COCA COLA PRODUCT

Coca Cola Company - Soft Drink Products

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Coca Cola Co. - Soft Drinks

Introduction

The Coca-Cola Company (TCCC) owns more than 500 brands of refreshments, which are distributed worldwide. It was founded in the late 1800s as a wine producer, but when a local prohibition law was passed, Coke became the world's first flavored soda. The top three brands in North America for 2009 were Coca-Cola classic, Diet Coke and Sprite. The company has acquired a variety of beverage brands over the past five years to diversify the business and make it less dependent on carbonated soft drinks.

This research aims at exploring the fundamentals related to soft drink product division of The Coca-Cola Company. It explores the implication of market related factors that influence the decisions of the management with respect to management of soft drink brands across the globe (Coca Cola Co., 2012a). It explore the current performance of the industry, how does market environment forces shape the soft-drinks product development decisions, and external environment factors affecting the Coca-Cola position in the industry.

Coca-Cola Company - Overview

Coca-Cola Company serves 75.0% of the markets for Coca-Cola products in United States, Canada and the Caribbean islands. About two-thirds of its total revenue is earned in the United States. The company's largest customer in the United States is Wal-Mart, which generates over 13.0% of annual US revenue (Data Monitor, 2011). In 2009, the company sold about 12.0% of all nonalcoholic beverages sold in the United States that year, with about 57.0% being Coca-Cola brand sodas, 24.5% sparkling flavors and energy drinks, 7.5% water and 11.0% other still beverages (Ibis World, 2012).

Over the last five years, the Coca-Cola products segment has remained stable as a share of US revenue. The "other" segment shrank from about 8.5% of revenue, while the sparkling flavors and energy and water segments grew. CCE has over 5,300 US employees. Price fluctuation of inputs for drinks, packaging or transportation, such aluminum or oil, also led to operating losses in past years. The cost of US sales per case is anticipated to increase between 2.0% and 7.5% each year over the five years to 2011 (Ibis World, 2012). To maintain profit, the company has increased prices and restructured to cut the costs it can control.

While TCCC owns the rights to a variety of CSDs and produces the syrup, it has sold rights to mix and bottle its trademark beverages for over a century. The largest player in the Soda Production industry in recent years has been Coca-Cola Enterprises, Inc. (CCE), which bottles the majority of TCCC's products in North America. However, TCCC acquired CCE's North America division through a noncash transaction in December 2010 (Lussier, 2011). This resulted in a subdivision of TCCC called Coca-Cola Refreshments USA, Inc. (CCR-USA) that will combine TCCC's national fountain, juice, distribution, marketing and other bottling operations with those of CCE.

Consolidation is expected to enable TCCC to streamline production and distribution operations, cutting costs that may translate into a higher profit ...