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Coca-Cola: one of the inevitables


According to the Coca-Cola company’s website, there are 1.9bn global servings of its products each day in over 200 countries and it’s estimated to control 30% of the global beverage market.

In the UK, and much of the rest of the world, Coca-Cola is also the owner of Powerade, Vitaminwater, Schweppes, Sprite, Fanta, Dr Pepper, Lilt, Oasis, Relentless and retro favourite 5 Alive as well as all the related Light, Diet, Zero and Free spinoffs. Between Coke, Diet Coke, Fanta and Spite, Coke as a whole own four of the world’s top five soft drinks brands. To add insult to injury, in several years recently Diet Coke alone has outsold Pepsi in the US.

So how does the Coca-Cola Company sees itself, or, rather, how does it want us to see it? The following is taken from its UK website:

“Founded in 1886 by pharmacist Dr John S Pemberton in Atlanta, Georgia, The Coca‑Cola Company is the world’s leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups, and produces more than 500 brands. The Coca‑Cola Company continues to be based in Atlanta, USA, with operations in more than 200 countries.”

Notice how strongly Coca-Cola emphasises its heritage alongside its global reach? Coke, as market leader since forever, has the undoubted advantage of being well-known as the originator of its genre, so to speak. In the minds of many, Coca-Cola is not just cola, but IS soft drinks.

In the 1980s, Pepsi began the extremely successful Pepsi challenge campaign, which emphasised that Pepsi outperformed Coke in blind taste tests. By 1983 Pepsi had started to outsell Coke in supermarkets. On April 23 , 1985, Coca-Cola responded with what is seen paradoxically as either one of the worst marketing blunders of all time, or a stroke of untrammelled genius: New Coke – a new recipe specifically formulated to outperform both Coke ‘classic’ and Pepsi in blind taste tests. It was a disaster.

During New Coke’s first month, Pepsi recorded the fastest year-on-year sales growth in its 92 year history. Coke received over 400,000 calls and letters of complaint. Less than three months later, Coke ‘classic’ was revived, an event that Senator David Pryor dubbed “a meaningful moment in U.S. history” in the senate, and sales surged.

If this story has a moral, it’s that Coke’s greatest strength is itself. It was Interbrand’s top brand in the world for 12 successive years from 2000 to 2012 and to maintain its position, aside from continuing to evolve and expand in emerging markets, much of its battle is just reminding consumers of that.

Take the ‘Share a coke with…’ campaign which ran in the UK in summers 2013 and ’14, and 70 other countries, when Coke printed the country’s 1000 most popular names on bottles and cans. This was hugely successful, generating 998m ‘impressions’ on Twitter; 235,000 tweets from 111,000 fans using the #ShareaCoke hashtag; resulting in over 730,000 glass bottles personalised via the online store and 17,000 virtual named bottles shared online across Europe. Campaigns such as this cement Coke’s brand in the minds of millennials, for whom ‘sharing’ on social media is an activity engrained into everyday life.

Chris Ross, Senior Brand Activation Manager, said:

“Share a Coke is about taking our global brand and making it personal to our consumers, giving them the chance to Share a personalised Coke with friends or loved ones and creating special moments of happiness, and memories.” Yes, this is trite stuff but the fact remains that if you’re Coke, the best thing you can do is never let your ubiquity slip.

Coca-Cola too, continually associates itself with major global events such as the 2014 FIFA World Cup, where it was one of Fifa’s main partners. Coca-Cola is also the official sponsor of the Rugby World Cup later this year.

If you had to pick the key word of Coke’s self-assessment it would be ‘marketer’. Coke is so monolithic, so expected, that it’s easy to forget how ceaselessly and relentlessly it renews its core brand. Business Insider found that in 2010, the Coca-Cola company spent more on advertising than Apple and Microsoft combined - this despite Steel Media’s analysis finding that Coke’s red and white logo is already recognised by 94% of people worldwide.

The company reported spending $3.3bn on advertising globally in 2013 and Coca-Cola’s CEO Muhtar Kent said in early 2014 that the company plans to increase media spending and brand-building initiatives by up to $1bn by 2016, funded by operational streamlining. He was keen to emphasise that the marketing investments would be felt “in every country that we operate in large or small.”

Last year, in response to long-rumbling concerns about the effects of both diet and ‘full fat’ fizzy drinks, Coke launched Coca-Cola Life, a “mid-calorie” soft drink in a green can with a third less sugar than Coke. It is perhaps a sign of just how embedded in the contemporary culture Coke is that the name ‘Life’ did not even attract that much mockery. In truth, it hardly even matters whether Life proves a success…

International still beverage growth will likely be a major source of Coca-Cola’s growth in the future. The company has 11 still brands worth over $1bn per year in sales. A major strength is diversity: in addition to the Coca-Cola company’s 19 $1bn brands, Coca-Cola has 20 brands that do between $500m and $1bn per year in sales.

Certainly there is more work to be done. In 2012, on a volume per capita basis Coca Cola sold 3.5% in India of what it did in the US. In China, the equivalent figure was 10%. These are gigantic markets – together, eight times bigger than the US, and ones that Coca-Cola will target aggressively in the future. With the strength of its central brand, backed up by a diverse stable of others, marketing expertise and operational know-how, it seems unlikely that Coca-Cola will not be able to capitalise on these expanding markets.

Warren Buffet-led investment company Berkshire Hathaway, which specialises in ‘value investing’, owns a $15.3bn share in Coca-Cola. Buffett, consistently ranked amongst the richest people in the world and known as “the oracle of Ohama” for his consistent ability to pick undervalued stocks, wrote in a letter to shareholders way back in 1996: “Companies such as Coca-Cola…might well be labelled “The Inevitables…No sensible observer – not even these companies’ most vigorous competitors, assuming they are assessing the matter honestly - questions that Coke will dominate [its] field worldwide for an investment lifetime. Indeed, [its] dominance will probably strengthen.”

Coca-Cola’s third quarter results to September 2014 were unspectacular: net revenues were even in the quarter and down 2% in the year to date. Coca-Cola’s October growth strategy outwardly contained nothing spectacular in response. Aside from fairly standard fair about “streamlining and simplifying its operational model” and “expanding productivity initiatives”, its central aim was this:

“Refocusing on [our] core business model of building the world’s greatest beverage brands and leading an unmatched global system of strong local bottling partners.” In other words, just keep being Coke.

Published on Thursday 12 February by Editorial Assistant

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