Financial Analysis Performing: Coca Cola Inc. vs. Pepsi Co.

Résumé du document

Coca-Cola was invented in May 1886 by John Pemberton, a pharmacist from Atlanta, Georgia. John Pemberton created the Coca Cola formula in a three legged brass kettle in his backyard. The name was a suggestion by his bookkeeper Frank Robinson who also scripted the famous logo.

The soft drink was first sold to the public at the soda fountain in Jacob's Pharmacy in Atlanta. Until 1905, the soft drink, marketed as a tonic, contained extracts of cocaine as well as cocoa nut. In 1887, Asa Candler, his partner bought the formula from Mr. Pemberton for $2,300. By the late 1890s, Coca Cola became one of the best selling drinks in America, largely due to Candler's aggressive marketing of the product. Under Candler's ownership, the company increased its sales by over 4000% between 1890 and 1900.

Today, "The Coca Cola Company" is steered by E. Nevill Isdell and possesses its head office in Atlanta in the United States.
"The Coca Cola Company" is the unchallenged world leader in the soft drink industry. We can count coca-cola, light Coca-cola, Coca-cola without caffeine, Lemon Coca, and a range of famous soft drink brands like Fanta, Sprite, Minute Maid, PowerAde, and Nestea among its most known products.

So, if at the beginning, Pemberton, its inventor, sold just 9 glasses of Coca-cola per day, today, the company produce more than 10 billion gallons of syrup.
Undoubtedly the biggest icon, Coca Cola has gone beyond a product and brand, into the realm of a cultural phenomenon. While all cocaine was removed in the early 1900's, Coca-Cola's flavor continues to entice fans every day. And, regarding the mysterious formula, a single written copy remains in vault in SunTrust Bank in Atlanta, Georgia. Less than 10 people know the formula of the popular soft drink.

Extraits

[...] The most popular beverage was something he called "Brad's drink" made of carbonated water, sugar, vanilla, rare oils, and pepsin and cola nuts. "Brad's drink", created in the summer of 1893, was later renamed Pepsi Cola in 1898 after the inclusion of pepsin and cola nuts in the recipe. In 1898, Caleb Bradham bought the trade name "Pep Cola" for $100 from a competitor from Newark, New Jersey. The new name was trademarked on June 16th and Bradham's neighbor, who was an artist, designed the first Pepsi logo. [...]

[...] In marketing the cola's have a global hue. Pepsi is usually blue and Coke is usually red. Pepsi is attempting to market their product in a red wrapper in China for the 2008 Olympics and so far has been met with a raised eyebrow (Chao & McKay). Free trade trade-off's can have benefits and down falls. A trade-off is something that a corporation manipulates to gain benefits but this may also create disadvantages, for example the use of time, money or product quality. [...]

[...] A significant portion of this cash was generated in locations outside the US. CASH AND CASH EQUIVALENTS Net Cash Flow As exhibited, the net cash flow is continuously increasing, which strongly suggests that the Coca-Cola Company's ability to generate cash from operations is one of the fundamental financial strength. Free Cash Flow (FCF) In 2004 the FCF of the company plummeted primarily due to the impact of the major acquisition of plants and bottling companies in Germany, South Africa including the big purchase of San Miguel Corporation, the biggest bottling company in the Philippines. [...]

[...] Five years of financial data from Pepsi Inc. were obtained from Morningstar and Yahoo Finance reports. The balance sheets and the income statements from 2004 to 2007 were analyzed Balance sheet Are suggested initiatives to improve revenue? The PepsiCo products require meeting the needs and wants of the customers. They are designing products to meet healthy guidelines (PepsiCo5, pg. 2). This is the current trend with beverages and snack foods. The company focuses on reducing cost of production to keep sales prices down for the customer. [...]

[...] They are using sources of green power to decrease the negative impact on the environment (Kenney), which in turn increases the sales from the environmentally conscious consumers. Conceptual Framework Underlying financial accounting Coca Cola Inc vs. Pepsi's fight in the world In the United States, Pepsi outsells Coke in central Appalachia, the city of Chicago, the state of North Dakota, the region in and around the state of Utah, and in the city of Buffalo (by a 2-1 margin). More importantly, Pepsi outsells its rival in grocery and convenience stores in the U.S. [...]