Coca-Cola Acquisition

of Red Bull
Team Six: Jordan Carey, Heather Harlow, Alex Hundertmark, Ryan
Gillette, & Tom Romano
Agenda

Discussion of target market and presentation

purpose
Qualitative Research
Quantitative Research
Analysis of both companies
Justifications & Closing
Background

Target Market: Coca-Cola Executives

Desired Outcome: Approval for
acquisition of Red Bull by Coca-Cola
Red Bull

Founded in Mid 1980s-Dietrich Mateschitz

Markets to high energy, active, & experience
driven consumers
Large presence in events & sports marketing
(Stratos Campaign)
Diversification--not just an energy drink
anymore
Distribution all over the world
Valued $7.9 billion
Coca-Cola

Founded in 1886 in Atlanta, GA

Responsible Marketing
Currently has world-wide
representations
Distribution in large amount of
countries
Some diversification in products
Valued at $80.31 billiondown from
$83.84 billion in 2015
Red Bull
Strengths
Early mover advantage
Majority market share
(internationally)
Strong brand value
Disruptive marketing campaigns
Opportunities
Always a fresh market (youth)
Alliance that offers vending
machine access
Sugar-free, low calorie option
Weaknesses
Limited product line that is
vulnerable to market trends
Expensive marketing (30 -
40% of sales)
Threats
Strong competition
Vorayuth Yoovidhya scandal
IP violation
Concerns about safety of product
Decline of sugary beverages in
US
Coca-Cola
Strengths
Worlds 3rd most powerful
brand
Largest beverage company
(3,900 products worldwide)
Investment of 90+B in
bottling partners
Opportunities*
Consumer-centric brand portfolio
Improve franchise relationships
with bottling partners
Noncaloric sweetener innovation
Drive market growth in emerging
markets
*Form 10-K Report: Strategic Priority, Capability, or Challenge
Weaknesses
Carbonation reliance
Many brands with
insignificant revenue
Lack of diversification
Threats
Strong competition
IP violation
Decline of sugary beverages in US
Water scarcity and quality
Evolving customer preferences
Reliance on bottling partners
Energy Drink Market
Key players: PepsiCo, Hansen Natural Corp., Red Bull GMBH, and The Coca-
Cola Company

Strengths Weaknesses
Established international Developed market (US)
market Growing competition
Positive long-term growth (internal and external)
outlook Limited shelf space;
branding critical

Threats
Opportunities
Concerns about obesity
Dynamic economies in Asia pandemic and sugary
Pacific and Latin America beverages (NA and W.
Young consumer base in Europe)
above economies Currency fluctuations
Public perception of safety
 Red Bull

Reach
Coca-Cola In 200 Countries around the world
US Energy Drink Market Share 2014
Before Monster took the field from 10 to 6 Brands in 2015
World wide there are still 14 major competitors
Market share is larger world wide but still in decline
Company Position and Value
Ranked 74th on the Forbes Most Valuable Companies List
Between BASF 73rd and FedEx 75th
Worth $7.9 Billion in 2016
Energy Shots like 5-hour Energy
New competition
The Coke Monster Deal
Coke bought a controlling interest in Monster in 2015
Monster gained control of Coke energy drink companies
Coke gained control of Hansons Natural soda from Monster
Red Bull is not publicly traded like Monster
Requires a company purchase rather than controlling interest
Red Bull is larger than Monster
Red Bull would get Monster and other energy drinks
Coke would control most of the worlds energy drink market
IPO would pay for most of Red Bull purchase
High Level Analysis
Both companies have an understanding of:
Foreign exchange (currencies, tariffs, tax impacts, etc.)
Legal expertise & cultural understanding
Global pricing strategies & opportunistic hedging
Successful portfolio specialization & diversification
Key Analysis Takeaway

Red Bull
Sales Growth: UP
Market Share: DOWN

Coca-Cola
Sales Growth: DOWN
Market Share: UP
Insights to Action Full Disclosure

Multination conglomerates spend millions of dollars with resource rich teams

researching, planning and executing return on investment driven acquisitions
over multi-year timelines.
The speculative recommendations we will unveil next, are based off the
research we collected.
For these recommendations to be implemented, feasibility and plans of
action will need to be further defined and decomposed.
Last but not least, the following assumption is built in to our
recommendations. If it is not broken, do not attempt to fix it. If it can be
improved, do so only after addressing the top priority/critical items first.
Insights to Action Recommendations

Proposal # 1
Media, Marketing & Sales
Red Bull arguably has one of the best marketing & sales departments on the
planet.
Red Bulls market share is on the decline, however via their marketing &
sales strategy their bottom line has not yet been impacted. Why? They have
been able to successfully create an extremely loyal product customer base.
Coca-Cola could benefit immensely from this.
Insight to Action
Coca-Cola leverage and integrate Red Bulls marketing & sales department
expertise into their overall best practices. Data purports, Coca-Cola needs
help in product customer base retention efforts to drive continued sales.
Insights to Action Recommendations

Proposal # 2
Global Presence & Penetration Strategy
Red Bull struggles capturing foreign market share in specific areas.
As many are already aware, capturing foreign markets is one of Coca-
Colas strength. Coca-Cola uses a continual expansion model to
mitigate the impact of stagnating local sales.
Insights to Action
Coca-Cola integrate their global expansion and market penetration
expertise into their newly acquire Red Bull product line distribution
strategy. Data supports, Red Bull lacks the needed expertise to
continue global expansion successfully.
THANK YOU
References

Red Bull GMBH in Soft Drinks

Forbes Brands Ranking
World of Coca Cola
Transparency Market Research: Energy
Drink Market
Investopedia: The Energy Drink Industry
Coca-Cola 10k Report (2016)