• Written on 23 Feb 2013

SWOT analysis of Coca Cola

Coca Cola logo

This is a Coca Cola Company SWOT analysis for 2013. For more information on how to do SWOT analysis please refer to our article.

Company background

Name The Coca Cola Company
Industries served Beverages
Geographic areas served Worldwide
Headquarters U.S.
Current CEO Muhtar Kent
Revenue $ 48.01 billion (2012)
Profit $ 9.01 billion (2012)
Employees 146,200
Main Competitors PepsiCo Inc., Dr Pepper Snapple Group, Inc., Unilever, Groupe Danone, Kraft Foods Inc., Nestlé S.A. and others.

The Coca Coola Company is the largest beverage business in the world serving more than 200 countries and offering more than 500 brands.
You can find more information about the business in its official website or Wikipedia’s article.

SWOT

Coca Cola SWOT analysis 2013

Strengths

Weaknesses

  1. The best global brand in the world in terms of value ($77,839 billion)
  2. World’s largest market share in beverage
  3. Strong marketing and advertising
  4. Most extensive beverage distribution channel
  5. Customer loyalty
  6. Bargaining power over suppliers
  7. Corporate social responsibility
  1. Significant focus on carbonated drinks
  2. Undiversified product portfolio
  3. High debt level due to acquisitions
  4. Negative publicity
  5. Brand failures or many brands with insignificant amount of revenues

Opportunities

Threats

  1. Bottled water consumption growth
  2. Increasing demand for healthy food and beverage
  3. Growing beverages consumption in emerging markets (especially BRIC)
  4. Growth through acquisitions
  1. Changes in consumer preferences
  2. Water scarcity
  3. Strong dollar
  4. Legal requirements to disclose negative information on product labels
  5. Decreasing gross profit and net profit margins
  6. Competition from PepsiCo
  7. Saturated carbonated drinks market

Strengths

  1. The best global brand in the world in terms of value. According to Interbrand, The Coca Cola Company is the most valued ($77,839 billion) brand in the world.
  2. World’s largest market share in beverage. Coca Cola holds the largest beverage market share in the world (about 40%).
  3. Strong marketing and advertising. Coca Cola’ advertising expenses accounted for more than $3 billion in 2012 and increased firm’s sales and brand recognition.
  4. Most extensive beverage distribution channel. Coca Cola serves more than 200 countries and more than 1.7 billion servings a day.
  5. Customer loyalty. The firm enjoys having one of the most loyal consumer groups.
  6. Bargaining power over suppliers. The Coca Cola Company is the largest beverage producer in the world and exerts significant power over its suppliers to receive the lowest price available from them.
  7. Corporate Social Responsibility (CSR). Coca Cola is increasingly focusing on CSR programs, such as recycling/packaging, energy conservation/climate change, active healthy living, water stewardship and many others, which boosts company’s social image and result in competitive advantage over competitors.

Weaknesses

  1. Significant focus on carbonated drinks. The business is still focusing on selling Coke, Fanta, Sprite and other carbonated drinks. This strategy works in short term as consumption of carbonated drinks will grow in emerging economies but it will prove weak as the world is fighting obesity and is moving towards consuming healthier food and drinks.
  2. Undiversified product portfolio. Unlike most company’s competitors, Coca Cola is still focusing only on selling beverage, which puts the firm at disadvantage. The overall consumption of soft drinks is stagnating and Coca Cola Company will find it hard to penetrate to other markets (selling food or snacks) when it will have to sustain current level of growth.
  3. High debt level due to acquisitions. Nearly $8 billion of debt acquired from CCE’s acquisition significantly increased Coca Cola's debt level, interest rates and borrowing costs.
  4. Negative publicity. The firm is often criticized for high water consumption in water scarce regions and using harmful ingredients to produce its drinks.
  5. Brand failures or many brands with insignificant amount of revenues. Coca Cola currently sells more than 500 brands but only few of the brands result in more than $1 billion sales. Plus, the firm’s success of introducing new drinks is weak. Many of its introduction result in failures, for example, C2 drink.

Opportunities

  1. Bottled water consumption growth. Consumption of bottled water is expected to grow both in US and the rest of the world.
  2. Increasing demand for healthy food and beverages. Due to many programs to fight obesity, demand for healthy food and beverages has increased drastically. The Coca Cola Company has an opportunity to further expand its product range with drinks that have low amount of sugar and calories.
  3. Growing beverages consumption in emerging markets. Consumption of soft drinks is still significantly growing in emerging markets, especially BRIC countries, where Coca Cola could increase and maintain its beverages market share.
  4. Growth through acquisitions. Coca Cola will find it hard to keep current growth levels and will find it hard to penetrate new markets with its existing product portfolio. All this can be done more easily through acquiring other companies.

Threats

  1. Changes in consumer tastes. Consumers around the world become more health conscious and reduce their consumption of carbonated drinks, drinks that have large amounts of sugar, calories and fat. This is the most serious threat as Coca Cola is mainly serving carbonated drinks.
  2. Water scarcity. Water is becoming scarcer around the world and increases both in cost and criticism for Coca Cola over the large amounts of water used in production.
  3. Strong dollar. More than 60% of The Coca Cola Company income is from outside US. Due to strong dollar performance against other currencies firm’s overall income may fall.
  4. Legal requirements to disclose negative information on product labels. Some Coca Cola’s carbonated drinks have adverse health consequences. For this reason, many governments consider to pass legislation that requires disclosing such information on product labels. Products containing such information may be perceived negatively and lose its customers.
  5. Decreasing gross profit and net profit margins. Coca Cola’s gross profit and net profit margin was decreasing over the past few years and may continue to decrease due to higher water and other raw material costs.
  6. Competition from PepsiCo. PepsiCo is fiercely competing with Coca Cola over market share in BRIC countries, especially India.
  7. Saturated carbonated drinks market. The business significantly relies on the carbonated drinks sales, which is a threat for the Coca Cola as the market of carbonated drinks is not growing or even declining in the world.

Related topics

KFC SWOT

McDonalds SWOT

Nestle SWOT

PepsiCo SWOT

Starbucks SWOT

Subway SWOT

Walmart SWOT

Walt Disney SWOT

Sources

  1. The Coca Cola Company (2013). Coca Cola Journey. Available at: http://www.coca-colacompany.com/
  2. Bazil, M. (2013). The Motley Fool. Coca-Cola Has a Prosperous 2013 Ahead of It. Available at: http://beta.fool.com/muhammadbazil/2013/01/04/coca-cola-has-prosperous-2013-ahead-it/20272/?ticker=KO&source=eogyholnk0000001
  3. Wikipedia (2013). The Coca-Cola Company. Available at: http://en.wikipedia.org/wiki/The_Coca-Cola_Company

Written by Ovidijus Jurevicius

Connect on Google+

If you're interested in strategic management, business strategy or any other business related topic, connect with me on Google+ Ovidijus Jurevicius


comments powered by Disqus