INTRODUCTION
Coca Cola is a leading brand in the soda industry and the arch rival of Pepsico. The company is present worldwide and sells its products across more than 200 countries. The brand has a global network of bottlers and distributors who have helped it maintain its global presence. Its global network is a key strength that has enabled the company to manage its sales and distribution globally with efficiency. Coca Cola has also managed a large, global and efficient supply chain. However, to achieve and sustain a leadership position in the highly competitive soda industry, it requires several sources of competitive advantage. In recent years, while the net revenues of the company have steadily declined, its global presence and its position in the soda industry has remained strong. The brand has sustained its focus upon marketing which is also a source of competitive advantage in the soda industry. This is a discussion of the resources and capabilities of Coca cola and how they have helped the brand build strong and sustainable competitive advantage.
Global presence:
The business of Coca Cola spans more than 200 countries. The company makes its branded beverage products available to consumers across more than 200 countries and territories through its global network of bottling partners, distributors, wholesalers and retailers. Coca Cola owns the world’s largest beverage distribution network which also includes company owned or controlled bottling and distribution operations. More than 1.9 billion servings of Coca Cola are enjoyed by consumers throughout the world each day. To grow its global presence and brand recognition, Coca Cola continues to invest in marketing. The company has divided its business operations into the following segments :
• Europe, Middle East and Africa • Latin America • North America • Asia Pacific • Bottling Investments
It manages its business mainly on a geographic basis. The headquarters of Coca Cola are in Atlanta, Georgia, United States.
Supply chain:
Coca Cola has also managed a strong and global supply chain which supports its global manufacturing and distribution network. Its global supply chain leverages the size and scale of Coca Cola system to gain a competitive advantage. The company continues to assess the standards across its entire supply chain and update them as required. The company also sources from a large number of farmers across the globe which are the primary suppliers of the agricultural ingredients for the production of Coca Cola beverages. The ingredients used for producing these beverages include a large number of agricultural products such as sugarcane, corn, sugar beets, citrus, coffee and tea. Water is also a key ingredient required for manufacturing Coca Cola products. To maintain consumer confidence in its products, the brand also invests a lot in quality and product safety. The company has formed a code of business conduct for its suppliers to maintain the quality standards down its supply chain. The role of its suppliers is vital to the continued business success of the brand.
Bottling and distribution network :
Coca Cola’s bottling and distribution network has also played a vital role in its success globally. Its large and global bottling and distribution network includes independent bottling partners and distributors, wholesalers, retailers as well as company owned or controlled bottling and distribution operations. Its strong and stable distribution system also helps it capture growth by manufacturing, distributing and selling existing as well as new Coca Cola products around the globe. In 2018, the Coca Cola system sold 29.6 billion unit cases of beverages. Its five main bottling partners in 2018, based upon the number of unit cases and which accounted for around 40% of the entire sales together were :
- Coca-Cola FEMSA, S.A.B. de C.V. (“Coca-Cola FEMSA”)
- Coca-Cola European Partners plc (“CCEP”)
- Coca-Cola HBC AG (“Coca-Cola Hellenic”)
- Arca Continental, S.A.B. de C.V.
- Swire Beverages
These were five independent bottling partners with the largest footprint in various corners of the globe. In this way, the largest network of bottling and distribution partners has helped Coca Cola manage its global presence efficiently. This is a strong source of competitive advantage.
Marketing:
Marketing is also a key source of competitive advantage in the soda industry and a major driver of sales and revenue for the soda brands. Coca Cola is known for its great marketing strategy and promotional techniques. Marketing is one of the leading drivers of its growth and global expansion. Apart from investing in advertising and promotions through several channels including digital and traditional, the company also invests in CSR to manage its reputation. Apart from digital marketing, the company uses social media channels for promotions and customer engagement. In 2018, it invested around $4.1 billion in marketing and promotions. Marketing helps Coca Cola strengthen its sustainable competitive advantage as well as retain sales and customers in a hyper competitive industry and market. The brand also runs seasonal campaigns from time to time to grow its popularity and the excitement surrounding the brand and its products.
Product range and quality:
Another important source of Coca Cola’s competitive advantage is its large and varied product range which Coca Cola has designed, keeping in mind the taste of the modern generation. In recent years, it has also released a large number of health friendly and low calorie beverages. A large product range is also a key driver of sales and revenue for Coca Cola. Coca Cola owns, markets and sells a large number of nonalcoholic beverages that include the following:
sparkling soft drinks: Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, Fanta, Schweppes,* Sprite, Thums Up;
• water, enhanced water and sports drinks: Aquarius, Dasani, glacéau smartwater, glacéau vitaminwater, Ice Dew, I LOHAS, Powerade;
• juice, dairy and plant-based beverages: AdeS, Del Valle, innocent, Minute Maid, Minute Maid Pulpy, Simply, ZICO; and
• tea and coffee: Ayataka, Costa, FUZE TEA, Georgia, Gold Peak, HONEST TEA.
The product portfolio of the company also features 21 billion dollar brands. 19 of them are available in low or zero calorie options. They include Diet Coke, Coca-Cola Zero, Fanta, Sprite, Dasani, vitaminwater, Powerade, Minute Maid, Simply, Del Valle, Georgia and Gold Peak
Human resource management:
Another important source of competitive advantage for the Coca Cola brand is its excellent human resource management. The company has maintained a heavy focus on managing its people strategically. As of 2018, Coca Cola employed 62,600 people of which 11,400 were employed in the United States. The company apart from paying good salaries, has also made attractive benefits including financial and non financial available to its employees throughout the world. Moreover, it spends a large sum each year on the training and development of its people. Coca Cola has an excellent performance management system in place to manage the performance of its employees worldwide. It is using digital tools for the training and development of its employees and has also implemented several training and exchange programs. Inside the organization, Coca Cola has maintained an environment of continuous learning and a culture that fosters diversity and inclusion. The brand was ranked 28th best employer for women for 2019 as well as 33rd among the world’s best employers for 2018 by Forbes.
- Sources:
- Coca Cola Annual Report 2018.