Coca Cola SWOT analysis 2016

| March 31, 2016

Company Background

Name The Coca-Cola Company
Logo
Industries served Beverage (more than 500 brands)
Geographic areas served Worldwide (more than 200 countries)
Headquarters Atlanta, Georgia, United States
Current CEO Muhtar Kent
Revenue US$44.294 billion (2015) 3.7% decrease over US$45.998 billion (2014)
Profit US$7.351 billion (2015) 3.6% increase over US$7.098 billion (2014)
Employees 123,200 (2016)
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.

Business description

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 500 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 57 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.”

Coca Cola SWOT 2016 Factors

Strengths

1. Advertising and marketing capabilities. The Coca-Cola Company’s annual advertising spending was US$3.976 billion, US$3.499 billion and US$3.266 billion in 2015, 2014 and 2013, respectively.[1] Advertising expenses accounted for 6.9% of total revenues each year. In 2015, The Coca-Cola Company was the largest advertiser in the beverage industry in the world.

Figure 1. The Coca-Cola Company and its competitors’ advertising expenses 2013-2015 (in US$ billions)

Company 2015 2014 2013
The Coca Cola Company 3.976 3.499 3.266
PepsiCo Inc. 2.4 2.3 2.4
Dr Pepper Snapple Group Inc. 0.473 0.473 0.486

Source: The respective companies’ financial reports[1][3][4]

The company’s large advertising budget provides competitive advantages such as:

  • helping to introduce new products to the market
  • promoting the brand
  • informing consumers about the product’s features
  • communicating brand’s message to the public
  • increasing sales.

In addition, the company’s total marketing expenses reached US$6.8 billion (or 15.4% of total revenue in 2015), generating US$44.3 billion in revenue. It is one of the largest marketing budgets in the beverage industry and it is used very effectively. Only PepsiCo uses its marketing budget more effectively, spending just US$3.9 billion to generate US$63 billion in revenue.

Figure 2. The Coca-Cola Company and its competitors’ advertising expenses in 2015 (in US$ billions)

Company Marketing expenses Total revenue % of total revenue
The Coca-Cola Company 6.8 44.294 15.4%
PepsiCo Inc. 3.9 63.056 6.2%
Dr Pepper Snapple Group Inc. 3.8 6.282 61.2%
Nestlé S.A. 20.3 89.772 22.6%

Source: The respective companies’ financial reports[1][3][4][5]

With its largest advertising budget and strong marketing capabilities the Coca-Cola Company is able to attract more customers, more effectively than most of its rivals.