cola wars case

8/9/2019 Cola Wars Case

1/11

CASE ANALYSIS:

ANEESH KEDLAYA14PGHR08

DEEPA KAUSHIK 14PGHR22

NIHARIKA TANEJA14PGHR43NANCY WADHWA 14PGHR44

RAHUL RASTOGI 14PGHR48

SIDDHANT KEDIA 14PGHR58


2/11

CSD OVERVIEW IN USA

66 billion dollar marketConsumption grew 3% every year

Consumption grew from 23 gallons/yr in 1970 to 52

gallons/yr in 2004

People preferred CSD to other substitutes

CSD ModelConcentrate producers

BottlersRetail channels

Suppliers


3/11

COLA WARS: TOP 2 COMPANIES

1886, John Pemberton

1899, Franchisee Model

Went international during World War 2

Master Bottler contract: Determines concentrateprice and other terms of sales

1893, Caleb Bradham

Pepsi also adopts the franchisee

model

Business grew in the great depression

Master Bottler Contract: Pepsi can

force bottlers to purchase rawmaterials from Pepsi

Coke Pepsi


4/11

COLA WARS: TOP 2 COMPANIES

Acknowledged Pepsi

Americas preferred taste

No wonder coke refreshes best

Fanta, Sprite

Minute maid, Springs water (non-CSD)

1950, Beat Coke (Alfred Steele)

1963, Young at heart (Donald

Kendall)

Teem, Mountain Dew

Frito Lays (non-CSD)

Coke Pepsi


5/11

STRATEGIES OF PEPSI, 1979

Pepsi Challenge blind taste tests in Dallas

Lead to significant increase in sales.

Pepsi took the campaign nationwide

Cokes market share eroded Coke countered with discounts, retail price cuts, ads

questioning tests validity

Pepsi passed Coke in food store sales for the first time


6/11

STRATEGIES OF COKE, 1980S

Doubled advertising spending

IntroducedDiet Coke huge success

1985 Coke disaster: Change in 99year old formula negative market response -

Original formula back under Coca-Cola Classic

Coca-Cola Enterprises created: Anchor Bottler Coke bought small, poorly managed bottlers and sold to CCE

Renegotiated contracts with suppliers and retailers

Merged redundant distribution, cut workforce by 20%

Pepsi adopted anchor bottlers model Top 10 bottlers of coke represented 94.7% of volume compared

to Pepsis 87.2% and Cadbury Schweepers 72.9%


7/11

1990S END

Stagnation of sales for the CSD industry

Goizueta passed away (Coke share prices rose by 3500%

during his tenure)

Some coke disasters: Contamination issue in Belgium,

layoffs damaging morale, internal problems in acquisitions

Pepsi grew well in this period and became dominant in

non-CSD.

46% returns enjoyed by Pepsi shareholders, compared to

26% of Coke


8/11

PROBLEMS FACED BY CSD COMPANIES

Increasingly health conscious consumers

CSD was the largest source of obesity

New federal nutrition guidelines

Stagnation in the sales of CSD (1% growth)

Cola getting a lot of negative press

Importance of non-CSD segment

What is next for the Big 2?

Threat of substitutes (Beer, milk, coffee, bottledjuices, tea, sports drinks etc.)


9/11

ADAPTING TO THE TIMES (OPTIONS)

War has gone international. More emphasis here.

Emphasis on nutritious CSD

Diet soda is one path to revive sales

Need for new products

Taking a holistic look at the traditional CSD franchisee

model Can we change it?

Importance of the non-CSD market as it looks like the next

big thing (Energy drinks, Bottled water etc.)

Strategy to align with the new climate


10/11

RECOMMENDATIONS

New products for new age consumers

Focusing on the non-CSD market

Gaining international market share by giving

franchises out to local dealers in other countriesto have better focus on the customer segment

Fix the internal problems in the companies


11/11

THANK YOU

cola wars case

Documents