The Cola Wars: Pepsi vs. Coca-Cola

Résumé du document

Fight against obesity: In the United States, the current first lady Michelle Obama wants to fight obesity as the health issue number one of this century. She launched the campaign “Let's Move” which aims to push the cafeterias of public schools to change and diversify their menus, and to make the children more sensitive about exercising and practicing sports.
The political environment is changing. The mayor of New York, Michael Bloomberg, wants to prohibit the sale of XXL sodas (extra-large cans) in the restaurants, movie theaters, baseball stadiums… Michael Bloomberg already prohibited the purchase of sodas with food stamps, to protect the lower class from obesity.

In the US, the number of calories now has to appear on the bottle. The Unites States are returning to the state of prohibition, not for the alcoholic beverages but this time, for the non-alcoholic beverages, which involves a strong lobbying by pressure groups to limit the restrictions.

Indeed, the fight against obesity doesn't gather all the political class. Some Republicans denounce the actions taken by the government as a violation of individual freedom, claiming that they are creating a country of assistantship, a “nanny” country.

Extraits

[...] Some geographical areas are dominated by Pepsi and some others are dominated by Coca Cola. However, Coca Cola is the world's largest company on the general non-alcoholic beverage market. Coca Cola is the leader of the sparkling beverage market, and owns four of the world's top five nonalcoholic sparkling beverage brands including Coca-Cola, Diet Coke, Sprite and Fanta, while Pepsi is the leader of the still beverages (juices like Tropicana, sports drinks like Gatorade, waters ) Porter's five forces model Potential entrants: Other non-alcoholic beverage brands, private label products Suppliers: Bottling partners, same model for Pepsi and Coca Cola Clients / Distributors: Oligopoly dominated by Coca Cola and Pepsi Intense competition Substitute products: Nonalcoholic beverages different than sodas like fruit juices, energy drinks Supermarkets, grocery stores, hotels, restaurants, movie theaters, theme parks II) The strategy of the Coca Cola Company The Coca Cola Company is an American multinational company, which is the world's leader of the non-alcoholic beverage market, operating in this industry as manufacturer, retailer and marketer of non-alcoholic concentrates and syrups. [...]

[...] In of adults and 17% of children between 2 and 19 years old are in a situation of obesity in the US. The sodas, like the junk food, are often assimilated to this obesity issue. Since 30 years, the rate of obesity has tripled. However, the first measures undertaken by the government are paying, indeed for the first time the rate of children's obesity in the US has decreased, so the government will probably continue its efforts to fight against this health issue, which represents a threat for sodas manufacturers like Coca Cola or Pepsi. [...]

[...] In 2010, the company has affirmed its plans to build and expand its nutrition business to further grow its “Good-for-You” portfolio of products. In line with this strategy, the company acquired Wimm-Bill-Dann, one of Europe's largest dairy products company, in 2010. Additionally, the company is also focused on expanding its portfolio of products made with allnatural ingredients, increasing the amount of whole grains, fruits, vegetables, nuts, seeds and low-fat dairy in several of its products, while taking steps to reduce the amount of sodium, saturated fat and added sugar per serving to strengthen its nutritional offerings. [...]

[...] Any increase in the food prices will affect the company's cost of raw materials and needs to be compensated by either price increases or by driving volume sales. However, increasing volume sales is difficult to achieve in mature markets like the North America or Western Europe, where any impact of global food prices will have to be offset through additional investments by the company on advertising or promotions to drive more volume sales. Intensifying competition with Coca-Cola The company has been losing significant market share in the carbonated beverages area to its rivals, Coca-Cola and Dr. Pepper Snapple in the US. [...]

[...] This system allows the company to market its portfolio in a massive way. Nowadays the firm has around 275 bottling partners worldwide, from big multinational publicly traded businesses to small family owned ones, who develop localized marketing plans everywhere in the world. Thanks to this organization the company sells its products as a rate of more than 1.7 billion each day. The long-term success of the company depends of a good collaboration between all the entities of the system: the company, its bottling partners and its customers. [...]