COCA-COLA COMPANY

INTRODUCTION TO COCA COLA COMPANY

Coca-Cola, the product that has given the world its best-known taste was born in Atlanta,
Georgia, on May 8, 1886. Coca-Cola Company is the worlds leading manufacturer, marketer
and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 400
beverage brands. It sells beverage concentrates and syrups to bottling and canning operators,
distributors, fountain retailers and fountain wholesalers. The Companys beverage products
comprises of bottled and canned soft drinks as well as concentrates, syrups and not-ready-to-
drink powder products. In addition to this, it also produces and markets sports drinks, tea and
coffee. The Coca- Cola Company began building its global network in the 1920s. Now operating
in more than 200 countries and producing nearly 400 brands, the Coca-Cola system has
successfully applied a simple formula on a global scale: Provide a moment of refreshment for a
small amount of money- a billion times a day.

The Coca-Cola Company and its network of bottlers comprise the most sophisticated and
pervasive production and distribution system in the world. More than anything, that system is
dedicated to people working long and hard to sell the products manufactured by the Company.
This unique worldwide system has made The Coca-Cola Company the worlds premier soft-
drink enterprise. From Boston to Beijing, from Montreal to Moscow, Coca-Cola, more than any
other consumer product, has brought pleasure to thirsty consumers around the globe. For more
than 115 years, Coca-Cola has created a special moment of pleasure for hundreds of millions of
people every day.
The Company aims at increasing shareowner value over time. It accomplishes this by working
with its business partners to deliver satisfaction and value to consumers through a worldwide
system of superior brands and services, thus increasing brand equity on a global basis. They aim
at managing their business well with people who are strongly committed to the Company values
and culture and providing an appropriately controlled environment, to meet business goals and
objectives. The associates of this Company jointly take responsibility to ensure compliance with
the framework of policies and protect the Companys assets and resources whilst limiting
business risks.

COMPANY PROFILE

MISSION :

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company
and serves as the standard against which we weigh our actions and decisions.

To refresh the world...

To inspire moments of optimism and happiness..
To create value and make a difference.

VISSION :
Our vision serves as the framework for our Roadmap and guides every aspect of our business by
describing what we need to accomplish in order to continue achieving sustainable, quality
growth.
People: Be a great place to work where people are inspired to be the best they can be.
Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and
satisfy people's desires and needs.
 Partners: Nurture a winning network of customers and suppliers, together we create
mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by helping build and support
sustainable communities.

Profit: Maximize long-term return to shareowners while being mindful of our overall
responsibilities.
Productivity: Be a highly effective, lean and fast-moving organization.

WINNING CULTURE :
Our Winning Culture defines the attitudes and behaviours that will be required of us to make
our 2020 Vision a reality.

LIVE OUR VALUES :

Our values serve as a compass for our actions and describe how we behave in the world.
Leadership: The courage to shape a better future.
Collaboration: Leverage collective genius.
Integrity: Be real.
Accountability: If it is to be, it's up to me.
Passion: Committed in heart and mind.
Diversity: As inclusive as our brands.
Quality: What we do, we do well.
FOCUS ON MARKET :
Focus on needs of our consumers, customers and franchise partners.
Get out into the market and listen, observe and learn.
Possess a world view.
Focus on execution in the marketplace every day.
Be insatiably curious.
WORK SMART :
Act with urgency.
Remain responsive to change.
Have the courage to change course when needed.
Remain constructively discontent.
Work efficiently.
ACT LIKE OWNER :
Be accountable for our actions and inactions.
Steward system assets and focus on building value.
Reward our people for taking risks and finding better ways to solve problems.
Learn from our outcomes -- what worked and what didnt.

BE THE BRAND :

Inspire creativity, passion, optimism and fun

HISTORY OF COCA COLA

The prototype Coca-Cola recipe was formulated at the Eagle Drug and Chemical Company, a
drugstore in Columbus, Georgia by John Pemberton, originally as a coca wine called
Pemberton's French Wine Coca. He may have been inspired by the formidable success of Vin
Mariani, a European cocawine.

In 1886, when Atlanta and Fulton County passed prohibition legislation, Pemberton responded
by developing Coca-Cola, essentially a non-alcoholic version of French Wine Coca. The first
sales were at Jacob's Pharmacy in Atlanta, Georgia, on May 8, 1886. It was initially sold as a
patent medicine for five cents a glass at soda fountains, which were popular in the United States
at the time due to the belief that carbonated water was good for the health. Pemberton claimed
Coca-Cola cured many diseases, including morphine addiction, dyspepsia, neurasthenia,
headache, and impotence. Pemberton ran the first advertisement for the beverage on May 29 of
the same year in the Atlanta Journal.

By 1888, three versions of Coca-Cola sold by three separate businesses were on the
market. Asa Griggs Candler acquired a stake in Pemberton's company in 1887 and incorporated
it as the Coca Cola Company in 1888. The same year, while suffering from an ongoing addiction
to morphine, Pemberton sold the rights a second time to four more businessmen: J.C. Mayfield,
A.O. Murphey, C.O. Mullahy and E.H. Bloodworth. Meanwhile, Pemberton's alcoholic son
Charley Pemberton began selling his own version of the product.
John Pemberton declared that the name "Coca-Cola" belonged to Charley, but the other two
manufacturers could continue to use the formula. So, in the summer of 1888, Candler sold his
beverage under the names Yum Yum and Koke. After both failed to catch on, Candler set out to
establish a legal claim to Coca-Cola in late 1888, in order to force his two competitors out of the
business. Candler purchased exclusive rights to the formula from John Pemberton, Margaret
Dozier and Woolfolk Walker. However, in 1914, Dozier came forward to claim her signature on
the bill of sale had been forged, and subsequent analysis has indicated John Pemberton's
signature was most likely a forgery as well.

In 1892 Candler incorporated a second company, The Coca-Cola Company (the current
corporation), and in 1910 Candler had the earliest records of the company burned, further
obscuring its legal origins. By the time of its 50th anniversary, the drink had reached the status of
a national icon in the USA. In 1935, it was certified kosher by Rabbi Tobias Geffen, after the
company made minor changes in the sourcing of some ingredients.

Coca-Cola was sold in bottles for the first time on March 12, 1894. The first outdoor wall
advertisement was painted in the same year as well in Cartersville, Georgia. Cans of Coke first
appeared in 1955. The first bottling of Coca-Cola occurred in Vicksburg, Mississippi, at the
Biedenharn Candy Company in 1891. Its proprietor was Joseph A. Biedenharn. The original
bottles were Biedenharn bottles, very different from the much later hobble-skirt design that is
now so familiar. Asa Candler was tentative about bottling the drink, but two entrepreneurs from
Chattanooga, Tennessee, Benjamin F. Thomas and Joseph B. Whitehead, proposed the idea and
were so persuasive that Candler signed a contract giving them control of the procedure for only
one dollar. Candler never collected his dollar, but in 1899 Chattanooga became the site of the
first Coca-Cola bottling company. The loosely termed contract proved to be problematic for the
company for decades to come. Legal matters were not helped by the decision of the bottlers to
subcontract to other companies, effectively becoming parent bottlers. Coke concentrate, or Coke
syrup, was and is sold separately at pharmacies in small quantities, as an over-the-counter
remedy for nausea or mildly upset stomach.
On April 23, 1985, Coca-Cola, amid much publicity, attempted to change the formula of the
drink with "New Coke". Follow-up taste tests revealed that most consumers preferred the taste of
New Coke to both Coke and Pepsi, but Coca-Cola management was unprepared for the public's
nostalgia for the old drink, leading to a backlash. The company gave in to protests and returned
to a variation of the old formula, under the name Coca-Cola Classic on July 10, 1985.

On February 7, 2005, the Coca-Cola Company announced that in the second quarter of 2005 they
planned to launch a Diet Coke product sweetened with the artificial sweetener sucralose, the
same sweetener currently used in Pepsi One. On March 21, 2005, it announced another diet
product, Coca-Cola Zero, sweetened partly with a blend of aspartame and acesulfame potassium.
In 2007, Coca-Cola began to sell a new "healthy soda": Diet Coke with vitamins B 6, B12,
magnesium, niacin, and zinc, marketed as "Diet Coke Plus. On July 5, 2005, it was revealed
that Coca-Cola would resume operations in Iraq for the first time since the Arab League
boycotted the company in 1968.

In April 2007, in Canada, the name "Coca-Cola Classic" was changed back to "Coca-Cola." The
word "Classic" was truncated because "New Coke" was no longer in production, eliminating the
need to differentiate between the two. The formula remained unchanged.

In January 2009, Coca-Cola stopped printing the word "Classic" on the labels of 16-
ounce bottles sold in parts of the southeastern United States. The change is part of
a larger strategy to rejuvenate the product's image. In November 2009, due to a
dispute over wholesale prices of Coca-Cola products, Costco stopped restocking its
shelves with Coke and Diet Coke

GLOBAL MARKET SHARE OF COCA COLA

In 2009, the company generated revenues of $31 billion with $6.8 billion net income. An
increased consumer preference for healthier drinks has resulted in slowing growth rates for sales
of carbonated soft drinks (abbreviated as CSD), which constitutes 78% of KOs sales. KOs
profits are also vulnerable to the volatile costs for the raw materials used to make drinks - such as
the corn syrup used as a sweetener, the aluminum used in cans, and the plastic used in bottles.
Furthermore, slowing consumer spending in Coke's large North American market compounds the
challenge of increasing costs and a weak economic environment. Finally, Coca-Cola earns
approximately 75% of revenue from international sales, exposing it to currency fluctuations,
which are particularly adverse with a stronger U.S. Dollar (USD).

Despite these challenges, Coca-Cola has remained profitable. Though the non-CSD market is
growing quickly, the traditional CSD market is still large in terms of both revenues and volume
and highly lucrative. The size and variety of KOs offerings in the CSD category, coupled with
the unparalleled brand equity of the Coca-Cola trademark, has allowed KO to maintain its share
of this important market. KO has also responded to consumers changing tastes with new, non-
CSD product launches and acquisitions such as that of Glaceau in 2007. Strong international
growth has also more than offset a weak domestic market.

On February 25, Coca-Cola Company announced its plan to buy Coca-Cola Enterprises (CCE)
for $12.3 million. Since spinning of Coca-Cola Enterprises (CCE) 24 years ago, the soft drink
market has changed dramatically with consumers buying fewer soft drinks and more non-
carbonated beverages, such as Powerade and Dasani water. Under the new deal, Coca-Cola
Company will take control of the bottler's North America operations, giving the company control
over 90% of the total North America volume. In return, Coca-Cola Enterprises will take over
Coke's bottling operations in Norway and Sweden, becoming a European-focused producer and
distributor.

In March 2010, Coca-Cola Company entered into discussions to buy the Russian juice company,
OAO Nidan Juices. The company is 75% owned by a private equity firm in London and 25% by
its Russian founders and controls 14.5% of the Russian juice market. If successful, the purchase
would add to Coca-Cola's 20.5% market share, passing Pepsi's 30% market share. The Russian
juice market is estimated to be $3.2 billion dollars, and estimates of Nidan's purchase price are
between $560-$620 million.

In April 2010, Coca-Cola Company purchased a majority share of Innocent, the British fruit
smoothie maker. Last year the company bought an 18% share of the company for more than $45
million, and recent purchases of additional shares increased Coke's stake to 58%.

In June 2010, Coca-Cola Company agreed to pay Dr Pepper Snapple Group (DPS) $715 million
for the continued right to sell their products following the company's acquisition of Coca-Cola
Enterprises (CCE). The deal covers the next 20 years with an option to renew for an additional
20 years.

TRENDS AND FORCES

The Global Economic Recession Threatens Overall

Demand:
In 2008 and 2009, the global economy has fallen into a recession. Not just the United States but
countries from all over the world have felt the impacts of the 2008 Financial Crisis. This may be
a problem for Coke, which derives approximately 75% of its sales from outside North America.
Still, the company has positioned itself well in international markets both organically and
through acquisitions, such as that of Chinese juice maker Huiyuan for $2.4 billion. However the
company was unsuccessful with its purchase of Huiyuan as it broke antitrust laws in China. On
March 5, 2010, Coke's CEO said that emerging markets are bouncing back quicker than more
developed markets.

New Aversion to Soda Threatens Main Business:

74% of the Coca Cola Company's products are classified as carbonated soft drinks, making it
particularly sensitive to changes in demand for CSD. Consumer demand for CSD has been
negatively affected by concerns about health and wellness. This is true across most of KO's
markets. There has been an increase in the number of regulations regarding CSD in the United
States in response to the heightened desire for healthy food consumption.

In 2006, many state public school systems banned the sale of soft drinks on their campuses. The
Centre for Science and Public Interest proposed that a warning label be placed on all beverages
containing more than 13g of sugar per 12-oz serving. This proposal would affect all non-diet, full
calorie drinks produced by KO. These factors have driven a shift in consumption away from
CSD to healthier alternatives, such as tea, juices, and water.

Within the CSD segment consumers have been moving away from sugared drinks, opting instead
for diet beverages, which do not generally contain any sugar or calories.
Though KO has been somewhat slow to respond to this shift in consumer preferences, it has
recently begun to increase its development of both diet CSD and non-CSD beverages. KO is
faced with the task of balancing the risk of new innovations with the low growth rates of
established brands, a predicament for manufactures throughout the beverage industry.

Integrated Bottler Strategy Increases Flexibility:

After CEO Neville Isdell was brought out of retirement in 2004 to revive the then flagging
beverage maker, one of the first areas that he targeted for improvement was KO's frayed relations
with its extensive network of bottlers. Since consolidating all company-owned bottlers into the
Bottling Investments division, Isdell has continued to increase KO's interest in its bottlers
through stake purchases or outright buyouts. This strategy represents a weakening of the division
between KO's production and distribution operations. Isdell believes that by combining
production and distribution operations the company will have enhanced its ability to quickly
respond to changing market conditions. In KO's 2007 Q3 Analyst call, Isdell credited the outright
purchase of Coca-Cola Bottlers Philippines (CCBPI) for double-digit volume growth in that
country. Additionally, KO has signed new agreements with many of its bottlers which allow them
to distribute drinks produced by other companies. For example, Coca-Cola Enterprises (CCE)
now distributes Arizona, a ready-to-drink tea made by Ferolito, Vultaggio & Sons, an American
iced-tea company. Isdell sees these agreements as another way of taking advantage of the rapidly
growing non-CSD market.

Bottled Water Falling Out of Favour:

In Q3 2009, Dasani bottled water's revenues fell by double digits; this decrease is emblematic of
the bottled water industry as a whole. In August 2009, the Wall Street Journal reported that sales
of bottled water had fallen for the first time in five years. The combination of the recession and
upper class consumers' increased environmental consciousness has lead many customers to cut
back on bottled water in favour of tap water and reusable containers.

Following this trend, at least one town in Washington state and one in Australia have
outlawed the selling of bottled water within their city limits. In 2008, bottled water was the third
most popular beverage (behind soda and milk), but compared to 2007, Americans consumption
declined for the first time, down to 8.7 billion gallons from 8.8 billion gallons. Although this is a
seemingly small decrease, industry experts don't expect bottled water to bounce back anytime
soon.

Dollar Affects International Performance:

Another trend affecting Coca-Cola is the relative strength of the U.S. Dollar (USD). Although the
company is based in the US, KO derives about 75% of its operating income from outside United
States. Because of this, the company is very sensitive to the strength of the dollar. As foreign
currencies weaken relative to the dollar, goods sold in foreign markets are suddenly worth fewer
dollars back in the US, lowering earnings. Thus, if the dollar strengthens (as it did in the second
half of 2008 and 2009), it has a negative effect on KO's earnings. Coca-Cola executives expect
currency fluctuations to adversely affect 3Q09 operating income by 10-12% and 4Q09 operating
income by high single digits.

KO has broad exposure to foreign currencies and actively hedges a large portion of these to
avoid wide swings in earnings from currency fluctuations. Although this hedging insulates from
the potential downside of a strengthening dollar, it also limits larger gains from drastic
downswings in the dollar's value.

Commodity Cost Fluctuations Affect Margins:

The Coca-Cola Companys profitability can be affected both directly and indirectly by the costs
of various production inputs. KO itself is responsible for purchasing the raw materials used to
make its concentrates and syrups. Variations in the prices for these goods can affect the
companys total cost of production as well as its profit margins. Changes in the production costs
of bottlers can also impact KOs profitability, though in a more indirect way. If the raw materials
necessary for bottling become more expensive, the bottler may be forced to drastically raise
prices to compensate.

Such a price increase would likely hurt KO, given the competitive nature of the non-
alcoholic beverage industry, and provide a possible incentive for consumers to switch to other
companies beverages.
Aluminum, corn, and PET resin are three examples of such production goods used by bottlers
that could have significant bearing on the Coca-Cola Companys profit margins. In 2007, the
prices of these commodities rose drastically with general commodities bubble and dramatically
pressured margins. They receded in 2008, but the possibility of another significant rise in
Commodities represents a constant threat to profits

ANALYSIS OF COCA-COLA COMPANY

SWOT ANALYSIS OF COCA-COLA

in 3 segments.
Robust revenue growth
operations. WEAKNESS
Negative Publicity.
Large scale of

Decline in cash from

World's leading brand.
STRENGTHES Operating Activities.
SWOTSluggish Performance .
OPPORTUNITIESANALYS in North America.
IS
Acquisitions. Carbonated beverages.
Growing bottled water Sluggish growth of
market. Patners.
Growing Hispanic Dependence on bottling
Population in U.S. Intense Competition.
THREATS

STRENGTHES:

WORLDS LEADING BRAND

Coca-Cola has strong brand recognition across the globe. The company has a leading brand
value and a strong brand portfolio. Business-Week and Inter-brand, a branding consultancy,
recognize. Coca-Cola as one of the leading brands in their top 100 global brands ranking in
2006.The Business Week-Inter-brand valued Coca-Cola at $67,000 million in 2006. Coca-Cola
ranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brand value of
$12,690 million Furthermore; Coca-Cola owns a large portfolio of product brands. The company
owns four of the top five soft drink brands in the world: Coca-Cola, Diet Coke, Sprite and Fanta.

Strong brands allow the company to introduce brand extensions such as Vanilla Coke, Cherry
Coke and Coke with Lemon. Over the years, the company has made large investments in brand
promotions. Consequently, Coca-cola is one of the best recognized global brands. The
companys strong brand value facilitates customer recall and allows Coca-Cola to penetrate new
markets and consolidate existing ones.

LARGE SCALE OF OPERATIONS

With revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola is the
largest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups
in the world. Coco-Cola is selling trademarked beverage products since the year 1886 in the US.
The company currently sells its products in more than 200 countries. Of the approximately 52
billion beverage servings of all types consumed worldwide every day, beverages bearing
trademarks owned by or licensed to Coca-Cola account for more than 1.4 billion.

The companys operations are supported by a strong infrastructure across the world. Coca-Cola
owns and operates 32 principal beverage concentrates and/or syrup manufacturing plants located
throughout the world.

In addition, it owns or has interest in 37 operations with 95 principal beverage bottling and
canning plants located outside the US. The company also owns bottled water production and still
beverage facilities as well as a facility that manufactures juice concentrates. The companys large
scale of operation allows it to feed upcoming markets with relative ease and enhances its revenue
generation capacity.
 ROBUST REVENUE GROWTH IN 3 SEGMENTS

Coca-Colas revenues recorded a double digit growth, in three operating segments. These three
segments are Latin America, East, South Asia, and Pacific Rim and Bottling investments.
Revenues from Latin America grew by 20.4% during fiscal 2006, over 2005. During the same
period, revenues from East, South Asia, and Pacific Rim grew by 10.6% while revenues from
the bottling investments segment by 19.9%.

Together, the three segments of Latin America, East, South Asia and Pacific Rim bottling
investments, accounted for 34.8% of total revenues during fiscal 2006. Robust revenues growth
rates in these segments contributed to top-line growth for Coca-Cola during 2006.

WEAKNESS:

NEGATIVE PUBLICITY

The Coca-Cola Company has been involved in a number of controversies and lawsuits related to
its relationship with human rights violations and other perceived unethical practices. There have
been continuing criticisms regarding the Coca-Cola Company's relation to the Middle East and
U.S. foreign policy. The company received negative publicity in India during September
2006.The company was accused by the Centre for Science and Environment (CSE) of selling
products containing pesticide residues. Coca-Cola products sold in and around the Indian
national capital region contained a hazardous pesticide residue.

On 10 December 2008, the US Food and Drug Administration (FDA) wrote to Mr. Muhtar Kent,
President and Chief Executive Officer, to warn him that the FDA had concluded that Coca-Cola's
product Diet Coke Plus 20 FL OZ was is in violation of the Federal Food, Drug, and Cosmetic
Act.

In January 2009, the US consumer group the Centre for Science in the Public Interest filed a
class-action lawsuit against Coca-Cola. The lawsuit was in regards to claims made, along with
the company's flavours, of Vitamin Water. Claims say that the 33 grams of sugar are more
harmful than the vitamins and other additives are helpful.

SLUGGISH PERFORMANCE IN NORTH AMERICA

Coca-Colas performance in North America was far from robust. North America is Coca-Colas
core market generating about 30% of total revenues during fiscal 2006. Therefore, a strong
performance in North America is important for the company.

In North America the sale of unit cases did not record any growth. Unit case retail volume in
North America decreased 1% primarily due to weak sparkling beverage trends in the second half
of 2006 and decline in the warehouse-delivered water and juice businesses. Moreover, the
company also expects performance in North America to be weak during 2007. Sluggish
performance in North America could impact the companys future growth prospects and prevent
Coca-Cola from recording a more robust top-line growth.

DECLINE IN CASH FROM OPERATING ACTIVITIES

The companys cash flow from operating activities declined during fiscal 2006. Cash flows from
operating activities decreased 7% in 2006 compared to 2005. Net cash provided by operating
activities reached $5,957 million in 2006, from $6,423 million in 2005. Coca-Colas cash flows
from operating activities in 2006 also decreased compared with 2005 as a result of a contribution
of approximately $216 million to a tax-qualified trust to fund retiree medical benefits.

The decrease was also the result of certain marketing accruals recorded in 2005.Decline in cash
from operating activities reduces availability of funds for the companys investing and financing
activities, which, in turn, increases the companys exposure to debt markets and fluctuating
interest rates.

OPPORTUNITIES:

ACQUISITIONS
During 2006, its acquisitions included Kerry Beverages, (KBL), which was subsequently,
reappointed Coca-Cola China Industries (CCCIL). Coca-Cola acquired a controlling
shareholding in KBL, its bottling joint venture with the Kerry Group, in Hong Kong.
The acquisition extended Coca-Colas control over manufacturing and distribution joint ventures
in nine Chinese provinces.

In Germany the company acquired Apollinaris which sells sparkling and still mineral water.
Coca-Cola has also acquired a 100% interest in TJC Holdings, a bottling company in South

Africa. Coca-Cola also made acquisitions in Australia and New Zealand during 2006. These
acquisitions strengthened Coca-Colas international operations.

These also give Coca- Cola an opportunity for growth, through new product launch or greater
penetration of existing markets. Stronger international operations increase the companys
capacity to penetrate international markets and also gives it an opportunity to diversity its
revenue stream. On 25 February 2010, Coco cola confirms to acquire the Coca cola enterprises
(CCE) one the biggest bottler in North America. This strategy of coca cola strengthens its
operations internationally.

GROWING BOTTLED WATER MARKET :

Bottled water is one of the fastest-growing segments in the worlds food and beverage market
owing to increasing health concerns. The market for bottled water in the US generated revenues
of about $15.6 billion in 2006.

Market consumption volumes were estimated to be 30 billion litres in 2006. The market's
consumption volume is expected to rise to 38.6 billion units by the end of 2010. This represents a
CAGR of 6.9% during 2005-2010.

In terms of value, the bottled water market is forecast to reach $19.3 billion by the end of 2010.
In the bottled water market, the revenue of flavoured water (water-based, slightly sweetened
refreshment drink) segment is growing by about $10 billion annually. The companys Dasani
brand water is the third best-selling bottled water in the US. Coca-Cola could leverage its strong
position in the bottled water segment to take advantage of growing demand for flavoured water.

GROWING HISPANIC POPULATION IN U.S

Hispanics are growing rapidly both in number and economic power. As a result, they have
become more important to marketers than ever before. In 2006, about 11.6 million US
households were estimated to be Hispanic. This translates into a Hispanic population of about 42
million.

The US Census estimates that by 2020, the Hispanic population will reach 60 million or almost
18% of the total US population. The economic influence of Hispanics is growing even faster than
their population. Nielsen Media Research estimates that the buying power of Hispanics will
exceed $1 trillion by 2008- a 55% increase over 2003 levels.

Coca-Cola has extensive operations and an extensive product portfolio in the US. The company
can benefit from an expanding Hispanic population in the US, which would translate into higher
consumption of Coca-Cola products and higher revenues for the company.

THREATS:

INTENSE COMPETITION

Coca-Cola competes in the non-alcoholic beverages segment of the commercial beverages

industry. The company faces intense competition in various markets from regional as well as
global players. Also, the company faces competition from various non-alcoholic sparkling
beverages including juices and nectars and fruit drinks. In many of the countries in which Coca-
Cola operates, including the US, PepsiCo is one of the companys primary competitors. Other
significant competitors include Nestle, Cadbury Schweppes, Groupe DANONE and Kraft Foods.
Competitive factors impacting the companys business include pricing, advertising, sales
promotion programs, product innovation, and brand and trademark development and protection.
Intense competition could impact Coca-Colas market share and revenue growth rates.

DEPENDENCE ON BOTTLING PARTNERS

Coca-Cola generates most of its revenues by selling concentrates and syrups to bottlers in whom
it doesnt have any ownership interest or in which it has no controlling ownership interest. In
2006, approximately 83% of its worldwide unit case volumes were produced and distributed by
bottling partners in which the company did not have any controlling interests. As independent
companies, its bottling partners, some of whom are publicly traded companies, make their own
business decisions that may not always be in line with the companys interests. In addition, many
of its bottling partners have the right to manufacture or distribute their own products or certain
products of other beverage companies.

If Coca-Cola is unable to provide an appropriate mix of incentives to its bottling partners, then
the partners may take actions that, while maximizing their own short-term profits, may be
detrimental to Coca-Cola. These bottlers may devote more resources to business opportunities or
products other than those beneficial for Coca-Cola. Such actions could, in the long run, have an
adverse effect on Coca-Colas profitability. In addition, loss of one or more of its major
customers by any one of its major bottling partners could indirectly affect Coca-Colas business
results. Such dependence on third parties is a weak link in Coca-Colas operations and increases
the companys business risks.

SLIGGISH GROWTH OF CARBONATED BEVERAGES

US consumers have started to look for greater variety in their drinks and are becoming
increasingly health conscious. This has led to a decrease in the consumption of carbonated and
other sweetened beverages in the US. The US carbonated soft drinks market generated total
revenues of $63.9 billion in 2005, this representing a compound annual growth rate (CAGR) of
only 0.2% for the five-year period spanning 2001-2005. The performance of the market is
forecast to decelerate, with an anticipated compound annual rate of change (CAGR) of -0.3% for
the five-year period 2005-2010 expected to drive the market to a value of $62.9 billion by the
end of 2010.

Moreover in the recent years, beverage companies such as Coca-Cola have been criticized for
selling carbonated beverages with high amounts of sugar and unacceptable levels of dangerous
chemical content, and have been implicated for facilitating poor diet and increasing childhood
obesity. Moreover, the US is the companys core market. Coca-Cola already expects its
performance in the region to be sluggish during 2007. Coca-Colas revenues could be adversely
affected by a slowdown in the US carbonated beverage market.

PESTEL ANALYSIS OF COCA- COLA

PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental. It is a
tool that helps the organisations for making strategies and to know the EXTERNAL environment
in which the organisation is working and is going to work in the future.

Coca-Cola beverage, which is the leading manufacturer and distributor of non-alcoholic drinks
also need to undergo this PESTLE analysis to know about the external environment (especially
their competitors and the opportunities available) in order to keep pace with the fast growing
economy.

Political Analysis:

Political factors are how far a government intervenes in the operations of the company. The
political factors may include tax policy, trade restrictions, environmental policy, laws imposed on
the recruiting labours, amount of permitted goods by the government and the service provided by
the government.

Globally, Coca-Cola beverages being a non-alcoholic industry falls under the FDA (Food and
Drug Administration), it is an agency in the United States Department of Health and Human
Services. Its headquarters is in USA and it has started opening offices in foreign countries as
well. The job of the FDA is to check and certify whether the ingredients used in the
manufacturing of Coca-Cola products in the particular country is meeting to the standards or not.
In Coca-Cola the company takes all the necessary steps to analyze thoroughly before introducing
any ingredients in its products and get prior approval from the FDA. The company also has to
take into consideration of the regulation imposed by FDA on plastic bottled products.

Apart from FDA the other political factors includes tax policies and accounting standards. The
accounting standards used by the company changes from time to time which have a significant
role in the reported results.

The company also is subjected to income tax policies according to the jurisdiction of various
countries. In addition to this, the company is also subjected to import and excise duties for
distribution of the products in the countries where it does not have the outsourcing units.

Moreover, if there is any unrest or changes in the government and any kind of protest by the
political activists may decline the demand for the products. Also the situations like the unsure
conditions prevailing in Iraq and escalation of the terrorist activities in these areas could affect
the international market of our product. It creates an inability for the company to penetrate in the
markets of such countries.

Economic Factors:

The economic factors analyze the potential areas where the firm can grow and expand. It
includes the economic growth of the country, interest rates, exchange rates, inflation rates, wage
rates and unemployment in the country.

The company first analyzes the economic condition of the country before venturing into that
country. When there is an economic growth in the country, the purchasing power among people
increases. It gives the company or the marketer a good chance to market the product. Coca-Cola,
in the past identified this correctly and rightly started its distribution across various countries.
The net operating profits for the company outside US stands at around 72%. Along with this the
company uses 63 various types of currencies other than US Dollar. Hence there is a definite
impact in the revenues due to the fluctuating foreign currency exchange rates. A strong and weak
currency tends to affect the exporting of the products globally.

Interest rates are the rate which is imposed on the company for the money they have borrowed
from government. When there is an increase in the interest rates, it may deter the company in
further investment as the cost for borrowing is higher. Coca-Cola uses derivative financial
instruments to cope up with the fluctuating interest rates. Inflation and wage rate go hand in
hand, when there is an increase in the inflation the employee demand for a higher wage rate to
cope up with the cost of living.

This comes as additional cost for the company which cannot be reflected in the price of the final
product as the competition and risk in this segment is higher. This is a threat in the external
environment faced by the company. From the above explanation it is clearly seen that the
economic factors involves a major impact in the behaviour of the company during various
economic situations.

Social Factors:

Social factors are mainly the culture aspects and attitude, health consciousness among people,
population growth with age distribution, emphasis on safety. The company cannot change the
social factors but the company has to adjust itself to the changing society. The company adapts
various management strategies to adapt to these social trends.

Coca-Cola which is a B2C company, is directly related to the customer, so social changes are the
most important factors to consider. Each and every country has a unique culture and attitude
among the people. It is very important to know about the culture before marketing in a particular
country. Coca-Cola has about 3300+ products in their stable, when entering into a country it does
not introduce all the products. It introduces minimum number of products according to the
culture of the country and the attitude of the people.

Consumers and government are becoming increasingly aware of the public health consequences,
mainly obesity which is the second social factor in the soft drinks industry. It inspired the
company to venture into the areas of Diet coke and zero calorie soft drinks. The problem of
obesity is taken seriously among the youngsters who like to maintain a good physique. Hence
coke introduced dietary products for those youngsters who can enjoy coke with zero calories. In
one of the study it is said that Consumer from the age groups 37 to 55 are also increasingly
concerned with nutrition. Since many are aware, they are concerned with the longevity of their
lives. This will affect the demand of the company in the existing product and also is an
opportunity to venture into new health and energy drinks industry.

Population growth rate and the age distribution is another social factor to be considered. It is
very important because non-alcoholic markets have most of its share from the children and
youngsters. Adults used to celebrate mostly with alcohol. The age distribution of the country
becomes important for the success of the product in a country.

Technological Factors:

Technology plays a varied role in the soft drinks industry. The manufacturing and distribution of
the products is relatively a Low-Tech business, although the creation of a new product with the
perfect blend and taste is a science (an art in itself).

Technological contributions are most important in packaging. The company rely on their bottling
partners for a significant portion of their business. Nearly 83% of the worldwide unit case
volume is manufactured and distributed by their bottling partners in whom the company does not
have controlling power. Hence it is necessary for the company to maintain a cordial relation with
their bottling partners. If the company do not give ample support in pricing, marketing and
advertising then the bottling industry while increase their short term profits, may become
detrimental to the company.

The advancement in technology in the company has led to: Introduction of new ways for the
availability of Coca-Cola, it introduced general vending machines all over the world. In products
it led to the development of new products like Cherry Coke, Diet Coke etc. The technical
advancement in the bottling industries include, introduction of recyclable and non refillable
bottles, introduction of cans which are trendy, stylish and popular among the youngsters.

Legal Factors
The legal factors include discrimination law, customer law, antitrust law, employment law and
health and safety law. In Coca-Cola the business is subjected to various laws and regulation in
the numerous countries in which they do the business, the laws include competition, product
safety, advertising and labelling, container deposits, environment protection, labour practices.

In the US the products of the company is subjected to various acts like Federal Food, Drug and
Cosmetic Act, the Federal Trade Commission Act, Occupation Safety and Health Act, various
environment related acts and regulations, the production, distribution, sale and advertising of all
the products are subjected to various laws and regulations. Changes in these laws could result in
increased costs and capital expenditures, which affects the company profitability and also the
production and distribution of the products.

Various jurisdictions may adopt

significant regulations in the
additional product labelling and warning
of certain chemical content or
perceived health consequences. These
requirements if become applicable in
the future the company must be
ready to accept and have necessary
changes in hand for the same.

Environment Factors

These factors include the environment such as the weather conditions and the seasons in which
people prefer to buy cool beverages. Also the company must follow the environmental issues
related to the product manufacturing, packaging and distributing in various countries. It must
adhere to the norms and market the product accordingly. Usage of renewable plastic in the PET
bottles is followed by the company strictly.

POTERS FIVE FORCES

 RIVALRY AMONG EXISTING FIRMS:

The greatest competition that Coca-cola faces is from the rival sellers within the industry. Coca-
Cola, Pepsi Co, and Cadbury Schweppes are among the largest competitors in this industry, and
they are all globally established which creates a great amount of competition. Aside from these
major players, smaller companies such as Cott Corporation and National Beverage Company
make up the remaining market share. All five of these companies make a portion of their profits
outside of the United States.

Though Coca-Cola owns four of the top five soft drink brands (Coca-Cola, Diet Coke, Fanta, and
Sprite), it had lower sales in 2005 than did PepsiCo (Murray, 2006c). However, Coca-Cola has
higher sales in the global market than PepsiCo, PepsiCo is the main competitor for Coca-Cola
and these two brands have been in a power struggle for years (Murray, 2006c). Coke has been
more dominant with a 53% of market share as in 1999 compared to Pepsi with a market share of
21%.
According to Beverage Digest's 2008 report on carbonated soft drinks, PepsiCo's U.S. market
share has increased to 30.8%, while the Coca-Cola Company's has decreased to 42.7% due to
Pepsi marketing schemes still the higher large gap between the market share can be attributed to
the fact that Coca-Cola took advantage of Pepsi entering the market late and has set up its
bottler's and distribution network especially in developed markets.

"The Coca-Cola Company" is the largest soft drink company in the world. Every year
800,000,000 servings of just "Coca-Cola" are sold in the United States alone. Bottling plants
with some exceptions are locally owned and operated by independent business people who are
native to the nations in which they are located. Coca-Cola manufactures, distributes and markets
non-alcoholic beverage concentrates and syrups, including fountain syrups.

It supplies concentrates and beverage bases used to make the products and provides management
assistance to help it's bottler's ensure the profitable growth of their business. This has put Pepsi at
a significant disadvantage compared to US market. Overall, Coca-Cola continues to outsell Pepsi
in almost all areas of the world. However, exceptions include India, Saudi Arabia and Pakistan.

By most accounts, Coca-Cola was India's leading soft drink until 1977 when it left India after a
new government ordered, The Coca-Cola Company to turn over its secret formula for Coke and
dilute its stake in its Indian unit as required by the Foreign Exchange Regulation Act (FERA).

In 1988, PepsiCo gained entry to India by creating a joint venture with the Punjab government-
owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture
marketed and sold Lehar Pepsi until 1991 when the use of foreign brands was allowed. PepsiCo
bought out its partners and ended the joint venture in 1994. In 1993, The Coca-Cola Company
returned in pursuance of India's Liberalization policy. In 2005, The Coca-Cola Company and
PepsiCo together held 95% market share of soft-drink sales in India. Coca-Cola India's market
share was 52.5%.

In Russia, Pepsi initially had a larger market share than Coke but it was undercut once the Cold
War ended. In 1972, Pepsi Co Company struck a barter agreement with the government of the
Soviet Union, in which Pepsi Co was granted exportation and Western marketing rights to
Stolichnaya vodka in exchange for importation and Soviet marketing of Pepsi-Cola.

This exchange led to Pepsi-Cola being the first foreign product sanctioned for sale in the
U.S.S.R. Pepsi, as one of the first American products in the Soviet Union, became a symbol of
that relationship and the Soviet policy.

Brand name loyalty is another competitive pressure. The Brand Keys Customer Loyalty Leaders
Survey (2004) shows the brands with the greatest customer loyalty in all industries. Diet Pepsi
ranked 17th and Diet Coke ranked 36th as having the most loyal customers to their brands. The
new competition between rival sellers is to create new varieties of soft drinks, such as vanilla and
cherry, in order to increase sales and getting new customers.

Pepsi is however trying to counter this by competing more aggressively in the emerging
economies where the dominance of Coke is not as pronounced, with the growth in emerging
markets significantly expected to exceed the developed markets, rivalry in international market is
going to be more pronounced.
Pepsi advertisements often focused on celebrities, choosing Pepsi over Coke, supporting Pepsi's
positioning as "The Choice of a New Generation." In 1975, Pepsi began showing people doing
blind taste tests called Pepsi Challenge in which they preferred one product over the other. Pepsi
started hiring more popular spokespersons to promote their products.
In the late 1990s, Pepsi launched its most successful long-term strategy of the Cola Wars, Pepsi
Stuff. Consumers were invited to "Drink Pepsi, Get Stuff" and collect Pepsi Points on billions of
packages and cups. They could redeem the points for free Pepsi lifestyle merchandise. After
researching and testing the program for over two years to ensure that it resonated with
consumers, Pepsi launched Pepsi Stuff, which was an instant success.

Tens of millions consumers participated. Pepsi outperformed Coke during the summer of the
Atlanta Olympics, held at Coke's hometown where Coke was the lead sponsor for the Games.
Due to its success, the program was expanded to include Mountain Dew into Pepsi's international
markets worldwide. The company continued to run the program for many years, continually
innovating with new features each year.

Coca-Cola and Pepsi engaged in a "cyber-war" with the re-introduction of Pepsi Stuff in 2005 &
Coca-Cola retaliated with Coke Rewards. This cola war has now concluded, with Pepsi Stuff
ending its services and Coke Rewards still offering prizes on their website. Both were loyalty
programs that give away prizes and product to consumers after collecting bottle caps and 12 or
24 pack box tops, then submitting codes online for a certain number of points. However, Pepsi's
online partnership with Amazon allowed consumers to buy various products with their "Pepsi
Points", such as mp3 downloads. Both Coca-Cola and coke previously had a partnership with the
iTunes Store.

POTENTIAL ENTRANTS:

New entrants are not a strong competitive pressure for the soft drink industry. Coca-Cola and
Pepsi Co dominate the industry with their strong brand name and great distribution channels. In
addition, the soft-drink industry is fully saturated and growth is small. This makes it very
difficult for new, unknown entrants to start competing against the existing firms.

Another barrier to entry is the high fixed costs for warehouses, trucks, and labour, and
economies of scale. New entrants cannot compete in price without economies of scale. These
high capital requirements and market saturation make it extremely difficult for companies to
enter the soft drink industry therefore new entrants are not a strong competitive force.

Capital requirements for producing, promoting, and establishing a new soft drink traditionally
have been viewed as extremely high. According to industry experts, this makes the likelihood of
potential entry by new players quite low, except perhaps in much localized situations that matter
little to Coke or Pepsi. Yet, while this view may reflect conventional wisdom, some industry
observers question whether a new time is coming, with 'new age' beverages selling to well-
informed and health-informed and health-conscious consumers. This issue was beginning to
grab the attention of both Coke and Pepsi in the summer of 1992, when they both were not able
to explain a drop in their June 1992 sales.

SUBSTITUTES:

Numerous beverages are available as substitutes for soft drinks. Citrus beverages and fruit juices
are the more popular substitutes. Availability of shelf space in retail stores as well as advertising
and promotion traditionally has had a significant effect on beverage purchasing behaviour.
Overall total liquid consumption in the United States in 1991 included Coca-Cola's 10% share of
all liquid consumption.

For years the story in the non-alcoholic sector centred on the power struggle between Coke and
Pepsi. But as the pop fight has topped out, the industry's giants have begun relying on new
product flavours and looking to noncarbonated beverages for growth.

Substitute products are those competitors that are not in the soft drink industry. Such substitutes
for Coca-Cola products are bottled water, sports drinks, coffee, and tea, juices etc.
Bottled water and sports drinks are increasingly popular with the trend to be a more health
conscious consumer. There are progressively more varieties in the water and sports drinks that
appeal to different consumer's tastes, but also appear healthier than soft drinks.

In addition, coffee and tea are competitive substitutes because they provide caffeine. The
consumers who purchase a lot of soft drinks may substitute coffee if they want to keep the
caffeine and lose the sugar and carbonation.

Blended coffees are also becoming popular with the increasing number of Starbucks, Barista and
CCD stores that offer many different flavours to appeal to all consumer markets. It is also cheap
for consumers to switch to these substitutes making the threat of substitute products very strong
(Datamonitor, 2005).

The growth rate has been recently criticized due to the market saturation of soft drinks.
Datamonitor (2005) stated, Looking ahead, despite solid growth in consumption, the global soft
drinks market is expected to slightly decelerate, reflecting stagnation of market prices. The
change attributed to the other growing sectors of the non-alcoholic industry including tea &
coffee is 11.8% and bottled water is 9.3%. Sports drinks and energy drinks are also expected to
increase in growth as competitors start adopting new product lines.

Profitability in the soft drink industry will remain rather solid, but market saturation has caused
analysts to suspect a slight deceleration of growth in the industry (2005). Because of this, soft
drink leaders are establishing themselves in alternative markets such as the snack, confections,
bottled water, and sports drinks industries.

In order for soft drink companies to continue to grow and increase profits they will need to
diversify their product offerings. So in order to compete with the substitutes industry, coca-cola
has diversified from just carbonated drink industry to other substitute and so have other brands
like Pepsi, Dr pepper/Snapple.

BARGANING POWER OF BUYERS:

Individual consumers are the ultimate buyers of soft drinks. However, Coke and Pepsi's real
'buyers' have been local bottlers who are franchised -or are owned, especially in the case of
Coke- to bottle the companies' products and to whom each company sells its patented syrups or
concentrates. While Coke and Pepsi issue their franchise, these bottlers are in effect the 'conduit'
through which these international cola brands get to local consumers
Through the early 1980's, Coke's domestic bottlers were typically independent family businesses
deriving from franchises issued early in the century. Pepsi had a collection of similar franchises,
plus a few large franchisees that owned many locations. Until 1980, Coke and Pepsi were
somewhat restricted in owning bottling facilities, which was viewed as a restraint of free trade.
Jimmy Carter, a Coke fan, changed that by signing legislation to allow soft-drink companies to
own bottling companies or territories, plus upholding the territorial integrity of soft-drink
franchises, shortly before he left office.

Also, the three most important channels for soft drinks are supermarkets, fountain sales, and
vending. In 1987, supermarkets accounted for about 40% of total U.S. soft drink industry sales,
fountain sales represented about 25%, and vending accounted for approximately 13%. Other
retailers represent the remaining percentage.

While both Coca-Cola and Pepsi distribute their bottled soft drinks through a network of
bottling companies, Coca-Cola uses its own network of wholesalers for their fountain syrup
distribution, and Pepsi distributes its fountain syrup through its bottlers.

BARGANING POWER SUPPLIERS:

The principal raw material used by the soft-drink industry in the United States is high fructose
corn syrup, a form of sugar, which is available from numerous domestic sources. The principal
raw material used by the soft-drink industry outside the United States is sucrose. It likewise is
available from numerous sources.

Another raw material increasingly used by the soft-drink industry is aspartame, a sweetening
agent used in low-calorie soft-drink products. Until January 1993, aspartame was available from
just one source -the NutraSweet Company, a subsidiary of the Monsanto Company- in the
United States due to its patent, which expired at the end of 1992.

Coke managers have long held 'power' over sugar suppliers. They view the recently expired
aspartame patents as only enhancing their power relative to suppliers

PRODUCTS OF COCA-COLA COMPANY:-

COCA-COLA

In PAKISTAN Coca-Cola was leading soft drink till 1977 when Government policies
necessitated its departure. Coca-Cola made its return to the country in 1993 and made significant
investments to ensure that the beverage is available to more and more people, even in remote and
inaccessible parts of the nation

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SPRITE:-

Sprite a global leader in the lemon lime category is the second largest sparkling beverage brand
in PAKISTAN. Launched in 1999, Sprite with its cut-thru perspective has managed to be a true
teen icon.

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FANTA:-

Fanta entered the PAKISTAN market in the year 1993. Over the years Fanta has occupied a
strong market place and is identifies as The Fun Catalyst. Perceived as a fun youth brand,
Fanta stands for its vibrant colour, tempting taste and tingling bubbles that not just uplifts
feelings but also helps free spirit thus encouraging one to indulge in the moment. This positive
imagery is associated with happy, cheerful and special times with friends

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MINUTE MAID PULPY ORANGE:-

The history of the Minute Maid brand goes as far back as 1945 when the Florida Food
Corporation developed orange juice powder. The company developed a process that eliminated
80% of the water in the orange juice, forming a frozen concentrate that when reconstitute created
orange juice. They branded it Minute Maid a name connoting the convenience and the ease of
preparation. Minute Maid thus moved from a powdered concentrate to the first ever orange juice
from concentrate.

MAAZA:-

Maaza was introduced in late 1970s. Maaza has today come to symbolise the very spirit of
mangoes. Universally loved for its taste, colour, thickness and wholesome properties, Maaza is
the mango lovers first choice

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KINLEY:-
The importance of water can never be understated, Particularly in a nation such as PAKISTAN
where water governs the lives of the millions, be it as a part of everyday ritual or as the monsoon
which gives life to the sub continent. Kinley water comes with the assurance of safety from the
Coca-Cola Company.

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