Coca Cola SWOT analysis 2017

| July 24, 2017

Company Background

Key Facts
Name The Coca-Cola Company
Logo
Industries served Beverage (more than 600 brands)
Geographic areas served Worldwide (more than 200 countries)
Headquarters Atlanta, Georgia, United States
Current CEO James Quincey
Revenue (US$) 41.863 billion (2016) 5.5% decrease over 44.294 billion (2015)
Profit (US$) 6.527 billion (2016) 11.2% decrease over 7.351 billion (2015)
Employees 100,300 (2017)
Main Competitors PepsiCo Inc., Dr Pepper Snapple Group, Inc., Unilever Group, Mondēlez International, Inc., Groupe Danone, Kraft Foods Inc., Nestlé S.A. and many other companies in the beverage industry.

The Coca-Cola Company business overview from the company’s financial report:

"The Coca-Cola Company is the world’s largest beverage company. We own or license and market more than 600 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still beverages such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks.

We own and market four of the world’s top five nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing our trademarks, sold in the United States since 1886, are now sold in more than 200 countries.

We make our branded beverage products available to consumers throughout the world through our network of Company-owned or -controlled bottling and distribution operations as well as independent bottling partners, distributors, wholesalers and retailers — the world’s largest beverage distribution system.

Beverages bearing trademarks owned by or licensed to us account for 1.9 billion of the approximately 59 billion beverage servings of all types consumed worldwide every day.

We believe our success depends on our ability to connect with consumers by providing them with a wide variety of choices to meet their desires, needs and lifestyle choices. Our success further depends on the ability of our people to execute effectively, every day.

Our goal is to use our Company’s assets — our brands, financial strength, unrivaled distribution system, global reach, and the talent and strong commitment of our management and associates — to become more competitive and to accelerate growth in a manner that creates value for our shareowners.”[1]

Coca Cola SWOT Factors

Strengths

1. Dominant market share in the beverage industry

The Coca-Cola Company is the largest non-alcoholic beverage company in the world. It serves 1.9 billion or 3.2% of the total 59 billion beverage servings of all types consumed worldwide every day.[1] The company owns, distributes and sells over 600 various non-alcoholic beverage brands in over 200 countries.

Figure 1. Largest beverage companies in the world in 2016
Rank Name 2016 revenue (in US$ billions) Beverage segment
1 Anheuser-Busch InBev 45.517 Alcoholic
2 The Coca Cola Company 41.900 Non-alcoholic
3 PepsiCo Inc. 30.144 Non-alcoholic
4 Nestlé S.A. 24.534 Non-alcoholic
5 Suntory Holdings Limited 23.660 Alcoholic
6 Heineken N.V. 22.674 Alcoholic
7 Starbucks Corporation 21.316 Non-alcoholic
8 Diageo plc 13.530 Alcoholic
9 Unilever Group 10.905 Non-alcoholic
10 Pernod Ricard S.A. 9.467 Alcoholic

Source: Beverage Industry[2]

Only PepsiCo and Nestlé can compare to The Coca-Cola Company’s sheer size and the market share in the non-alcoholic beverage segment. Being large and having dominant market share has a few advantages over competitors:

  • Economies of scale. Economies of scale allow the company to share its fixed costs over hundreds of brands and billions of servings, making each drink as cheap as possible.
  • Market power over suppliers and competitors. Due to its size, The Coca-Cola Company can exercise its market power over suppliers by requiring lower prices from them. The company can also use its size to affect the competition by underpricing some of its items, acquiring the smaller competitors or saturating the market with many of its own products.
  • Power over the buyers. Unlike some of its smaller competitors, the Coca-Cola brand and the company’s other signature drinks have an enormous brand recognition all over the world. The company can influence consumers’ buying decisions through its brand power and massive marketing campaigns more easily than most of its smaller rivals.
  • Wide audience reach. The Coca-Cola Company’s distribution network allows the chain to reach more customers than most of its rivals could reach. According to the company, the company serves 1.9 billion servings a day, more than any other competitor in the world. Wide audience reach does not only help the company to target more customers and increase brand awareness, but also to introduce new products more easily.

2. Diversified product portfolio with 21 billion-dollar brand

The Coca-Cola Company owns and distributes over 600 different brands, which is the most extensive beverage brand portfolio in the whole industry. The company offers beverages for every taste in 7 beverage categories:

  • Carbonated Soft Drinks
  • Bottled Water
  • Juice & Juice Drinks
  • Sports Drinks
  • Tea & Coffee
  • Energy Drinks & Shots
  • Alternative Drinks

Figure 2. Largest beverage brand portfolios

The Coca-Cola Company's and its rivals beverage rband portfolios. Coca-Cola owns 648 brands, PepsiCo owns 56 brands, Dr Pepple Snapple Group owns 62 brands and Nestle owns 10 brands.

Source: Companies’ financial reports and official websites[3][4][5][6]

The most popular company’s drink is Coca-Cola. Coca-Cola trademark (includes Diet Coke and Coca-Cola Zero) earned around 40% of the company’s total revenue.[1] While Coca-Cola is the most important product, it is only one of the 21 billion-dollar brands that the business owns. The company’s billion-dollar brands include:

The company also owns 13 other brands that each annually earn at least US$1 billion:[6]

  • Coca-Cola
  • Fanta
  • Sprite
  • Diet Coke/Coca-Cola Light
  • Coca-Cola Zero
  • Minute Maid
  • Georgia Coffee
  • Powerade
  • Del Valle
  • Schweppes
  • Aquarius
  • Minute Maid Pulpy
  • Dasani
  • Simply
  • Vitaminwater
  • Gold Peak
  • Fuze Tea
  • Ice Dew
  • smartwater
  • I LOHAS
  • Ayataka.

Figure 3. The Coca-Cola Company’s billion-dollar brands

Coca-Cola company's 21 billion-dollar brands logos.

Source: The Coca-Cola Company[7]

No other business in the beverage industry owns as many billion-dollar brands as The Coca-Cola Company.

What does a diversified portfolio provide for the company? First, The Coca Cola Company depends less on one or two of its beverages to generate the majority of its revenue. Second, with so many beverage drinks in so many flavors, the business can satisfy every consumer’s needs and tastes. Third, if the demand for one of the company’s beverages falls sharply (as it is now with Coca-Cola) the business can rely on other beverages to generate higher sales.

Few of The Coca Cola Company’s rivals can enjoy such a diversified brand portfolio, which provides strong competitive advantage over the rivals.

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Published: July 24, 2017
Format: PDF
Pages: 28
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