CONTENTS

CHAPTER 1 INTRODUCTION - PAGE 1-6

CHAPTER 2 INDUSTRY PROFILE - PAGE 7-11

CHAPTER 3 COMPANY PROFILE - PAGE 12-63

 COCA-COLA COMPANY - PAGE 13-17

 GLOBAL MARKET SHARE OF COCA-COLA - PAGE 17-18
 TRENDS AND FORCES - PAGE 19-22
 POTER’S FIVE FORCES - PAGE 22-29
 PESTLE ANALYSIS - PAGE 29-
33
 SWOT ANALYSIS - PAGE 33-40
 COCA-COLA INDIA - PAGE 41-42
 PRODUCTS IN INDIA - PAGE 42-46
 MARKETING MIX - PAGE 49-58
 PESTLE ANALYSIS - PAGE 58-62
 SWOT ANALYSIS - PAGE 60-62

CHAPTER 4 RESEARCH METHODOLOGY - PAGE 63-68

CHAPTER 5 DATA ANALYSIS - PAGE 69-79

CHAPTER 6 SUGGESTIONS AND CONCLUSION - PAGE 80-82

Page 1
 1.
INTRODUCTION

INTRODUCTON
Let reason go before every enterprise,

And counsel before every action

Research is a human activity based on intellectual investigation and is aimed at

discovering, interpreting, and revising human knowledge on different aspects
of the world.

MARKETING RESEARCH:-

Page 2
Marketing research is the function that links the consumer, customer and
public to the marketer through information used to identify and define
marketing opportunities and problems; generate, refine, and evaluate
marketing actions; monitor marketing performance; and improve
understanding of marketing as a process. Marketing research specifies the
information required to address these issues, designs the methods for
collecting information, manages and implements the data collection process,
analyzes and communicates the findings and their implications.

-American Marketing Association

Marketing research is about researching the whole company‘s marketing

process.

INTRODUCTION TO COCA-COLA

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 world‘s 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 Company‘s beverage products comprises of bottled
and canned soft drinks as well as concentrates, syrups and notready-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 CocaCola 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.‖

Page 3
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 world‘s 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
Company‘s assets and resources whilst limiting business risks.

2.
INDUSTRY PROFILE

Page 4
 INDUSTRY PROFILE

A BRIEF INSIGHT - THE FMCG INDUSTRY IN INDIA

Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG) are products
that have a quick turnover and relatively low cost. Consumers generally put less thought into the
purchase of FMCG than they do for other products.

The Indian FMCG industry witnessed significant changes through the 1990s. Many players had been
facing severe problems on account of increased competition from small and regional players and from
slow growth across its various product categories. As a result, most of the companies were forced to
revamp their product, marketing, distribution and customer service strategies to strengthen their
position in the market.

By the turn of the 20th century, the face of the Indian FMCG industry had changed significantly. With
the liberalization and growth of the Indian economy, the Indian customer witnessed an increasing
exposure to new domestic and foreign products through different media, such as television and the
Internet. Apart from this, social changes such as increase in the number of nuclear families and the
growing number of working couples resulting in increased spending power also contributed to the
increase in the Indian consumers' personal consumption. The realization of the customer's growing
awareness and the need to meet changing requirements and preferences on account of changing
lifestyles required the FMCG producing companies to formulate customer-centric strategies. These
changes had a positive impact, leading to the rapid growth in the FMCG industry. Increased availability

Page 5
of retail space, rapid urbanization, and qualified manpower also boosted the growth of the organized
retailing sector.

HLL led the way in revolutionizing the product, market, distribution and service formats of the FMCG
industry by focusing on rural markets, direct distribution, creating new product, distribution and
service formats. The FMCG sector also received a boost by government led initiatives in the 2003
budget such as the setting up of excise free zones in various parts of the country that witnessed firms
moving away from outsourcing to manufacturing by investing in the zones.
Though the absolute profit made on FMCG products is relatively small, they generally sell in large
numbers and so the cumulative profit on such products can be large. Unlike some industries, such as
automobiles, computers, and airlines, FMCG does not suffer from mass layoffs every time the
economy starts to dip. A person may put off buying a car but he will not put off having his dinner.

Unlike other economy sectors, FMCG share float in a steady manner irrespective of global market dip,
because they generally satisfy rather fundamental, as opposed to luxurious needs. The FMCG sector,
which is growing at the rate of 9% is the fourth largest sector in the Indian Economy and is worth
Rs.93000 cr. The main contributor, making up 32% of the sector, is the South Indian region. It is
predicted that in the year 2010, the FMCG sector will be worth Rs.143000 cr. The sector being one of
the biggest sectors of the Indian Economy provides up to 4 million jobs. (Source: HCCBPL, Monthly
Circular)

A BRIEF INSIGHT - BEVERAGE INDUSTRY IN INDIA

In India, beverages form an important part of the lives of people. It is an industry, in which the players
constantly innovate, in order to come up with better products to gain more consumers and satisfy the
existing consumers.

Page 6
 BEVERAGES

NON-
ALCOHOLIC
ALCOHOLIC

NON-
CARBONATED
CARBONATED

COLA NON-COLA NON-COLA

Fig 2.0 BEVERAGES IN INDIA

The beverage industry is vast and there various ways of segmenting it, so as to cater the right
product to the right person. The different ways of segmenting it are as follows:

 Alcoholic, non-alcoholic and sports beverages.

 Natural and Synthetic beverages.
 In-home consumption and out of home on premises consumption.
 Age wise segmentation i.e. beverages for kids, for adults and for senior citizens.
 Segmentation based on the amount of consumption i.e. high levels of consumption and low
levels of consumption.

If the behavioural patterns of consumers in India are closely noticed, it could be observed that
consumers perceive beverages in two different ways i.e. beverages are a luxury and that

Page 7
beverages have to be consumed occasionally. These two perceptions are the biggest challenges
faced by the beverage industry. In order to leverage the beverage industry, it is important to address
this issue so as to encourage regular consumption as well as and to make the industry more
affordable.

Four strong strategic elements to increase consumption of the products of the beverage industry in
India are:

 The quality and the consistency of beverages needs to be enhanced so that consumers are
satisfied and they enjoy consuming beverages.
 The credibility and trust needs to be built so that there is a very strong and safe feeling that
the consumers have while consuming the beverages.
 Consumer education is a must to bring out benefits of beverage consumption whether in
terms of health, taste, relaxation, stimulation, refreshment, well-being or prestige relevant
to the category.
 Communication should be relevant and trendy so that consumers are able to find an appeal
to go out, purchase and consume.
 The beverage market has still to achieve greater penetration and also a wider spread of
distribution. It is important to look at the entire beverage market, as a big opportunity, for
brand and sales growth in turn to add up to the overall growth of the food and beverage
industry in the economy.

Page 8
 3.

COMPANY PROFILE

COMPANY PROFILE

Page 9
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.

VISION:
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.

Page 10
  Quality: What we do, we do well.

FOCUS ON THE 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 OWNERS:

 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 didn‘t.
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.

Page 11
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.[9] 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

Page 12
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
B6, 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 KO‘s sales.
KO‘s 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 aluminium 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

Page 13
lucrative. The size and variety of KO‘s 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.[7] 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.

Page 14
  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.

Page 15
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. CocaCola 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 Company‘s 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 company‘s total cost
of production as well as its profit margins. Changes in the production costs of bottlers can also impact
KO‘s 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.

Aluminium, corn, and PET resin are three examples of such production goods used by bottlers that
could have significant bearing on the Coca-Cola Company‘s 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.

Page 16
 POTER’S 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, CocaCola 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%.

Page 17
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.

Page 18
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:

Page 19
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 CocaCola'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

Page 20
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, cocacola 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.

Page 21
  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.

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.

Page 22
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.

Page 23
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.

Page 24
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.

SWOT ANALYSIS OF COCA-COLA

STRENGTHES WEAKNESS
Negative Publicity.
World's leading brand.
Decline in cash from
Large scale of operations.
Operating Activities.
Robust revenue growth in 3 Sluggish Performance in
segments.
SWOT North America.

OPPORTUNITIES ANALYSIS THREATS

Acquisitions. Intense Competition.
Growing bottled water Dependence on bottling
market. Patners.
Growing Hispanic Population Sluggish growth of in U.S.
Carbonated beverages.

Page 25
 Fig 2.1 SWOT ANALYSIS OF COCA-COLA

STRENGTHES:

 WORLD’S 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. CocaCola 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 company‘s
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 company‘s operations are supported by a strong infrastructure across the world. CocaCola 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 company‘s large scale of
operation allows it to feed upcoming markets with relative ease and enhances its revenue
generation capacity.

Page 26
  ROBUST REVENUE GROWTH IN 3 SEGMENTS

Coca-Cola‘s 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-Cola‘s performance in North America was far from robust. North America is Coca-

Cola‘s core market generating about 30% of total revenues during fiscal 2006. Therefore, a strong
performance in North America is important for the company.

Page 27
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 company‘s future growth prospects and prevent Coca-Cola from recording
a more robust top-line growth.

 DECLINE IN CASH FROM OPERATING ACTIVITIES

The company‘s 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-
Cola‘s 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 company‘s investing and financing activities,
which, in turn, increases the company‘s 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-Cola‘s 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-Cola‘s 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 company‘s 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

Page 28
Bottled water is one of the fastest-growing segments in the world‘s 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 company‘s 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 company‘s primary competitors. Other
significant competitors include Nestle, Cadbury Schweppes, Groupe DANONE and Kraft Foods.

Competitive factors impacting the company‘s business include pricing, advertising, sales promotion
programs, product innovation, and brand and trademark development and protection. Intense
competition could impact Coca-Cola‘s market share and revenue growth rates.

 DEPENDENCE ON BOTTLING PARTNERS

Page 29
Coca-Cola generates most of its revenues by selling concentrates and syrups to bottlers in whom it
doesn‘t 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 company‘s 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-Cola‘s profitability. In addition, loss of one or more of its major
customers by any one of its major bottling partners could indirectly affect Coca-Cola‘s business
results. Such dependence on third parties is a weak link in Coca-Cola‘s operations and increases the
company‘s 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 company‘s core market. Coca-Cola already expects its performance in the
region to be sluggish during 2007. Coca-Cola‘s revenues could be adversely affected by a slowdown in
the US carbonated beverage market.

Page 30
Coca-Cola India was the leading soft drink brand in India till 1977 when it was forced to close down its
operation by a socialist government in the drive for self sufficiency. After 16 years of absence, coca
cola returned to India and witnessed a different culture and economic platform. During their absence,
Parle brothers introduced a new type of cola called THUMS UP. Along with, they also formulated a
lemon flavoured drink, LIMCA, and mango flavoured, MAAZA. In 1993, coca cola bought the whole
Parle Brother operation, in a hope to beat the main competitor (Pepsi). They presumed that with the
tried and tested products of Parle they will be able to regain their throne in the Indian soft drink
market. Pepsi having a 6 year head start helped revive the demand for global cola but it was not easy
for the soft drink giant (coca cola) to return to India. Pepsi put more focus on the youth of the country
in their advertisements but coca cola tried influencing Indians with the ‗American‘ way of life, which
turned out to be a mistake.

Coca-Cola invested heavily in India for the first five years, which got them credit of being one of the
biggest investor in the country; however, their sales figures were not so impressive. Hence, they had
to re-think their market strategies. Coca-Cola learned from Hindustan Lever that reducing their will
result in more turnover, hence leading to profit. They launched an extensive market research in India.
They ascertained that in India 3 As must be applied; Affordability, Availability and Acceptability. Coca-
Cola learnt that they were competing with local drinks such as ―Nimbu Pani‖, ―Narial Pani‖, ―Lassi‖
etc. and reached to a conclusion that competitive pricing was unavoidable. Since then they introduced
a 200 ml glass bottle for Rs.5.

Further, they had different advertising campaigns for different regions of the country. In the southern
part, their strategy was to make Bollywood or Tamil stars to endorse their products. In various regions
they tried portraying coca cola products with different regional food products. One of the most famous
ad campaigns in India was ‗Thanda Matlab Coca-Cola‘; they featured the same quote with different
regional entities.

Presently, Coca-Cola is the biggest brand in soft drinks and is way ahead in market share i.e. 60% in
Carbonated Soft drinks Segment, 36% in Fruit drinks Segment, 33% in Packaged water Segment,
compared to its arch rival, Pepsi. Diversifying their product range and having a competitive pricing
policy, they have regained their throne. With virtually all the goods and services required to produce

Page 31
and market Coca-Cola being made in India, the business system of the Company directly employs
approximately 6,000 people, and indirectly creates employment for more than 125,000 people in
related industries through its vast procurement, supply, and distribution System.

The Indian operations comprises of 50 bottling operations, 25 owned by the Company, with another
25 being owned by franchisees. That apart, a network of 21 contract packers manufactures a range of
products for the Company.

On the distribution front, 10-tonne trucks – open bay three-wheelers that can navigate the narrow
alleyways of Indian cities – constantly keep our brands available in every nook and corner of the
Country‘s remotest areas.

PRODUCTS OF COCA-COLA INDIA

COCA-COLA:-

In India 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.

Over the past fourteen years has enthralled consumers in India by connecting with passions of
India – Cricket, movies, music & food. Coca-Cola‘s advertising campaigns “Jo Chaho Ho

Jaye” & “Life Ho Toh Aise” were very popular & had entered youths vocabulary. In 2002.Coca-
Cola launched its iconic campaign “Thanda Matlab Coca-Cola” which sky rocketed the brand to
make it India‘s favourite soft drink brand.

GLASS PET CAN FOUNTAIN

200ml, 300ml, 500ml, 1.5L, 2L, 330 ml VARIOUS SIZES

500ml, 1000ml 2.25L, 500ml, 100ml

Table - 1.0

LIMCA:-

Limca was introduced in 1971 in India. Limca has remained unchallenged as the No.1 sparkling drink
in the cloudy lemon segment. The success formula is the sharp fizz and lemoni bite combined with
the single minded proposition of the brand as the provider of ―Freshness‖.

Limca can cast a tangy refreshing spell on anyone, anywhere. Derived from ―Nimbu‖ +

Page 32
―Jaise‖ hence Lime Sa, Limca has lived up to its promises of refreshment and has been the original
thirst choice of millions of customers for over 3 decades.

GLASS PET CAN FOUNTAIN

200ml, 300ml, 500ml, 1.5L, 2L, 330 ml VARIOUS SIZES

500ml, 1000ml 2.25L, 500ml, 100ml

Table - 1.1

THUMS UP:-

Thums up is a leading sparkling soft drink and most trusted brand in India. Originally introduced in
1977, Thums up was acquires by The Coca-Cola Company in 1993. Thums up is known for its strong,
fizzy taste and it confident, mature and uniquely masculine attitude.
This brand clearly seeks to separate the men from the boys.

GLASS PET CAN FOUNTAIN

200ml, 300ml, 500ml, 1.5L, 2L, 330 ml VARIOUS SIZES

500ml, 1000ml 2.25L, 500ml, 100ml

Table - 1.2

SPRITE:-

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

RGB PET CAN FOUNTAIN

200ml, 300ml 500ml, 600ml, 330 ml VARIOUS SIZES

1250ml, 1500ml,
2000ml, 2250ml

Table – 1.3

Page 33
 FANTA:-

Fanta entered the Indian 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.

GLASS PET CAN FOUNTAIN

200ml, 300ml 500ml, 1.5L, 2L, 330 ml VARIOUS SIZES

2.25L, 500ml, 100ml

Table – 1.4

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.

The launch of Minute Maid in India (started with the south of the country) is aimed to further extend
the leadership of Coca-Cola in India in the juice drink category.

Available in 3 PET pack sizes i.e. 400ml, 1 litre, 1.25 litres.

MAAZA:-

Page 34
Maaza was introduced in late 1970‘s. 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 lover‘s first choice.

RGB PET POCKET MAAZA

200ml, 250ml 250ml, 600ml, 1.2L 200ml

Table – 1.5

KINLEY:-

The importance of water can never be understated, Particularly in a nation such as India 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. Available in PET 500ml and 1000ml.

GEORGIA GOLD COFFEE:-

Georgia coffee was introduced in India in 2004. The Georgia gold range of Tea and coffee beverages
is the perfect solution for office and restaurant needs. Today Georgia coffee is available at Quick-
Service Restaurants, Airports, Cinemas and in Corporates across all major metros in India.

HOT BEVERAGES Espresso, Americano, Cappuccino, Caffe Latte, Mochaccino, Hot

Chocolate, Cardamon Tea.

COLD BEVERAGES Ice Teas, Cold Coffee.

Table – 1.6

MARKETING MIX OF COCA-COLA INDIA

 PRODUCT:-

Coca-Cola India has a wide range of products in its product line i.e. Coca-Cola, Fanta, Sprite,

Thums Up, Maaza, Minute Maid and Georgia Gold. Bottled water was another area where

Coca-Cola identified major opportunities. In 2002, Packaged drinking water in India was a

Rs 1,000 cr industry and growing by 40% every year. PDW was a low margin – high volume business,
but it was an attractive proposition for bottlers as it increased plant utilization rates.
In this market Coke‘s Kinley was pitched against Ramesh Chauhan‘s Bisleri and Pepsi‘s Aquafina. The
product not only faced intense competition but also was difficult to differentiate. Coke positioned

Page 35
Kinley as natural water with the tag line “Bhoond Bhoond Mein Vishwas” (Trust in each drop of
water).

In early 1999, the parent company acquired Cadbury Schweppes. As a result 12 more bottlers were
brought into CCI‘s fold. This acquisition added Crush, Canada Dry and Sport Cola to CCI‘s product
line. This meant CCI had three orange, clear lime and cola drinks each in its portfolio.

 PRICE:-

Coke learnt with experience that price was a strategic weapon in an emerging market like India. An
increase in value added tax in 1996 had taken the price of the 300ml bottle beyond the reach of
many Indian customers. In 2000, CCI conducted a yearlong experiment in coastal Andhra Pradesh by
introducing a 200ml bottle at Rs 7. The volumes went up by 30% demonstrating the importance of
consumer affordability. So the 200ml pack priced at Rs 5 was rolled out countrywide in January 2003.
The advertising Campaign highlighted the affordability and Indian image.

To make it affordable, Coke introduced Kinley in 200ml pouches for Re. 1 in selected places in
Ahmadabad and 200ml water cups in Maharashtra, priced at Rs 3 per cup in testing marketing
exercise conducted in mid – 2002. In 2002 Kinley with 35% market share had become the leader in
the retail PDW segment and was contributing 20% of CCI‘s revenues.

 PLACE:-

Coke pushed down responsibilities from corporate headquarters to the local business units. The aim
was to effectively align CCI's corporate resources, support systems and culture to leverage the local
capabilities. CCI's operations had been divided into North, Central and Southern regions. Each
region had a president at the top, with divisions comprising marketing, finance, human resources
and bottling operations. The heads of the divisions reported to the CEO. Bottling operations were
divided into four companies directed by the bottling head from headquarters. Under the new plan,
CCI shifted to a six region profit center set up where product customization and packaging,
marketing and brand building were taken up locally. A Regional General Manager (RGM) headed
each region with the regional functional heads reporting to him. All the RGMs reported to VP
(Operations, who in turn reported to CEO. The four bottling operations, with 37 bottling plants, were
merged into Hindustan Coca-Cola Beverages (HCCB). Each of the six regions had on an average six
bottling plants. Each plant was headed by an Area General Manager (AGM) and held profit center
responsibility for a business territory. He reported to the RGM as well as the head of bottling at the
head quarters.

 PROMOTION:-

In the initial years, CCI focused on establishing the Coca-Cola brand quickly. The marketing campaign
positioned Coca-Cola as an international brand and did not emphasize local association. Coke, as a
deliberate strategy, decided not to spend heavily on promoting Thums
Up. Indeed the marketing spend on Thums Up between 1993 and 1996 was almost negligible.

Page 36
The overall marketing effort was also not focused as CCI changed the head of marketing three times
during the period. Thumps Up remained neglected. Inadequate marketing support for other Parle
brands also led to their declining market shares.

The bottlers taken over by Coke also had problems adjusting to a new work culture. They argued
that CCI's lack of interest in promoting Thumps Up was resulting in falling sales and asked CCI to take
corrective action.

Coke is primarily targeted at young individuals over the age of twenty-five. This can be seen by Coca-
Colas advertising campaigns, which are aimed towards the young, by featuring well known
personalities popular to this age group. During 90'ies Coke's promotion efforts did not seem to be
effective. They were focused on mega events like the 1996 Cricket World Cup held in India. CCI's
World Cup Cricket campaign was overshadowed by Pepsi's "Nothing official about it" campaign.
Major analysts were surprised that Thumps Up was totally out of the picture during such a mega
event. In 1998 localization of marketing efforts, CCI signed up celebrities like Aamir Khan, Aishwarya
Rai, and Sunil Gavaskar to promote Coke. Coke also began efforts to rejuvenate the Parle brands,
Limca and Thumps Up. In 1998, India was declared the fastest growing market within the Coca-Cola
system. But things were far from normal. Attempts at building growth through discounts and PET
take home segment were not very successful because of lack of coordination between the launches
and marketing back-up.

To maintain good relationships with bottlers and avoid defections to the other camp, dealers had
been pampered by offering expensive overseas trips. In 2000, Coke wrote off investments in India,
amounting to $400 Mn. The revised value of CCI's assets after the charge was $300 mn.

CCI spent $3.5 mn to beef up advertising and distribution for Thumps Up. By 2002, it had become
India's No.2 cola drink after Pepsi. Maaza, the mango drink, was repositioned as a juice brand and
saw a growth of almost 30% in 2001. Since India was a large country of different tastes and cultures,
CCI customized its marketing strategy for different regions. It promoted the Coke brand in Delhi,
Thumps Up in Mumbai and Andhra Pradesh, and Fanta in Tamil Nadu. Coke had plans to launch
Rimzim, a spicy soda drink in North Maharashtra.

PESTEL ANALYSIS OF COCA-COLA INDIA

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.

Political Factors:

 Historical

Page 37
Coca Cola India was the leading soft drink brand in India till 1977 when it left rather than revealing its
formula to the government. They re-entered the country in 1993. However, the primary barrier for
Coca-Cola‘s entry into the Indian market was its political environment. Despite the liberalization of the
Indian economy in 1991 and introduction of the New Industrial Policy to eliminate barriers such as
bureaucracy and regulation, there was still a lot of protectionism. India‘s past promotion of
―Indigenous availability‖ or ―Swadeshi movement‖ depicted its affinity for local products. Due to
India‘s suspicion of foreign business entering Indian markets, Coca Cola received alien status its re-
entry. This and some of the policies imposed on foreign enterprises proved as a hindrance to the
growth of the company in the country. To make things worse, the policies were neither clear nor
unchanging.

For example, foreign businesses were not allowed to market their products under the same name if
selling within the Indian market. Thus, Coca Cola had to be changed to Coca Cola India (and Pepsi had
to be renamed to Lehar Pepsi). However, the most controversial, and by far, the most damaging was
when Coca-Cola was forced to sign an agreement to sell 49% of its equity in order to buy out Indian
bottlers. Due to the lack of consistency in the legal aspects, more importance was being given to
lobbying the politicians.

 Recent Scenario

During recent times, Coca Cola India has faced its fair share of problems. On August 5th

2003, The Centre for Science and Environment (CSE), an activist group in India focused on
environmental sustainability issues (specifically the effects of industrialization and economic growth)
issued a press release stating: "12 major cold drink brands sold in and around Delhi contain a deadly
cocktail of pesticide residues". According to tests conducted by the Pollution Monitoring Laboratory
(PML) of the CSE from April to August, three samples of twelve PepsiCo and Coca-Cola brands from
across the city were found to contain pesticide residues surpassing global standards by 30-36 times.

This had an adverse impact on the sales of Coca Cola, with a drop of almost 30-40%1 in only two weeks
on the heels of a 75% five-year growth trajectory. Many leading clubs, retailers, restaurants, and
college campuses across the country had stopped selling Coca-Cola. This threatened the newly
achieved leadership attained over Pepsi due to a successful marketing campaign.

But this was not the end of Coca Cola‘s troubles. There was widespread discontent around many of
their plants. For example, in Plachimada, Kerala, the communities in and around the Coca Cola plant
blamed the factory for their water problems. Due to this, the local Panchayat decided not to renew
the license issued to Coca Cola to ―protect public interest". The company has also been accused of
illegally occupying a portion of the village property resources in Mehdiganj, near Varanasi. However,
there are certain positives as well, with a 22 percent increase in its unit case volume last quarter.
Economic Analysis:

The Indian economy sustained the global economic slowdown in the previous year and has shown a
tremendous economic growth. It showed 8.6% of growth in the last quarter of 200910 as compared
to 5.8% same time in the previous year. It has emerged as an attractive economy to invest in as many
opportunities has been recognized.

Page 38
  Economic growth
India is ranked second in economic growth, just behind China. Analysts have said that India will be the
third biggest economy of the world in the coming year behind China and USA. With economic growth
many opportunities have been seen, which have attracted many foreign investor to the company.

Coca cola India returned to the country in 1993, despite few problems in the start they have emerged
as the king of soft drink industry in India. The strong economic growth of India has resulted in coca
cola to invest heavily in sales and distributive channels. It has introduced two new products, Nimbu
Fresh and an energy drink ‗Burn‘.

Coca cola registered 22% growth in their unit case volume in the second quarter (April-June). It is the
16th consecutive quarter of such growth out of which 13 are double digit. Coca cola
India‘s growth is in contrast to its overall performance, the beverage king reported a growth of just
5% (worldwide) in the same quarter.

 Inflationary effects
Inflation is one of the main problems that Indian economy has been facing for a year now.

Rising prices in the food and other products doesn‘t only effect the consumers it also has an adverse
effect on a company. The inflation rate for the year 2009 was recorded to be 11.49%. As prices have
gone up in India for various products, especially oil, there has been uncertainty in decision making of
almost every company. Coca cola India has also been affected by the same; it has been forced to think
about their input costs, as they have been rising due to inflation. Their expenditure has been rising,
with more costs in salaries, distribution channels and other operating costs. Beverage industry being
price competitive market, they have not revised their product prices.

Exchange rate
The exchange rate of rupee to US Dollar has been stable but in the previous months the rate has had
a tumultuous period. Exchange rate determines at what price will the company export its products
and import whatever is required by it. The previous year, the rate of rupee to USD touched 44, on an
average it has been around 47, so the exports earned less and the imports cost more. Therefore, coca
cola India had to bear some low profitable times. However, in the present scenario rates have reached
a stable level and exports are on an increasing trend.

Social Analysis:
Coca- Cola returned to India in 1993 after a 16 year hiatus, amidst competition from Leher Pepsi which
had the advantage of entering the country 7 years earlier. Initially, it struggled to find acceptance as
there were already other brands such as Parle‘s Thums Up which existed in the market. Coca-Cola had
earlier focussed more on the American way of life in their advertising campaigns, which the Indian
consumers could not identify with. Also, they did not focus on competition from other alternatives
such as lemonade, Lassi etc.

Page 39
These products had been around for centuries, and were also cheaper alternatives to CocaCola.
However, things were brought under control when Thums Up was bought over by Coca Cola, and more
attention was paid by the company on their marketing mix.
With the lowering of their prices by almost 15-20%, introduction of newer products which appealed
to the Indian tastes, more investment in market research and focussing on the target group of 18-24
year olds, they were able to increase their market share and build brand loyalty.

Coca Cola today, has made significant investments to build its business in India. It has also generated
employment for almost 1,25,000 people in related industry through its procurement, supply and
distribution cycles.

The soft drink industry today is growing steadily due to the booming economy, strengthened middle
class and low per capita consumption. With the increase in health consciousness among the urban
consumers, the company has introduced newer products such as Diet Coke, which contain lesser
calories than ordinary Coca Cola. This is also responsible for the company shifting focus from
carbonated drinks to Fruit Drinks / Juices and bottled water. The rural market had also been identified
by Coca-Cola India as an attractive target, with almost 70% of the country‘s population. The company
has recorded significant growth in recent years

Coca Cola India has also taken many initiatives as a responsible corporate citizen, by tying up with
many NGOs such as BAIF (or Bharatiya Agro Industries Foundation), SOS Children‘s Villages and Save
the Children. It has also taken initiatives to promote education in rural areas.
Technological Analysis:
Coca-Cola has started operations of its R&D facility in India, with the view of localizing its product
portfolio. The major focus would be on non carbonated drinks and flavours. The company‘s R&D team
has already rolled out drinks such as Maaza aam panna and also a Maaza mango milk drink, and is
exploring options to enter new categories in India such as juices in localised flavours, energy drinks,
sports drinks and flavoured water. These initiatives are being taken by the company to further expand
their product portfolio. With the increasing importance of 360 degree media tools and overall ad
spend on social media sets likely to grow by almost 44%, Coca-Cola has increased ad spend on the
internet.
Case in point is the recent 2009 Sprite campaign, which was first launched on the internet.

Environmental Analysis:

Coca Cola has earned a title of environment friendly company and Coca Cola India too has followed in
the footsteps. Coca Cola India‘s Corporate Social Responsibility (CSR), is an initiative that prioritizes
many social and environmental issues; one of them being ‗water conservation‘. They support many
community based rainwater harvesting projects and help lending conservation education.

The company has made sure that the following ideas are considered during their operations:

Page 40
 1. Environmental due diligence before acquiring land

2. Environmental impact assessment before commencing project

3. Ground water and environment survey before selecting the site

4. Ban on purchasing CFC emitting refrigerating equipment

5. Waste water treatment facilities

6. Compliance with all regulatory environmental requirements

7. Energy conservation programs

By following these guidelines Coca-Cola India has helped the environment with consistent profits and
success. They seek to provide leadership in three different areas, these are as follows:

1. Water efficiency and water quality

2. Energy efficiency

3. Eliminating or minimizing solid waste.

Though being an environmental friendly company, Coca Cola India had to face its share of
controversies. On 4th February, 2003, Centre of Science and Environment in India, released a report
based on experiment done by Pollution Monitoring Laboratory. In the experiment, they tested 17
packaged drinking water brands and found that, Coca Cola‘s Kinley has 15 times more pesticide
residual levels than the stipulated norms, Bisleri had 59 times and Aquaplus had 109 times.

The main law governing the food safety is the 1954 Prevention of food alteration act, which stated
that pesticides should not be present in any food item but did not have law against pesticides being
present in soft drinks. However, the Food Processing Order 1955 stated that the main ingredient used
in soft drinks must be ‗potable water‘ but the Bureau of Indian Standards had no prescribed standards
for pesticides in water.

But later it was found that BIS had stated that pesticides should not be present or it should not exceed
0.001 part per million. Further, the health ministry of India admitted that ‗there were lapses in PFA
regarding carbonated drinks‘.

Page 41
 Fig 2.2 GRAPH OF PESTICIDES IN SOFT DRINKS IN INDIA

Legal Analysis:
As the Indian consumer is getting more educated, the government is also paying special attention to
consumer laws. In the past, there were not so many laws protecting the benefits to the consumer but
now every business has to go by the law and fix their operations, strategies so as to satisfy their
consumers, and employees. Keeping in mind the consumer laws, employment laws, antitrust law,
discrimination laws etc. a business should plan out everything.

 Consumer Laws
In the present scenario, consumer is the king, if a product is defective, not meeting the stated
standards a consumer can complain against the manufacturer. Complaining and getting the verdict
the court has made very fast and efficient as government of India has installed new consumers courts.
Their main job is to see that the consumer benefits are being met or not. When producing their
beverages, Coca Cola India has to make sure that they have written price, manufacturing date, expiry
date, batch no, nutritional facts are written on the packed product.

 Employment Laws

Ministry of Labour makes the laws for proper employment in the country. They have stipulated norms
on employing people from the country and getting expatriates in the company as well. India has strict
laws against employing child labour. Being a male dominated society, the ministry has made sure that
female employees are treated with respect and given equal importance at the work place. Every field

Page 42
of work has got its own wage, these are to meet the norms and laws set by the labour ministry. When
employing anyone, coca cola India cannot discriminate on social, regional or any racists‘ basis. If it is
found that the company has been violating the law, it has to face strict action and fines.

 Health and safety laws

As coca cola produces a product that is consumed by the consumer as a food item, there are laws that
the company must abide by when producing it. Ministry of Food Processing Industries makes and
oversees the laws and norms for the food processing industries.

The Indian Parliament has recently passed the Food Safety and Standards Act, 2006 that overrides all
other food related laws.

It will specifically repeal eight laws:

• The Prevention of Food Adulteration Act, 1954.

• The Fruit Products Order, 1955.
• The Meat Food Products Order, 1973.
• The Vegetable Oil Products (Control) Order, 1947.
• The Edible Oils Packaging (Regulation) Order, 1998.
• The Solvent Extracted Oil, De oiled Meal, and Edible Flour (Control) Order, 1967.
• The Milk and Milk Products Order, 1992.
• Essential Commodities Act, 1955 relating to food.
From now on, the act establishes a regulatory body, the Food Safety and Standards Authority of India.
Anything that coca cola makes, have to make accordingly to the laws. They have to check the weight,
volume and ingredients of the product. The export or the import of the products by the company has
to meet the quality standards stipulated by the law.

 Anti-trust law
The Competition Commission of India was made under the Indian Competition Act 2002, Monopolies
Restrictive and Trade Practices Act 1969 was replaced by it. This committee looks after all the issues
regarding unethical means of doing business, competition issues and any dispute between two
different business entities. CLG competition and anti trust practices are as follows:

• Representing clients before the MRTP Commission in ‗monopolistic and restrictive trade
practices‘ and ‗unfair trade practices‘ matters.

• Legal Advice and sophisticated insight into the international best practices on competition
law.
• Consultancy services on specific issues - supply and distribution, pricing and marketing,
‗promotional materials‘, mergers, acquisitions, amalgamation, licensing, joint operation and
research, joint buying, ‗dominant-firm‘ status etc.

Page 43
 • Competition Audit and Due Diligence for developing appropriate guidelines for employees,
distributors, agents, franchisees etc.
• Legal Due Diligence on anti-competition, unfair and restrictive market practices.
• Drafting claims, counter-claims, replies, rejoinders, representations etc. on Competition Law
and related legal issues.
• Strategic policing on anti-competition market practices and trends.
• Policy due diligence for mergers, acquisitions, joint ventures with appropriate antitrust
safeguard measures and policy.

All these laws help Coca Cola India to maintain its own brand and values. Any other business trying to
copy the brand of coca cola will face the strict action against itself. These laws help every business to
compete in a fair environment. As it is known that the coca cola and Pepsi are the fiercest rivals in the
beverage industry, the CCI makes sure that either of them does not indulge in unfair means to make
profits and hurt each other‘s business.

SWOT ANALYSIS OF COCA-COLA INDIA

STRENGTHES WEAKNESSES
Distribution Network. Health Care Issues.
Strong Brand Image. Small Scale Sector
Reservations.
Low Cost of Operation.

SWOT
ANALYSIS
OPPORTUNITIES
THREATS
Large Domestic Markets.
Imports.
Export Potential.
Tax & Regulatory Sector.
High Income among People.
Slowdown in Rural Demand.

Fig 2.3 SWOT ANALYSIS OF COCA -COLA INDIA

STRENGTHES:

 DISTRIBUTION NETWORK

Page 44
The Company has a strong and reliable distribution network. The network is formed on the basis of
the time of consumption and the amount of sale yielded by a particular customer in one transaction.
It has a distribution network consisting of a number of efficient salesmen, 700,000 retail outlets and
8000 distributors. The distribution fleet includes different modes of distribution, from 10 tonne to
open bay three wheelers that can navigate the narrow alleyways of Indian cities – constantly keep
Coca-Cola brands available in every nook and corner of the Country‘s remotest areas.

 STRONG BRAND IMAGE

Coke has its history of about more than a century and this prolonged sustenance has definitely added
to the brand image in the minds of the consumers and to its wallet. The products produced and
marketed by Coca-Cola India have a strong brand image.

Strong brand names like Coca-Cola, Fanta, Thums up, Limca and Maaza add up to the brand name of
Coca-Cola Company as a whole. Coca Cola India for the first time has come out with corporate
campaign in India targeting its stakeholders. The multimedia campaign “Little Drops of Joy " is
aimed at raising the corporate brand image of the company which took a heavy beating with a number
of controversies it faced in different domains.

The new campaign is a part of a complete restructuring exercise in the Indian arm of this global change.
Coca Cola recently announced its new corporate strategy called the ―5 Pillar" strategy. The company
has identified the 5 pillars as
• People.
• Planet.
• Portfolio.
• Partners.
• Performance.

 LOW COST OF OPERATIONS

In light of the company‘s Affordability Strategy, Coca-Cola went about bringing a cost-focus culture
in the company. This included procurement Efficiencies – through focus on key input materials, trade
discipline and control and proactive tax management through tax incentives, excise duty reduction
and creating marketing companies. These measures have reduced the costs of operations and
increased profit margins.

WEAKNESSES:

 HEALTH CARE ISSUES

In India, there exists a major controversy concerning pesticides and other harmful chemicals in
bottled products including Coca-Cola. In 2003, the Centre for Science and Environment (CSE), a non-

Page 45
governmental organization in New Delhi, said aerated waters produced by soft drinks manufacturers
in India, including multinational giants PepsiCo and Coca-Cola, contained toxins including lindane,
DDT, malathion and chlorpyrifos - pesticides that can contribute to cancer and a breakdown of the
immune system.

 SMALL SCALE SECTOR RESERVATIONS

The Company‘s operations are carried out on a small scale and due to Government restrictions and
‗red-tapism‘, the Company finds it very difficult to invest in technological advancements and achieve
economies of scale.

OPPORTUNITIES:

 LARGE DOMESTIC MARKETS

The domestic market for the products of the Company is very high as compared to any other soft
drink manufacturer. Coca-Cola India claims a 58 per cent share of the soft drinks market; this
includes a 42 per cent share of the cola market.

Other products account for 16 per cent market share, chiefly led by Limca. The company appointed
50,000 new outlets in the first two months of this year, as part of its plans to cover one lakh outlets
for the coming summer season and this also covered 3,500 new villages. In Bangalore, Coca-Cola
amounts for 74% of the beverage market.

 EXPORT POTENTIAL

The Company can come up with new products which are not manufactured abroad, like Maaza etc
and export them to foreign nations. It can come up with strategies to eliminate apprehension from
the minds of the people towards the Coke products produced in India so that there will be a
considerable amount of exports and it is yet another opportunity to broaden future prospects and
cater to the global markets rather than just domestic market.

 HIGHER INCOME AMONG PEOPLE

Development of India as a whole has lead to an increase in the per capita income thereby causing an
increase in disposable income. Unlike olden times, people now have the power of buying goods of
their choice without having to worry much about the flow of their income.
Coca-Cola Company can take advantage of such a situation and enhance their sales.

THREATS:

Page 46
  IMPORTS
As India is developing at a fast pace, the per capita income has increased over the years and a
majority of the people are educated, the export levels have gone high. People understand trade to a
large extent and the demand for foreign goods has increased over the years. If consumers shift onto
imported beverages rather than have beverages manufactured within the country, it could pose a
threat to the Indian beverage industry as a whole in turn affecting the sales of the Company.

 TAX & REGULATORY SECTOR

The tax system in India is accompanied by a variety of regulations at each stage on the consequence
from production to consumption. When a license is issued, the production capacity is mentioned on
the license and every time the production capacity needs to be increased, the license poses a
problem. Renewing or updating a license every now and then is difficult. Therefore, this can limit the
growth of the Company and pose problems.

 SLOWDOWN IN RURAL DEMAND

The rural market may be alluring but it is not without its problems: Low per capita disposable
incomes that is half the urban disposable income; large number of daily wage earners, acute
dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals
and special occasions; poor roads; power problems; and inaccessibility to conventional advertising
media. All these problems might lead to a slowdown in the demand for the company‘s products.

Page 47
 4.
RESEARCH
METHODOLOGY

OBJECTIVES OF THE STUDY

Page 48
 The main objective of the project is to analyze and study in efficient way the current
position of Coca- Cola Company.

 To perform PESTLE and SWOT analysis of Coca-cola globally as well as locally.

This would help us identify areas of potential growth.

 The study was aimed to perform Market Analysis of Coca-Cola Company & find out different
factors effecting the growth of Coca-Cola.

 Another objective of the study was to perform Competitive analysis between CocaCola and
its competitors.

 To understand the reasons behind the purchase of Coca-Cola products.

SCOPE OF THE STUDY:-

This study basically tries to discover the current position of Coca-cola in the market. It also tries
to discover the preferences of the customers when posed with a choice between
Coca-Cola and Pepsi. It is primarily directed to the general public but was done only in

New Delhi, Noida and Greater Noida

RESEARCH DESIGN
A research design is the specification of methods and procedures for acquiring the needed
information. It is overall operational pattern or framework of the project that stipulates what
information is to be collected from which source by what procedure.

There are three types of objectives in a marketing research project:-

• Exploratory Research.
• Descriptive Research.
• Casual Research.

1. Exploratory Research:-
The objective of exploratory research is to gather preliminary information that will help define
problems and suggest hypothesis.

2. Descriptive Research:-

Page 49
 The objective of descriptive research is to describe things, such as the market potential for a
product or the demographics and attitudes of consumers who buy the product.

3. Casual Research:-
The objective of casual research is to test hypothesis about casual and effect relationships.

Based on the above definitions it can be established that this study is a Descriptive Research as the
attitudes of the customers who buy the products have been stated. Through this study we are trying
to analyze the various factors that may be responsible for the preference of Coca-Cola products.

SOURCES OF DATA

The data has been collected from both primary as well as secondary sources.

SECONDARY DATA:-

It is defined as the data collected earlier for a purpose other than one currently being pursued.

As a researcher I have scanned lot of sources to get an access to secondary data which have formed
a reference base to compare the research findings. Secondary data in this study has provided an
insight and forms an outline for the core objectives established.

The various sources of secondary data used for this study are:-

 News papers.
 Magazines.
 Text books.
 Marketing reports of the company.
Internet.

PRIMARY DATA:-

The primary data has been collected simultaneously along with secondary data for meeting the
established objectives to provide the solution for the problem identified in this study.

Page 50
The methods that have been used to collect the primary data are:-

 Questionnaire.
 Personal Interview.

RESEARCH MEASURING TOOLS & TECHNIQUES

The primary tool for the data collection used in this study is the respondent‘s response to the
questionnaire given to them. The various research measuring tools used are:-

 Questionnaire.
 Personal interview.
 Tables.
 Percentages.
 Pie-charts.
 Bar-charts.
 Column charts.

SAMPLING DESIGN

An integral component of a research design is the sampling plan. Especially it addresses three
questions: Whom to survey (sample Unit), how many to survey (Sample Size) and how to select them
(sampling Procedure). Making the census study of the entire universe will be impossible on the
account of limitations of time and money. Hence sampling becomes inevitable. A sample is only his
portion of population. Properly done, sampling produces representative data of the entire population.

SAMPLE SIZE:-

i. Through questionnaire – 150 respondents. ii.

Through personal interview – 27 respondents.

SAMPLING TOOL:-

Questionnaire was used as a main tool for the collection of data, mainly because it gives the chance
for timely feedback from respondents. Moreover respondents feel free to disclose all necessary detail

Page 51
while filling up a questionnaire. Respondents seeking any clarification can easily be sorted out through
tool.

Sampling Tools Respondents Number

Questionnaire Customers 150
Personal Interview Customers 27
Total 1 77
Table – 1. 7

FIELD WORK:-

The study was conducted in New Delhi, Noida and Greater Noida.

 The questionnaires were given to the respondents to fill in order to get their feedback.
 Questions were read out to the respondents and the answers were noted.

LIMITATIONS OF THE STUDY:-

The main purpose of this study is get idea about the preference of the customers towards various
Coca-Cola products. But there are certain factors which affects this study they are as follow:
Since the sampling procedure was judgmental, the sample selected may not be true
representative of the population.

 Economic and market conditions are very unpredictable (Present and future).

 The project duration is limited to 4 weeks so it limits the area of study.

 The study was confined to New Delhi, Noida and Greater Noida due to which the result
cannot be applied universally.

Page 52
 5.
DATA ANALYSIS

Page 53
 Respondents based on age group
180
160
140
120
100
80
60
40
20
0
Below 20 20-30 30-40 40-50 above 50
Number of respondents 10 159 6 1 1

Fig 2.4

Page 54
 Respondents based on gender

37%

Male
63%
Female

Fig 2.5

AGE GROUP & GENDER:

From Fig 2.4, we can comprehend that 90% of total respondents belong to the age group of 20-30. This
is because most of the consumers that prefer or consume Coca-Cola products belong to this age group.
About 6% belong to age group below 20 and 3% belong to age group of 30-40.Form Fig 2.5, we come to
know that the gender ratio of the total respondents is almost 2:1 (male: female).

Frequency of soft drink consumption

50
40
30
20 Series1
10
0
Once a Twice a Thrice a Everyday Rarely
week week week

Fig 2.6

Page 55
 Weekly expenditure of coca-
cola products (INR)
4% 3%
12%
50-100
100-150
81% 150-200
Above 200

Fig 2.7

SOFT DRINK CONSUMPTION & EXPENDITURE:

From Fig 2.6, we interpret that about 48% of the total respondents consume soft drinks rarely or once a
week. About 35% respondents consume soft drinks twice or thrice a week and only 18% consumes soft
drinks every day.

From Fig 2.7, we interpret that about 81% of the respondents spend only Rs. 50-100 a week on Coca-
Cola products, which is very low as compared to the global scenario. This creates a potential growth
market for Coca-Cola India. About 12% spends from 100-150 a week & 7% spend above 150.

Page 56
 Purchasing Portal Preference

120
S
100 e
80 r
i
60 e
40 s
1
20
0
Supermarkets Retails Vendor Pubs & Multiplexes
Machines Restaurant

Vendor Pubs &

Supermarkets Retails Multiplexes
Machines Restaurant
Series1 26 103 8 20 20

Fig 2.8

PURCHASING PORTAL PREFERENCE:

From the above data, we have ascertained that preferred portal for purchase of Coca-Cola products is
the retail shops i.e. 58%. This is probably because not all communities in India have supermarkets and
other purchasing channels present nearby, whereas, we can find retail shops in every corner.19% prefer
to purchase from Supermarkets and Vendor machines. 23% prefer to purchase from Pubs, Restaurants
and Multiplexes.

Page 57
 Occasions/Reasons for consumption

Just like that

Parties

Cinemas

Picnics

Festivals

0 20 40 60 80 100 120

Festivals Picnics Cinemas Parties Just like that

Series1 3 4 26 40 104
Number of respondents

Fig 2.9

REASON FOR CONSUMPTION:

From this graph, we infer that there is no specific occasion why people purchase Coca-Cola products.
Although some of the advertising campaigns target special occasion or festivals. From Fig 2.9 it is
concluded that 59% respondents purchase Coca-Cola without any specific reason. About 23% purchase
for the purpose of parties, 15% purchase while watching movies in the cinemas and only about 4%
purchase during festivals and for picnic purposes.

Page 58
 Soft drink preference

80
70 S
60 e
50 r
40 i
e
30
s
20 1
10
0
Coca-Cola Pepsi Other products Other products Other drinks
of Coca-Cola of Pepsi

Other products of Other products of

Coca-Cola Pepsi Other drinks
Coca-Cola Pepsi
Series1 72 34 52 7 12

Fig 2.10

SOFT DRINK PREFERENCE:

From the above graph we interpret that about 70% of the respondents, prefer consuming Coca-Cola
product over Pepsi and other drinks. This clearly states why Coca-Cola is market leader with almost 60%
of market share. 23% prefer Pepsi Products and only 75 prefer other drinks.

Page 59
 Opnion About Coca-Cola Products
Bad

Below Satisfactory

Satisfactory

Good

Excellent

0 20 40 60 80 100 120
NO. OF RESPONDENTS

Fig 2.11

Products expected by consumers from

Coca-Cola
Fizzy drinks Fruit drinks Energy drinks Alcoholic drinks

20% 14%

26% 40%

Fig 2.12

OPINION ABOUT COCA-COLA PRODUCTS

& PRODUCTS EXPECTED BY CONSUMERS:

From Fig 2.11, we infer that though the respondents are more than satisfied by the Coca-Cola product
range they would still like the company to introduce new drinks. From Fig 2.12, we conclude that about
40% would like to see a new fruit drink being added to the product basket, 26% want energy drinks,
20% alcoholic drinks and only 14% want another fizzy drink. Majority of the people wanting to see a
fruit drink is mainly because people are more health conscious now and want to manage their calorie
intake.

Page 60
 Quantity preference

90 S
80 e
70
60 r
50 i
40 e
30 s
20
10 1
0
200-250 ml 300 ml Can 500 ml Pet 1 litre 2 litre
Glass bottle bottle

200-250 ml 500 ml Pet

300 ml Can 1 litre 2 litre
Glass bottle bottle
Series1 47 33 83 5 9

Fig 2.13

QUANTITY PREFERENCE:
From Fig 2.13, we infer that about 47% of respondents prefer to purchase PET bottle of Coca-Cola
Products. About 27% prefer to purchase glass bottles, 19% prefer Can of 300ml and only 8% prefer 1 & 2
litre bottles of Coca-Cola.

Page 61
 Branding

Pepsi products

Coca-Cola products

0 50 100 150

Coca-Cola products Pepsi products

Series1 109 68

NO. OF RESPONDENTS

Fig 2.14

Pricing

150

100
Series1
50

0
Coca-Cola products Pepsi products

Fig 2.15

BRANDING & PRICING:

From Fig 2.14, it is concluded that respondents find Coca-Cola products better than that of

Pepsi products. About 62% respondents said that they find Coca-cola products better than Pepsi and
only 38% supported Pepsi products.

From Fig 2.15, we infer that about 62% of the respondent considers the pricing of Coca-Cola much more
reliable than that of Pepsi. About 38% respondents think that Pepsi have better pricing than that of
Coca-Cola.

Page 62
 Quality

150

100

50 Series1

0
Coca-Cola products Pepsi products

Fig 2.16

TASTE

Pepsi products

Coca-Cola products

0 50 100 150

Coca-Cola products Pepsi products

Series1 130 47

NO. OF RESPONDENTS

Fig 2.17

QUALITY & TASTE:

From Fig 2.16 & 2.17, it‘s clear that Coca-Cola products have better taste and quality than that of Pepsi.
About 73% respondents consider that Coca-Cola products have very good quality and taste. 27%
respondents consider Pepsi products have better taste and quality.

Page 63
 Availability

Pepsi products

Coca-Cola products

85 86 87 88 89 90

Coca-Cola products Pepsi products

Series1 90 87

Number of respondents

Fig 2.18

Satisfaction

Pepsi products

Series1

Coca-Cola products

0 50 100 150

Fig 2.19

AVAILABILITY & SATISFACTION:

From Fig 2.18, it‘s clear that there is slight difference between the availability of products of Coca-Cola
and Pepsi. About 51% respondents think that Coca-Cola products are much easily available in the
market.49% consider that availability of Pepsi products is more in the market.

About 70% of respondents are satisfied with the Coca-Cola products while as 30% respondents are
satisfied with the Pepsi products as shown in Fig 2.19.

Page 64
 6.
SUGGESTIONS AND
CONCLUSION
SUGGESTIONS
The suggestions made in this section are based on the market study conducted as part of ―Coca-Cola
India‖. The suggestions are arranged in order of priority, highest first.

 Perform a detail demand survey at regular interval to know about the unique needs and
requirements of the customer.

 The company should make hindrance free arrangement for its customers/retailers to make any
feedback or suggestions as and when they feel.

 The company should focus to bring some more flavors like health drinks and other low-calorie
offerings. Coca-Cola India can also introduce some fruit based drinks, as it has already entered
the energy drink arena with ―Burn‖.

Page 65
  Coca-Cola‘s distribution channel is mostly through retail. Whereas the competitors also
concentrates more on the multiplexes, pubs and restaurants. Coca-Cola should try to increase
their distribution in these areas.

 The company must keep a watch on its primary competitors in market in order to be able to
compete with them.

 The company should use new attractive system of word of mouth advertisement to keep alive
the general awareness in the whole market as a whole.

 The company should be always in a position to receive continuous feedback and suggestions
from its customers/ consumers as well as from the market and try to solve it without any delay
to establish its own good credibility.

 A strong watch should be kept on distributors so that the goodwill of the BRAND doesn‘t get
affected.

CONCLUSION

Though there were certain limitations in the study that was conducted. The sample allowed for some
conclusions to be drawn on the basis of analysis that was done on the data collected.

The data has clearly indicated that Coca-Cola products are more popular than the products of Pepsi
mainly because of its TASTE, BRAND NAME, INNOVATIVENESS and
AVAILABILITY, thus it should focus on good taste so that it can capture the major part of the
market. The study also indicated that the consumers are satisfied with the Coca-Cola products and
purchase them without any specific occasions.

In today‘s scenario, customer is the king because he has got various choices around him. If you are not
capable of providing him the desired result he will definitely switch over to the other provider.
Therefore to survive in this cutthroat competition, you need to be the best.
Customer is no more loyal in today‘s scenario, so you need to be always on your toes.

Page 66
Page 67
Page 68
Page 69
Page 70
Page 71
Page 72
Page 73
Page 74
Page 75
Page 76
Page 77
Page 78
Page 79
Page 80
Page 81
Page 82
Page 83
Page 84
Page 85
Page 86
Page 87
Page 88
Page 89
Page 90
Page 91