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Coca-Cola Distribution strategy

distribution strategy of coca cola and contingency plan

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Coca-Cola Distribution strategy

  1. 1. History • Invented in May of 1886 by Dr. John Styth Pemberton • First glass sold for 5 cents at Jacob’s Pharmacy in Atlanta • May 29, 1886- first newspaper advertisement pronounced it “Delicious and Refreshing” • April 1888, Dr. Pemberton sold off his interest in Coca-Cola and passed away two days after. • April 1888, Asa Candler began buying up Coca-Cola shares • By 1892, Asa Candler was sole proprietor of Coca-Cola for a total investment of $2,300.
  2. 2. • In 1894, Joseph A. Biedenharn owner of the Biedenharn Candy Company in Vicksburg, Mississippi, first bottled "Coca Cola". • By 1903 the use of cocaine was controversial and "coca cola" decided to use only "spent coca leaves" It also stopped advertising "coca cola" as a cure for headaches and other ills. • In 1929 after his death Griggs Candler's family sold the interest in 'interest in "coca cola" to a group of businessmen led by Ernest woodruff for $25 million. • Woodruff was appointed president of "coca cola" on April 28, 1923 • On July 12, 1944, the one-billionth gallon of Coca-Cola syrup was manufactured by The Coca-Cola Company. Cans of Coke first appeared in 1955. • The Coca-Cola Company re-entered India through its wholly owned subsidiary, Coca-Cola India Private Limited and re-launched Coca-Cola in 1993 after the opening up of the Indian economy to foreign investments in 1991.
  3. 3. Coke brands in Indian origin COCA-COLA: Developed in a brass pot in 1886, Coca-Cola is the most recognized and admired trademark around the globe. Not to mention the best selling soft drink in the world. SPRITE: In 1961, a citrus-flavored drink made its U.S. debut, using "Sprite Boy" as inspiration for its name. This elf with silver hair and a big smile was used in 1940s advertising for Coca- Cola. Sprite is now the fastest growing major soft drink in the U.S., and the world's most popular lemon-lime soft drink.
  4. 4. FANTA: The name "Fanta" was first registered as a trademark in Germany in 1941, when it was used for a few years for a soft drink created from available materials and flavors. The name was then revived in 1955 in Naples, Italy, when it was used for the "Fanta" orange drink we know today. It is now the trademark name for a line of flavored drinks sold around the world. DIET COKE: The extension of the Coca-Cola name began in 1982 with the introduction of diet Coke (also called Coca-Cola light in some countries). Diet coke quickly became the number- one selling low-calorie soft drink in the world.
  5. 5. LIMCA: This is thirst-quenching beverage features a fresh and light lemon-lime taste and a lighthearted attitude. The Limca brand was introduced in 1971 and acquired by the Coca-Cola Company in 1993. MAAZA: Maaza, launched in 1984 and acquired by The Coca-Cola Company in 1993, is a non-carbonated mango soft drink with a rich, juicy m natural mango taste.
  6. 6. Thumps Up: In 1993, The Coca-Cola Company acquired this brand, which was originally introduced in 1977. Its strong and fizzy taste makes it unique carbonated Indian Cola. KINLEY WATER: This is thirst-quenching beverage features fresh the fresh water with the saturated oxygen level.
  7. 7. Market share and growth Current sales turnover of the company:- • Foreign Sales- 28285 million • Domestic Sales- 19732 million • Growth rate (past 5 years) Revenue Growth 13.40% EBIT Growth 7.60% Free cash flow growth 8.10% Book Value Growth 13.60%
  8. 8. Strategies followed by the company • One of Coca cola’s goals is to maximize growth and profitability to create value for our shareholders. Coca cola’s efforts to achieve this goal are based on: • Transforming its commercial models to focus on our customers’ value potential and using a value-based segmentation approach to capture the industry’s value potential. • Implementing multi-segmentation strategies in its major markets to target distinct market clusters divided by consumption occasion, competitive intensity and socioeconomic levels. • Implementing well-planned product, packaging and pricing strategies through different distribution channels. • Driving product innovation along with different product categories • Achieving the full operating potential of various commercial models and processes to drive operational efficiencies throughout the company.
  9. 9. Distribution strategy • The company operates a franchised distribution system dating from 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory. • Hub and Spoke model for rural distribution channel, in which they divided the different categories of distributors according to the area they are covering. Coca Cola Company makes two types of selling • Direct selling -In direct selling they supply their products in shops by using their own transports. They have almost 450 vehicles to supply their bottles. In this type of selling company have more profit margin. • Indirect selling -They have their whole sellers and agencies to cover all area. Because it is very difficult for them to cover all area of Pakistan by their own so they have so many whole sellers and agencies to assure their customers for availability of coca cola products.
  10. 10. Promotion PUSH STRATEGY • Coca cola is using Push strategy in which they use its sales force and trade promotion money to induce intermediaries to carry, promote and sell the product to end users i.e. consumers. • For example-as coca cola is giving free pet bottles and other trade schemes to distributors, agency owners and retailers. PULL STRATEGY • Coca-cola is also using Pull strategy in which they are using advertising and promotion to persuade consumers to ask intermediaries for the company brand product by this way coca cola inducing customer to order it from shopkeeper. • For example-Coca cola is using flanges, display racks, tier racks, standees, mobile hangers and visicooler brand strips
  11. 11. Swot analysis STRENGTHS: • Coke Company has a good market reputation and a strong distribution network. • Coke is having a multi brand strategy ad is looking for a great volume opportunity in India. • Coke is presently no. 1 player in Indian Carbonated soft drinks market. • Coke was born 11 year before Pepsi (in 1987) ad a century later still maintains that pioneering least. • Pepsi and coke both have good brand image. WEAKNESS: • Coke has less no. of retailers • Less force - it has less no. Have owned bottling plant. • It has not planned for setting up of any new plants where their competitor has planned to set up several new plants.
  12. 12. OPPORTUNITY: • A rapidly growing market, which is expanding @ 205 every year. • It can take the market very well with the new investment of Rs. 2400 corers. • It can give a big jerk to its major competitor Pepsi it can increase its number of fountain to a sizeable amount. • Increasing trend of cold drink of different brands. THREATS: • It has a continuous threat from Pepsi as well as various other local soft drinks. • Coke has a major market than Pepsi between the teenager as well as the student due to advertisement of world cup cricket. • A large amount of expenses on the advertisement. • There is no proper policy of distributing the merchandising assets of the company to the retailers. • The company should search the new target market to expand the market share in this competitive era. • To meet the demand of the customers the company should set up the new plants as its competitors are planning to set up.
  13. 13. Conclusion • According to the survey, conducted by the international firm Indian People like less sweet cola drink. So for this Coca-Cola Company should Think about bringing a new product for example new diet flavors, in the Market to fulfill the local need. • Marketing team should try to increase the availability of Coke in rural Areas. • Now young generation has a trend to drink a coke 2 regular bottles at Same time, so providing more satisfaction to them company. • Coca Cola Company should think about producing Coke can locally as Well because currently coke Cans are only smuggled from abroad and Sold at high price. Company can capitalize on this factor.
  14. 14. Contingency plan Declining Consumer Demand • Reduced consumer confidence and disposable income, together with challenging macro-economic conditions could lead to reduced demand for our products due to lower consumer spending. This trend continued in 2012 in our established and developing markets as the Eurozone sovereign debt crisis remains a key issue. Foreign exchange • Our foreign exchange exposure arises from adverse changes in exchange rates between the euro, the US dollar and the functional currencies in our non-euro countries. • This exposure affects our results in the following ways: • raw materials purchased in currencies such as the US dollar or euro can lead to higher cost of sales which, if not recovered in local pricing or through cost reduction initiatives, might lead to reduced profit margins; • devaluations of weaker currencies that are accompanied by high inflation and declining purchasing power can adversely affect sales and unit case volumes; and • As some operations have functional currencies other than our presentation currency (euro), any change in the functional currency against the euro impacts our income statement and balance sheet when results are translated into euros, as this exposure is unhedged. • In 2012, we experienced devaluations in two of our markets.
  15. 15. Channel mix • The increasing concentration of retailers and independent wholesalers, on which we depend to distribute our products in certain countries, could lower our profitability and harm our ability to compete. • In addition, the immediate consumption channel is under pressure as consumers switch increasingly to at-home consumption. • This trend continued in 2012 with many in the hotel/restaurant/café segment going out of business. Climate Change • Climate change presents significant long-term risks to our business – from rising energy costs to threats to our agricultural supply chain and availability of water. Adverse weather conditions could reduce demand for our products and the price and availability of key crops (e.g. sugar). Water scarcity could limit availability for our operations. Increased regulation on carbon emissions could increase costs for our business. • In 2012, there was no significant change to this risk. Product quality • Contamination of our products could damage our reputation and depress our revenues. • In 2012, we experienced three public product recalls in Greece, the first in our business since its inception. Safety • Adverse safety performance can affect our reputation with customers, consumers, communities and employees. It also leads to lost-time incidents, which represent both a human and financial cost to the business. Our highest risks are around road safety because of the amount of travel within our distribution infrastructure, and because road safety in general is a challenge in some of our emerging markets
  16. 16. Thank you Team efforts by: Kushagr Jain Nitin Pratap Ruchi Negi Nikhil Kr. Singh Anjali Saxena Puneet Ranjan Priyanka Tiwary Chanchal Kr. Jha