Coca-Cola in 2011: in Search of A New Model

Coca-Cola in 2011 : In Search of a New Model
Coca-Cola Overview
The world largest soft drink company
The most powerful brand in the world - $70 billion in 2010
2020 Goals
- To Double the Coca-Cola system’s revenues (2010 revenue 35 billion)
- Be #1 in NARTD business in every market and category
- Be the most preferred and trusted beverage partner
- Global leadership in sustainable water use
- Manage people, time and money for greatest effectiveness
Coca-Cola History
1886 John Pemberton invented Coca-Cola : Atlanta, Georgia

1895 Asa Candler aggressively marketed Coca-Cola available in
every state
1916 Erenst Woodruff took Coke to public – “Arm’s width of
desire”, “It’s the real thing” – International phenomenon
1981 Robert Goizueta debuted Diet Coke expense marketing
$ 100 M. in the first year
1983 Diet Coke had become The best–selling diet soft drink
1997 Douglas Ivester Asian financial crisis
2000 Douglas Daft cut cost laid off 6,000 employees, Legal
problem, brand image & invest mistake (Quaker Oats)
2004 E. Neville Isdell bring back several senior manager – create
“Manifesto for growth”, Strengthen brand power
2005 Muhtar Kent spearhead the company’s international
business – Global sales increase 6%
The Soft Drink Industry
Top-10 Sparkling Brands Market Share
4 Primary participant : Name (Owner) In 2010 In 2005
- Concentrate producers Coca-Cola (Coke) 17.0% 17.6%

- Bottlers Diet Coke (Coke) 9.9% 9.8%
- Retailers Pepsi-Cola (Pepsi) 9.5% 11.2%
- Suppliers Mt. Dew (Pepsi) 6.8% 6.5%
Dr. Pepper (DPS) 6.3% 5.7%
Suppliers Suppliers Sprite (Coke) 5.6% 5.7%
Diet Pepsi (Pepsi) 5.3% 6.0%
Concentrate Producer Diet Mt. Dew (Pepsi) 2.0% 1.4%

30 Plants
(COKE) Diet Dr Pepper (DPS) 1.9% NA
Fanta (Coke) 1.8% 1.6%
Cold-filled / Profitable
CCE Bottlers Bottlers
Market Share
Marketing / Save shelf
COKE PEPSI DPS
Retailers Retailers
19%
48%
Consumers
33%
2. BOTTLERS 1. Concentrate Producer
8% margin 32% margin
- Blended raw material ingredient
- Ship to bottlers
- Manufacture, operate - Invest in R&D innovation
- Selling and delivery drinks - Invest in Marketing - Advertising
- Direct store delivery (DSD)
- Concentrate price was fixed
- Can carry competitor’s non-cola brands
- Final say in retail pricing decision
3. RETAILERS
- Supermarket
4. SUPPLIERS
- Restaurants, Cafeterias
- Convenience stores - Caramel coloring
- Phosphoric / Citric acid
- Caffeine
- Can manufacturer – Ball and Rexam
The creation of CCE
- Significant acquisition in 1985 by

Goizueta – buy 2 Coke’s biggest
bottler – control 1/3 of Coke’s
volume
- Coca Cola Enterprises (CCE) was
spun off the Coca Cola company CCE in 2010
in 1986
- CCE become Coke’s first Sales rose and grew to 75% of Coke’s North American
domestic “Anchor bottler” ; bottle and can volume
consolidate bottler through CCE CCE got financial strapped to invest more
- Coke buy small bottlers and sell
to CCE Coke bought CCE’s entire North American operations
Revenue ratio change from quarter to half of its sales

The Emergence of Still Beverage
Consumer’s trend - Healthier Lifestyles
Coke response
- Low / no-calorie drinks : Coke Zero (2005)
- New digital media platforms
- Global campaigns at sports events like the World Cup
Still beverages : Sport drinks, enhanced water, ready-to-

drink teas and coffees, energy drinks, juice, and juice drinks
Opportunities : Market growth and Higher retails price

Impacts on Coke : Hot-filled plant – innovation and higher
margin, Bottlers lose profit
- New challenges – existing bottler’s franchise agreements

- Coke created “Bottling investment group” (BIG) – hospital ward strategy
- In 2010, the group owned 98 bottling operations and 23% net operating revenues
- CCE incidence pricing model – drive revenue > ounces
Coke business model
• Franchise bottlers : acquisition

• Hospital ward : buy local underperform bottlers - fixed them – spinning off
• Anchor bottler strategy : buy independent bottlers – sell them to CCE
• Buy /Own CCE : Operate manufacturing, package and distribution
• Beer strategy : keep manufacturing and refranchise distribution
What’s Next?
- NARTDs gain 20% of total industry volume

- U.S. personal expenditure per capita expect to reach $34,000 by 2020
- U.S. teen population forecast to grow to 31 million by 2020
- Still beverages expect to generate over 45% of retails sales value by 2020
• Buying CCE in North America

• Buying overall CCE network : fix CCE and refranchise the bottling business
• Imitate Beer strategy
• Replay hospital ward strategy
• Keep the bottling business and control the whole value chain
THANK YOU
5750502 Shompoonuch Paibulsuwan

5750503 Chetthawat Songprasert
5750505 Nuttasin Triped
5750514 Pikulthong Khampiranon

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Coca-Cola in 2011 : In Search of a New Model

1886 John Pemberton invented Coca-Cola : Atlanta, Georgia

4 Primary participant : Name (Owner) In 2010 In 2005

- Concentrate producers Coca-Cola (Coke) 17.0% 17.6%

Concentrate Producer Diet Mt. Dew (Pepsi) 2.0% 1.4%

- Significant acquisition in 1985 by

Revenue ratio change from quarter to half of its sales

Still beverages : Sport drinks, enhanced water, ready-to-

Opportunities : Market growth and Higher retails price

- New challenges – existing bottler’s franchise agreements

• Franchise bottlers : acquisition

- NARTDs gain 20% of total industry volume

• Buying CCE in North America

5750502 Shompoonuch Paibulsuwan

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