Growth Strategies of Coca-Cola Company
Company overview
The Coca-Cola Company is a manufacturer of more than 3,000 beverages, including carbonated, diet and light beverages, waters, juices, enhanced waters, teas, coffees, and energy and sports drinks. These soft drinks sold under brand names such as The Coca-Cola Company, Cherry Coke, Diet Coke, Thums Up, Kinley, Eight O'Clock, Fanta, Sprite, Pibb Xtra and Fresca, among others. The company owns or licenses about 500 brands. The products are sold to bottling and canning companies, fountain wholesalers and retailers.
In 2010, The Coca-Cola Company announced its plans to acquire Russian juice maker, Nidan from a UK based investment fund, Lion Capital. This is a strategic move made by The Coca-Cola Company to establish it as a dominant player, ahead of its major competitor PepsiCo, in the Russian juice market. However, the deal is subject to approval from the Russian authorities.
Recent financial performance
The Coca-Cola Company reported consolidated revenues of $31,944m for the fiscal year ended December 2008, an increase of 10.7% over 2007. The Coca-Cola Company's revenues grew at a CAGR of 10.1% during 2004–08. The increase in the company’s revenues in 2008 was due to:
• An increase of concentrate sales volumes;
• An increase in average price of soft drinks;
• A favorable product mix;
• Currency fluctuations.
Growth strategies
Product launches to drive business growth
The Coca-Cola Company is expanding its carbonated and still beverages portfolio, focusing largely on health-conscious consumers. In the carbonated beverages category, it launched a new variant of Sprite under the brand name Sprite Green in the US during 2008. The low-calorie carbonated drink contains the natural sweetener Truvia, a steviabased sugar substitute.
In the still soft drinks segment, it has continued to launch products in categories such as juices, ready-to-drink (RTD) beverages and enhanced waters that feature new flavours and ingredients.
Expanding in the emerging markets
The Coca-Cola Company's is increasing its geographical footprint by investing in distribution and other infrastructure in emerging markets such as India and China. In 2009, it announced plans to invest $250m (increasing the current investment by 20%) in India during 2010–13 to create additional infrastructure. This includes adding more bottling lines, new trucks and cold equipment throughout all of its brands in the country. In addition, the company intends to double its investment in China during 2010–13. It already invested $90m in R&D to expand its product lines. It also founded two new bottling facilities in central and western China with its bottling partner COFCO, The Coca-Cola Company Beverages. The investments will cater to the rising demand in northwestern China. It also planned a combined investment of about $2bn during 2010–13 in Turkey, Vietnam and Russia, directed towards creating new R&D and infrastructure facilities.
Acquisitions and divestments
The Coca-Cola Company predominantly acquired companies in the still beverages segment during 2007–09 to capitalize on the shift from conventional carbonates to noncarbonated beverages. It also acquired companies to exploit the potential of emerging markets such as Brazil and Mexico in Latin America.
In addition, it acquired 18 German bottling and distribution operations through its German bottling operation The Coca-Cola Company Erfrischungsgetraenke in 2007. These acquisitions will increase its control over its bottling and distribution operations.
