CASE ANALYSIS:

ANEESH KEDLAYA 14PGHR08

DEEPA KAUSHIK 14PGHR22
NIHARIKA TANEJA 14PGHR43
NANCY WADHWA 14PGHR44
RAHUL RASTOGI 14PGHR48
SIDDHANT KEDIA 14PGHR58

CSD OVERVIEW IN USA

66 billion dollar market
Consumption grew 3% every year
Consumption grew from 23 gallons/yr in 1970 to 52
gallons/yr in 2004
People preferred CSD to other substitutes

CSD Model

Concentrate producers
Bottlers

Retail channels
Suppliers

COLA WARS: TOP 2 COMPANIES

Coke

Pepsi

1886, John Pemberton

1899, Franchisee Model

Went international during World War 2

Master Bottler contract: Determines concentrate

price and other terms of sales

1893, Caleb Bradham

Pepsi also adopts the franchisee

model

Business grew in the great depression

Master Bottler Contract: Pepsi can

force bottlers to purchase raw
materials from Pepsi

COLA WARS: TOP 2 COMPANIES

Coke

Pepsi

Acknowledged Pepsi

Americas preferred taste

No wonder coke refreshes best

1950, Beat Coke (Alfred Steele)

1963, Young at heart (Donald
Kendall)

Fanta, Sprite

Teem, Mountain Dew

Minute maid, Springs water (non-CSD)

Frito Lays (non-CSD)

STRATEGIES OF PEPSI, 1979

Pepsi Challenge blind taste tests in Dallas

Lead to significant increase in sales.
Pepsi took the campaign nationwide
Cokes market share eroded
Coke countered with discounts, retail price cuts, ads
questioning tests validity
Pepsi passed Coke in food store sales for the first time

STRATEGIES OF COKE, 1980S

Doubled advertising spending

Introduced Diet Coke huge success
1985 Coke disaster:

Coca-Cola Enterprises created: Anchor Bottler

Change in 99year old formula negative market response Original formula back under Coca-Cola Classic
Coke bought small, poorly managed bottlers and sold to CCE
Renegotiated contracts with suppliers and retailers
Merged redundant distribution, cut workforce by 20%

Pepsi adopted anchor bottlers model

Top 10 bottlers of coke represented 94.7% of volume compared
to Pepsis 87.2% and Cadbury Schweepers 72.9%

1990S END

Stagnation of sales for the CSD industry

Goizueta passed away (Coke share prices rose by 3500%
during his tenure)
Some coke disasters: Contamination issue in Belgium,
layoffs damaging morale, internal problems in acquisitions
Pepsi grew well in this period and became dominant in
non-CSD.
46% returns enjoyed by Pepsi shareholders, compared to
26% of Coke

PROBLEMS FACED BY CSD COMPANIES

Increasingly health conscious consumers

CSD was the largest source of obesity
New federal nutrition guidelines
Stagnation in the sales of CSD (1% growth)
Cola getting a lot of negative press
Importance of non-CSD segment
What is next for the Big 2?
Threat of substitutes (Beer, milk, coffee, bottled
juices, tea, sports drinks etc.)

ADAPTING TO THE TIMES (OPTIONS)

War has gone international. More emphasis here.

Emphasis on nutritious CSD
Diet soda is one path to revive sales
Need for new products
Taking a holistic look at the traditional CSD franchisee
model Can we change it?
Importance of the non-CSD market as it looks like the next
big thing (Energy drinks, Bottled water etc.)
Strategy to align with the new climate

RECOMMENDATIONS
New products for new age consumers
Focusing on the non-CSD market
Gaining international market share by giving
franchises out to local dealers in other countries
to have better focus on the customer segment
Fix the internal problems in the companies

THANK YOU