent and complaints about its harm to health. This fact is the challenge for Company to begin building of long-term strategy and ability to face more sophisticated decisions made by PepsiCo. Sustainable, quality growth is possible only if the Company will focus on changing needs of its customers, act with urgency, will not resist change. Its main values such as leadership, integrity, accountability and quality should be not only great words but also practical actions.