Uploaded on

cola wars contiue case

cola wars contiue case

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
  • gd one
    Are you sure you want to
    Your message goes here
No Downloads

Views

Total Views
14,881
On Slideshare
0
From Embeds
0
Number of Embeds
1

Actions

Shares
Downloads
869
Comments
1
Likes
1

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Cola Wars Continue Case Study Analysis Presented by- Dhirendra Singh Erwin Saurabh Tigga Debabrata Swain Dilip Kumar Ganesan.M
  • 2.
    • War over $66bn industry
    • lasted between 1950-1990s
  • 3. New Challenges
    • Cola wars continued into the 21st century with new challenges
      • Was their era of sustained growth and profitability coming to a close?
      • Could they boost flagging domestic CSD sales?
      • Would newly popular beverages provide them with new (and profitable) revenue streams?
  • 4. Production & distribution of CSD
    • concentrate producers
    • Bottlers
    • Retail channels
    • suppliers
  • 5. Concentrate Producer
    • Blended raw material ingredients,packaged the mixture, shipped those container to the bottler.
    • Key production investment areas
    • - machinery, overhead and labor.
    • A typical manufacturing plant
    • cost - $25 million to
    • $50 million
  • 6. Concentrate Producer
    • Significant costs were for advertising, promotion, market research.
    • Coca-Cola and Pepsi-Cola claimed a combined 74.8% of the U.S. CSD market in sales volume in 2004
  • 7. Bottlers
    • Bottlers purchased concentrate
    • Added carbonated water and high-fructose corn syrup
    • Bottled or canned the resulting CSD product
    • Delivered it to customer account
  • 8. Bottlers
    • Bottling process is capital intensive.
    • Packaging accounted for 40% to 45% of sales, same for concentrate and sweeteners for 5% to 10%.
    • Coke and Pepsi bottlers offered “direct store door delivery”.
    • Cooperative merchandizing agreements is a key ingredient of soft drink sales.
  • 9. Profitability
    • Concentrate producer earn more profit than bottler.
    • Cost of sale is more in bottler.
  • 10. Retail channel
    • Super markets
    • Vending machines
    • Convenience stores
    • Gas stations
  • 11. Suppliers to Bottlers
    • Coke and Pepsi were among the metal can industry’s largest customers.
    • Major can producers- Ball, Rexam, Crown Cork & Seal
  • 12.  
  • 13. Caleb D. Bradham
  • 14. Cola War begins
    • “ Beat Coke”
    • “ Pepsi Generation”
    • “ young at heart.”
    • Concentrate Price 20% lower
    • 1970 – larger bottlers
    • “ American’s preferred taste”
    • “ No wonder Coke refreshes best”
  • 15. Year 1960s – the Armageddon
    • Fanta (1960)
    • Sprite (1961)
    • Low calorie cola Tab (1963)
    • Non-CSD (Purchased)
    • Minute Maid (fruit juice)
    • Duncan foods (coffee, tea, hot chocolate)
    • Belmont Springs water
    • Teem (1960)
    • Mountain Dew (1964)
    • Diet Pepsi (1964)
    • Non-CSD (Merged)
    • Frito Lays
  • 16. Pepsi’s Challenge
    • Blind taste test
    • Eroded Coke’s Market share
    • Part of Pepsi’s promotional strategy not a part of marketing research.
    • Rebates
    • Retail price cuts
    • Advertisements that questions tests validity
    • 1978 – Re-negotiation of contract with franchisee bottlers
  • 17. Leadership
    • 1980 – Roberto Goizueta
    • Share price rose by 3500%
    • Most valuable Brand
    • Use of lower priced corn syrup against sugar
    • Double spending on ads 1981-84
    • Sold non-CSD business
    • Diet Coke (1982)
    • 2001: Steve Reinemund “Grow the core add some more”
    • Launched new CSD products (Sierra Mist, Mountain Dew code red)
    • Acquisition of Quaker Oats
    • Net income raised by 17.6% per year
    • ROI capital 29.3 (2003) from 9.5 (1996 )
  • 18. Product Launch
    • Teem (1960)
    • Mountain Dew (1964)
    • Diet Pepsi (1964)
    • Lemon Lime Slice (1984)
    • Caffeine free Pepsi Cola (1987)
    • Sierra Mist (2000)
    • Mountain Dew Code Red (2001)
    • Pepsi One (2005)
    • Diet Coke with Splenda (2005)
    • Fanta (1960)
    • Sprite (1961)
    • Low calorie cola Tab (1963)
    • Diet Coke (1982)
    • Caffeine free coke (1983)
    • Coca-Cola Classic (1985)
    • New Coke (1985)
    • Cherry Coke (1985)
    • Sierra Mist Free (2004)
    • Coca-Cola Zero (2005)
  • 19.  
  • 20.  
  • 21.  
  • 22. Expansions
    • Acquired – Pizza hut (1978), Toco Bell (1986), KFC (1986)
    • Merged with Frito Lay to form PepsiCo
    • Pepsi purchased Quaker Oats
    • Exclusive deals with Burger king, McDonalds
    • Purchased Minute Maid, Duncan Foods, Belmont Springs water
    • Acquired – Planet Java coffee drink brand
    • Acquired - Mad River juices and tea
  • 23. Marketing Campaigns
    • Pepsi generation
    • Young at heart
    • Pepsi challenge
    • Smart Spot – good for you
    • Americans Preferred Taste
    • No wonder Coke refreshes best
  • 24. Challenges
    • Flat demand during 1998 to 2004.
    • Contamination scare at India
    • Obesity Issue
    • Challenges of Internationalization
  • 25. Challenges to Coca-Cola
    • Performance & execution :
      • on providing alternative beverages
      • on adjusting key strategic relationships,
      • on cultivating international markets
    • Currency crisis in Asia and Russia
    • Recall in Belgium – (public relations disaster)
    • Series of legal problems
  • 26. 1996-2004:reversal of fortune
    • Pepsi flourished
    • Acquisition of Quaker oats
    • 3% growth 2004
    • Net income rose by 17.6% per year
    • ROI 29.3% from 9.5%(1996)
    • Shareholders return 46%
    • Coke struggled
    • Flat growth
    • Annual growth in net income falls to 4.2% from 18%(1990-96)
    • Shareholders return -26%
  • 27. Quest for alternatives
    • Market share:
    • CSD- 80%(2000) to 73.1%(2004)
    • Diet soda- 24.6%(1997) to 29.1%(2004)
    • Bottled water 6.6%(2000) to 13.2%(2004)
    • Non-carbs 12.6%(2000) to 13.7%(2004)
    • Non-carbs & bottled water contribution to volume growth – coke 100% & Pepsi 75%
  • 28. Quest for alternatives
    • No longer designing of marketing course
    • Diet Pepsi, Pepsi One, Diet Coke with slpenda
    • Diet Pepsi as flagship brand
    • Non-CSD: total beverage company
    • Reluctant to diversify
  • 29. Evolving stuctures and stratgies
    • System profitability
    • Price war
    • low -cost strategy by the bottlers
    • Incidence pricing
    • Retailers resist price increases(Wal-Mart)
    • Coke’s relationship with bottlers :
    • Dysfunctional,
  • 30. Internationalisation
    • Next largest market : Mexico, Brazil, Germany, China, and the United Kingdom
    • Asia and Eastern Europe
    • 837 eight ounce cans: 21 eight ounce cans
    • Coke’s dominance : Western Europe, much of Latin America, while Pepsi :Middle East and Southeast Asia.
    • Coca-Cola became synonymous with American culture .
    • About 70% of Coke’s sales and about 80% of its profits came from outside the United States; only about one-third of Pepsi’s beverage sales took place overseas.
    • Arab and Soviet exclusion of Coke
  • 31. Venezuela crisis
    • Before
    After
  • 32. SWOT : Strengths
    • Coke Brands Enjoy a High-Profile Global Presence
    • Four of the top five leading brands
    • Broad-based bottling strategy
    • 47% of global volume sales in carbonates
    • • PepsiCo Brands Enjoy a High-Profile Global Presence
    • Pepsi Owns the World’s 2 nd Best-Selling Soft Drinks Brand
    • Constant Product Innovation
    • Aggressive Marketing Strategies Using Famous Celebrities
    • A Broad Portfolio of Products
  • 33. SWOT : Weaknesses
    • Carbonates Market is in Decline
    • Over-complexity of relationship with bottlers in North America
    • Execution ability
    • Carbonates Market is in Decline
    • Pepsi is Strongest in North America
    • They Only Target Young People
  • 34. SWOT :: Opportunities
    • Soft drinks volumes in the Asia-Pacific region forecast to increase by over 45%
    • Brands like Minute Maid Light and Minute Maid Premium Heart Wise are positioned well with the “Health-concerned” market
    • Use distribution strengths in Eastern Europe and Latin America
    • Increased Consumer Concerns with Regard to Drinking Water
    • Growth in Healthier Beverages
    • Growth in RTD Tea and Asian Beverages
    • Growth in the Functional Drinks
    • Industry
  • 35. SWOT : Threats
    • Growing "health-conscience" society
    • PepsiCo’s Gatorade, Tropicana and Aquafina are stronger brands
    • Boycott in the Middle East
    • Protest against Coke in India
    • Negative publicity in WesternEurope
    • Obesity and Health Concerns
    • Coca-Cola Increases Marketing
    • and Innovation Spending to
    • $400M Globally
    • Relying on North America only
    • is Bad
  • 36. Profit Margins of Industry Concentrate Producers and Bottlers
  • 37.  
  • 38. US Liquid consumption trends (gallons/capita ) Source- US Beverage industry Consumption Statistics
  • 39. Promising Segment US Liquid consumption trends (gallons/capita ) Source- US Beverage industry Consumption Statistics
  • 40. Market Share by case volume(percent ) Coca cola 1966-04 : 29.04% Gain PepsiCo 1966-04 : 55.14% Gain Others 1966-04- 82.55 % loss
  • 41.  
  • 42.  
  • 43.
    • Q:Who has been losing?
    • Smaller Brands:
    • Because-Entry Barrier, Duopoly
  • 44.
    • Q: Who has been wining the war?
    • 1950: Coke have 47% and Pepsi have 10%
    • 1970: Coke have 35% and Pepsi have 29%
    • 1990: Coke have 41% and Pepsi have 32%
    • 2000:Coke have 44%Pepsi have31.4% other beverage Cadbury Schweppes 14.7%
    • 2006:Coke have 43.1% Pepsi have 31.7% Cadbury Schweppes 14.5%
  • 45. Key questions
    • Q: Could they boost flagging domestic CSD sales?
    • Through Product innovation
    • Aggressive marketing and promotion
    • Packaging innovations
  • 46.
      • Would newly popular beverages provide them with new (and profitable) revenue streams?
    • Yes
    • Non carb and Bottled water contribution to
    • Total volume growth: Coke-100%, Pepsi-75
    • Contamination issue, Obesity issue
  • 47.
    • Q-Can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-CSDs?
    • Coke and Pepsi did not just inherit this business they created it.
    • By diversification.
    • Innovation : e.g diet coke
  • 48. Thank you