COCA COLA

I. HISTORY
Coca-Cola history began in 1886 when the curiosity of an Atlanta pharmacist, Dr. John S.
Pemberton, led him to create a distinctive tasting soft drink that could be sold at soda fountains.
He created a flavored syrup, took it to his neighborhood pharmacy, where it was mixed with
carbonated water and deemed “excellent” by those who sampled it. Dr. Pemberton’s partner and
bookkeeper, Frank M. Robinson, is credited with naming the beverage “Coca-Cola” as well as
designing the trademarked, distinct script, still used today.
Prior to his death in 1888, just two years after creating what was to become the world’s #1-
selling sparkling beverage, Dr. Pemberton sold portions of his business to various parties, with the
majority of the interest sold to Atlanta businessman, Asa G. Candler. Under Mr. Candler’s
leadership, distribution of Coca-Cola expanded to soda fountains beyond Atlanta. In 1894,
impressed by the growing demand for Coca-Cola and the desire to make the beverage portable,
Joseph Biedenharn installed bottling machinery in the rear of his Mississippi soda fountain,
becoming the first to put Coca-Cola in bottles. Large scale bottling was made possible just five
years later, when in 1899, three enterprising businessmen in Chattanooga, Tennessee secured
exclusive rights to bottle and sell Coca-Cola. The three entrepreneurs purchased the bottling rights
from Asa Candler for just $1. Benjamin Thomas, Joseph Whitehead and John Lupton developed
what became the Coca-Cola worldwide bottling system.

II. STRENGTHS

1. Brand Equity – Interbrand in 2011 awarded Coca cola with the highest brand equity award.
Coca cola with its vast global presence and unique brand identity is definitely one of the
costliest brands with the highest brand equity.
2. Company valuation – One of the most valuable companies in the world, Coca cola is
valued around 79.2 billion dollars. This valuation includes the brand value, the numerous
factories and assets spread out across the world and the complete operations cost and profit
of Coca cola.
3. Vast global presence – Coca cola is present in 200 countries across the world. Chances are,
any country that you go to, you will find coca cola present in that market. This vast global
presence of coca cola has also contributed to the building of the mammoth brand name.
4. Largest market share – There are only 2 Big competitors in the beverage segment
– Pepsiand Coca cola. Out of these 2, coca cola is the clear winner and hence has the largest
market share. Amongst all beverages, Coke, Thums up, Sprite, Diet coke, Fanta, Limca and
Maaza are the growth drivers for Coca Cola.
5. Fantastic marketing strategies – Coca cola unlike Pepsi always tries to win peoples heart.
Where Pepsi’s target is continuously changing, and is targeted towards youngsters, Coca
cola targets people of all ages. The targeting is also done by celebrities who are well liked –
for example – Amitabh Bacchan, Sachin tendulkar, Aishwarya Rai, Aamir Khan etc
6. Customer Loyalty – With such strong products, it is natural that Coca cola has a lot
of customer loyalty. The products mentioned above like Coca cola and Fanta have a huge
 fan following. People will prefer these soft drinks over others. Because of the good taste of
Coca cola, finding substitutes becomes difficult for the customer.
7. Distribution network – Coca cola has the largest distribution network because of
the demand in the market for its products. On the other hand, due to this successful
distribution network, Coca cola has been able to command such a high market presence.

III. WEAKNESSES

1. Competition with Pepsi – Pepsi is a thorn in the flesh for Coca cola. Coca cola would have
been the clear market leader had it not been for Pepsi. The competition in these two brands
is immense and we don’t think Pepsi will give up so easily.
2. Product Diversification is low – Where Pepsi has made a smart move and diversified into
the snacks segment with products like Lays and Kurkure, Coca cola is missing from that
segment. The segment is also a good revenue driver for Pepsi and had Coca cola been present
in this segment, these products would have been an additional revenue driver for the
company.
3. Absence in health beverages – If you watch the news, you would know that obesity is a
major problem affecting people nowadays. The business environment is changing and
people are taking measures to ensure that they are not obese. Carbonated beverages are one
of the major reasons for fat intake and Coca cola is the largest manufacturer of Carbonated
beverages. The inference is that the consumption of beverages in developed countries might
go down as people will prefer a healthy alternative.
4. Water management – Coca cola has faced flak in the past due to its water management
issues. Several groups have raised lawsuits in the name of Coca cola because of their vast
consumption of water even in water scarce regions. At the same time, people have also
blamed Coca cola for mixing pesticides in the water to clear contaminants. Thus water
management needs to be better for Coca cola.

IV. STRATEGIES

1. WE FOCUSED ON DRIVING REVENUE AND PROFIT GROWTH

We used segmented revenue growth strategies across our business in a way that varied by
market type. And we aligned our employee incentives accordingly. In emerging markets, we
focused primarily on increasing volume, keeping our beverages affordable and strengthening the
foundation of our future success. In developing markets, we struck a balance between volume and
pricing. In developed markets, we relied more on price/mix and improving profitability by offering
more small packages and more premium packages like glass and aluminum bottles.

Creating value for our Company and customers looks different in different countries, and
we did a good job segmenting our markets to drive revenue growth in 2015. While we still have
more to do, we were encouraged by our results. Globally, price/mix rose 2 percent as did volume,
helping increase organic revenue 4 percent. We also gained worldwide value share in our industry.
2. WE INVESTED IN OUR BRANDS AND BUSINESS
Healthy businesses require continuous investment. We made a choice to invest in more and better
marketing for our brands, increasing both the quantity and quality of our advertising. We increased
spending on media advertising by more than $250 million, and we used these funds to share
stronger, more impactful ads.

At the same time, we invested across our expansive beverage portfolio. We improved our position
in the energy category with a strategic new partnership with Monster Beverage Corporation. We
invested in brands like Suja, a line of premium organic, cold-pressed juices, and agreed to buy
China Green Culiangwang, a plant-based protein beverage brand. We also expanded to nationwide
the U.S. distribution of fairlife ultra-filtered milk.

In 2015, we developed our first global marketing campaign to support the entire Coca-Cola
Trademark of Coke, Diet Coke, Coke Zero and Coca-Cola Life. Launched in early 2016, “Taste
the Feeling” emphasizes the refreshment, taste, uplift and personal connections that are all part of
enjoying an ice-cold Coca-Cola. With this campaign and our broader “one brand” strategy, we’re
letting consumers know they can enjoy Coca-Cola with calories, fewer calories or no calories and
with or without caffeine. The choice belongs to each individual, every time he or she reaches for
a delicious and refreshing Coca-Cola.

3. WE BECAME MORE EFFICIENT

As we took steps to rebuild our growth momentum, we knew we needed to invest in more and
better marketing while also increasing our financial flexibility. To these ends, we increased our
efficiency and productivity while reducing costs.

Part of the solution was “zero-based work”—a way of looking at our business that starts from the
assumption that organizational budgets start at zero and must be justified annually, not simply
carried over at levels established in the previous year. We also cut spending on non-media
marketing like in-store promotions. And we found new savings in our supply chain around the
world.

Overall, we were able to realize more than $600 million in productivity improvement in 2015,
which we used to invest further in our brands and business and also to return to our shareowners.

For the future, we’re working to drive productivity and continuous savings across our Company
and system. We see productivity not as an event or series of events but as an ongoing, day-by-day
process of becoming stronger, leaner and ultimately better.
4. WE SIMPLIFIED OUR COMPANY
Few industries have changed more rapidly in recent years than the nonalcoholic beverage industry.
Evolving consumer tastes and preferences, coupled with sweeping innovations in the retail and
supply chain landscapes, have created an environment in which speed, precision and empowered
employees determine who wins in the marketplace.

To seize this opportunity, we took steps to reshape our business. We looked hard at our operating
structure and identified areas where we could be faster, smarter and more efficient. We removed a
layer of functional management and connected our regional business units directly to headquarters.
We streamlined a number of important internal processes and removed roadblocks and barriers
that inhibited us from being as effective and responsive as we knew we could be.

Most importantly, we began to look at ways to enhance further the employee experience across
our Company with the goal of creating the world’s most exciting, productive, fun and fulfilling
career environment, with workplaces that nourish curiosity, learning, innovation and growth.
While this journey has just begun, our associates have responded with the resolve, commitment
and passion that have been hallmarks of Coca-Cola leadership since 1886.

5. WE REFOCUSED ON OUR CORE BUSINESS MODEL

The Coca-Cola Company has always been a creator of refreshing beverage brands. Today, our
expansive portfolio includes more than 500 brands, including sparkling beverages, juices and juice
drinks, coffee, tea, sports drinks, water, value-added dairy, energy and enhanced hydration drinks.
Among these brands are 20 that generate more than a billion dollars in annual retail sales.

Another core competency has been our ability to lead the world’s most sophisticated system of
independent bottling partners while creating value for our retail and restaurant customers. Over
the years, we’ve acquired and managed a number of Coca-Cola bottling partners with the aim of
improving performance, optimizing manufacturing and distribution systems, and ultimately
refranchising the bottling territories back to independent status.

In North America, we took aggressive steps in 2015 to accelerate the refranchising of

Company-owned bottling territories with the goal of completely refranchising our North America
bottling system by year-end 2017. We also announced a transaction to form a unified new bottling
partner in Western Europe and took action to improve our bottling system in Southern and East
Africa, Indonesia and China. By year-end 2017, we expect Company-owned bottlers to produce
just 3 percent of our global volume, down from 18 percent today.
 V. REASONS FOR BEING A GLOBAL BRAND
1. It started with a unique, market-tested formula.

Coca-Cola started as a less intoxicating version of the coca wines that were popular in the
nineteenth century.

After serving as a Confederate colonel in the Civil War, John Pemberton wanted to develop
a version of the coca wines (basically cola with alcohol and cocaine) that were in vogue at the
time. In 1886, Atlanta passed prohibition laws that forced beverage manufacturers to produce non-
alcoholic versions of their drinks.

Pemberton sent his nephew Lewis Newman with samples of his formulas to a local
pharmacy where people congregated to drink these early versions of sodas. Newman relayed
feedback to his uncle about the various concoctions, and by the end of the year Pemberton had a
recipe that was unique and tailored to customers' tastes. The original recipe is still locked in a vault
in Atlanta.

Cocaine was removed from Coke in 1903. Other minor adjustments have been made in the
past century or so, but beyond the "New Coke" disaster of 1985, the recipe has largely remained
unchanged. This decision helped the company scale, Butler writes, since it did not spend time
trying to tailor the taste to regional markets throughout the world.

2. Its logo uses a timeless font.

Pemberton's bookkeeper, Frank Mason Robinson, decided that Coca-Cola's logo should be
written in the Spencerian script, which accountants used, because it would differentiate it from its
competitors. The company standardized the logo in 1923 and, like the recipe, decided that while
packaging could adjust to the times, the core logo was to be untouched.

It's resulted in a logo that has had more than 100 years to become imprinted in the minds
of people around the world.

3. It was distributed in a proprietary bottle.

After the Georgia businessman Asa Griggs Candler became the majority shareholder of
Coca-Cola in 1888, he set his sights on making Coke the nation's most popular cola through
marketing and partnerships with regional bottlers.

By 1915, Candler was losing market share to hundreds of competitors. He launched a

national contest for a new bottle design that would signal to consumers that Coke was a premium
product that couldn't be confused with some other brown cola in an identical clear glass bottle.
 The new bottle had to be able to be mass produced using existing equipment yet also be
distinct.

The Root Glass Company in Indiana decided to enter the contest and base its design off the
product's name. While combing through the dictionary for the word "coca" and words like it, Butler
writes, mold shop supervisor Earl R. Dean came across an illustration for the cocoa plant that
caught his attention. Coca-Cola had nothing to do with cocoa, but the cocoa pod had a strange but
appealing shape. He and his team got to work and were declared the contest winners the next year.

Coca-Cola commissioned the bottle design as a piece of defensive marketing, but began
promoting the shape as much as the logo and product. Even after plastic replaced glass as the
standard means of drinking Coke in countries like the US, the company continued to promote the
image of the Coke bottle as an icon.

4. It held retailers responsible for maintaining its high standard.

Ernest Woodruff's Trust Company of Georgia bought Coca-Cola from Candler in 1919.
Woodruff was focused on maintaining a standard of excellence as the company scaled.

The Coke team decided that its drink should be served at 36 degrees Fahrenheit, and would
send salesmen to new retailers to tell them the product should never be served above 40 degrees.

The tactic may seem a bit silly today, but the 36-degree standard was just another example
of establishing Coca-Cola as a premium product that was worthy of more attention than any of its
competitors.

5. It kept its consumer price fixed for 70 years.

It's common today for tech startups to begin by offering a service for free and then charging
a higher price to consumers and/or advertisers once they've become hooked. Before utilizing
networking effects became a standard practice, Coca-Cola used a similar approach to scale across
the US and then throughout the world.

From 1886 to 1959, a bottle of Coke cost just five cents.

6. It guided word-of-mouth advertising and developed a voice.

It became apparent after Candler took over early in the company's life that Coke was as
much a drink as it was a consumable brand, an idea consumers could feel good about identifying
with.
Candler started a mass coupon initiative that resulted in 10% of all products from 1887 to 1920 to
be given away in order to build brand awareness. He also provided retailers with Coca-Cola swag
like posters and festoons for decorations and calendars and clocks for customers. According to
Butler, Coke was a pioneer in affixing a brand to items unrelated to the product.

And finally, all national, and then global, advertising contained variations of "Drink Coca-
Cola/Delicious and refreshing" and fit into a standardized design style.

7. It adopted a franchise model.

"Amid the soda wars that broke out in the 1880s, Candler's most significant business
decision had nothing to do with branding," Butler writes.

In 1899, two Tennessee lawyers, Benjamin F. Thomas and Joseph B. Whitehead,

approached Candler and asked if he would let them bottle Coke. The drink was sold as a syrup that
retailers would mix with soda water, but it wasn't typical to drink cola on the go or bring it into the
home. Candler decided to hand over the bottling rights for just a dollar, which he never collected,
because he was content with maintaining the rights to the syrup.

This marked the beginning of what the company internally calls The Coca-Cola System, a
franchise partnership with bottlers that allowed the brand to truly take off. Today, there are about
275 independent bottlers around the world.

"The Coca-Cola Company isn't one giant company; it's a system of small companies,"
Butler writes. "And this pattern helps it scale new products, new communications, new equipment,
etc. Designing for this pattern is critical; when it wants to scale fast, it can."