ASSIGNMENT

OF
SAM





SUBMITTED TO: SUBMITTED BY:
DR INDRISH KAUR ROLIKA SETH
SWATI RATHORE
DINKAR PATHAK


ACKNOWLEDGEMENT


Accomplishment oI any task necessarily depends upon the willingness and enthusiastic
contribution oI time and energy oI many people.
From the starting till the completion oI this project, there are many people whose
assistance all my eIIorts would have been Iruitless. I, thereIore acknowledge all who generously
helped me by sharing their time, experience and knowledge with me without which this project
would have never been accomplished.
I must express my gratitude to DR Indrish Kaur whose perceptive
guidance, constant encouragement, constructive criticism and aIIection were the light oI
guidance during the tenure oI my work. Finally I would like to state that the project not only
IulIilled an academic requirement, but would also help me in Iuture endeavors in the years.










ABSTRACT

The project is based on the study oI the FMCG industry and the competitive analysis oI the Coca
Cola Company under this industry. A brieI oI the FMCG sector showed how vast it is. The study
brought out the competitive environment in which the company is going along with all the
necessary inIormation related with the company. The porters Iive Iorce model used showed the
various determinants which are to be kept in mind while strategic planning.

In today`s competitive world these models enlighten the path Ior Iurther growth oI the company.
To know the application oI this model becomes very essential Ior every marketer and Ior those
who want to be the same in Iuture.

The analysis showed that coca cola has a large market share as compared to its competitors. The
products are made as per the set standards and the processes used Ior manuIacturing are
environmental Iriendly and abide by other rules and regulations.






INTRODUCTION OF FMCG

Fast moving consumer goods (FMCG) -or Consumer Packaged Goods (CPG) are products that
are sold quickly and at relatively low cost. Examples include non-durable goods such as soIt
drinks, toiletries, and grocery items. Though the absolute proIit made on FMCG products is
relatively small, they generally sell in large quantities, so the cumulative proIit on such products
can be substantial.

SCOPE
The term FMCG reIers to those retail goods that are generally replaced or Iully used up over a
short period oI days, weeks, or months, and within one year. This contrasts with durable
goods or major appliances such as kitchen appliances, which are generally replaced over a period
oI several years.
FMCGs have a short shelI liIe, either as a result oI high consumer demand or because the
product deteriorates rapidly. Some FMCGs such as meat, Iruits and vegetables, dairy products
and baked goods are highly perishable. Other goods such as alcohol, toiletries, pre-packaged
Ioods, soIt drinks and cleaning products have high turnover rates.
The Indian FMCG market has been divided Ior a long time between the organized sector and the
unorganized sector. While the latter has been crowded by a large number oI local players,
competing on margins, the Iormer has varied between a two-player-scenario to a multi-player
one.

Unlike the U.S. market Ior Iast moving consumer goods (FMCG), which is dominated by a
handIul oI global players, India's Rs.460 billion FMCG market remains highly Iragmented with
roughly halI the market going to unbranded, unpackaged home made products. This presents a
tremendous opportunity Ior makers oI branded products who can convert consumers to branded
products. However, successIully launching and growing market share around a branded product
in India presents tremendous challenges. Take distribution as an example. India is home to six
million retail outlets and super markets virtually do not exist. This makes logistics particularly
Ior new players extremely diIIicult. Other challenges oI similar magnitude exist across the
FMCG supply chain. The Iact is that FMCG is a structurally unattractive industry in which to
participate. Even so, the opportunity keeps FMCG makers trying.

At the macro-level, over the long term, the eIIorts on the inIrastructure Iront (roads, rails, power,
and river linking) are likely to enhance the living standards across India. Till date, India's per
capita consumption oI most FMCG products is much below world averages. This is the latent
potential that most FMCG companies are looking at. Even in the much-penetrated categories like
soaps/detergents companies are Iocusing on getting the consumer up the value chain. Going
Iorward, much oI the battle will be Iought on sophisticated distribution strengths.

Indian FMCG Sector
The Indian FMCG sector is the Iourth largest in the economy and has a market size oI US$13.1
billion. Well-established distribution networks, as well as intense competition between the
organized and unorganized segments are the characteristics oI this sector. FMCG in India has a
strong and competitive MNC presence across the entire value chain. It has been predicted that
the FMCG market will reach to US$ 33.4 billion in 2015 Irom US $ billion 11.6 in 2003. The
middle class and the rural segments oI the Indian population are the most promising market Ior
FMCG, and give brand makers the opportunity to convert them to branded products. Most oI the
product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita
consumption as well as low penetration level, but the potential Ior growth is huge.
The Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid
urbanization, increased literacy levels, and rising per capita income.
The big Iirms are growing bigger and small-time companies are catching up as well. According
to the study conducted by AC Nielsen, 62 oI the top 100 brands are owned by MNCs, and the
balance by Indian companies. FiIteen companies own these 62 brands, and 27 oI these are owned
by Hindustan Lever. Pepsi is at number three Iollowed by Thumps Up. Britannia takes the IiIth
place, Iollowed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle (9). These are Iigures the soIt
drink and cigarette companies have always shied away Irom revealing. Personal care, cigarettes,
and soIt drinks are the three biggest categories in FMCG. Between them, they account Ior 35 oI
the top 100 brands.






S.No

Companies
1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)
3. Nestl India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India

FMCG Companies Sales/Turnover ProIit Total Assets
HUL 20,601.56 2,496.45 2,483.46
Dabur India 2,417.91 373.56 877.17
Colgate 1,770.82 290.22 220.98
Godrej 1,088.01 161.55 599.8
Marico 1,921.85 142.12 676.21
Godrej Ind 880.97 19.33 1,628.10
P and G 645.02 131.41 346.64
Gillette India 588.84 117.37 425.4
Emami 651.01 67.36 324.2
Jyothy Labs 350.85 40.88 352.51

The companies mentioned are the leaders in their respective sectors. The personal care category
has the largest number oI brands, i.e., 21, inclusive oI Lux, LiIebuoy, Fair and Lovely, Vicks,
and Ponds. There are 11 HLL brands in the 21, aggregating Rs. 3,799 crore or 54 oI the
personal care category. Cigarettes account Ior 17 oI the top 100 FMCG sales, and just below
the personal care category. ITC alone accounts Ior 60 volume market share and 70 by value
oI all Iilter cigarettes in India.
The Ioods category in FMCG is gaining popularity with a swing oI launches by HLL, ITC,
Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore. Nestle and
Amul slug it out in the powders segment. The Iood category has also seen innovations like
soIties in ice creams, chapattis by HLL, ready to eat rice by HLL and pizzas by both GCMMF
and Godrej Pillsbury. This category seems to have Iaster development than the stagnating
personal care category. Amul, India's largest Ioods company has a good presence in the Iood
category with its ice-creams, curd, milk, butter, cheese, and so on. Britannia also ranks in the top
100 FMCG brands, dominates the biscuits category and has launched a series oI products at
various prices.
SWOT ANALYSIS
Strengths Weaknesses
Low Operational Costs

Presence oI established distribution networks
in both urban and rural areas

Presence oI well-known brands in FMCG
sector

Lower scope oI investing in technology and
achieving economies oI scale, especially in
small sectors

Low exports levels

Me-too products, which illegally mimic the
labels oI the established brands

These products narrow the scope oI FMCG
products in rural and semi-urban market

Opportunities Threats

Flourishing rural market

Rising income levels, i.e. increase in
purchasing power oI consumers

Large domestic market- a population oI over
one billion

Export potential

High consumer goods spending

Removal oI import restrictions resulting in
replacing oI domestic brands

Slowdown in rural demand

Tax and regulatory structure

PEST ANALYSIS

Political (incl. Legal) Economic Social Technological
Environmental regulations
and protection
Economic growth Income distribution
Government research
spending
Tax policies
Interest rates &
monetary policies
Demographics,
Population growth rates,
Age distribution
Industry Iocus on
technological eIIort
International trade
regulations and restrictions
Government
spending
Labor / social mobility
New inventions and
development
Contract enIorcement law
Consumer protection
Unemployment
policy
LiIestyle changes
Rate oI technology
transIer
Employment laws Taxation
Work/career and leisure
attitudes
Entrepreneurial spirit
LiIe cycle and speed oI
technological
obsolescence
Government organization
attitude
Exchange rates Education Energy use and costs
Competition regulation InIlation rates Fashion, hypes
(Changes in)
InIormation
Technology
Political Stability
Stage oI the business
cycle
Health consciousness &
welIare, Ieelings on
saIety
(Changes in) Internet
SaIety regulations
Consumer
conIidence
Living conditions
(Changes in) Mobile
Technology





FEATURES OF FMCG INDUSTRY

DISTINGUISHING FEATURES OF INDIAN FMCG BUSINESS:
FMCG companies sell their products directly to consumers. Major Ieatures that distinguish this
sector Irom the others include the Iollowing:
1. Design and Manufacturing
O Low Capital Intensity - Most product categories in FMCG
Require relatively minor investment in plant and machinery and other Iixed assets. Also, the
business has low working capital intensity as bulk oI sales Irom manuIacturing take place on a
cash basis.
O Technology
Basic technology Ior manuIacturing is easily available. Also, technology Ior most products had
been Iairly stable. ModiIications and improvements rarely change the basic process.
O Third-party Manufacturing
ManuIacturing oI products by third party vendors is quite common. BeneIits associated with
third party manuIacturing include
(1) Flexibility in production and inventory planning;
(2) Flexibility in controlling labor costs; and
(3) Logistics - sometimes it`s essential to get certain products manuIactured near the market.
2. Marketing and Distribution marketing Iunction is sacrosanct in case oI FMCG companies.
Major Ieatures oI the marketing Iunction include the Iollowing:
(1) High Initial Launch Cost - New products require a large Iront-ended investment in product
development, market research, test marketing and launch. Creating awareness and develop
Iranchise Ior a new brand requires enormous initial expenditure on launch advertisements, Iree
samples and product promotions. Launch costs are as high as 50-100 oI revenue in the Iirst
year.
For established brands, advertisement expenditure varies Irom 5 - 12 depending on the
categories.

(2) Limited Mass Media Options
The challenge associated with the launch and/or brand-building initiatives is that Iew no mass
media options. TV reaches 67 oI urban consumers and 35 oI rural consumers. Alternatives
like wall paintings, theatres, video vehicles, special packaging and consumer promotions become
an expensive but required activity associated with a successIul FMCG.
3. Huge Distribution Network - India is home to six million retail outlets, including 2 million in
5,160 towns and Iour million in 627,000 villages. Super markets virtually do not exist in India.
This makes logistics particularly Ior new players extremely diIIicult. It also makes new product
launches diIIicult since retailers are reluctant to allocate resources and time to slow moving
products. Critical Iactors Ior success are the ability to build, develop, and maintain a robust
distribution network
4. Competition:
SigniIicant Presence oI Unorganized Sector - Factors that enable small, unorganized players with
local presence to Ilourish include the Iollowing:
Basic technology Ior most products is Iairly simple and easily available.
The small-scale sector in India enjoys exemption/ lower rates oI excise duty, sales tax etc. This
makes them more price competitive vis-a-vis the organized sector.
A highly scattered market and poor transport inIrastructure limits the ability oI MNCs and
national players to reach out to remote rural areas and small towns.
Low brand awareness enables local players to market their spurious look-alike brands.

From the consumers' perspective:
Frequent purchase
Low involvement (little or no eIIort to choose the item -- products with strong brand
loyalty are exceptions to this rule)
Low price
From the marketers' angle:
High volumes
Low contribution margins
Extensive distribution networks
High stock turnover


INDUSTRY STRUCTURE

The structure

The Indian FMCG sector is the Iourth largest sector in the economy and creates employment Ior
three million people in downstream activities. Within the FMCG sector, the Indian Iood
processing industry represented 6.3 per cent oI GDP and accounted Ior 13 per cent oI the
country's exports in 2003-04.

A distinct Ieature oI the FMCG industry is the presence oI most global players through their
subsidiaries (HLL, P&G, Nestle), which ensures new product launches in the Indian market Irom
the parent's portIolio.

Critical operating rules in Indian FMCG sector

Heavy launch costs on new products on launch advertisements, Iree samples and product
promotions.

Majority oI the product classes require very low investment in Iixed assets

Existence oI contract manuIacturing

Marketing assumes a signiIicant place in the brand building process

Extensive distribution networks and logistics are keys to achieving a high level oI penetration
in both the urban and rural markets

Factors like low entry barriers in terms oI low capital investment, Iiscal incentives Irom
government and low brand awareness in rural areas have led to the mushrooming oI the
unorganized sector

Providing good price points is the key to success


RURAL MARKETS: SMALL IS BEAUTIFUL

By the early nineties FMCG marketers had Iigured out two things

Rural markets are vital Ior survival since the urban markets were getting saturated

Rural markets are extremely price-sensitive

Thus, a number oI companies Iollowed the strategy oI launching a wide range oI package sizes
and prices to suit the purchasing preIerences oI India's varied consumer segments. Hindustan
Lever, a subsidiary oI Unilever, coined the term Nano-marketing in the early nineties, when it
introduced its products in small sachets. Small sachets were introduced in almost all the FMCG
segments Irom oil, shampoo, and detergents to beverages.

Cola major, Coke, brought down the average price oI its products Irom around twenty cents to
ten cents, thereby bridging the gap between soIt drinks and other local options like tea, butter
milk or lemon juice. It also doubled the number oI outlets in rural areas Irom 80,000 during 2001
to 160,000 the next year, thereby almost doubling its market penetration Irom 13 per cent to 25
per cent. This along with greater marketing, led to the rural market accounting Ior 80 per cent oI
new Coke drinkers and 30 per cent oI its total volumes.

The rural market Ior colas grew at 37 per cent in 2002, against a 24 per cent growth in urban
areas. The per capita consumption in rural areas also doubled during 2000-02.

Exports

India is one oI the world's largest producers Ior a number oI FMCG products but its exports are a
very small proportion oI the overall production. Total exports oI Iood processing industry were
US$ 2.9 billion in 2001-02 and marine products accounted Ior 40 per cent oI the total exports.
Though the Indian companies are going global, they are Iocusing more on the overseas markets
like Bangladesh, Pakistan, Nepal, Middle East and the CIS countries because oI the similar
liIestyle and consumption habits between these countries and India. HLL, Godrej Consumer,
Marico, Dabur and Vicco laboratories are amongst the top exporting companies.

Investment in the FMCG sector

The FMCG sector accounts Ior around 3 per cent oI the total FDI inIlow and roughly 7.3 per cent
oI the total sectoral investment. The Iood-processing sector attracts the highest FDI, while the
vegetable oils and vanaspati sector accounts Ior the highest domestic investment in the FMCG
sector.

Source: SIA Newsletter, DIPP














ADVANTAGES TO THE SECTOR:


Governmental Policy

Indian Government has enacted policies aimed at attaining international competitiveness through
liIting oI the quantitative restrictions, reducing excise duties, and automatic Ioreign in-vestment
and Iood laws resulting in an environment that Iosters growth. 100 per cent ex-port oriented units
can be set up by government approval and use oI Ioreign brand names is now Ireely permitted.
FMCG SECTOR
Central & State Initiatives

Recently Government has announced a cut oI 4 per cent in excise duty to Iight with the
slowdown oI the Economy. This announcement has a positive impact on the industry.

But the beneIit Irom the 4 per cent reduction in excise duty is not likely to be uniIorm across
FMCG categories or players. The changes in excise duty do not impact cigarettes (ITC, GodIrey
Phillips), biscuits (Britannia Industries, ITC) or ready-to-eat Ioods, as these products are either
subject to speciIic duty or are exempt Irom excise. Even players with manuIacturing Iacilities
located mainly in tax-Iree zones will also not see material excise duty savings. Only large
FMCG-makers may be the key ones to bet and gain on excise cut.

Foreign Direct Investment (FDI)

Automatic investment approval (including Ioreign technology agreements within speciIied
norms), up to 100 per cent Ioreign equity or 100 per cent Ior NRI and Overseas Corporate Bodies
(OCBs) investment, is allowed Ior most oI the Iood processing sector except malted Iood,
alcoholic beverages and those reserved Ior small scale industries (SSI).

There is a continuous growth in net FDI InIlow. There is an increase oI about 150 per cent in Net
InIlow Ior Vegetable Oils & Vanaspati Ior the year 2008.

Policy Issues

Tax reforms:


The government has gradually removed the restrictions on imports oI consumer goods in the
country and also signiIicantly reduced custom duties. The domestic tax structure oI these
products, however, has not been rationalized to provide level playing Iield Ior competition. This
is adversely aIIecting the growth oI the FMCG industry and could have Iar reaching adverse
impact. The Iollowing taxation issues need urgent attention oI the government:

1) Extremely high incidence oI tax on certain product categories Some FMCG products such as
shampoos, processed Iood, soIt drinks and toiletries containing alcohol attract high rates oI
excise duty and sales tax. The total tax incidence in some cases is more than 60 per cent oI the
cost or more than 30 per cent oI MRP. Such high tax incidence hampers growth oI these product
categories besides encouraging manuIacture oI spurious products and smuggling. It is
recommended that the total excise incidence oI FMCG products should not exceed 16 per cent in
the case oI non Iood items and eight per cent in the case oI processed Ioods. Similarly, the
marginal rates oI sales tax, which is currently in the range oI 10 to 25 per cent, should not exceed
12 per cent.

2) Irrational domestic tax structure encouraging imports signiIicant reduction in custom duty
rates oI consumer goods has made imported product cheaper as compared to indigenously
manuIactured products, due to irrational domestic tax structure. For instance, goods
manuIactured in India suIIer Irom cascading eIIects oI taxes on inputs as additional cost
compared to imports.

The cascading eIIect oI sales tax and local levies on inputs used in domestic manuIacture should
be eliminated by providing either MODVAT credit or by introducing notional VAT covering
both central and state taxes on an urgent basis.

Moreover, MRP-based excise duty is levied on a large number oI FMCG products.
Countervailing duty on the same product when imported is charged on CIF value. The MRP
based assessable value Ior excise duty does not allow abatement Ior post manuIacturing costs
such as advertising and selling expenses whereas CIF value considered Ior the purpose oI import
duty does not include costs oI these elements incurred subsequently by importers. This
diIIerential basis creates unIair competition as tax incidence on domestic manuIacture could be
considerably higher in case oI those products which incur signiIicant marketing and distribution
cost. There is a need to bring parity in tax incidence between domestic manuIacture and imports
by including all such elements oI post manuIacturing costs while deciding the abatement
percentage oI MRP based duty.

3) Inverted Duty structure Ior selected inputs Duty on certain raw materials is higher or the same
as compared to Iinished products in which these materials are used. Such raw materials include
oils and chemicals like Soda ash, caustic soda and LAB. In addition to customs duty, raw
materials are also subject to SAD/sales tax and octroi and thereIore total tax incidence and cost
oI indigenous manuIacture goes up. The import duty on raw materials needs to be rationalized so
that it does not exceed 60 to 70 per cent oI the duty on Iinished goods.

4) Need Ior rationalization oI taxes on processed Ioods processed Iood industry, with its vertical
integration with the agricultural sector has signiIicant potential Ior employment generation and
economic growth. The existing tax structure and its high overall incidence, however, have been
hampering the growth oI the processed industry. The increase in excise duty in last year`s budget
Irom eight per cent to 16 per cent has adversely aIIected the growth oI processed Ioods industry.
It is recommended that marginal rate oI excise duty on processed Ioods should not be more than
eight per cent and the sales tax should be levied at Iour per cent.

5) Cascading eIIect oI Special Excise Duty The special excise duty introduced last year is not
"Convictable`` except in the case oI selected products. Most FMCG products covered by tariII
such as shampoos, ice creams and cosmetics are subject to SED. This tariII also contains very
wide deIinition oI the term "manuIacture`` which includes labeling, relabeling or conversion oI
large packs into small packs. The levy oI SED on such products thereIore leads to double
taxation when goods are labeled or converted into small packs aIter manuIacture. It is
recommended that SED should be made "Convictable``; alternatively the term "manuIacture``
needs modiIication, at least Ior the purpose oI SED by excluding labeling, relabeling or
conversion into small packs.

FDI Policy Automatic investment approval (including Ioreign technology agreements within
speciIied norms), up to 100 per cent Ioreign equity or 100 per cent Ior NRI and Overseas
Corporate Bodies (OCBs) investment, is allowed Ior most oI the Iood processing sector except
malted Iood, alcoholic beverages and those reserved Ior small scale industries (SSI). 24 per cent
Ioreign equity is permitted in the small scale sector. Temporary approvals Ior imports Ior test
marketing can also be obtained Irom the Director General oI Foreign Trade. The evolution oI a
more liberal FDI policy environment in India is clearly supported by the successIul operation oI
some oI the global majors like PepsiCo in India.

Typically, a consumer buys these goods at least once a month. The sector covers a wide gamut oI
products such as detergents, toilet soaps, toothpaste, shampoos, creams, powders, Iood products,
conIectioneries, beverages, and cigarettes. Typical characteristics oI FMCG products are: -

1. The products oIten cater to 3 very distinct but usually wanted Ior aspects - necessity, comIort,
luxury. They meet the demands oI the entire cross section oI population. Price and income
elasticity oI demand varies across products and consumers.
2. Individual items are oI small value (small SKU's) although all FMCG products put together
account Ior a signiIicant part oI the consumer's budget.
3. The consumer spends little time on the purchase decision. He seldom ever looks at the
technical speciIications. Brand loyalties or recommendations oI reliable retailer/ dealer drive
purchase decisions.
4. Limited inventory oI these products (many oI which are perishable) are kept by consumer and
preIers to purchase them Irequently, as and when required.
5. Brand switching is oIten induced by heavy advertisement, recommendation oI the retailer or
word oI mouth.






INDUSTRY ANLYSIS

O Products oIten cater to 3 distinct but usually wanted Ior aspects like necessity, comIort,
luxury. They meet the demands oI the entire cross section oI population. Price and
income elasticity oI demand varies across products and consumers.

O Individual items are oI small value (small SKU's) although all FMCG products put
together account Ior a signiIicant part oI the consumer's budget.

O The consumer spends little time on the purchase decision. He seldom ever looks at the
technical speciIications. Brand loyalties or recommendations oI reliable retailer/ dealer
drive purchase decisions.

O Limited inventory oI these products (many oI which are perishable) are kept by consumer
and preIers to purchase them Irequently, as and when required.

O Brand switching is oIten induced by heavy advertisement, recommendation oI the retailer
or word oI mouth.












INDUSTRY ENVIRONMENT

FMCG ENVIRONMENT
While the pace oI the FMCG industry may be quick, it`s a rewarding environment where
ambition can take you a long way.

Forget conventional thinking
To succeed in FMCG, it`s important to think Iast and outside the norms oI conventional thinking.
You should be constantly curious, up-to-speed with what`s going on in your proIession and with
a thirst Ior Iinding out more.

Be competitive
Your competitive edge will really come into play when working in FMCG. You`ll strive to
achieve the best results, but not at the expense oI teamwork. Your competitive drive should be
Iocused on pulling together to drive the business Iorward.

Adapt to change
As the FMCG market changes so quickly, you`ll have to be ready to adapt to change too, helping
your company transIorm with speed and precision.

Seek out responsibility
FMCG encourages you to speak out and to take ownership oI your ideas as well as your career.
All contributions are valid and important, no matter what level employee you are. Hit the ground
running and you`ll have the Ireedom to progress your career and to push your ideas.
Add to all this the exciting international setting that the majority oI FMCG companies work
within, and you'll begin to see just how much a career in FMCG has to oIIer.







REGULATORY AUTHORITY

FDA Organization

FDA is an agency within the Department of Health and Human Services.
The FDA's organization consists of the Office of the Commissioner and four directorates
overseeing the core functions of the agency: Medical Products and Tobacco, Foods, Global
Regulatory Operations and Policy, and Operations.

About the Center for Food Safety and Applied Nutrition

The Center Ior Food SaIety and Applied Nutrition, known as CFSAN, is one oI six product-
oriented centers, in addition to a nationwide Iield Iorce, that carry out the mission oI the Food
and Drug Administration (FDA). FDA is a scientiIic regulatory agency responsible Ior the saIety
oI the nation's domestically produced and imported Ioods, cosmetics, drugs, biologics, medical
devices, and radiological products.
The Center has over 800 employees, who range Irom secretaries and other support staII to highly
specialized proIessionals--such as chemists, microbiologists, toxicologists, Iood technologists,
pathologists, molecular biologists, pharmacologists, nutritionists, epidemiologists,
mathematicians, sanitarians, physicians and veterinarians.
The Center provides services to consumers, domestic and Ioreign industry and other outside
groups regarding Iield programs; agency administrative tasks; scientiIic analysis and support;
and policy, planning and handling oI critical issues related to Iood and cosmetics. Most Center
staII members work in the Center's headquarters in College Park, Maryland. The Center also
operates research Iacilities in Laurel, Maryland and in Dauphin Island, Alabama.









COMPETITIVE ANALYSIS

Porter's Five Forces Model:





Rivalry among Competing Firms:

In the Fast Moving Consumer Goods (FMCG) Industry, rivalry among competitors is very
Iierce. There are scarce customers because the industry is highly saturated and the competitors
try to snatch their share oI market. Market Players use all sorts oI tactics and activities Irom
intensive advertisement campaigns to promotional stuII and price wars etc. Hence the intensity
oI rivalry is very high.

The intensity oI rivalry is very high among the competitor oI FMCG Industry.

Potential Entry of New Competitors:

FMCG Industry does not have any measures which can control the entry oI new Iirms. The
resistance is very low and the structure oI the industry is so complex that new Iirms can easily
enter and also oIIer tough competition due to cost eIIectiveness. Hence potential entry oI new
Iirms is highly viable.

There is a threat Ior new entrants as well as Ior substitute.


Potential Development of Substitute Products:

There are complex and never ending consumer needs and no Iirm can satisIy all sorts oI needs
alone. There are plenty oI substitute goods available in the market that can be re-placed iI
consumers are not satisIied with one. The wide range oI choices and needs give a suIIicient room
Ior new product development that can replace existing goods. Every other day there is some
short oI new product, variants and design. This leads to higher consumer`s expectation.

Bargaining Power of Suppliers:

The bargaining power oI suppliers oI raw materials and intermediate goods is not very high.
There is ample number oI substitute suppliers available and the raw materials are also readily
available and most oI the raw materials are homogeneous. There is no monopoly situation in the
supplier side because the suppliers are also competing among themselves.

Even there is high bargaining power Ior Suppliers as well as Ior Buyers.

Bargaining Power of Consumers:

Bargaining power oI consumers is also very high. This is because in FMCG industry the
switching costs oI most oI the goods is very low and there is no threat oI buying one product
over other. Customers are never reluctant to buy or try new things oII the shelI.
























INDUSTRY PERFORMANCE






CURRENT SCENARIO

The growth potential Ior FMCG companies looks promising over the long-term horizon,
as the per-capita consumption oI almost all products in the country is amongst the lowest in the
world. As per the Consumer Survey by KSA- Techno Park, oI the total consumption
expenditure, almost 40 and 8 was accounted by groceries and personal care products
respectively. Rapid urbanization, increased literacy and rising per capita income are the key
growth drivers Ior the sector. Around 45 oI the population in India is below 20 years oI age
and the proportion oI the young population is expected to increase in the next Iive years.
Aspiration levels in this age group have been Iuelled by greater media exposure, unleashing a
latent demand with more money and a new mindset. In this backdrop, industry estimates suggest
that the industry could triple in value by 2015 (by some estimates, the industry could double in
size by 2010).
In our view, testing times Ior the FMCG sector are over and driving rural penetration
will be the key going Iorward. Due to inIrastructure constraints (this inIluences the cost-
eIIectiveness oI the supply chain); companies were unable to grow Iaster. Although companies
like HLL and ITC have dedicated initiatives targeted at the rural market, these are still at a
relatively nascent stage. The bottlenecks oI the conventional distribution system are likely to be
removed once organized retailing gains in scale. Currently, organized retailing accounts Ior just
3 oI total retail sales and is likely to touch 10 over the next 3-5 years. In our view, organized
retailing results in discounted prices, Iorced-buying by oIIering many choices and also opens up
new avenues Ior growth Ior the FMCG sector.



FUTURE OUTLOOK

Indian FMCG sector is Iourth largest sector in the economy. Over a period oI time with growth
in GDP, change in liIestyle and with established distribution system across the country this
sector is also growing with new market horizons and also seize sustained growth in coming
years. Indian FMCG market experienced 16 growth in FY 09-10 and expected to grow by
roughly 20 in FY 10-11.
In the Industry all the major players are growing consistently. The companies are having
almost negligible debt proportion in their balance-sheet. It makes very saIe and strong case Ior
anyone to invest. Among heavyweights HUL has strong presence in the Indian FMCG market so
one can hold the stock or buy at decline. ITC is still having major part oI revenues Irom cigarette
business. Its FMCG business is still in the investment phase.
Colgate is the market leader in the oral care segment with consistently holding signiIicant
market share in the segment. Dabur is diversiIying in to many segments with increasingly adding
presence in global market as well. Marico is also the leader in hair care market and aggressively
increasing its presence in overseas market organically and inorganically. P&G is increasing
penetration in Indian markets especially in health care and Ieminine hygiene. We believe these
stocks can outperIorm in bearish market scenario. Hence, one should add these stocks in his
portIolio, which can give good returns in long term.
The Rs. 85,000 crore FMCG market in India is making rapid strides irrespective oI the
downward economic trend. Increased income and standard oI living has been the spearhead in
FMCG sector. Consumer mindset has now changed to Value Ior Money Irom Money Irom
Value. Relaxed FDI conditions in India have inducted many global players in Indian market.
Companies like HUL, Dabur & ITC have outperIormed their counter peers in the Indian market
due to their consistent class perIormance and new quality oI innovations.
Fast moving consumer goods (FMCG) sector in India is one oI the largest sectors in the economy
with estimated total market size oI around Rs 110,000 crore in 2010. The FMCG market in India
is expected to reach Rs 1, 80,000 crore by 2015.

Market Share of IMCG roducts
Indian FMCG market is strongly supported by a chain oI strong MNC`s. This sector requires
high expenditure on branding. Most companies in the sector create customer value through
product diIIerentiation, package innovation, and diIIerential pricing and highlighting the
Iunctional aspect oI their products.
Nano marketing is one oI the greatest achievements made by the FMCG industry which has
aided the companies to manuIacture products in smaller package sizes, at lower price and reach
new users Irom the lower income group as well as to expand market share Ior value added
products in urban area. The trend was introduced by Hindustan Lever, a subsidiary oI Unilever in
mid 1990s when it started packing products in small sachets. Today, nearly all the products like
oil, shampoo, detergents etc are available in sachet Iorm in the market.

-ew Market for IMCG

India has a high population oI approx 350 million Irom middle class strata. This mass has a
potential to create huge demand. With economy expected to grow at 8 10 rate per annum
the standard oI living and the disposable income oI the individuals will increase. Changing
liIestyle will put more importance on personal care products .The demands will eventually be
directed to the FMCG sector Ior various FMCG products.
The rural class which was unexplored until recently is a great scope. With communication and
awareness penetrating the rural arena there is a huge expectation Ior change in the liIestyle and
the necessity oI the products in the rural areas. This would bring more market Ior the FMCG
industry




Checkpoints in FMCG Industry
Tapping customer necessity with ease accompanied with the use oI technology is the key to
FMCG industry. However this sector is boggled due to high production cost. The industry Iaces
a lot oI pressure due to any rise in InIlation level. InIlation rate in India as on May, 2011 was
8.72 .Higher inIlation rate can certainly erode the disposable income even in a growing
economy. FMCG market has always been against any hike in excise duty levied in consumer
goods and services. In Union budget 2011, the base rate on excise duty was increased Irom 4
to 5 . An increase in excise duty not only aIIects the production and distribution cost but also
tampers the demand in FMCG sector.

FMCG in International arena
The international economy has led to a rapid pace in demand Ior FMCG products. The major`s
top line FMCG products oI global market are growing day by day. The consumer goods like
soap, shampoo, skin cream, Iace wash, Make Up items, Lipstick, nail paint and cosmetics are
like to bring up a huge market Ior FMCG

Bottled water major Bisleri International on June 8, 2011 said it is looking at entering Middle
East countries as part oI its strategy to expand its overseas presence. As part oI the plan, the
company said it will consider setting up more manuIacturing Iacilities outside India.

Vast range oI consumable goods oIIered by the FMCG industry involves a huge amount oI
money, while the contest among FMCG manuIacturers is turning out to be a lot Iiercer than ever
beIore. We are witnessing people investing a lot oI money into the FMCG industry, especially in
United States, where the FMCG industry is by Iar the largest sector, and is estimated to double
Ior every upcoming year. In New Zealand to add with, the FMCG industry has reported to
account Ior 6 oI Gross Domestic Product, what we call as GDP.

Less inclination and time to cook at home implies eating out more oIten, a trend that is most
prevalent in the USA, where meals eaten outside account Ior almost halI oI the Iood budget,
nearly double the proportion spent in 1970.Car culture and distances traveled has also spawned
the hugely undesirable practice oI eating and drinking in cars. In the USA, the car is Iast become
an integral part oI places to eat and drink. According to a University oI Michigan research paper,
almost 10 oI all meals in America are now eaten in a car, but Iigures as high as 20 have also
been quoted. Eating or drinking in a moving vehicle is not very smart, but it is a phenomenon
that is occurring with growing Irequency. What will also likely grow is the use oI the stationary
car as a place to eat. Such growing demand presents packaging opportunities Ior well designed,
easy-to-open and dispose oI packaging appropriate Ior the stationary vehicle environment.
Innovative packaging designs that allow a one-handed meal that Iits easily into a car cup holder
to be consumed without creating a mess provides immense ease the customer. These trends are
all part oI an overall picture oI increasingly hectic liIestyles that has created a demand Ior new
Iood and beverage products packaged in a way that oIIers user convenience. To meet these
challenges, many lightweight, single-serve containers that are easily consumed on-the-go are
being developed. Soup is a Iavorite with packaging designed Ior on-the-go portability with an
easy-open, microwaveable, package that provides a quick meal; a selI-heating smart packaging
Ior soup is commercial in the USA. Other examples include grab n go squeezable yogurt in a
tube, and Iruit to go in single-serve easy peel clear plastic bowls.
On the whole the FMCG industry is gearing up Ior a rapid boom. With quick adaptation to
changing liIestyle the demand market will certainly widen and create new avenues in Iuture.






FUTURE TRENDS

Fast moving consumer goods will become an Rs 400,000-crore industry by 2020. A Booz &
Company study Iinds out the trends that will shape its Iuture
Consider this. The anti-ageing skincare category grew Iive times between 2007 and 2008. It`s
today the Iastest-growing segment in the skincare market. Olay, Procter & Gamble`s premium
anti-ageing skincare brand, captured 20 per cent oI the market within a year oI its launch in 2007
and today dominates it with 37 per cent share. Who could have thought oI ready acceptance Ior
anti-ageing creams and lotions some ten years ago? For that matter, who could have thought
Indian consumers would take oral hygiene so seriously? Mouth-rinsing seems to be picking up as
a habit mouthwash penetration is growing at 35 per cent a year. More so, who could have
thought rural consumers would Iall Ior shampoos? Rural penetration oI shampoos increased to
46 per cent last year, way up Irom 16 per cent in 2001.
Consumption patterns have evolved rapidly in the last Iive to ten years. The consumer is trading
up to experience the new or what he hasn`t. He`s looking Ior products with better Iunctionality,
quality, value, and so on. What he needs` is Iast getting replaced with what he wants`? A new
report by Booz & Company Ior the ConIederation oI Indian Industry (CII), called FMCG
Roadmap to 2020: The Game Changers, spells out the key growth drivers Ior the Indian Iast
moving consumer goods (FMCG) industry in the past ten years and identiIies the big trends and
Iactors that will impact its Iuture.
The report estimates the FMCG sector witnessed robust year-on-year growth oI approximately
11 per cent in the last decade, almost tripling in size Irom Rs 47,000 crore in 2000-01 to Rs
130,000 crore now (it accounts Ior 2.2 per cent oI the country`s GDP). Growth was even Iaster in
the past Iive years almost 17 per cent annually since 2005. It identiIies robust GDP growth,
opening up oI rural markets, increased income in rural areas, growing urbanization along with
evolving consumer liIestyles and buying behaviors as the key drivers oI this growth.
The report Iurther estimates that the FMCG industry will grow at least 12 per cent annually to
become Rs 400,000 crore in size by 2020. Additionally, iI some oI the Iactors play out Iavorably,
say, GDP grows a little Iaster, the government removes bottlenecks such as the goods and
services tax (GST), inIrastructure investments pick up, there is more eIIicient spending on
government subsidy and so on, growth can be signiIicantly higher. It could be as high as 17 per
cent, leading to an overall industry size oI Rs 620,000 crore by 2020.
Says Booz & Company Partner Abhishek Malhotra: The Indian GDP per capita is low but many
Indian consumer segments which constitute rather large absolute numbers are either close to or
have already reached the tipping point oI rapid growth. The sector is poised Ior rapid growth
over the next 10 years, and by 2020, the industry is expected to be larger, more responsible and
more tuned to its customers.
Based on research on industry evolutions in other markets and discussions with industry experts
and practitioners, Booz & Company has identiIied some important trends that will change the
Iace oI the industry over the next ten years. Some key ones related to evolution oI consumer
segments are as Iollows:
Accelerating premiumisation`

The rising income oI Indian consumers has accelerated the trend towards premiumisation` or
up-trading. The trend can be observed prominently in the top two income groups the rich with
annual income exceeding Rs 10 lakh, and the upper middle class with annual income ranging
between Rs 5 lakh and Rs 10 lakh. The reports says, the rich are willing to spend on premium
products Ior their emotional value` and exclusive Ieel`, and their behaviour is close to
consumers in developed economies. They are well-inIormed about various product options, and
want to buy products which suit their style. The upper middle class wants to emulate the rich and
up-trade towards higher-priced products which oIIer greater Iunctional beneIits and experience
compared to products Ior mass consumption.
While these two income groups account Ior only 3 per cent oI the population, the report
estimates that by 2020 their numbers will double to 7 per cent oI the total population. The rich
will grow to approximately 30 million in 2020, which is more than the total population oI
Sweden, Norway and Finland put together. Similarly, the upper middle segment will be a
population oI about 70 million in 2020, which is more than the population oI the UK.
Over the next ten years, these groups will constitute large enough numbers to merit a dedicated
strategy by FMCG companies. We have seen companies Iocused on selling primarily to the mid
segments. OIten, there is no clear segmentation being oIIered. Players will do well to clearly
separate their oIIerings Ior the upper and mid segments, says Malhotra and adds that the two
should be treated as separate businesses with a dedicated team and strategy Ior each.




Evolving categories

Categories are evolving at a brisk pace in the market Ior the middle and lower-income segments.
With their rising economic status, these consumers are shiIting Irom need- to want-based
products. For instance, consumers have moved Irom toothpowders to toothpastes and are now
also demanding mouthwash within the same category.
Also, the report notes, consumers have started demanding customized products, speciIically
tailored to their individual tastes and needs. The complexities within the categories are
increasing signiIicantly. Earlier a shampoo used to have two variants normal and anti-
dandruII. Now, you have anti-dandruII shampoos Ior short hair, oily hair, curly hair, and so on.
Every thing is getting customized, says Malhotra.
The trend towards mass-customization oI products will intensiIy with FMCG players proIiling
the buyer by age, region, personal attributes, ethnic background and proIessional choices. Micro-
segmentation will ampliIy the need Ior highly customized market research so as to capture the
speciIic needs oI the consumer segment targeted, beIore the actual product design phase gets
underway.
The beauty products market will grow by 20 per cent per annum as result oI the changing socio-
economic status oI consumers, especially women. Middle-class women are now more conscious
oI their appearance and are willing to spend more on enhancing it. Products such as colour
cosmetics (growing by 46 per cent) and sun care products (growing at 13 per cent) have latched
on to this trend rapidly.
Value at the bottom

Booz deIines the bottom-oI-the-pyramid or BoP consumers as those who earn less than Rs 2 lakh
per annum per household. The group constitutes about 900 to 950 million people. While the
middle class segment is largely urban, already well-served and competitive, the BoP markets are
largely rural, poorly-served and uncompetitive. A lot oI the basic needs oI BoP consumers are
yet unmet: Financial services, mobile phones & communication, housing, water, electricity and
basic healthcare. And so there is untapped opportunity.
Malhotra says, The aspiration was always there, and increasingly money is coming in. The
segment is being targeted primarily with lower-priced products, say, an Rs 2 Parle-G. But
increasingly it will need products that deliver more value say, an Rs 5 product that serves as
dinner and also delivers nutrition (vitamins, proteins etc). Companies like PepsiCo and Tata are
working on such products.
The report says the rural BoP population is estimated to be about 78 per cent oI the total BoP
population. The segment is becoming an important source oI consumption by moving beyond the
survival` mode. As a result oI rising incomes, the growth oI FMCG market in rural areas at 18
per cent a year has exceeded that oI the urban markets at 12 per cent. While the rural market
comprises only 34 per cent oI the total FMCG market, given the current growth rates, its
contribution is expected to increase to 45-50 per cent by 2020. It will require tailored products at
highly aIIordable prices with the potential oI large volume supplies.
Products such as Iruit juices and sanitary pads which had no demand in the rural markets earlier
have suddenly started establishing their presence. While most FMCG players have succeeded in
establishing suIIicient access to their products in rural areas, the next wave oI growth is expected
to come Irom increasing category penetration, development oI customized products and up-
trading rural consumers towards higher-priced and better products.
Another big trend that has been the highlight oI the study is the emerging idea oI many India`s.
The report says that despite the complexities oI language, culture and distances, the Indian
market has largely been seen as a homogenous market. There`s one product Ior the entire country
the same Maggi noodles Ior Karnataka and West Bengal, or the same Diet Coke Ior Punjab
and Assam. Besides, these products have the same advertisements that run across the country.
Increasingly, FMCG players are realizing that India is not a homogenous market and consumer
preIerences vary signiIicantly. By 2020, Maharashtra`s GDP will exceed that oI Greece,
Belgium, and Switzerland, and Uttar Pradesh`s economic size will exceed that oI Singapore and
Denmark. So, having a dedicated Iirm Ior Maharashtra or Gujarat can prove to be a realistic and
proIitable proposition.
We will see companies coming up with regional products. Hindustan Unilever has teas which
are very diIIerent in one state versus the other. Pepsi has a diIIerent product in Andhra Pradesh
which is not sold anywhere else. DiIIerentiation used to happen at the country level; now you
will see at the state level, says Malhotra.
FMCG players need to grow regional` in their thinking and move towards an increasingly
decentralized operating model in India. As consumer preIerences diIIer across regions and states,
companies may Iollow a regional strategy in terms oI product ingredients, positioning, marketing
campaign, and channels. Overall, decentralization or regionalization will become an increasingly
important theme Ior FMCG players.
SOURCE: BUSINESS STANDARD


COCA COLA

COMPANY HISTORY
The Coca-Cola Company re-entered India through its wholly owned subsidiary, Coca-Cola India
Private Limited and re-launched Coca-Cola in 1993 aIter the opening up oI the Indian economy
to Ioreign investments in 1991. Since then its operations have grown rapidly through a model
that supports bottling operations, both company owned as well as locally owned and includes
over 7,000 Indian distributors and more than 1.3 million retailers. Today, our brands are the
leading brands in most beverage segments. The Coca-Cola Company`s brands in India include
Coca-Cola, Fanta Orange, Fanta Apple, Limca, Sprite, Thums Up, Burn, Kinley, Maaza, Maaza
Milky Delite, Minute Maid Pulpy Orange, Minute Maid Nimbu Fresh and Nestea Iced tea, the
Georgia Gold range oI teas and coIIees and Vitingo (a beverage IortiIied with micro-nutrients).
In India, the Coca-Cola system comprises oI a wholly owned subsidiary oI The Coca-Cola
Company namely Coca-Cola India Pvt Ltd which manuIactures and sells concentrate and
beverage bases and powdered beverage mixes, a Company-owned bottling entity, namely,
Hindustan Coca-Cola Beverages Pvt Ltd; thirteen authorized bottling partners oI The Coca-Cola
Company, who are authorized to prepare, package, sell and distribute beverages under certain
speciIied trademarks oI The Coca-Cola Company; and an extensive distribution system
comprising oI our customers, distributors and retailers. Coca-Cola India Private Limited sells
concentrate and beverage bases to authorized bottlers who are authorized to use these to produce
our portIolio oI beverages. These authorized bottlers independently develop local markets and
distribute beverages to grocers, small retailers, supermarkets, restaurants and numerous other
businesses. In turn, these customers make our beverages available to consumers across India.
The Coca-Cola Company has invested nearly USD 1.1 billion in its operations in India since its
re-entry back into India in 1992. The Coca-Cola system in India directly employs over 25,000
people including those on contract. The system has created indirect employment Ior more than 1,
50,000 people in related industries through its vast procurement, supply and distribution system.
We strive to ensure that our work environment is saIe and inclusive and that there are plentiIul
opportunities Ior our people in India and across the world.
The beverage industry is a major driver oI economic growth. A National Council oI Applied
Economic Research (NCAER) study on the carbonated soIt-drink industry indicates that this
industry has an output multiplier eIIect oI 2.1. This means that iI one unit oI output oI beverage
is increased, the direct and indirect eIIect on the economy will be twice oI that. In terms oI
employment, the NCAER study notes that an extra production oI 1000 cases generates an extra
employment oI 410 man days.
As a Company, our products are an integral part oI the micro economy particularly in small
towns and villages, contributing to creation oI jobs and growth in GDP. Coca-Cola in India is
amongst the largest domestic buyers oI certain agricultural products.
As an industry which has strong backward and Iorward linkages, our operations catalysis growth
in demand Ior products like glass, plastic, reIrigeration, transportation, and Industrial and
agricultural products. Our operations also lead to incremental growth Ior enterprises engaged in
post production activities like merchandising, marketing and sales. In addition, we share best
practices and technological advancements with our suppliers, vendors and allied industries which
oIten lead to improvement in the overall standards oI quality across industries.
The Coca-Cola Company has always placed high value on good citizenship. Our basic
proposition entails that our Company`s business should reIresh the market; enrich the workplace;
protect and preserve the environment; and strengthen the community. We leverage our unique
strengths to actively support and respond to local needs -- be it the need Ior education, health,
water or nutrition. We have used our distribution network Ior disaster relieI, our marketing
prowess to raise awareness on issues such as PET recycling, and our presence in communities to
improve access to education and potable water. The Coca-Cola India Foundation is now taking
Iorward in the community at large, projects and programs oI social relevance to carry Iorward
the message oI inclusive growth and development.

COCA COLA SYSTEM WORLD WIDE AND IN INDIA

At the core oI our business in India, as in the rest oI the world is our production and distribution
network, which we call the Coca-Cola system. Globally, the Coca-Cola system includes our
Company and more than 300 bottling partners. The Coca-Cola Company manuIactures and sells
concentrate and beverage bases. Our authorized bottlers combine our concentrate or beverage
bases as the case may be with sweetener (depending on the product), water or carbonated water
to produce Iinished beverages. These Iinished beverages are packaged in authorized containers
bearing our trademarks -- such as cans, reIillable glass bottles, non-reIillable PET bottles and
tetra packs -- and are then sold to wholesalers or retailers. In India, additionally, the Company
also sells certain powdered beverage mixes such as Vitingo and Fanta Fun Taste.
Our beverages reach our ultimate consumers through our customers: the grocers, small retailers,
hypermarkets, restaurants, convenience stores and millions oI other businesses that are the Iinal
points oI distribution in the Coca-Cola system. What truly deIines the Coca-Cola system, and
indeed what makes it unique among businesses, is our ability to create value Ior our customers
and consumers.
In India, the Coca-Cola system comprises oI a wholly owned subsidiary oI The Coca-Cola
Company namely Coca-Cola India Pvt Ltd which manuIactures and sells concentrate and
beverage bases and powdered beverage mixes, a Company-owned bottling entity, namely,
Hindustan Coca-Cola Beverages Pvt Ltd; thirteen authorized bottling partners oI The Coca-Cola
Company, who are authorized to prepare, package, sell and distribute beverages under certain
speciIied trademarks oI The Coca-Cola Company; and an extensive distribution system
comprising oI our customers, distributors and retailers. Coca-Cola India Private Limited sells
concentrate and beverage bases to authorized bottlers who are authorized to use these to produce
our portIolio oI beverages. These authorized bottlers independently develop local markets and
distribute beverages to grocers, small retailers, supermarkets, restaurants and numerous other
businesses. In turn, these customers make our beverages available to consumers across India.

ENVIRONMENTPOLICY

Coca-Cola has a commitment to always comprehend, prevent and reduce any negative impacts
on environment due to its production process, to continuously provide high quality services and
products to its customers and consumers, and to create a saIe working environment.
We believe that all Coca-Cola employees and all its partners have important roles in
implementing the company`s environment policy. Thus, we always encourage our employees to
actively and Iully involve in this environment protection eIIort.
We will:

do our best to achieve environment protection targets as required by The Coca-Cola Company
and government policy and regulation;


always consider environment in developing our Business Plan to ensure that environment
management is an integral part oI the Company`s operation;

implement and maintain standardized environment management system, and continuously
enhance and monitor the system to make it in line with the Company`s operation;

enIorce and equip our employees to be able to identiIy, understand and act in every eIIort oI
preventing and reducing any negative impacts, which potentially endanger the environment;

develop and implement methods that increase eIIicient use oI resources, including energy,
chemical, water, packaging and other raw materials;

prevent, reduce, reuse and recycle the waste oI our production process and ensure a saIe waste
water management; and


request the suppliers and business partners to comply with our environment management
standard

MISSION, VISION AND VALUES
The world is changing all around us. To continue to thrive as a business over the next ten years
and beyond, we must look ahead, understand the trends and Iorces that will shape our business in
the Iuture and move swiItly to prepare Ior what's to come. We must get ready Ior tomorrow
today. That's what our 2020 Vision is all about. It creates a long-term destination Ior our
business and provides us with a "Road map" Ior winning together with our bottling partners.

Mission
Our Road map 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.
O To reIresh the world...
O To inspire moments oI optimism and happiness...
O To create value and make a diIIerence

Vision
Our vision serves as the Iramework Ior our Road map and guides every aspect oI our business by
describing what we need to accomplish in order to continue achieving sustainable, quality
growth.
O People: Be a great place to work where people are inspired to be the best they can be
O Portfolio: Bring to the world a portIolio oI quality beverage brands that anticipate and
satisIy people`s desires and needs
O Partners: Nurture a winning network oI customers and suppliers, together we create
mutual, enduring value
O Planet: Be a responsible citizen that makes a diIIerence by helping build and support
sustainable communities
O Profit: Maximize long-term return to share owners while being mindIul oI our overall
responsibilities
O Productivity: Be a highly eIIective, lean and Iast-moving organization

Winning Culture
Winning Culture deIines the attitudes and behaviors that will be required oI us to make our 2020
Vision a reality.






Live Our Values

The values serve as a compass Ior our actions and describe how we behave in the world.
O Leadership: The courage to shape a better Iuture
O Collaboration: Leverage collective genius
O Integrity: Be real
O Accountability: II it is to be, it`s up to me
O Passion: Committed in heart and mind
O Diversity: As inclusive as our brands
O "uality: What we do, we do well

Focus on the Market
O Focus on needs oI our consumers, customers and Iranchise partners
O Get out into the market and listen, observe and learn
O Possess a world view
O Focus on execution in the marketplace every day
O Be insatiably curious

Work Smart
O Act with urgency
O Remain responsive to change
O Have the courage to change course when needed
O Remain constructively discontent
O Work eIIiciently

Act Like Owners
O Be accountable Ior our actions and in actions
O Steward system assets and Iocus on building value
O Reward our people Ior taking risks and Iinding better ways to solve problems
O Learn Irom our outcomes -- what worked and what didn`t

Be the Brand
O Inspire creativity, passion, optimism and Iun





PRODUCT LIST
Coca-Cola
Diet Coke
Thums Up
Sprite
Fanta
Limca
Maaza
Maaza Milky Delite
Minute Maid Pulpy Orange
Minute Maid Nimbu Fresh
Burn
Kinley Water
Kinley Soda
Nestea
Schweppes
GEORGIA Gold

PRODUCT SAFETY AND "UALITY
The global nature oI our business requires that the Coca-Cola system has the highest standards
and processes Ior ensuring consistent product saIety and quality Irom our concentrate
production to our bottling and product delivery. We measure key product and package quality
attributes to ensure our beverage products in the marketplace meet Company requirements and
consumer expectations. Consistency and reliability are critical to our product quality and to
meeting global regulatory requirements and Company standards.


SWOT ANALYSIS:-
Strengtbs:

Single Established Company.

The biggest strength oI Coca-Cola is that unlike other beverages, it has established itselI as a
single large company CCBPL with 10 plants in all major cities running directly under
supervision oI Coca-Cola international. So unlike to bottler system there is no conIlict oI
decisions and policy. One policy adopted is Ior al plants throughout the country. Similarly one
decision taken (e.g. price cutsRs.2/-) is implemented eIIectively and immediately in all plants
all over India without argument. So you will Iind same prices, same quality, same schemes in all
cities.

Working Structure.

Coca-Cola`s organizational structure is oI International standards, hence there are clear cut and
well deIined policies, procedures rules and regulations that have to be Iollowed under all
circumstances, hence working style is highly proIessional, and discipline is maintained.

Human Resource.

The biggest strength oI Coca-Cola is its Intellectual brain power oI highly proIessional qualiIied
and dedicated employees who put in all their eIIorts to satisIy their customers by providing the
ultimate best oI Coke.

Proper Time Delivery.

The Iixed time oI delivery oI Coke to retailers, shopkeeper`s etc punctuality is maintained which
gives Coke an edge over all its competitors

Brand Name, Symbol, and Bottle Shape.

These all are Coke`s strengths which give it an edge over its competitors. Coca-Cola bottle
shape is so unique and stylish than even iI the name is rubbed oII people will still easily identiIy
that its Coca-Cola bottle. Same is the case with its symbol and name which cannot be imitated
and are so well known. The most known and spoken word in world aIter OK is COKE.

Superior Product "uality:

Coca-Cola Company management never compromise on quality even iI they have to spend a
little extra in production. Bottle caps are one example. Examine and you will Iind that Coca-
Cola brand caps (especially on liter bottles) and disposable bottles are superior in quality than
those oI others beverages). Quality in taste as well as bottle and caps and giIts which are oIIered
doesn`t vary Irom city to city but is same throughout the company.

Diet Coke:

Coca-Cola`s strength is that they are market leaders who successIully launched .Diet Coke to
cater the needs oI overweight and health conscious people and have been popular to a certain
extent, their closest competitor also Iollowed and launched their own diet beverages brand, but it
never proved to be up to the mark and Iailed.

SSS:

Limitation of resources:

This is the biggest weakness oI Coke .They heavily depend on Iinance Irom the CCI (Coca-Cola
International) based in USA. Consequently they are not able to supply as many Ireezers, coolers
or Iinance sign and electronic bill boards as shopkeepers demand as does Pepsi which is the
major reason why they lag behind.


Non -Availability:-

Coke is not available in small towns and in rural areas, reason being that the distribution
channel oI Coke is not large, is not extended owing to limitations oI resources and lack oI proper
inIrastructure.

Formality of Rules and Regulations:

The organizational structure oI Coke is too Iormal ( being supervised by CCI),so the lengthy
processes oI decision making and implementation through hierarchy system (i-e Iollow order
Irom CEO to downwards) have to be Iollowed and employees in India even (GM) is not allowed
to take decisions to change even smallest oI things like (Instruction on bottle) on their own .So
many brilliant ideas to improve and boost sales remain locked up in employees brain as they are
not allowed to work at their own Iree will.

UPPURTUTS:

Coke currently holds about 36 market share in indai Pepsi leads by holding 54 oI market
share 10 to other small beverages e.g. RC- cola, Maka-Cola, Pak-Cola etc.So there is vast
opportunity Ior Coke to capture 70 market share.i.e. 54 of Pepsi and 10 oI others.
Coca-Cola with International standards can increase its market share many Iolds with little
eIIorts Increasing distributing channels and inIrastructure to ensure availability in small towns
and areas.Line extension like Fanta, Coke, and Sprite in diIIerent Ilavors. Launch a new product
it can do it successIully as it`s is well established, Company and has already positioned itselI in
customers mind (as those who provide the ultimate in taste and quality) so they are bound to try
their new product as well.




THRTS:

Major Threat:

Pepsi and its products as it is market leader so time to pose a serious threat to Coke.
Potential Threat:

New Entrants:
New entrants like Maka-Cola, Pak Cola that can exploit anti Jewish and anti war sentiments,
provoke nationalism sell at low price and thus can be a source oI threat Ior Coke in Iuture once
they Iully launch their product in Indiai market so Coke management has to look out Ior them
over time.
Nestle Products:
Like juices, Milo cold coIIee ,drinks, etc as well as Shezan products e.g. squashes, tetra pack
juices are also sort oI threat but not the direct threat Ior Coke because they provoke health
consciousness and physical Iitness .Although Coke has converted their attack on health issues by
oIIering Diet Coke yet the threat isn`t over .
However Coca-Cola can eIIectively counter their threat at any time by launching their own
juice.

Taxes (Govt.Laws and Policies):
The Coca-Cola management is not happy with the Govt. tax laws and policies. Being a
multinational with whole plants in 10 cities it is under heavy tax .Imposition so much so that on
single bottle revenue. It has to pay as much as Rs2.97/- as tax to the government. With the
consequent result that Coca-Cola is the Iirst beverage and 2nd highest tax paying company in
India. It pays 33 on its total revenues.

PORTERS FIVE FORCE MODEL FOR COCA COLA
Porters Iive Iorces model is a Iramework Ior the industry analysis and development oI business
strategy. Three oI porters Iive Iorces reIers to rivalry Irom external/outside sources such as micro
environment, macro environment and rest are internal threats. It draws ahead industrial
organization economics to develop Iive Iorces that conclude the competitive intensity and
consequently attractiveness oI a market place or industry. Attractiveness in this Iramework reIers
to the generally overall industry proIitability. An unattractiveness in industry is one in which the
mixture oI these Iive Iorces proceed to constrain behind overall proIitability. An extremely
unattractive industry would be one moving toward pure competition in which existing proIits Ior
all companies are moving down to zero.










THE THREAT OF THE ENTRY OF NEW COMPETITORS
Advertising and Marketing
SoIt drink industry needs huge amount oI money to spend on advertisement and marketing. In
2000, Pepsi, Coke and their bottler`s invested approximately $2.58 billion. In 2000, the average
advertisement expenditure per point oI market share was $8.3 million. This makes it
exceptionally hard Ior a new competitor to struggle with the current market and expand
visibility.
Customer Loyalty/ Brand Image
Pepsi and Coke have been investing huge amount on advertisement and marketing throughout
their existence. This has resulted in higher brand equity and strong loyal customers` base all over
the globe. ThereIore, it becomes nearly unIeasible Ior a new comer to counterpart this level in
soIt drink industry.
Retail Distribution
This industry provides signiIicant margins to retailers. For example, some retailers get 15-20
while others enjoy 20-30 margins. These margins are reasonably enough Ior retailers to
entertain the existing players. This makes it very diIIicult Ior new players to persuade retailers to
carry their new products or substitute products Ior Coke and Pepsi.
Fear of Retaliation
It is very diIIicult to enter into a market place where already well-established players are present
such as Coke and Pepsi in this industry. So these players will not allow any new entrants to
easily enter the market. They will give tough time to new entrants which could result into price
wars, new product line, etc in order to inIluences the new comers.
Bottling Network
In this industry manuIacturers have Iranchise contracts with their presented bottler`s that have
privileges in a deIinite geographic area in eternity such as both Pepsi and Coke have contracts
with their presented bottler`s. These contracts Iorbid bottler`s Irom taking on new competing
brands Ior similar products. Latest consolidation between the bottler`s and the backward
integration with Coke buying considerable numbers oI bottling Iirms, it makes very diIIicult Ior
new player to contract with bottler`s agreeable to distribute their brands. The alternative is that
new entrances build their bottling plants, which will need intense capital and exertion. Because
in 2000 new bottling plant needs capital oI $80 million.
THE INTENSITY OF COMPETITIVE RIVALRY
The industry is almost dominated by the Coke and Pepsi. This industry is well known as a
Duopoly with Coke and Pepsi as the companies competing. These both players have the majority
oI the market share and rest oI the players have very low market share. Otherwise; competition is
comparatively low to result any turmoil oI industry structure. Coke and Pepsi primarily are
competing on advertising and diIIerentiation rather than on pricing. This resulted in higher
proIits and disallowed a decline in proIits. Pricing war is nevertheless experienced in their global
expansion strategies.
Composition of Competitors
Except the Coke and Pepsi other competitors are oI unequal size especially in local
markets. Coke and Pepsi both players have the majority oI the market share and rest oI the
players have very low market share.
Scope of Competition
Scope oI competition in this industry is generally global; Coke and Pepsi are approximately
presents in 200 countries.
Market Growth Rate
The soIt drinks business will not see growth in near Iuture, with the smoothie and bottled water
sectors mainly hit by a decline in 2008, and across all sectors volume declined by 1.1 percent.
Fixed Storage Cost
This industry needs huge manuIacturing plants and contracts with bottling network companies.
These contracts make sure that bottler`s must have standard manuIacturing plant; these plants
need huge capital and exertion.
Degree of differentiation
Marketing and Product diIIerentiation have become more signiIicant. Coke and Pepsi mainly are
competing on advertising and diIIerentiation rather than on pricing. Coke has diverse
advertisement campaigns according to conditions. Coca-Cola is recognized as the best-known
brand name in the globe. More prominently, its consumers would not do without it, and have
established a loyalty.

Strategic Stake
Coke`s core operation is the manuIacturing and distribution both Ior itselI and beneath Iranchise,
oI non-alcoholic beverages and related products. Because oI the strategic stake the main brand oI
the Coke has been around Ior a lot oI years.
THE THREAT OF SUBSTITUTE PRODUCTS
This industry is enriched with enormous statistics oI substitutes such as: water, tea, beer, juices,
coIIee, etc presented to the end-consumers. But all the suppliers oI these substitutes need
massive advertising, brand equity, brand loyalty and making sure that their brands are
eIIortlessly accessible to the consumers. Most oI the substitutes cannot counterpart the existing
players` oIIers or diversiIy business by oIIering new product lines oI the substitute products to
saIeguard themselves Irom rivalry.
Aggressiveness of substitute products in promotion
SoIt drink industry companies spend huge amount oI money on advertisement and marketing to
diIIerentiate their products Irom others and also create brand equity, base oI loyal customers and
increase visibility.
Switching Cost
Switching cost oI the substitute products is very low so consumers can easily shiIt towards the
substitute products.
Perceived price/ value
Perceived price/value in this industry is very low because all products are comparatively same
and are only diIIerentiated by promotional activities.


THE BARGAINING POWER OF CUSTOMERS (BUYERS)
The most important buyers Ior the SoIt Drink industry are Iast Iood Iountain, vending,
convenience stores, Iood stores, restaurants, college canteens and others in the categorize oI
market share. The proIitability/revenue in each oI these segments obviously demonstrates the
bargaining power oI the buyers to pay diIIerent prices.

Fast Food Fountain
Pepsi and Coke mainly regard this segment as Paid Sampling due to small margins. This
division oI buyer`s is the slightest proIitable because oI the high bargaining power oI the buyers.
The bargaining power oI the buyers is high because they purchase in bulks.
Vending Machines
Vending Machines provide products to the customers in a straight line with enormously no
power with the buyer.
Convenience Stores
This segment is tremendously Iragmented and has no bargaining power due to which it has to
pay superior prices.
Food Stores
This segment oI buyers` is Iairly merged with Iew local supermarkets and numerous chain stores.
Since this segment presents best shelI space it demands lower prices.
THE BARGAINING POWER OF SUPPLIERS
Most oI the raw materials desirable to manuIacture soIt drink are basic merchandise such as
Ilavor, color, caIIeine, sugar, and packaging etc. The suppliers oI these commodities have no
bargaining power over the pricing due to which the suppliers in soIt drink industry are relatively
weak.

Number of important Suppliers
Raw materials Ior soIt drink are basic commodities which are easily available to every producer
and have low cost which makes no diIIerence Ior any supplier.
Switching cost
All the raw material ingredients are basic merchandize and easily accessible to manuIacturers.
Switching cost to the suppliers is very low; manuIactures can easily shiIt towards the other
suppliers.
Availability of substitutes
SoIt drink products have standard raw material ingredients which could not have any alternatives
or used instead oI the actual ingredients.
Threat of forward integration
Threat oI Iorward integration is very low in this industry because manuIacturers oI the soIt
drinks need huge manuIacturing plants, bottling network, strong distribution network and best
shelI space. Suppliers could not aIIord such kind oI well-established network.
Importance of buyer industry to suppliers
SoIt drink industry is very important to the suppliers because buyers purchase larger amount oI
raw material. This encourages suppliers to remain in good contact with buyers.
Suppliers` product an important input to the buyer`s
Product oI the suppliers is very important input Ior the manuIacturers in this industry because
these products do not have any substitute.







The Iive Iorces may be explained as under:
1. Rivalry among existing competitors:
The industry is described by high level oI competition, especially between the market giants
Coca Cola and Pepsi. However Amul and Parle which also have an important share in the Indian
market throws huge competition to both the market leaders.

2. Threat of New Entrants:
The market is highly threatened by the entry oI New Entrants which may kill and capture the
existing market scenario. For e.g. Dabur in association with Del Monte Juices entered the Indian
market in the juice segment. It thereby Iorces a certain threat to the market share oI Coca Cola
products.
3. Threat of substitute products:
The substitute products to a certain range oI product or services also impose a threat to the
current market scenario. For eg. A shiIt oI customer Irom carbonated drinks to juices, or say
tea/coIIee may result in a huge loss to the company selling the carbonated drinks.
4. Bargaining power of Suppliers:
A market leader like Coca Cola decides how the supply chain Iunctions, and also the margins
are decided by the company. Hence the company has a huge bargaining power in the market on
how the products are put in the market. On when to adopt a push strategy and when a pull
strategy must be put into Iorce.
5. Bargaining power of buyers:
Until and unless the customer decides to buy the product, based on its quality and iI it meets the
preIerences, no product can sell in the market, which is the most important in the Iunction oI the
business. Hence the buyers also possess a huge bargaining power which directly impacts the
existing market.





COMPETITIVE ENVIRONMENT
Buyers/Customers
Coca-Cola has there major and large customers in the market, Iood street 60,000 cerates /year,
MacDonald`s 40,000 cerates/year and India Railways who buy 50,000 cerates /year.
However, these three customers being large and powerIul are in an inIluential and bargaining
position they can demand discount or others Iacilities like (boards sign/Ireezers/coolers etc.) and
impose a threat to switch to their closest rival and competitor Pepsi.
$:-899:908

Nestle products like juices, coIIee, mineral water etc. and Shezan juices are substitutes oI Coke
Ior health conscious people and other Iresh juices.

Rivals/Competitors
rect Compettors
The direct competitor oI Coca-Cola is Pepsi and that oI CCBPL is PCI (Pepsi cola international)
there is always ongoing tuII competition between these two arch rivals with Pepsi leading with
54 market share and Coke gradually growing and catching up 36 market share in India.
However on global level the situation is reverse.
Both companies oIten engage in price cut wars, prize scheme wars and sponsorship wars to win
over each other customers.
ndrect Compettor
These include Nestle and Shezan juices who do not pose a threat to Coke as yet but has the
potential to do so as it is exploiting the natural aspect and health issues more and more to make
people conscious about physical Iitness Coke has launched Diet Coke to counter the physical
Iitness demands.






Indian Regulatory Environment

The main law governing Iood saIety in India was the 1954 Prevention oI Food Alteration
Act (PFA) which contained a rule regulating pesticides in Ioods but did not include
Beverages. The Food Processing Order (1955) required that the main ingredient used in soIt
drinks be potable water but the Bureau oI Indian Standards (BIS) had no prescribed
Standards Ior pesticides in water. One BIS directive stated that pesticides must be absent and
Set a limit oI 0.001 parts per million but the Health Secretary admitted, There are lapses in
PFA regarding carbonated drinks.
Indian law enIorcement was minimal with virtually no conviction under PFA. In the absence
OI national standards, NGOs such as the CSE turned to the United States and the European
Coca-Cola India no.
Union Ior international norms. The appropriateness and Ieasibility oI these standards Ior
Developing nations however, remained a question Ior many. Under EU Iood laws Ior
Example, milk, Iruit, and basic staples such as rice and wheat would need to be imported into
India to satisIy saIety standards.

MARKET SHARE

Coca-Cola: A Fortune 500 company in India

Coca-Cola is a leading player in the Indian beverage market with a 60 per cent share in the
carbonated soIt drinks segment, 36 per cent share in Iruit drinks segment and 33 per cent share in
the packaged water segment.
In 2004, Coca-Cola sold 7 billion packs oI its brands to more than 230 million consumers across
4,700 towns and 175,000 villages. The company has doubled its volumes and trebled its proIits
between 2001 and 2004.
Coca-Cola continues to re-aIIirm its commitment to India through active Citizenship EIIorts.
All its plants in India partner with local NGOs to alleviate local community issues in numerous
small ways. It boasts oI impeccable credentials on quality.
Coca-Cola has succeeded in spite oI an extremely price-sensitive consumer with entrenched
beverage consumption habits tea, nimbu-paani (lemonade) and a Iragmented and
geographically dispersed retail market, and a high tax environment.

Market Share in India





BRAND NAME MARKET SHARE (ORG. FIGURE)
COCA-COLA 50
PEPSI 30
OTHERS BRANDS 20

/;843412,709
50%
30%
20%
COKE
PEPSI
OTHERS
HISTORY OF BOTTLING
1950 Coca-Cola bottling plant opens in New Delhi
1958 Concentrate plant opens in India
1973 22 bottling plants operate in 13 states
1977 Coca-Cola and 38 other companies reIuse to dilute stake, Iormally
withdraws Irom Country in 1978
1992 Re-enters India

Bottlers
Main article: List oI assets owned by The Coca-Cola Company
In general, The Coca-Cola Company (TCCC) and/or subsidiaries only produces (or produce)
syrup concentrate which is then sold to various bottlers throughout the world who hold a Coca-
Cola Iranchise. Coca-Cola bottlers, who hold territorially exclusive contracts with the company,
produce Iinished product in cans and bottles Irom the concentrate in combination with Iiltered
water and sweeteners. The bottlers then sell, distribute and merchandise the resulting Coca-Cola
product to retail stores, vending machines, restaurants and Iood service distributors.
One notable exception to this general relationship between TCCC and bottlers is Iountain syrups
in the United States, where TCCC bypasses bottlers and is responsible Ior the manuIacture and
sale oI Iountain syrups directly to authorized Iountain wholesalers and some Iountain retailers.
In 2005, The Coca-Cola Company had equity positions in 51 unconsolidated bottling, canning
and distribution operations which produced approximately 58 oI volume. SigniIicant investees
include:
36 oI Coca-Cola Enterprises which produces (by population) Ior 78 oI USA, 98 oI Canada
and 100 oI Great Britain (but not Northern Ireland), continental France and the Netherlands,
Luxembourg, Belgium and Monaco.
40 oI Coca-Cola FEMSA, S.A. de C.V. which produces (by population) Ior 48 oI Mexico,
16 oI Brazil, 98 oI Colombia, 47 oI Guatemala, 100 oI Costa Rica, Ecuador, Nicaragua,
Panama, Peru and Venezuela, and 30 oI Argentina.
23 oI Coca-Cola Hellenic Bottling Company, S.A. which produces (by population) Ior 67 oI
Italy and 100 oI Armenia, Austria, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, the Czech
Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Macedonia, Moldova, Montenegro,
Nigeria, Northern Ireland, Poland, Rep. oI Ireland, Romania, Russia, Serbia, Slovakia, Slovenia,
Switzerland and Ukraine.
34 oI Coca-Cola Amatil Limited which produces (by population) Ior 98 oI Indonesia and
100 oI Australia, Indonesia, New Zealand, South Korea, Fiji and Papua New Guinea.
20 oI Coca-Cola Iecek AS. which produces (by population) Ior 100 oI Turkey, Kazakhstan,
Azerbaijan, Kyrgyzstan, Jordan, Syria, Iraq & Turkmenistan.
27 oI Coca-Cola Bottling Co. which is the second largest Coca-Cola bottler in the United
States. The company was incorporated in 1980, and "its predecessors have been in the soIt drink
manuIacturing and distribution business since 1902.|8|
11 oI Embotellodora Andina which is the major bottler in Chile, Argentina, and a part oI
Brazil.

HISTORY OF BOTTLING
Coca-Cola originated as a soda Iountain beverage in 1886 selling Ior Iive cents a glass. Early
growth was impressive, but it was only when a strong bottling system developed that Coca-Cola
became the world-Iamous brand it is today.
YEAR WISE HISTORY OF BOTTLING:
Year 1894: A modest start for a bold idea
In a candy store in Vicksburg, Mississippi, brisk sales oI the new Iountain beverage called Coca-
Cola impressed the store's owner, Joseph A. Biedenharn. He began bottling Coca-Cola to sell,
using a common glass bottle called a Hutchinson. Biedenharn sent a case to Asa Griggs Candler,
who owned the Company. Candler thanked him but took no action. One oI his nephews already
had urged that Coca-Cola be bottled, but Candler Iocused on Iountain sales.
Year 1899: The first bottling agreement
Two young attorneys Irom Chattanooga, Tennessee believed they could build a business around
bottling Coca-Cola. In a meeting with Candler, Benjamin F. Thomas and Joseph B. Whitehead
obtained exclusive rights to bottle Coca-Cola across most oI the United States Ior a sum oI one
dollar. A third Chattanooga lawyer, John T. Lupton, soon joined their venture.

Years 1900-1909: Rapid growth
The three pioneer bottlers divided the country into territories and sold bottling rights to local
entrepreneurs. Their eIIorts were boosted by major progress in bottling technology, which
improved eIIiciency and product quality. By 1909, nearly 400 Coca-Cola bottling plants were
operating, most oI them Iamily-owned businesses. Some were open only during hot-weather
months when demand was high.
Year 1916: Birth of the Contour Bottle
Bottlers worried that Coca-Cola's straight-sided bottle was easily conIused with imitators. A
group representing the Company and bottlers asked glass manuIacturers to oIIer ideas Ior a
distinctive bottle. A design Irom the Root Glass Company oI Terre Haute, Indiana won
enthusiastic approval. The Contour Bottle became one oI the Iew packages ever granted
trademark status by the U.S. Patent OIIice. Today, it is one oI the most recognized icons in the
world.
In the 1920s: Bottling overtakes fountain sales
As the 1920s dawned; more than 1,000 Coca-Cola bottlers were operating in the U.S. Their ideas
and zeal Iueled steady growth. Six-bottle cartons were a huge hit starting in 1923. A Iew years
later, open-top metal coolers became the Iorerunners oI automated vending machines. By the end
oI the 1920s, bottle sales oI Coca-Cola exceeded Iountain sales.
In the 1920s and 1930s: International expansion
Led by Robert W. WoodruII, chieI executive oIIicer and chairman oI the Board, the Company
began a major push to establish bottling operations outside the U.S. Plants were opened in
France, Guatemala, Honduras, Mexico, Belgium, Italy and South AIrica. By the time World War
II began, Coca-Cola was being bottled in 44 countries.
In the 1940s: Post-war growth
During the war, 64 bottling plants were set up around the world to supply the troops. This
Iollowed an urgent request Ior bottling equipment and materials Irom General Eisenhower's base
in North AIrica. Many oI these war-time plants were later converted to civilian use, permanently
enlarging the bottling system and accelerating the growth oI the Company's worldwide business.

In the 1950s: Packaging innovations
For the Iirst time, consumers had choices oI Coca-Cola package size and type-the traditional 6.5
ounce Contour Bottle, or larger servings including 10, 12 and 26 ounce versions. Cans were also
introduced, becoming generally available in 1960.
In the 1960s: Introduction of new brands
Sprite, Fanta, Fresca and TAB joined brand Coca-Cola in the 1960s. Mr. Pibb and Mello Yello
were added in the 1970s. The 1980s brought diet Coke and Cherry Coke, Iollowed by PowerAde
and Fruitopia in the 1990s. Today scores oI other brands are oIIered to meet consumer
preIerences in local markets around the world.
In the 1970s and 1980s: Consolidation to serve customers
Advancement in technology led to global economy, retail customers oI The Coca-Cola Company
merged and evolved into international mega chains. Such customers required a new approach. In
response, many small and medium-size bottlers consolidated to better serve giant international
customers. The Company encouraged and invested in a number oI bottler consolidations to
assure that its largest bottling partners would have capacity to lead the system in working with
global retailers.
In the 1990s: New and growing markets
Political and economic changes opened vast markets that were closed or underdeveloped Ior
decades. AIter the Iall oI the Berlin Wall, the Company invested heavily to build plants in
Eastern Europe. As the century closed, more than $1.5 billion was committed to new bottling
Iacilities in AIrica.
21
st
Century: Coca-Cola today
The Coca-Cola bottling system grew up with roots deeply planted in local communities. This
heritage serves the Company well today as consumers seek brands that honor local identity and
the distinctiveness oI local markets. As was true a century ago, strong locally based relationships
between Coca-Cola bottlers, customers and communities are the Ioundation on which the entire
business grows.