Dr. John S. Pemberton, a physician, founded the Coca-Cola Company in 1886 in Atlanta, Georgia, as a soft drink business. It is also the third world’s largest beverage company as of 2020, producing more than 500 different brands, including Coca-Cola classic and Sprite. The product line includes sparkling beverages (carbonated), still drinks (non-carbonated), energy drinks, waters, coffee & tea, fruit juices, and other beverages under distinct labels.
>In 2020 Coca-Cola had net revenue of $33 billion with an operating cash flow of $8.9 billion, total assets of $87.296 billion, and a market capitalization value of $232.623 billion as of September 2021. Coca-Cola is publicly traded, listed on the New York Stock Exchange (NYSE: KO).
Coca-Cola stands out as a differentiated product, setting it apart from other beverage companies such as PepsiCo (NASDAQ: PEP), Dr. Pepper Snapple Group (NYSE: KDP), and Red Bull. Coca-Cola’s differentiated products result from the company’s strong marketing campaigns and sponsorship ties with world-renowned celebrities and organizations.
Coca-Cola Business Strategy
Coca-Cola operates in more than 200 countries and sells over 500 brand beverages. To maintain its global presence and increase its market share, Coca-Cola incorporates an assumed global strategy where the company allows for geographic differentiation of its products in terms of marketing, packaging, pricing, etc. Each country can adapt its individualized approach, which varies depending on consumer preferences and market conditions.
Through its competitive positioning strategy, Coca-Cola stays ahead of its competitors by offering an extensive product line, providing superior customer service, and expanding its advertising efforts. Coca-Cola dedicates a significant portion of its net revenue to advertising, contributing to its high market share.
Its advertising strategy is to maintain consumer recognition of the Coca- Cola brand, keep a strong market presence, and encourage repeated purchases. Its marketing campaigns (most notably its “Enjoy” campaign) created an emotional connection with customers for a long time.
Promoting happiness through its products is, in fact, the secret to Coca-Cola’s success. Essentially focusing on brand over product, Coca-Cola shows customers that its products contribute to their happiness. The company also takes advantage of sponsorship activities (i.e., sports sponsorships) and celebrity endorsements to stay relevant).
Coca-Cola SWOT Analysis
- Strong brand recognition: Coca-Cola is one of the world’s most recognized brands. Its marketing campaigns successfully built a strong emotional connection with its customers, significantly contributing to its brand recognition. Through its product line and marketing strategies, Coca-Cola gained a significant market share in the beverage industry.
- Global presence: Coca-Cola has a significant presence in more than 200 countries around the world. Various geographic conditions have allowed the company to adapt its products accordingly. Coca-Cola also has a strong presence in developing countries, where we expect an increase in income and overall consumer spending over the forecast period. We expect Coca-Cola to continue utilizing this competitive advantage through its geographic strategy, increasing its presence in developing countries.
- Extensive distribution network: The Company’s vast distribution network is one of the key factors contributing to its worldwide success. Coca-Cola boasts over 225 independent bottling partners globally. At the same time, Coca-Cola also has its bottling network in place. And with more than 500 brands sold around the world, customers have a variety of options available when purchasing beverages manufactured by Coca-Cola.
- Continuous product improvement: The Company constantly invests in its products and processes, striving for product innovation and improvement to attract customers. From reducing sugar content to introducing new flavors, Coca-Cola constantly adapts to its customers’ needs and demands.
- Health concerns: The main problem with soda is its high sugar content, contributing to health complications such as diabetes and obesity. Some activists perceive Coca-Cola’s products as unhealthy, which can hurt the company’s future growth if the company doesn’t effectively manage health and nutrition issues.
- Unsustainable practices: Coca-Cola is a major polluter, using non-biodegradable plastics to package its products. This and other unsustainable practices (such as exploiting employees in developing countries) are eroding the company’s reputation. Furthermore, if consumers become more conscious about the environment, they will look for less hazardous alternatives.
Want to learn more about SWOT analysis? Check out our pillar guide on What is a SWOT analysis.
- Introduce non-beverage products: Coca-Cola enjoys an extensive distribution network and a strong brand image, making the company a great candidate to introduce new products. As health and nutrition awareness rises worldwide, non-beverage products such as foods and pharmaceuticals can help the company further expand its product portfolio.
- Emerging markets in developing countries: Developing countries offer a significant growth opportunity for the beverage industry. The number of middle-class consumers will increase significantly in developing countries over the forecast period. Developing countries possess a large untapped consumer base, which will help Coca-Cola further expand its presence in these markets.
- Direct and indirect competitions: The beverage industry is highly competitive, with the top companies enjoying considerable success. Coca-Cola faces intense competition from both direct and indirect competitors. Direct competitors include soft drink producers, such as PepsiCo and Dr. Pepper Snapple Group Inc. Indirect competitors include beer and wine companies.
- Legal tussles: Coca-Cola has a history of legal battles, most notably the allegations of misleading marketing on sweetened beverages. This comes amid prevailing concerns on health issues associated with sweetened beverages. Legal tussles are becoming an increasingly significant issue, hurting the company’s image and future growth prospects.
Coca-Cola Competitor Analysis
Coca-Cola competes for market share in the beverage industry through product innovation and improvement, geographic expansion, and continuous investment in its distribution network. This section analyzes some of Coca-Cola’s significant competitors in terms of their product portfolio, business strategies, financial position, market share, etc.
PepsiCo is a global food and beverage company manufacturing various non-alcoholic beverages. Founded in 1898, PepsiCo operates in more than 200 countries and is headquartered in Harrison, New York. The company trades publicly on the New York Stock Exchange under the ticker symbol PEP.
PepsiCo’s product portfolio comprises various beverages, such as carbonated drinks (including colas and energy drinks), fruit juices, and bottled water. With a market value equity of $213.121 billion as of September 2021, PepsiCo enjoys considerable resources and can invest in initiatives that help the company expand globally.
Over the past several years, PepsiCo’s financial results have improved appreciably, owing to strong performance across all regions. The firm’s revenues for the 2020 financial year were $70.373 billion, up 4.7% from 2019. The company’s operating income was $10.08 billion in 2020, down from $10.291 billion in 2019.
While Pepsi focuses on “performance with a purpose,” Coca-Cola focuses on “Choice, convenience, and the consumer.” Metrics from Statista indicate that Coca-Cola is the market leader among carbonated soft drink (CSD) companies, with 44.9 percent of the market share in 2020. Moreover, Coca-Cola has been leading the market in both revenue and profits for over ten years.
All this time, PepsiCo was the second-largest company, with 25.9 percent of the market share in 2020. Notably, Coca-Cola increases its competitive advantage over PepsiCo due to a superior marketing strategy and a more diverse product line.
Keurig Dr. Pepper
Keurig Dr. Pepper is an American beverage manufacturing company with headquarters in Burlington, Massachusetts. The company manufactures and markets coffee and other non-carbonated drinks. Keurig DR Pepper trades publicly on the New York Stock Exchange under the ticker symbol KDP.
The company boasts over 70 brands, including 7-up, Dr. Pepper, A&W, Mott’s, Sunkist, and more. It was formed through the merger of Keurig Green Mountain and Dr. Pepper Snapple Group in July 2018 in an 18.7 billion Dr. Pepper Snapple Group buy-out. As of September 2021, Keurig Dr. Pepper had a market value equity of $48.016 billion.
The company’s revenue for 2020 was $11.61 billion, with an operating income of $2.48 billion, up from $2.37 billion in 2019. It ranks #267 on the Fortune 500 list of the leading companies in the United States.
Keurig Dr. Pepper’s product portfolio comprises beverages of all types, including coffee, tea, juice, water, energy drinks, and more. The company’s strong brand portfolio and distribution network are among its most substantial competitive advantages. Its financial resources help Keurig Dr. Pepper maintain a competitive edge over its rivals, including Coca-Cola.
However, the company has not been able to make much headway in the beverage industry. For instance, it controls 21.1 percent of carbonated soft drinks market share as of 2020, unlike Coca-Cola’s 44.9 percent market share for the same year.
Nestle is an international consumer goods company based in Vevey, Switzerland. The company operates in the nutrition, health, and wellness sectors and enjoys high-quality products. It was founded in 1866 and trades publicly on the Swiss Stock Exchange under the ticker symbol NSRGY.
With a market value equity of $336.774 billion as of September 2021, Nestle is one of the largest companies in the world, with a strong financial position. Its revenues for 2020 were $ 90.321 billion, with an operating income of $15.781 billion. The company boasts assets worth $132.388 billion. In addition, it ranks #79 on Fortune’s list of the 500 largest companies in the world.
Nestlé’s product portfolio is diverse and includes baby food, bottled water, coffee, frozen food items, ice cream, infant nutrition products, pet care products, dietary supplements, and more. According to Statista, Nestle is the Second largest leading beverage company globally in terms of volume sales. In 2020, its sales amounted to $43,476 billion compared to Coca-Cola’s $33,014 billion.
Although Nestle and Coca-Cola are not direct competitors, some product segments such as water, juice, coffee, and dairy products overlap. Very recently, Nestle entered into the water segment with its Pure Life brand of bottled water. It is worth noting that Nestle provides alternative beverage options for those who refrain from consuming sugary drinks.
Red Bull GmbH
Red Bull GmbH is an Austrian company best known for its energy drinks. Founded in 1987, it has its headquarters in Fuschl am See, Austria. Red Bull is a private conglomerate and operates under the management of Dietrich Mateschitz and Chaleo Yoovidhya.
The company’s product line includes several editions of the Red Bull brand energy drink differentiated by flavor, ingredients, and packaging. The Red Bull Distribution Company is responsible for distributing and selling the company’s products, which are sold in over 171 countries around the world. As of 2020, Red Bull employed more than 12,600 people globally and sold more than 7.9 billion cans worldwide.
The company derives its competitive advantages from its close association with extreme sports and adventure tourism. In addition, its strong marketing strategy led to huge brand recognition. Red Bull’s financial resources facilitated its large-scale expansion and helped it establish its dominance over the energy drinks market.
Its primary revenue comes from sales of its flagship drink, although it also sells advertisements and sponsorship deals with extreme sports teams and events. Despite Coca-Cola no longer producing energy drinks, it remains a formidable Red Bull competitor in the beverage industry.
Starbucks Corporation is an American coffee company and coffeehouse chain based in Seattle, Washington. Most people consider Starbucks as the trendiest coffeehouse in the world. The company operates in 80 countries with more than 32,000 stores. It trades on NASDAQ under the ticker symbol SBUX and has a market value equity of $134.547 billion as of September.
Starbucks offers a wide variety of coffee drinks, baked goods, and tea products. In addition to its traditional stores, Starbucks also offers a mobile app to place orders and deliver them. The company was founded in 1971 and has been instrumental in rising specialty coffee consumption across the globe.
In 2020, Starbucks’ revenues stood at $23.518 billion with a net income of $0.928 billion. It competes with Coca-Cola in the coffee industry and is a direct competitor in the ready-to-drink coffee market with its Frappuccino brand. Starbucks is known for providing innovative customer experiences and technologically advanced outlets that enhance the customers’ experience.
Its focus on selling coffee products in upscale outlets has helped it establish a strong brand presence globally. Unfortunately, its operating margins are below those of Coca-Cola. This mainly stems from the higher expenditure on employee training and product development, which is necessary to encourage repeat visits.
How Coca-Cola Stands Out Against Its Competitors
Coca-Cola is the most prominent player in its industry, and it manages to produce a wide range of products that appeal to various customer preferences. By targeting customers at an individual level, Coca-Cola ensures customer satisfaction and brand loyalty. This is one of the secrets behind its vast market share in both carbonated and non-carbonated beverage segments.
Coca-Cola’s brand and pricing strategies and advertising and marketing efforts also differentiate it from competitors like PepsiCo and Red Bull. Coca-Cola spends more on advertising and marketing, which enhances the visibility of its brand. It also uses bundles to sell its products at low prices while ensuring high revenues.
The company derives its competitive advantage from extensive production facilities, providing economies of scale and strong distribution channels that cater to a large customer base across all consumer demographics. Furthermore, Coca-Cola has a strong foothold in emerging markets, and it’s expected to continue increasing its presence in the beverage industry.
Coca-Cola Competitor Analysis (FAQs)
Question: Who is Coca-Cola’s Biggest Competitor?
Answer: Coca-Cola’s biggest competitor is PepsiCo, which has manufacturing facilities in the same markets. However, other beverage companies such as Nestlé, Keurig Dr. Pepper, and Red bull also pose a serious threat to its market dominance.
Question: How Does Coca-Cola Compete With Its Competitors?
Answer: Coca-Cola focuses on satisfying customers’ tastes and preferences. In addition, it invests heavily in advertising campaigns that introduce its products to large markets. The company also ensures that its products are affordable to various socioeconomic demographics.
Question: What is Coca-Cola’s Strategy?
Answer: Coca-Cola uses a focused approach that entails creating individual beverages to appeal to diverse customer preferences. It also focuses on brand building, advertising, and product development.
Coca-Cola remains the undisputed leader in the beverage industry, and numerous players such as PepsiCo and Red Bull have been unable to displace it from this position. Coca-Cola’s position is attributable to its unique branding strategy that caters to customer preferences. Competitors like Red Bull and Starbucks pose a threat to its dominance in specific markets.
However, Coca-Cola’s continued investments in developing markets and its focus on product quality will ensure that it remains the number one player in this highly competitive industry, at least in the foreseeable future.
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