Description
This is about case study on coke.
COCA-COLA: THE BATTLE ON NON-CARBONATED FRONT
For years, consumers have been moving away in droves from carbonated drinks to juices, bottled water and other non carbonated beverages. In the US alone, the non carbonated drinks market grew by 8% in 2003 compared to the previous year, while carbonated drinks consumption grew by less than 1% between 1998 and 2003. Coca-Cola: A Brief: Coca cola is an Atlanta based company .It is one of the world’s top beverage makers and owns roughly half of the global beverage market. However, Coca cola also succumbed to this change. Since the late 1990’s, the company has been experiencing stagnating growths and flat profits due to saturation of carbonated markets. To capture the growing non carbonated segment, coca cola began focusing almost exclusively on developing new beverages to reinvigorate its growth. After decades of focusing almost exclusively on carbonated drinks, the company has incorporated a cultural shift to move beyond carbonated beverages into the non-carbonated arena. Growing importance of non- carbonated drinks: In the 1980’s sales was fueled by a demand for diet drinks, but in the 1990’s the demand began to lean towards non-carbonated drinks like fruit juices , bottled water, and milk beverages. As a result between 1990 and 2000, the share of carbonated beverages fell from 71.3 % to 60.5%. This trend towards non-carbonated beverages was largely due to the mounting concerns about the harmful effects associated with carbonated soft drinks. Scientific studies have shown that regular intake of carbonated drinks can lead to health problems such as obesity, diabetes, tooth decay, osteoporosis, nutritional deficiencies, heart diseases and many neurological disorders. It increases the acid levels in the whole body, which is manifested through gastronomic distress. In order to neutralize a glass of cola, it takes 32 glasses of high PH alkaline water. Due to these health issues, consumers are opting more and more for non-carbonated beverages.
Identifying Market: The fastest growing product line among non carbonated beverages is bottled water. The shortage of potable drinking water, especially in many developing countries, boosted the demand for clean commercial water. Bottled water market has increased from $2.5 billion to $7.6 billion in 2002. Bottled water is poised to slide past beer, milk, and coffee to become the second best selling beverage behind soft drinks in the US within the next couple of years. Coca-cola which has been facing troubles with growth of its carbonated brands, identified the increasingly large role played by non carbonated drinks towards the development of the company. Departing from years of cola centric tradition, Coca cola began developing strategies to build its empire in the non carbonated field. Although coca cola was the king of the soft drink empire, bigger than Pepsi and Cadbury Schweppes, It was a distant second behind Pepsi in the growing non carbonated segment. Coca cola had a lot of catching up to do as competitors like Pepsi, Perrier group and Quaker Oats had already made strides into non carbonated arena. Coke’s non carbonated brands were not performing well in the market. • • Cokes’ Fruitopia was lagging behind “Snapple” in terms of market shares. The sports Drink Brand “Powerade” was struggling to compete with Quaker Oats “Gatorade”. Coca cola’s Restructuring Plan: Under the leadership of Douglas Daft, coca cola underwent a cultural transformation by moving beyond carbonated drinks and into the faster growing markets for bottled water, juices and other non carbonated drinks. He proposed a restructuring plan that included writing down much of the company’s bottling operations, laying off roughly 20% of its 29000 workers, and pushing new-product development down to its regional managers.
In 1999, Coca Cola introduced its first bottled water product under the brand name “Dasani” in the US markets. “Bonaqua”, another bottled water brand was extended in the European markets. It was positioned as low tap purified water. The company retrenched Fruitopia with a product that was more like a soft drink, but without commanding premium prices. To accelerate its growth in carbonated products, it innovated the carbonated segment by introducing brands like Sprite Remix, Surge and Citra. Although some of the new innovations and line extensions were aimed at enhancing market share, a major part was focused on penetration in new segments. Coca Cola initiated a new project called “ Project Mother ”to produce 5 new milk based drinks targeted for the under 12 age groups. Acquisitions During 2000, many players undertook acquisitions aimed at expanding into non carbonated markets. • • • Cadbury bought Snapple beverage group. Coke lost “South Beach Beverage” company of energy and tea drinks to Pepsi in a bidding war. Coca cola backed out of talks to buy Quaker Oats, maker of sports drink Gatorade and this opportunity was snapped by Pepsi. With this Pepsi was the number 1 spot in the non carbonated sector.
Strategy adopted • • Coca Cola initiated a series of collaborations; it enunciated a tie up with Walt Disney to sell healthy drinks for kids. It extended the minute maid line in 2001 by introducing minute maid light lemonade, which was the first diet, non carbonated, fountain drink containing real juice. • The company outsmarted Pepsi by being the first to include a blend designed to lower cholesterol.
• • •
It launched its sports drink ‘Powerade’ and it increased its global sports drink segment by 13%. It introduced new products in the carbonated segment as well like vanilla coke was launched in 2001. The diet coke portfolio was expanded by launching diet coke in lemon flavor.
Regional products It also introduced a series of regional brands during the year 2001. ? Marocha green tea in Japan. This was the fastest growing product in the fastest growing category -green tea. ? Qoo in Asis ? Kapo in Latin America ? Bibo in Africa In order to enhance the company’s marketing muscle, it inked a $150 million deal with Warner Bros. to co-market the Harry Potter film around the world.
Cokes’ extension line ? For the year 2002, coca cola bought New-York based ‘PJ Bean Co’, maker of ‘Planet Java’, to expand its presence in the ready-to-drink coffee market. ? The bottled coffee brand was to compete with ‘Frappuccino’. ? The company bought ‘Choglit’ (first joint venture of Coke and Nestle) marking its first entry into the milk-based beverage segment in US. ? It introduced 225 new sodas and soft-drinks. ? Continued its efforts to customize major brands to cater to the local taste around the world. ? Eg- Sprite Remix was launched in tropical flavour which increased its sale by 12%
? This resulted in a 14% increase in the sale of non-carbonated drink and 8% increase in operating profits. Coca Cola achieved worldwide volume growth by 5%, nearly 950 million increment in unit cases. It out spaced all the other major industries in the beverage sector. The % rise of the respective segments is as follows:• • • • • Carbonated soft drinks- 2% Non carbonated beverages- 28% Juices and drinks category- 21% Powerade-25% Water business-68%
THE ROAD AHEAD 1) Coca cola plans to launch many more new products aimed at penetrating into new market segments and accelerating the growth of the company. 2) It plans to introduce “Swerve”, its second milk beverage brand to be sold only in schools 3) Introduction of a new bottled spring water brand in Belgium, France and Germany. Amongst the heavy water war competition including Nestle and group danone. 4) It currently sells 400 diverse products and envisions a day when it will offer 2000 or more diverse products.
doc_884599873.doc
This is about case study on coke.
COCA-COLA: THE BATTLE ON NON-CARBONATED FRONT
For years, consumers have been moving away in droves from carbonated drinks to juices, bottled water and other non carbonated beverages. In the US alone, the non carbonated drinks market grew by 8% in 2003 compared to the previous year, while carbonated drinks consumption grew by less than 1% between 1998 and 2003. Coca-Cola: A Brief: Coca cola is an Atlanta based company .It is one of the world’s top beverage makers and owns roughly half of the global beverage market. However, Coca cola also succumbed to this change. Since the late 1990’s, the company has been experiencing stagnating growths and flat profits due to saturation of carbonated markets. To capture the growing non carbonated segment, coca cola began focusing almost exclusively on developing new beverages to reinvigorate its growth. After decades of focusing almost exclusively on carbonated drinks, the company has incorporated a cultural shift to move beyond carbonated beverages into the non-carbonated arena. Growing importance of non- carbonated drinks: In the 1980’s sales was fueled by a demand for diet drinks, but in the 1990’s the demand began to lean towards non-carbonated drinks like fruit juices , bottled water, and milk beverages. As a result between 1990 and 2000, the share of carbonated beverages fell from 71.3 % to 60.5%. This trend towards non-carbonated beverages was largely due to the mounting concerns about the harmful effects associated with carbonated soft drinks. Scientific studies have shown that regular intake of carbonated drinks can lead to health problems such as obesity, diabetes, tooth decay, osteoporosis, nutritional deficiencies, heart diseases and many neurological disorders. It increases the acid levels in the whole body, which is manifested through gastronomic distress. In order to neutralize a glass of cola, it takes 32 glasses of high PH alkaline water. Due to these health issues, consumers are opting more and more for non-carbonated beverages.
Identifying Market: The fastest growing product line among non carbonated beverages is bottled water. The shortage of potable drinking water, especially in many developing countries, boosted the demand for clean commercial water. Bottled water market has increased from $2.5 billion to $7.6 billion in 2002. Bottled water is poised to slide past beer, milk, and coffee to become the second best selling beverage behind soft drinks in the US within the next couple of years. Coca-cola which has been facing troubles with growth of its carbonated brands, identified the increasingly large role played by non carbonated drinks towards the development of the company. Departing from years of cola centric tradition, Coca cola began developing strategies to build its empire in the non carbonated field. Although coca cola was the king of the soft drink empire, bigger than Pepsi and Cadbury Schweppes, It was a distant second behind Pepsi in the growing non carbonated segment. Coca cola had a lot of catching up to do as competitors like Pepsi, Perrier group and Quaker Oats had already made strides into non carbonated arena. Coke’s non carbonated brands were not performing well in the market. • • Cokes’ Fruitopia was lagging behind “Snapple” in terms of market shares. The sports Drink Brand “Powerade” was struggling to compete with Quaker Oats “Gatorade”. Coca cola’s Restructuring Plan: Under the leadership of Douglas Daft, coca cola underwent a cultural transformation by moving beyond carbonated drinks and into the faster growing markets for bottled water, juices and other non carbonated drinks. He proposed a restructuring plan that included writing down much of the company’s bottling operations, laying off roughly 20% of its 29000 workers, and pushing new-product development down to its regional managers.
In 1999, Coca Cola introduced its first bottled water product under the brand name “Dasani” in the US markets. “Bonaqua”, another bottled water brand was extended in the European markets. It was positioned as low tap purified water. The company retrenched Fruitopia with a product that was more like a soft drink, but without commanding premium prices. To accelerate its growth in carbonated products, it innovated the carbonated segment by introducing brands like Sprite Remix, Surge and Citra. Although some of the new innovations and line extensions were aimed at enhancing market share, a major part was focused on penetration in new segments. Coca Cola initiated a new project called “ Project Mother ”to produce 5 new milk based drinks targeted for the under 12 age groups. Acquisitions During 2000, many players undertook acquisitions aimed at expanding into non carbonated markets. • • • Cadbury bought Snapple beverage group. Coke lost “South Beach Beverage” company of energy and tea drinks to Pepsi in a bidding war. Coca cola backed out of talks to buy Quaker Oats, maker of sports drink Gatorade and this opportunity was snapped by Pepsi. With this Pepsi was the number 1 spot in the non carbonated sector.
Strategy adopted • • Coca Cola initiated a series of collaborations; it enunciated a tie up with Walt Disney to sell healthy drinks for kids. It extended the minute maid line in 2001 by introducing minute maid light lemonade, which was the first diet, non carbonated, fountain drink containing real juice. • The company outsmarted Pepsi by being the first to include a blend designed to lower cholesterol.
• • •
It launched its sports drink ‘Powerade’ and it increased its global sports drink segment by 13%. It introduced new products in the carbonated segment as well like vanilla coke was launched in 2001. The diet coke portfolio was expanded by launching diet coke in lemon flavor.
Regional products It also introduced a series of regional brands during the year 2001. ? Marocha green tea in Japan. This was the fastest growing product in the fastest growing category -green tea. ? Qoo in Asis ? Kapo in Latin America ? Bibo in Africa In order to enhance the company’s marketing muscle, it inked a $150 million deal with Warner Bros. to co-market the Harry Potter film around the world.
Cokes’ extension line ? For the year 2002, coca cola bought New-York based ‘PJ Bean Co’, maker of ‘Planet Java’, to expand its presence in the ready-to-drink coffee market. ? The bottled coffee brand was to compete with ‘Frappuccino’. ? The company bought ‘Choglit’ (first joint venture of Coke and Nestle) marking its first entry into the milk-based beverage segment in US. ? It introduced 225 new sodas and soft-drinks. ? Continued its efforts to customize major brands to cater to the local taste around the world. ? Eg- Sprite Remix was launched in tropical flavour which increased its sale by 12%
? This resulted in a 14% increase in the sale of non-carbonated drink and 8% increase in operating profits. Coca Cola achieved worldwide volume growth by 5%, nearly 950 million increment in unit cases. It out spaced all the other major industries in the beverage sector. The % rise of the respective segments is as follows:• • • • • Carbonated soft drinks- 2% Non carbonated beverages- 28% Juices and drinks category- 21% Powerade-25% Water business-68%
THE ROAD AHEAD 1) Coca cola plans to launch many more new products aimed at penetrating into new market segments and accelerating the growth of the company. 2) It plans to introduce “Swerve”, its second milk beverage brand to be sold only in schools 3) Introduction of a new bottled spring water brand in Belgium, France and Germany. Amongst the heavy water war competition including Nestle and group danone. 4) It currently sells 400 diverse products and envisions a day when it will offer 2000 or more diverse products.
doc_884599873.doc