A REPORT ON

Coca Cola Supply Chain

Submitted to

Dr. Srikanta Routroy

In fulfillment of the course

Supply Chain Management

Prepared by

BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, PILANI

November, 2017

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 ACKNOWLEDGEMENT

We take this opportunity to express our profound gratitude and deep regards to our guide
Dr. Srikanta Routroy for his able guidance, monitoring and constant encouragement
throughout the course of this project. We also express gratitude to the institution BITS
Pilani, for giving us a platform to pursue our interests. We also give a special thanks to
our colleagues at BITS for their support.

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 Index

1. Introduction………………………..…………………………………………..…... 4
2. Product configuration.…………………………………………...……………...11
3. Strategic fit………………………………………………………………….………….17
4. Distribution network………………………………………………………………25
5. Logistical drivers……………………………………………………………….…...30
6. Cross functional drivers………………………………………………….……….42
7. SWOT analysis of the supply chain…………………………………..………46
8. Issues faced by supply chain………………………………………………..………..52
9. References………………………………………………………………………..……22

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1. Introduction
1.1 BEVERAGE INDUSTRY IN INDIA
In India, Beverages constitute a very important segment of the FMCG market. It's an industry which
requires constant innovation. Below is the overall classification of beverage market in India.

BEVERAGES

Alcoholic Non-Alcoholic

Carbonated Non-Carbonated

Cola Non-Cola Non-Cola

Coca Cola, the product we are mainly going to deal with, falls under the Non-Alcoholic carbonated cola
segment. Since the nation is vast, beverage industry caters to several sections of the market with specific
products marketed for each section. The different ways of segmenting it are as follows:

 Alcoholic, non-alcoholic and sports beverages

 Natural and Synthetic beverages
 In-home consumption and out of home on premises consumption.
 Age wise segmentation i.e. beverages for kids, for adults and for senior citizens
 Segmentation based on the amount of consumption i.e. high levels of consumption and low
levels of consumption.

If the behavior of consumers is closely observed, it can be interpreted that consumers perceive beverages
in two different ways i.e. beverages are a luxury and that beverages have to be consumed occasionally.
These two perceptions are the biggest challenges faced by the beverage industry. In order to leverage the

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beverage industry, it is important to address this issue so as to encourage regular consumption as well as
and to make the industry more affordable.

Four strong strategic elements to increase consumption of the products of the beverage industry in India
are:

 The quality and the consistency of beverages needs to be enhanced so that consumers are
satisfied and they enjoy consuming beverages.
 The credibility and trust needs to be built so that there is a very strong and safe feeling
that the consumers have while consuming the beverages.
 Consumer education is a must to bring out benefits of beverage consumption whether in
terms of health, taste, relaxation, stimulation, refreshment, well-being or prestige relevant
to the category.
 Communication should be relevant and trendy so that consumers are able to find an
appeal to go out, purchase and consume.
The beverage market has still to achieve greater penetration and also a wider spread of distribution. It is
important to look at the entire beverage market, as a big opportunity, for brand and sales growth in turn
to add up to the overall growth of the food and beverage industry in the economy.

1.2 History of The Coca Cola Company

John Pemberton, a Confederate Colonel was running drug store in Columbus, Georgia post-war. He was
addicted to morphine and was trying to find a substitute for the drug. He created Coca-Cola on May 8,
1886 which was served at Jacob's pharmacy. The name Coca-Cola was thought of by company
accountant Frank Robinson and he penned the famous Spencerian logo. Free coupons were sold by a
footbound vendor to promote coca-cola. Pemberton registered his "coca cola syrup and extract" label as
a copyright with the US patent office in 1887. Pemberton got into a partnership for the sale of coca cola
in 1888 with 4 Atlanta businessmen but specified that the copyright to the name coca cola belongs only
to his son Charley Pemberton. Atlanta businessman Ada Chandler began to aquire control of coca cola
from 1888 onwards from John Pemberton and his partners. Candler finalized the purchase of coca cola
company in 1892 and finalized an advertisement of $11000. Annual sales of Coca-Cola hit the 1
million-gallon mark in 1904. The firm began it's overseas operations in 1906 and bottling plants were
open in Canada, Cuba and Panama. In the same year, D'Arcy Advt. Company got into a 50 year
association with Coca-Cola. Annual budget for the company surpassed $1 million for the first time in
1911. Company finally expanded into Asia by opening a bottling plant in Philippines. Asa Candler
retired from the firm in 1916 to pursue his political aspirations. First bottling plants were opened in
Europe in 1919 in Bordeaux and Paris. Coca-Cola was purchased by a group of investors led by Ernest
Woodruff for $25 million in the same year. Robert Woodruff was elected president of the coca-cola firm
in 1923 and continued for 6 decades. In 1930, coca cola export corporation was created to market coca
cola outside the states. The firm expanded into Australia, Austria, Norway and South Africa in 1938.
Company started ammunition business in 1943 and opened a loading plant in Talladega, Alabama in

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1942. Coca Cola acquired the minute maid corporation in 1960 adding a line of juice products to it's
portfolio. The company celebrated it's 75th anniversary in 1961 and "Sprite" was introduced in the same
year. The firm expanded into Hungary, Yugoslavia and Somali Republic in 1968 and first bottling
operations began in Poland in 1972. Coca-Cola entered the Chinese market in 1978 after a 30 year gap.
Company's use of PET bottle began in the same year. Roberto Gouizeta took over as Chairman and CEO
of the company in 1981. Coca-Coca company ventured into entertainment business by first purchasing
Columbia Pictures Industries Inc in 1982. Bottling operations began in Russia in 1985. The formula for
the Coke was changed for the first time in 99 years in 1985 and was introduced as "New Coke". This
generated nationwide protest and the original product returned to the markets 79 days later. As the
Berlin Wall came down, Coca Cola was sold in the East Germany for the first time in 1990. Company
reentered the Indian markets in 1993 after it left for 16 years. They acquired Peruvian soft drink Inca
Kola and Schweppes beverage in 1999. In 2001, Coca-Cola and Nestle partnered to create a new
company, Beverage Partners Worldwide to market ready-to-serve coffee and tea beverages. A bottling
investments group was established in 2006 to manage operations of company owned bottling plants
around the world. In 2011, they celebrated their 125th anniversary and have grown to become the most
admired and best known trademarks in the world. Thirsty consumers around the world now enjoy Coca-
Cola's products 1.7 billion times every single day - about 19400 beverages every second. The firm is
reported to have a total revenue of $42 billion in 2016 and it continues to grow each year.

1.3 Values of the firm

MISSION

 To Refresh the World... In body, mind, and spirit

 To Inspire Moments of Optimism... Through our brands and our actions
 To Create Value and Make a Difference... Everywhere we engage.
VISION

 PROFIT: Maximizing return to shareowners while being mindful of our overall responsibilities.
 PEOPLE: Being a great place to work where people are inspired to be the best they can be.
 PORTFOLIO: Bringing to the world a portfolio of beverage brands that anticipate and satisfy
peoples’ Desires and needs.
 PARTNERS: Nurturing a winning network of partners and building mutual loyalty.
 PLANET: Being a responsible global citizen that makes a difference.

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 Vision for sustainable growth

1.4 SUPPLY CHAIN STRUCTURE

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Planning and marketing division of the firm considers all required inputs including forecasting and
modern computing tools to predict the demand and accordingly devises the strategy. This strategical
data is passed on to the sales division of the firm which in turn gives orders to the suppliers. Suppliers
include the various bottling plants and ingredient suppliers. Though mostly, coca cola gets into contract
with local bottling plants in order to receive bottles, it also owns several plants of it's own which are
handled by the bottling division set up in 2006. These supplies are received in the manufacturing plants
completely owned by the firm. Within the plant, complete formula is known to none and each worket is
provided only as much information so as to complete his work. The bottles are then packed and shipped
to dispatch warehouses so as to further be sent to several smaller warehouses. These warehouses are
used for temporary storage and from here, the shipment containing crates of coke are sent to both small
and larger retailers, each via a different method. This warehousing and transportation is handled by
logistics division. Consumers get coke directly from these small and large retailers. Used bottles from
these plants reach the recycling division of coke from where they reach the manufacturing plant again
for reuse.

1.5 ORGANIZATIONAL STRUCTURE OF COCA COLA INDIA

Region Vice
President

Chief Executive Officer AGM/AOD

Unit 1

AGM/AOD
Vice President Supply Chain Unit 2

AGM/AOD
Unit 3
Chief Finance Officer

AGM/AOD
Unit4

Human Resource Director

Region Finance

Vice President BSG Region Human Resource

Region Customer Service

Regional Vice President (North)

Region External Affairs

Regional Vice President (Central)

Region Cold Drink

Region Legal

Region BSG

Region
Director/Manager
Market Execution
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Region
Region
Capability
Channel
Management
 AGM/AOD

Human General
Plant Route to Resource Finance Sales
Manager Market Manager Manager Manager

Area
Area Sales Channel Capability
Manager Manager Manager

Sales Sales
Marketing
Executive Trainers

Market Key
Developer Accounts
1.6 DISTINCT FEATURES OF COCA COLA'S SUPPLY CHAIN
 The most important feature of Coca-Cola's supply chain and probably the most important reason
Distributors
behind Coca-Cola's successful presence in several nationsAndround the globe is that it gives extreme
importance to geographical and demographical needs of different regions and tailors it's
Salesmen

marketing strategy and supply chain according to that. Depending on the needs of local
population, the supply chain can become efficient, agile or responsive immediately.
 Though Coca-Cola owns several bottling facilities of it's own which are handled by the firm's
bottling division set up in 2006, it often collaborates with regional bottling firms to reduce the
logistical costs. Another factor which helps reduce logistical costs is the fact that their products
are never shipped more than a couple hundred miles.
 Rather than solely relying on incoming retail orders and historical sales data to determine supply
needs, Coca Cola uses a data warehouse to increase intelligence about customer behavior and
market needs using the several recent computing tools at it's disposal including machine learning
and data mining. The end result is a demand driven supply chain that takes production cues more
closely from the source.

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 To migrate Coca-Cola’s supply chain mindset, it developed a residential executive education
program for top supply chain leaders, but that meant need to train over 8,000 supply chain
managers and front-line employees across the globe. To reach these leaders, company invested
in a virtual development solution rooted in ‘connected learning’— an expert-led virtual learning
experience that is tied to relevant business challenges, integrated into real work, and engineers
collaborative problem solving by groups of learners. Coca-Cola estimates that the projects
undertaken as part of the connected learning program have identified in excess of $25M in cost
avoidance and productivity enhancements, a return of roughly 15-to-1.
 Coca-Cola Company uses proprietary software known as BASES and some specific modules of
SAP to manage all their operations in the world. This software performs the functions of the
entire ERP for the company and its worldwide operations. Information related to geographical
sales, per capita consumption trends, response from new product introduction, sales forecasting,
seasonal variations, customer relationship management data, fleet management data and all other
related information is managed using this software. All entities affiliated with or doing business
with the Coca-Cola Company use this software to communicate with the company. All query
management and customer problems are handled using this software.
 The company decided to implement a collaborative planning, forecasting and replenishment
system to decrease stock-outs, minimize variability in operations, reduce inventory, forecast
accuracy, improve asset utilization, and enhance customer service. Using J.D. Edwards’
advanced Planning Solution, it has increased demand-planning accuracy up to 93 percent and
reduced stock-outs to less than 1 percent. The system has helped the company to achieve greater
overall efficiency and most importantly, better customer service.
 The collaboration of Coca-Cola with suppliers is very extensive and detailed which ensured
greater profits for both and best practices in the supply chain.

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2. Product Configuration and Specification
The Coca-Cola Company has been offering a wide range of beverages under leading brands since past
25 years and still continue to introduce new products and thus widening the range further. Under the
portfolio of the company comes beverages ranging from carbonated drinks to juices & fruit drinks. The
range of different kind of beverages are:-

2.1 Carbonated Soft Drinks

Coca-Cola & Variants

This category consist of the flagship product Coca-Cola along with the low sugar and low caffeine
variants like Diet Coke, Coca-Cola Zero and Coca-Cola Life. The former two are the low sugar and
low calorie variant while Coca-Cola Life is a reduced-calorie cola sweetened with cane sugar and stevia
leaf extract. Diet Coke/Coca-Cola light is one of the biggest and best brands of The Coca-Cola
Company, accessible in more than 150 markets far and wide. It also offers three more flavors that are
Cherry, Lime and Splenda. There is also one caffeine free version of Diet Coke available. In the
following table the nutritional values of different variants of Coca-Cola are given. Coke Zero was Coca-
Cola's largest product launch in 22 years and launched in 2005, reaching billion-dollar status in 2007. It
is also available in Vanilla and Berry flavor and one caffeine free version.Typical values per 100ml

Variants of Carbohydrate Sugar Protein Sodium Caffein Fats Calories

Coca-Cola s (g) (g) (mg) e (g) (kcal)
(g) (mg)
Coca-Cola 11 11 0 12.5 9.4 0 44
Diet Coke 0 0 0 11.1 12.8 0 0.2
Coca-Cola Zero 0 0 0 11.1 9.4 0 0.3
Coca-Cola Life 6.7 6.7 0 9.7 7.8 0 25

The other leading brands of carbonated drinks under the portfolio of the company include Sprite, Fanta,
Thums Up, Limca, Barq’s, Seagram’s, Pibb, Barrilitos and Schweppes.

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Sprite

It was introduced in 1961. It is the third largest selling soft drink. It is a lime lemon soft drink. The drink
was redesigned by removing sugar and using Stevia leaves in it’s place. This reduced calories in the
drink by 30%. A low calorie version of sprite is also available known as Sprite Zero.

Fanta

Presented in 1940, Fanta is the second most seasoned brand of The Coca-Cola Company and our second
biggest brand outside the US. Fanta Orange is the main flavor. Devoured more than 130 million times
each day around the globe, buyers cherish Fanta for its extraordinary, fruity taste. Fanta also offers many
different flavors such as Fanta Grape, Fanta Pineapple and Fanta Strawberry. A low calorie version
of Fanta is also available known as Fanta Zero.

2.2 Juice & Juice Drinks

The Coca-Cola Company also has many brands of Juice and Juice Drinks under in its portfolio. These
brands consist of Minute Maid, Simply Orange, Odwalla, Five Alive and Honest Kids.

Minute Maid

Minute Maid has been making juice for over 60 years and has a legacy of sustenance, advancement, and
quality. In 1945, the U.S. Armed force requested 500,000 pounds of powdered squeezed orange from the
Florida Foods Corporation, which later renames itself to Vacuum Foods and afterward at long last the
Minute Maid Corporation. The Minute Maid Corporation was procured by The Coca-Cola Company in
1960, denoting it’s initially wander outside of soda pops. This brand offers many flavors under its

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banner such as Minute Maid Orange Juice, Mango, Litchi, Guava, Apple, Mixed Fruit, Lemonade and
Anar.

Simply Orange

Simply Orange is a premium, tenderly sanitized, not from think 100% squeezed orange. Accessible in
six flavors, Simply Orange is never solidified and never sweetened. The most popular are Orange and
Lime.

Odwalla

This brand provides over 30 different varieties of pure fruit juices and smoothies.

2.3 Water & Water Beverages

Dasani

It was launched by Coca-Cola Company in 1999. It offer bottled water added with traced mineral. It also
offers flavored water named as Dasani Sparkling Water under its banner.

Glacéau

Glacéau offers Vitamin Water and Smartwater under it’s banner. GLACÉAU Vitamin Water is a
vitamin rich, flavored and sweetened water along with electrolytes. GLACÉAU Smartwater is a vapor-

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distilled water with added electrolytes. The is also a low calorie version of Vitamin Water available
named as Vitamin Water Zero.

The other water and water beverages brands owed by the Coca-Cola Company are Ciel, Aquarius,
Kinley, Seagram’s and Tume-E Yummies.

2.4 Sports drink

In this segment there is only one brand under the company and that is Powerade. It comes in two
variant, Powerade and Powerade Zero. Powerade Zero is a no calorie drink with electrolytes.

2.5 Iced Tea

In this segment there are three brands of the company, one is Fuse, the second is Gold Peak and the
third is Honest Tea. Gold Peak comes in flavors of Unsweetened, Lemon and Diet.

2.6 Coffee and Coffee Drinks

There are three variants of coffee under the company. These are Gold Peak Coffee, Illy Issimo and
Georgia.

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2.7 Flavored Milk

Vio is the only brand in this segment under the company banner. It comes in four flavors which are
Vanila, Chocolate, Almond and Kesar.

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3. Strategic fit of Coca-Cola Company
Strategic fit requires that both the competitive and supply chain strategies of a company have
aligned goals. It refers to consistency between the customer priorities that the competitive strategy hopes
to satisfy and the supply chain capabilities that the supply chain strategy aims to build.

For a company to achieve strategic fit, it must accomplish the following:

1. The competitive strategy and all functional strategies must fit together to form a coordinated overall
strategy. Each functional strategy must support other functional strategies and help a firm reach its
competitive strategy goal.
2. The different functions in a company must appropriately structure their processes and
resources to be able to execute these strategies successfully.
3. The design of the overall supply chain and the role of each stage must be aligned to support the
supply chain strategy.

Developing effective strategies requires Coca-cola to understand how its strength and weakness may
differ from those of competitors.These differences lay the foundation on which Coca-cola bases its
strategy in the competitive market. Demand for beverages grows proportional to increase in population
and urbanization. Thus, the company needs to focus on improving the competitive strategy to maintain
highest market share in beverages products since inception.

Coca-cola focuses on competitive positioning strategy to be way ahead of its competitors in the Non-
Alcoholic beverages market.

3.1 Current Strategy

Coca-cola is going through an evolution to become a total beverage company by reshaping its growth
strategy and operating model in parallel with customer tastes and buying habits. The year 2017 onwards,
company’s main aim is revenue growth by means of consumer-centric brands i.e. introducing more low
and non-sugar drinks options. The driving force of new strategy will be a leaner operating model and a
digitalize business enterprise.

Coca-cola is creating value for consumers and customers by differentiation strategy. A differentiation
strategy is the improvement of an item or administration that offers one of a kind and unique properties
which are esteemed by the consumer and perceived to be superior to or unique in relation to the results
of the competitor. Through cost leadership strategy, the company tries to position its product cheaper
than its competitor and for this the company tries to minimize the cost of production. The company also
makes production on a large scale so that the operating cost is low, and the customers also benefit from
this.

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3.2 Operations strategy
Coca-cola is outsourcing the bottling operation to the franchise, FEMSA which is the largest Bottling
franchisee of the Coca-Cola trademark beverages in the world. Thus, in the underdeveloped non-
carbonated beverage market, growth opportunities are increasing with the help of strategic acquisitions.

3.3 Distribution Strategy

Responsiveness helps in grabbing the opportunities to attract customers. The company uses different
distribution models according to market, geographic location and customer’s demand. More than 2
billion products of Coca-cola are sold every day for which the company uses following distribution
models:

a) Pre-sale system: It separates sales and delivery functions letting trucks to be loaded with the mix
of products ordered by retailers previously, and hence improving sales and distribution
efficiency.
b) Conventional truck route: In this system, immediate sales of products available on the truck can
be made by a person in charge.
c) Hybrid distribution system: In this system same truck carries product ordered previously in the
pre-sale system and also the product available for immediate sales.
d) Telemarketing system: It can be combined with pre-sale visits.
e) Sales through third-party wholesaler

3.4 Marketing Strategy

Marketing strategy act as most important part of the bridge linking competitive strategy to supply chain
strategy. This strategy helps in understanding and creating customer demands which further leads to
desired innovation in the product. Innovation and creative marketing strategies are only ways for big
giants in the Non-alcoholic beverage segment to differentiate from each other.

The Coca-cola company’s marketing strategies are heavily linked with the concept of 4P’s:

P Pricing
P Product
P Promotion
P Place

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3.4.1 Pricing Strategy

Nowadays, it is common for a startup to offer their service free of cost or at low cost for few days and
after offering a good service level, then increase their prices. Coca-cola chose a different approach and it
was a tough challenge. The company kept the price of their product fixed for 73 years (1886 to 1959) at
5 cents.

Today, it is necessary to keep the price strategy strictly updated due to the presence of strong
competitors in the market like Pepsi. A noticeable change in the price may affect adversely to the sales
and revenue. For example, if the price of the Coca-Cola's product exceeds too much then people will
start using the Pepsi’s product. On the other hand, if the price drops below a certain level, the customer
might doubt about the quality of the product. Coca-cola uses segmented price strategy i.e. different price
strategy for different size of products.

3.4.2 Product Strategy

The Coca-cola company follows product differentiation strategy in which more than 500 products of the
company are currently existing in the market. Some of the products offered by The Coca cola company
are Coca Cola, Sprite, Fanta, Diet Coke, Lemon Coke, Cherry coke, Vanilla coke, Coca Cola Zero, Coca
Cola Life, Dasani, Minute Maid, Ciel, Powerade, Simply Orange, Coca Cola Light, Fresca, Glaceau
Vitaminwater, Del Valle, Glaceau Smartwater, Mello Yello, Fuze, Fuze Tea, Honest
Tea,Osewalla,Powerade Zero.

Coke is sold in various sizes, for example, 200 ml, 500 ml, 1L, 2L in cans and bottles.
Segmentation helps the brand to define the appropriate products for specific customer group; Coca-Cola
doesn’t target a specific segment but adapts its marketing strategy by developing new products. The
company applies a mix of undifferentiated and mass marketing strategies as well as niche marketing for
some products in order to drive sales in the competitive market. Its Cola is popular worldwide & is liked
by customers of all age group while the diet coke targets niche segment for people who are more health
conscious.

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Customers are always ready to pay a premium for unique products which don't have any substitute. The
Coca-cola company spends 20% of their promotion budget for maintenance and communication of its
differentiation strategies. The customer is demanding smaller packs which are more convenient to carry
and more than 40% of Coca-Cola's brands are available in such packs.

3.4.3 Place Strategy

Coca-Cola is in the market for over 130 years and working in more than 200 nations around the world, it
has created an exorbitant distribution network. The huge distribution network highlights the place
strategy for the company. All bottling partners work closely with suppliers- grocery stores, restaurants,
convenience stores, amongst many others- to execute localized strategies developed in partnership with
Coca-Cola. More precisely, although Coca-Cola is a global company, its products never have to travel
far to reach the final consumer, making the product more local than you may think, the product is made
local to the market where it is sold. Coca-Cola has a broad conveyance channel and its items are

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accessible in all retail outlets and markets around the globe. In India, Coca-Cola items are made
accessible crosswise over 2.5 million outlets.

Coca-Cola products are also distributed to various Hotels and restaurant chains throughout the world.
The company has collaborated with many restaurants and stores as a result, partners only sell Coca-cola
products. For instance, Dominos only sells Coca-cola beverage at their stores and online.

An array of points of sales can be categorized as:

 Wholesalers/distributors
 Malls and supermarkets
 Restaurants, Café, and Hotels
 Fuel stations
 Automated teller machines

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The company is been able to achieve the goal of high visibility and availability of the product
everywhere including the remote places.

3.4.4 Promotion Strategy

Promotional strategy of The Coca-cola Company focuses on aggressive marketing by the means of
advertisement campaigns where they use the media like Television, Social Media, Print Media,
Sponsorships etc. Promotion is the crucial part of the competitive strategy and Coca-cola has created a
strong brand cognition across. According to business insider, approximately 94% of the world
population is aware of the red & white logo of Coca-Cola.

The Coca-cola company advertise through different mediums:

(1) Sponsorship

Coca-cola is among the most recognized sponsor brands whose long history includes sponsorship
of American Idol, The Olympic Games, BET Network, NASCAR etc.

 American Idol: It is one of the most famous TV show and Coca-cola has officially sponsored all
seasons of it.
 The Olympic Games: Coca-cola got involved in Olympic sponsorship for the first time in The
Amsterdam 1928 Olympic games. In London Olympics 2012 Coca-Cola Great Britain produced
a special bottle that featured a special picture (it was a rose that illustrated the games being
handover to London from Beijing)
 NASCAR:  For more than 50 years, Coca-Cola has been an official sponsor of the National
Association of Stock Car Auto (NASCAR).

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(2) Social Media

 Facebook: Coca-cola uses a very unusual and unique strategy which is somewhat similar to
Starbucks. Coca-cola engages its customer to its post on Facebook very nicely. Future products
and campaigns are publicized very nicely through a post on FB by Coca-cola.
 Twitter: Coca-cola with more than 3 million followers is one of the most active brands on
Twitter. With spending a lot of time in replying @mentions and its tweets are also unique.
 Pinterest: The way, that Coca-Cola utilizes Pinterest is very engaging. Or maybe, then
concentrating on showcasing messages, Coca-Cola basically accumulates pictures that are by one
means or another identified with the Coke, itself. For instance, a considerable lot of the pictures
transferred to Coca-Cola's Pinterest account are arbitrary pictures from Flickr, that weren't taken
for publicizing, however for amusement and euphoria. Also, it's a great thought that Coca-Cola
concocted, because this way, they can urge individuals to interact with the brand all the more
regularly, and motivate the general public to take their chances and get included on the brand's
legitimate social profile.
(3) Advertising:

Advertising is the most creative and crucial part of the competitive strategy of The Coca-cola company.
One of the famous slogans are:

"It's the real thing."

Some of the creative advertisements by The Coca-cola Company are as follows:

1.

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2.Pepsi vs Coca-cola

3. Guerilla Marketing

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4. Advertisement through billboards

Overall Assessment of Strategic Fit

The following picture summarizes Coca-cola’s alignment with two major generic strategies; a cost-
based and differentiated strategy. The X indicates the position where Coca-cola is present and +
indicates where The Coca-cola Comapany should be in future:

Strategic fit chart Cost based 1 2 3 4 5 6 7 8 9 10 Differentiation (high quality/

(low cost/adequate adequate cost)
quality)
Product strategy Rapid follower X + Innovative
R & D expenses Low R & D X + High R & D
Structure Centralized X + Decentralized
Decision making Less autonomy X + Autonomy
Manufacturing Economies of scale X Economies of scope/ Flexible
Labour Mass production X Highly skilled/ flexible
Marketing Comparative push X + High cost/pioneering pull
Risk profile Low risk X High risk
Capital structure Leveraged X Conservative

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4. Distribution Network
Distribution is defined as the transportation of the product from the point of production or
transshipment to the point or points where demand has been recorded, in order to satisfy the
expectations of the production enterprise and the consumer. The physical distribution is part of the
supply chain, and its purpose is to deliver goods/services to the consumers. More specifically to the
demand points of the finished product in the right place and time, in the right quantity and at the lowest
possible total cost.

The objectives, which the distribution system is put through to achieve, are the following:
1) The management of the distribution channel with the lowest possible cost through certain procedures:
 planning financial resources to be used within the supply chain,
 planning of the distribution networks and routes of which it is composed,
 selection of partners within the distribution channel, and
 control of the system performance.
2) Ensuring that the products being distributed are of high quality. Namely the maintenance of quality in
a stable manner and the ability to respond to consumers’ needs and desires.
3) Ensuring the highest level of customer service, with the aim to convert them into “loyal customers”.
4) Ensuring maximum flexibility in the distribution network even in cases where problems like adverse
weather conditions occur, in order to maintain the credibility of the company.

4.1: COCA-COLA’s DISTRIBUTION NETWORK

The Company has a strong and reliable distribution network. The network is formed on the basis
of the time of consumption and the amount of sale yielded by a particular customer in one transaction. It
has a distribution network consisting of 24 bottling plants, a number of efficient salesmen, 26,00,000
retail outlets and 7000 distributors. The distribution fleet includes different modes of distributin, from 10
tons to open bay three wheelers that can navigate the narrow alleyways of Indian cities – constantly keep
Coca-Cola brands available in every nook and corner of the Country’s remotest areas.

It has a wide and well managed network of salesmen appointed for taking up the responsibility of
distribution of products to diverse parts of the cities. The distribution channels are constructed in such a
way that the demand of customers is fulfilled at the right place and the right time when it is needed by
them. The retailers are reuired to be able to hold an inventory of atleast 5 days. Producer gurantee
against defective bottles at the time of delivery .

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A typical distribution chain at Coca-Cola India would be:

Prodcution
(Sugar Syrup)
Fountains

Prodcution

(Bottling Plant)

Plant
Warehouse

Depot
Warehouse

Distribution Retail Stock

Warehouse

Retail Stock Retail Shelf

INDIRECT DIRECT
ROUTE ROUTE
Retial Shelf Consumer

Consumer

Disctribution Network of Coca-Cola India

The customers of the company are divided into different categories and different groups and
every salesman is assigned to one particular route, which is to be followed by him on a daily basis. A

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detailed and well organised distribution system contributes to the efficiency of the salesman. It also
leads to low costs, higher sales and higher efficiency thereby leading to higher profits for the firm.
The finished goods are sent to 3 different locations.

Distribution Center: The distribution center distributes the products ti the distrbutors from the
distribution center.Once the product is manufactured at a ploant, it is dispatched to the Distribution
Center after certain days whenever a demand is raised by the distributor.

Inter-Unit:These are the other COBO(Company Owned Bottling Operations) / FOBO(Franchise

Owned Bottling Operations) plants located in the other states of the country. For example, the water
facility in states like Rajasthan, Madhya Pradesh is not good so to cover up the demand of the customers
in that state the Coca-Cola transit products other states too.

Intra-Unit:These are the depots of the company; the depots are set up by the company so that the
products are directly distributed to the retailer. So a depot can order for the products from a production
plant when the demand in that areaincreases.

4.2: DISTRIBUTION ROUTES

The various routes formulated by HCCBPL for distribution of products are as follows:

 Key Accounts: The customers in this category collectively contribute a large chunk of the total
sales of the Company. It basically consists of organizations that buy large quantities of a
product in one single transaction. The Company provides goods to these customers on credit,
payments being made by them after a certain period of time i.e. either a month of half a month.
Examples: Clubs, fine dine restaurants, hotels, Corporate houses etc.

 Future Consumption: This route consists of outlets of Coca-Cola products, wherein a

considerable amount of stock is kept in order to use for future consumption. The stock does not
exhaust within a day or two, instead as and when required stocks are stacked up by them so as
to avoid shortage or non-availability of the product. Examples: Departmental stores, Super
markets etc.

 Immediate Consumption: The outlets in this route are those which require stocks on a daily
basis. The stocks of products in these outlets are not stored for future use instead, are exhausted
on the same day and might run a little into the next day i.e. the products are consumed at a fast
pace.
    Examples: Small sized bars and restaurants, educational institutions etc.

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  General: Under this route, all the outlets that come in a particular area or an area along with its
neighboring areas are catered to. The consumption period is not taken into consideration in this
particular route.

4.3: DISTRIBUTION STRATEGY

 Direct distribution: In direct distribution, the bottling unit or the bottler partner has direct
control over the activities of sales, delivery, and merchandising and local account management at
the store level. In direct selling, they supply the products in shops using their own transport.
Direct distribution is primarily used for urban areas where the product is directly transported
from the bottling plants to the retailers.

 Indirect distribution: They have their wholesalers and other agencies to cover all the area of
India to assure product availability to their customers in every nook and corner of the country. In
indirect distribution, an organization which is not part of the Coca-Cola system has control on
one or more of the distribution elements (Sales, delivery, merchandising and local account
management).

To cater to the need of the rural population of our country, Coca-Cola India shifted to Hub
and Spoke Distribution Network in the early 2000’s. Under the hub and spoke distribution
system, stock was transported from the bottling plants to hubs and then from hubs, the stock
was transported to spokes which were situated in small towns. These spokes fed the retailers
catering to the demand in rural areas. Coca-Cola India also changed the type of vehicles used for
transportation. The company used large trucks for transporting stock from bottling plants to
hubs and medium commercial vehicles transported the stock from the hubs to spokes. For
transporting stock from spokes to village retailers the company utilized auto rickshaws and
cycles.

 Merchandising: Merchandising means communication with the consumer at the point of

purchase to convey product benefit, value and Quality. Sales people and delivery personnel both
have this responsibility. In certain locations special teams who go into business locations to
specifically merchandise our products.

4.4: DEPARTMENTS INVOLVED IN THE DISTRIBUTION PROCESS

The Distribution process mainly consists of three departments:

 Distribution Department: It appoints distributors and establishes a distribution network,

processes approved sale orders and prepares invoices, arranges logistics and ship products, co-
ordinates with distributors for collections and monitors distribution stocks and their set-up.

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 Finance Department: It checks credit limits and approves sales orders in compliance with the
credit policy followed by the firm, records collections from distributors, periodically reconciles
outstanding balances from distributors, obtains balance confirmation from distributors and
follows up outstanding balances.

 Shipping or Warehousing Department:  It dispatches goods as per approved by order, ensures
that stocks are dispatched on a FIFO basis, ensures physical control over load out area and
updates warehouse stock records in a timely manner.

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 5. Logistic Drivers Coca cola
5.1 Overview

At a global level, the brand  has:

 146,200 worldwide employees

 3,500 different products
 8 billion coke bottles sold each day
 275 global Coke bottling companies

In local operations such as Spain, the company delivers within 24 hours. In large scale operations such
as Europe, the company can get drinks from its factories to supermarket shelves within 48 hours.

The Coca-Cola Company is among the biggest corporations in the world. More than 1 billion bottles of
Coke and other beverages of the company are sold every day. The company is present in most of the
major countries of the world. Its success in serving its customers in the past 120 years rests heavily on
its success in supply chain management. The company, in order to streamline its supply chain
management, has tried to keep the number of its bottling plants limited. The bottling plants of the
company in America and other markets are often owned by other companies, mainly local ones. By
keeping the number of bottling plants limited, Coca-Cola is able to monitor its supply chain more
effectively.

In 1960 there were around 1000 bottling plants of Coca-Cola globally; in 2015 this number has come
down to around 700.The company continuously strives to integrate demand with supply. Demand
forecasts are made on the basis of regular interactions with the sales & marketing teams. These
interactions take place on a daily and weekly basis. The demand forecasts are immediately conveyed to
suppliers.

The transport division and other external transporters involved in movement of outbound logistics are
also kept in the loop with regard to demand forecasts, so that they have transportation and resources
ready to arrange transportation for meeting the demand. On the basis of this forecast the company also
plans its production and operations. Inventory management process is also informed by this forecast.

It is not possible for Coca-Cola to make 100 per cent accurate demand forecasts. So it remains content
with a demand forecast accuracy of 80%-to-85%. Actually most of the times, the demand forecasts are
only as accurate as 70%. The difference between actual demand and demand forecast is met by Coca-

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Cola through a flexible supply chain management. This enables it to meet unexpected demand or
shortages in relatively less time.

Supply chain management in Coca-Cola is a highly dynamic process. The supply chain management
team remains constantly on its toes. The company has made supply chain management one of its main
sources of competitive advantage. The company also retains its ability to implement course corrections
every day in its supply chain. So in spite of having highly systematic supply chain processes in place,
the supply chain of Coca-Cola is also highly fluid and flexible. Almost as fluid as Coke itself!

Coca-Cola India minimised its capital needs by meeting new manufacturing capacity needs through
external co-packers, outsourcing its distribution and meeting its in-market-refrigeration and cooling
needs by giving incentives to retailers to self-fund the same through its “Own Your Fridge Scheme.”
Today, the company has an extensive rural and urban distribution network. Coca-Cola adopts a hub and
spoke format distribution network ensuring that large loads travel longer distances and short loads travel
short distances. The company has increased its village penetration from 9 per cent in 2000 to 28 per cent
in 2004 and covers approximately 175,000 villages today. Rural India now accounts for 30 per cent of
Coca-Cola’s sales volumes

5.2 Primary activities

Inbound logistics:

Coca Cola has managed a very large supply chain which consists of tens of thousands of farmers and
suppliers. It treats its suppliers as business partners.  These business partners provide its system with raw
material including ingredients, packaging and machinery as well as goods and services.  However, it has
also set guiding principles for the suppliers to follow. At a minimum these suppliers are required to
comply with all the applicable laws and regulations. In its guidelines Coca cola also emphasizes on
responsible environmental and workplace policies and practices. It has managed excellent relationship
with it suppliers and that helps it maintain a continuous and uninterrupted flow of raw material.

Outbound logistics:

This part of Coca Cola’s Value chain consists of its bottling partners and distributors. It bottling partners
manufacture, package, merchandise and distribute he final product to the customers and vending
partners. These vending partners then sell the product to the customers. The customers of Coca Cola
include the grocery stores, restaurants, street vendors, convenience stores, movie theatres and
amusement parks. The bottling partners of Coca Cola work with the customers to execute localized
strategies developed in partnership with Coca Cola company.

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Below table shows various parameters for evaluating logistics :-

Average Order Size

a) Distributor to company Based on Demand, Season
b) Retailer to Distributor
Order Placement
a) Distributor to company Phone
b) Retailer to distributor Distributor Representatives
Transit Time 2 Days
Order Frequency Daily
Inventory Maintained 1 day
Unsold/Damaged Merchandise Replaced
Technology a) A/C Keeping
b) Stock keeping
c) Complaint Handling
Mode of Transportation Company Vehicle
(Company to Distributor)
Transportation Expenses
a) Company to Distributor Company
b) Distributor to retailer Distributor
Warehousing
a) Storage Capacity Minimum 30m2
b) Ownership Owned / Rented
Stock Keeping responsibility Stock Keeper

5.3 Distribution System

Coca Cola make their branded beverage products available to consumers in more than 200 countries
through their network of Company-owned or -controlled bottling and distribution operations,
independent bottling partners, distributors, wholesalers and retailers — the world's largest beverage
distribution system. Consumers enjoy finished beverage products bearing trademarks owned by or
licensed to us at a rate of more than 1.9 billion servings each day. Coca cola continue to expand their
marketing presence in an effort to increase their unit case volume and net operating revenues in
developed, developing and emerging markets. Their strong and stable bottling and distribution system
helps us to capture growth by manufacturing, distributing and marketing existing, enhanced and new
innovative products to their consumers throughout the world.
The Coca-Cola system sold 29.3 billion, 29.2 billion and 28.6 billion unit cases of their products
in 2016, 2015 and 2014, respectively. Sparkling beverages represented 72 percent, 73 percent and 73
percent of their worldwide unit case volume for 2016, 2015 and 2014, respectively. Trademark Coca-

32
Cola accounted for 45 percent, 46 percent and 46 percent of their worldwide unit case volume
for 2016, 2015 and 2014, respectively.
In 2016, unit case volume in the United States represented 19 percent of the Company's worldwide unit
case volume. Of the U.S. unit case volume, 66 percent was attributable to sparkling beverages and 34
percent to still beverages. Trademark Coca-Cola accounted for 42 percent of U.S. unit case volume. Unit
case volume outside the United States represented 81 percent of the Company's worldwide unit case
volume for 2016. The countries outside the United States in which their unit case volumes were the
largest were Mexico, China, Brazil and Japan, which together accounted for 31 percent of their
worldwide unit case volume. Of the non-U.S. unit case volume, 73 percent was attributable to sparkling
beverages and 27 percent to still beverages. Trademark Coca-Cola accounted for 46 percent of non-U.S.
unit case volume.
Their five largest independent bottling partners based on unit case volume in 2016 were:
• Coca-Cola FEMSA, S.A.B. de C.V. ("Coca-Cola FEMSA"), which has bottling and distribution
operations in Mexico (a substantial part of central Mexico, including Mexico City, as well as
southeast and northeast Mexico), Guatemala (Guatemala City and surrounding areas), Nicaragua
(nationwide), Costa Rica (nationwide), Panama (nationwide), Colombia (most of the country),
Venezuela (nationwide), Brazil (greater São Paulo, Campiñas, Santos, the state of Mato Grosso
do Sul, the state of Paraná, the state of Santa Catarina, part of the state of Rio Grande do Sul, part
of the state of Goiás, part of the state of Rio de Janeiro and part of the state of Minas Gerais),
Argentina (federal capital of Buenos Aires and surrounding areas) and the Philippines
(nationwide);
• Coca-Cola European Partners plc ("CCEP"), which has bottling and distribution operations in
Andorra, Belgium, France, Germany, Great Britain, Iceland, Luxembtheirg, Monaco, the
Netherlands, Norway, Portugal, Spain and Sweden;

• Coca-Cola HBC AG ("Coca-Cola Hellenic"), which has bottling and distribution operations in
Armenia, Austria, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, the Czech
Republic, Estonia, the Former Yugoslav Republic of Macedonia, Greece, Hungary, Italy, Latvia,
Lithuania, Moldova, Montenegro, Nigeria, Northern Ireland, Poland, Republic of Ireland,
Romania, the Russian Federation, Serbia, Slovakia, Slovenia, Switzerland and Ukraine;
• Arca Continental, S.A.B. de C.V., which has bottling and distribution operations in northern and
western Mexico, northern Argentina, Ecuador and Peru; and
• Coca-Cola İçecek A.Ş. ("Coca-Cola İçecek"), which has bottling and distribution operations in
Azerbaijan, Iraq, Jordan, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey and
Turkmenistan and distribution operations in Syria.

In 2016, these five bottling partners combined represented 39 percent of their total unit case volume.
Being a bottler does not create a legal partnership or joint venture between us and their bottlers. Their
bottlers are independent contractors and are not their agents.

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5.4 Indian overview
Coca-Cola is made up of 7000 local employees, 500 managers, over 60 manufacturing locations, 27
Company Owned Bottling Operations (COBO), 17 Franchisee Owned Bottling Operations (FOBO) and
a network of 29 Contract Packers that facilitate the manufacture process of a range of products for the
company. It also has a supporting distribution network consisting of 700,000 retail outlets and 8000
distributors. Almost all goods and services required to cater to the Indian market are made locally, with
help of technology and skills within the Company. The complexity of the Indian market is reflected in
the distribution fleet which includes different modes of distribution, from 10-tonne trucks to open-bay
three wheelers that can navigate through narrow alleyways of Indian cities and trademarked tricycles
and pushcarts.

A typical distribution chain at HCCBPL would be:

Production  Plant Warehouse  Depot Warehouse  Distribution Warehouse  Retail Stock

 Retail Shelf  Consumer

Case Study:- Africa’s Distribution system

 In Africa, we have two sorts of distribution model.

Fig.- A delivery to the Kisima MDC, Dar Es Salaam, Tanzania. Image credit: Simon Berry

There is the much trumpeted Manual Distribution Centre (MDC) model which operates within densely
populated areas eg around large towns and cities. The MDCs are independent businesses with links to
their local bottler who may provide technical support (eg sales training and general support) and credit
to the MDCs. The owners of MDCs generally own the bottles and crates they use. They advertise a
‘liquid only’ wholesale price. First time customers (without crates and empty bottles to return) will have
to pay for the bottles and crates they take away as well as the liquid they contain. MDCs can be solely
dedicated to the sale of Coca-Cola but some are wholesalers of other products as well (eg bottled beer).

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MDCs are often run from shipping containers painted red. They receive a delivery of Coca-Cola once a
week or thereabouts. Typically a Coca-Cola lorry leaving the bottler will visit one MDC which will take
the entire load. Distribution from the MDCs is mostly ‘manual’ with crates being loaded on to handcarts,
bicycles etc.
The relationship between the MDCs and the bottler is similar to that between the bottlers and Coca-Cola
Altanta – although the MDCs are legally independent businesses, many depend on the local Coca-Cola
bottler for their business to succeed.

Fig.- The loading of handcarts in Dar Es Salaam, Tanzania. Image credit: Tielman Nieuwoudt

The MDC model works very well in densely populated areas where manual onward distribution is
feasible due to the short distances involved.
The MDC model is not the system that gets Coca-Cola to very remote areas, as we’ve pointed out
previously. So what does? It appears that it is ‘the pull of the Coca-Cola brand’ that is responsible for
getting Coca-Cola to the most remote parts of developing countries. There seem to be two parts to this:
1. People all over the world, even in the most remote parts of developing countries, demand Coca-
Cola. This is a function of the marketing efforts which emanate from Atlanta and are then cascaded
in each territory (eg in the UK);
2. There is money to made by everyone who is involved in getting the product to these people.

Fig- Left: A lorry leaving the Coca-Cola bottling plant in Dar Es Salaam, Tanzania. Image credit: Simon Berry
Right: Coca-Cola being transported by bicycle. Image credit: Owner unknown

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The lorry leaving the Coca-Cola bottling plant only goes so far. Beyond the lorry’s reach, an army of
entrepreneurs take over, to carry the product the last few miles to the most remote points on the planet.
At a recent Business Action for Africa event William Asiko, President, Coca-Cola Africa
Foundation and Chair, Business Action for Africa told a story of a recent trip he made to the Democratic
Republic of the Congo(DRC). Coca-Cola has no official presence in the DRC. Despite this when he
touched down he was able to buy a cold can of Coca-Cola.

5.5 Facilities

COBO
FOBO
CONTRACT PACKAGING

LOCATIONS OF COBO, FOBO & CONTRACT PACKAGING IN INDIA

Some of the major plants in India

The plant-level assessment focused on the following six Coca-Cola plants (four COBO [company
owned bottling operation] and two FOBO [franchisee owned bottling operation]) in India.

 HCCBPL (Hindustan Coca-Cola Beverages Pvt. Ltd), Kaladera, district Jaipur, Rajasthan
(COBO)
 Kandhari Beverages, Nabipur, district Fatehgarh Sahib, Punjab (FOBO)
 Sri Sarvaraya Sugars, Sathupalle, district Khammam, Andhra Pradesh (FOBO)
 HCCBPL, Pirangut, district Pune, Maharashtra (COBO)

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  HCCBPL, Nemam, district Thiruvellore, Tamil Nadu (COBO)
 HCCBPL, Mehndiganj, district Varanasi, Uttar Pradesh (COBO).

The six plant-level assessments encompassed the following.

 Agricultural practices Study of agricultural practices in and around the plant area with regard to
agricultural input relating to usage and quality of local area water.
 Raw intake water Study of sources, quantity, and quality of plant intake water based on primary
monitoring and secondary information on selected sites.
 Process water (treated water used inside for plant processes) Study of process water quality
based on primary monitoring.
 Effluent discharge Study of the nature, quantity, quality, sources, and point of discharge and
adherence to discharge norms by primary monitoring as well as secondary data information.
 Water balance Establishment of water balance at the plant level based on primary survey and
measurements.
 Groundwater Study of regional groundwater quality based on primary monitoring and
groundwater level based on secondary information (study area: within 5 km radius from plant
location).
 Stakeholder perceptions Stakeholder perceptions capture the views of different stakeholders on
the issues of trends in water availability, quality, utilization, and access across the study villages

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Some Key transportation involved in Hindustan Coca Cola :-

Movement from a plant can be summarised as following :-

Manufacturing Plant

Sales and Distribution Operations

Distributors Outlets

Outlets

Given below is the flow chart of the overall transportation:-

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 Water is received from the River Cauvery and it passes through the water treatment plant, further
passing through the sand filter and the activated carbon filter, so as to attain pure cleansed water.
Below is the figure of water usage

 In the syrup room, the concentrate received from another bottling plant situated at Pune, is
blended with the sugar syrup
 Once both the water and the final syrup are ready, they are both mixed together and sent to the
carbonator section where Carbon Dioxide is added to the mixture to form the final product.
 On the other hand, simultaneously, the returnable glass bottles are depalletized, inspected and
washed for the purpose of filling in the final product in it. This step does not take place in the
PET bottle line as the bottles once used are disposed.

39
  The product is finally filled in the bottles, crowned (in case of RGB)/ capped (in case of PET
bottles), labeled and cased in order to be sent into the warehouse for distribution. Below is the
map of bottling plants :-

The above process can be summarised by the following flow chart :-

Coca-Cola India division, Gurgaon Manufactures Concentrate, Beverage base and Syrup

Regional Bottlers Manufactures finished Bottles/Cans/Fountain Syrup

COBO/FOBO

Customers

Consumers

Some Key Features of Hindustan Coca Cola Inventory management :-

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The Coca Cola beverages India has a centralised management structure in the organisation at Gurugram.

Inventories consist primarily of raw materials and packaging (which includes ingredients and supplies )
and finished goods (which include concentrates and syrups in coca cola company’s concentrate
operations and finished beverages in the finished product operations).

Inventories are valued at lower of cost or market.

Coca cola company determines cost on the basis of the average cost or first-in , first-out methods(FIFO).

The Hindustan Coca Cola is currently operating and using the FIFO method for its inventories in the
accounts and finance departments. However the actual information of the inventories can not be
disclosed and provided here as it is the company’s confidential matter.

First-in-first-out stock valuation – Firms normally try to keep stock moving in assumes that the first
inventory purchased is the first inventory sold. Line with purchase dates to prevent old items from being
shop-soiled, outdated.

6. Cross Functional Drivers

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6.1 Information
Coca-Cola is one of the world’s largest beverage company. They sell their products in almost 200
countries all over the world. Due to its size, monitoring the finances and logistics of their global
enterprise is crucial and having the right kind of information system can mean the difference between
success and failure. Coca Cola Enterprises started out with an old system called the legacy system. This
turned out to be very inefficient, it was not user friendly and a lot of costs were incurred because of
these problems. They also did their financial plans manually on spreadsheets and were submitted as hard
copies. This made it very difficult to update information and was a very big issue as they began to
expand globally.

Due to the advent of technological advancements, Coca Cola has been solve this problem. The following
methods are now used for information collection and data analytics.

• SAP R/3 from IBM together with ERP system:

SAP R/3 from IBM together with ERP system is the most widely used software in Coca Cola Company.
These IT solutions have enabled the company in fast decision making and better product quality while at
the same time reducing the costs of operation. All the entities thus; Operations, Marketing, Accounting,
Inventory and Human resources have a common system that enables consistent reporting of
management and operational units. Apart from this closing of books either locally or globally,
purchasing, financing are all done concurrently. It also ensures that employees, customer, and suppliers
are on the same frame of reference. In Atlanta, SAP application include Accounting, Planning and
Budgeting, Procurement, Employee self-service and others that run on an Internet network.
Manufacturing plants have Project Systems implementation that oversees Inventory Management,
Material Management, Production Planning and Sales and Distribution. The IBM server RS/6000
enables more than 1000 users concurrently.

• Shifted on IBM’s DB2 Database:

Coca Cola Company used Oracle Databases which have SQL capabilities previously but due to its SAP
application, they have moved to IBM's DB2. The act led to reduction of hardware and software cost and
a better storage, retrieval and security of data. Databases provide all the information from products to
employees hence they play a vital part. IBM DB2 has greater compression which would reduce database
size and lower licensing renewals.

Example of Technological Innovations in Data Analytics at CCE: The Black Book Model

One of the most refreshing approaches on big data is that Coca-Cola uses it to produce orange juice that
has a consistent taste year-round, although the oranges used have a peak-growing season of just three
months. They have developed an algorithm, called the Black Book model, that combines various data
sets such as satellite imagery, weather date, expected crop yields, cost pressures, regional consumer
preferences, detailed data about the myriad of 600 different flavours that make up an orange, and many

42
other variables such as acidity or sweetness rates to tell Coca-Cola how to blend the orange juice to
create a consistent taste, down to the pulp content. Minute Maid, occupying 23% of the global juice
market, owes its success to the Black Book Model.

As per latest news Coca Cola is working on A.I (Artificial Intelligence), to make their system more
efficient.

Salesforce shows both the potential and the limits artificial intelligence in its demonstration of Einstein
Vision counting the stock in a Coca Cola cooler. Coca cola CIO (chief Information Officer) Barry
Simpson was on hand to explain that using AI in this way would enable his company to maximize its
sales potential across the 16 million installed in retail outlets worldwide. In a few clicks we could have
this order completely automated and we could rely on Einstein AI to make decisions too. But the
challenge which we are facing is that it would be difficult for us to take all global products and global
ideas and executing them locally is a huge opportunity. Once we overcome this hurdle then we could
save a lot on Information aspect and hence contributing towards Supply Chain efficiency.

6.2 Sourcing
Coca Cola only produces key raw materials such as beverage bases, sweeteners and syrups then these
raw materials will be sold to 300 bottling partners throughout the world. (The concentrate factories are
located nearby to sugarcane and corn plantations for easy access to sugar.) Then franchisees in each area
make the final products by adding water, sweeteners and carbonate.

Outside the United States, fountain syrups typically are manufactured by authorized bottlers from
concentrates sold to them by the Company. Separate contracts (‘‘Bottler’s Agreements’’) exist between
the Company and each of the bottling partners regarding the manufacture and sale of Company products.
Subject to specified terms and conditions and certain variations, the Bottler’s Agreements generally
authorize the bottlers to prepare specified Company Trademark Beverages, to package the same in
authorized containers, and to distribute and sell the same in (but, subject to applicable local law,
generally only in) an identified territory.

CCE are a prime example of global sourcing of raw materials. The key location for different ingredients
are given below:

- Coca leaves from Peru

- Metal cans, PET bottles and other packaging material from Ball Corporation, USA

- Other ingredients - sugar extract, etc. - are provided by mainly two companies - Stepan Company
(Illinois, USA) and Harris & Ford Company (Indiana, USA)

- Non Nutritive Sweeteners like Aspartame, primarily from The NutraSweet Company and
Ajinomoto Co., Inc.

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- Sucralose, another sweetener exclusively from Tate & Lyle.

- Citrus fruit or orange juice concentrate, either from Florida, or if weather conditions aren’t
suitable in Florida, then from Brazil.

Sourcing Workforce

The Coca- Cola Company reshaped its sourcing efforts several years ago, developing an internal
sourcing function similar to an in-house retained search firm. This sourcing group is comprised of
sourcing consultants that canvas the external market through multiple channels like LinkedIn, college
recruiting events etc. in key geographies like USA, UK and Turkey.

Sustainable Sourcing:

Coca Cola aims to be a pioneer with respect to Sustainable sourcing, as most of its raw materials are
agricultural in nature. The Coca-Cola Company aims to develop an approach to sustainable agriculture
to help ensure that by 2020, the global Coca-Cola system sources its key agricultural ingredients
sustainably. Work has focused thus far on sugar beet and sugar cane from Europe, but plans to expand
to other agricultural commodities are moving forward. Sustainable Agriculture Guiding Principles
(SAGPs) have been developed to set expectations for suppliers across 14 main ingredients.

The world’s first PET bottle made entirely from plants uses Plant Bottle packaging. Sugarcane based
ethanol, imported from Brazil is mainly used for this packaging due to it being an easily replenish able
‘Advanced Renewable Fuel’.

Apart for sourcing the ingredients Coca cola is working on bottling phase as well.

Coca cola company has planned to outsource various more aspects to increase profitability ratio. Coca
cola has decided to sell 9 of its production plants to different bottling companies. They also mentioned
that it will make this deal with three of its largest independent bottlers as it will unload the low margin
assets and hence lead to manufacturing costs. At the same time Coca cola is the largest shareholder in
Coca cola Bottling company with 34.8 percent stake. Swire Coca cola is a unit of Hong Kong based
swire pacific limited. The bottlers, Coca-Cola Bottling Co Consolidated, Coca-Cola Bottling Company
United and Swire Coca-Cola USA, will acquire the nine plants, valued at about $380 million, from
Coca-Cola Refreshments, which Coke created after buying its top bottler in North America in 2010.

6.3 Pricing
The pricing strategies differ from market (country) to market. The long-term pricing strategy of Coca-
Cola can be best described as either value based/competitor (mainly Pepsi) based strategy.

Different Strategies employed by Coca Cola with respect to pricing

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• International pricing strategy:

The price of a 2-liter bottle of Coke in the United States is different from the price of the same product
in China. This has to do with the difference in economic conditions, competitive situations, and laws.

• “Meet-the-competition pricing”:

Coca-Cola products pricing are set around the same level as its competitors (mainly Pepsi) as it has to be
perceived different but still affordable.

• Promotional pricing strategy:

In stores that sell Coca-Cola, prices are often temporarily priced below the list price to increase short-
run sales. It gives the product a sense of urgency and customers purchase the product because of the
lower price.

• Market Penetration Pricing Strategy:

Coca Cola uses lower price point to penetrate new markets that are especially sensitive to price. Coca
Cola does that to face the competition and to raise brand awareness among the population. Once it is
strongly implemented, it reposition itself as “premium” compared to numerous competitors (ex: Pepsi).

• Segmented Pricing Strategy:

Coca Cola uses the segmented pricing strategy for its Original Coca- cola. For instance, Coca-Cola
offers litre bottles, 6-pack cans, 6-pack bottles, and 12-pack cans of the same product, all for separate
prices. By their product in different sizes and at different costs, they get to increase their revenue,
because there is not much difference in the costs required to produce the products.

• Psychological Pricing Strategy:

Coca-Cola uses the psychological pricing strategy for their products. For instance, the price of a 2-liter
bottle of Original Coke would be $2.49 instead of $2.50.

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7. SWOT ANALYSIS
7.1 Strengths in the SWOT of Coca Cola
 Brand Equity – Coca cola was awarded with the highest brand equity award in 2011 by
interbrand. It is one of the costliest brands with a unique and highest brand equity and vast global
presence.
 Company valuation – Coca Cola is one of the most valuable companies in the world. It is
valued around 79.2 billion dollars. This valuation includes the brand value, the numerous
factories and assets spread out across the world and the complete operations cost and profit of
Coca cola.

 Global presence – Being delivered in 200 countries across the world, Coca Cola can be found in
almost every market of any country. This vast global presence of coca cola has also contributed
to the building of the mammoth brand name.

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 High market share – Coca Cola has only three big competitors in the beverage section –
PepsiCo, Dr. Pepper Snapper and Nestle. But Coca cola has clearly leaded this group and hence
has the highest market share. Amongst all beverages, Coke, Sprite, Thumbs Up, Fanta, Limca,
Maaza and Diet coke are the growth drivers for Coca Cola.

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 Amazing marketing strategies – Coca cola unlike Pepsi has always had one objective of
winning people’s heart. While Pepsi has always targeted youngsters, Coca cola targets people of
all ages.
 Loyalty to the Customers – With such strong products, it is natural for a brand to have a lot of
customer loyalty. Products like Coca Cola and Fanta have a huge fan following and are preferred
over other soft drinks. Because of its good taste, customers find it difficult to choose substitutes
for Coca Cola.
 Distribution network –Because of the demand in the market for its products, Coca cola has the
largest distribution network. It’s because of this successful distribution network that Coca cola
has been able to command such a high market presence.

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7.2 Weaknesses in the SWOT of Coca Cola
 Competition with PepsiCo– Pepsi acts as a thorn in the flesh for Coca cola. Had it not been for
Pepsi Coca cola would have been the clear leader in the market. The competition in these two
brands is immense and neither of the two will give up so easily.
 Low Product Diversification – Where Pepsi has played smartly by diversifying into the snacks
segment and bringing in products like Lays and Kurkure, Coca cola is far behind in that segment.
The segment is also a good revenue driver for Pepsi and had Coca cola been present in this
segment, these products would have been an additional revenue driver for the company.
 Absence in health beverages – Obesity is a major problem that is affecting a large segment of
people. This has led to a change in business environment and people are taking measures to
ensure to reduce the problem of obesity. Carbonated beverages are the major reasons for intake
of fat and Coca Cola is the largest manufacturer of carbonated beverages. The inference is that
the consumption of beverages in developed countries might fall as people will prefer a healthy
alternative.
 Water management – Coca cola has faced strong criticism in the past due to its issues on water
management. Various lawsuits have been raised in the name of Coca cola because of their large
consumption of water even in water deficient regions. They have also been blamed for mixing
pesticides in the water so that the contaminants could be cleared out of the drink. Thus water
management has to be improved by Coca cola.

7.3 Opportunities in the SWOT of Coca Cola

 Diversification – Diversification in the health and food business will improve the offerings of
Coca cola to their customers. This will also ensure that they get better revenue from existing
customers by cross selling their products. The supply chain which is distributing their beverages
can also distribute these snacks thereby sharing the load of Supply chain costs.
 Developing nations – Even the developed nations that have a high presence of Coca cola, have
started moving towards healthy beverages. However, developing countries are still being
introduced to the delight of carbonated drinks and soft drinks. Countries with hot summers like
India see the increase in consumption of cold drinks by twice the amount. Thus an increased

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 consumption in developing business environment acts as a good opportunity for capitalizing in
Coca Cola.
 Clean drinking water – Hygiene has always been a major issue in the consumption of water
especially in India, packaged drinking water has found its way into minds of the people. Coca
cola has a presence in the packed drinking water segment though Kinley. Although Kinley is not
so wide-reached, yet it has a huge potential of expansion. Thus Coca cola as a company should
focus on the expansion of Kinley as a brand and take it up to Bisleri’s level of trust.
 Supply chain improvement – As the transportation costs always rise, supply chain can act as a
major cost sink hole. Coca cola’s makes its business on the basis of transportation and
distribution. There are always possible improvements in this area. Thus Coca cola should strictly
watch on its Supply Chain and keep improving so that it could bring down the cost.
 Market the lesser selling products – Among the products of Coca Cola, there are various
products which have not yet been accepted in the market. Coca Cola should concentrate on the
marketing of these products as well. It can be easily understood that Coca cola has made several
costs to bring these products into the markets. Thus, the marketing and subsequent rise of sale of
these products will help increase the revenue of Coca Cola.

7.4 Threats in the SWOT of Coca Cola

 Raw material sourcing – Water acts as the only threat to Coca Cola. The weakness of Coca cola
was the use of pesticides or excessive consumption of water. However, the threat here is that
water deficiency is increasing. As the climate is changing, and regions of various countries
meeting scarcity of water, sooner or later there might be complaints on beverage companies.
Thus, Water Sourcing can fall on the head of Coca cola at any point of time. If water is limited or
rationed, Coca cola can face a major setback in their revenue and distribution capacity. It can
also affect its main rival Pepsi too.
 Indirect competitors – Coffee chains like Starbucks, Café coffee day, Costa coffee are
increasing. These chains act as a strong competition to Coca colas carbonated drinks. They might
not be a big competition for Coke, but they do give a dent to its beverage market. Similarly,
health drinks like Real and Tropicana as well as energy drinks like Red bull and Gatorade are
stealing away the market share indirectly.

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 Local Players with deeper reach and lower prices – Introduction of certain local players in
Indian markets are posing a threat by capturing 10% of the total aerated drinks market share.
These players also drum up their India origin to win over consumers. Two of them are Hajoori &
Sons uses themes such as 'Apna Desh, Apna Drink', Jayanti Group on its website writes on its
website, 'Be Indian, Buy Indian'.
At least two-dozen regional aerated drinks makers, including Gujarat's Hajoori & Sons, Alwar-
based Jayanti Beverages, Delhi's City Cola, Boss Beverages from Bareilly and Shri Brahm
Shakti Prince Beverages of Delhi, are quietly stealing the thunder from the two multinational
giants by selling quality products at least 20 per cent cheaper, mostly in small towns and rural
areas. These 'B-brands' have together captured at least 10 per cent — their highest ever — of the
Rs 14,000-crore aerated drinks industry in the country.
Hajoori & Sons, maker of 'Sosyo' aerated drinks, for example, claims it has 29 per cent share in
Gujarat while in Uttar Pradesh smaller brands have mopped up 22 per cent share this summer.
Industry experts attribute the rising popularity of local brands to their deep penetration into the
hinterland plus their low pricing due to low marketing spends as they deal directly with retailers.

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8. ISSUES FACED IN SUPPLY CHAIN AND
HOW THEY HAVE BEEN ADDRESSED
Coca-Cola, one of the bestselling soft drink company, faced many challenges and issues at different
stages before reaching the pinnacle of this industry. Coca-Cola landed in India in the year 1956 and has
been opposed by many groups then. Coca-Cola once booted out from India in 1977 after the
implementation of FERA (Foreign Exchange Regulation Act) and was waiting for policies which could
allow it to operate on its own terms and conditions in India. The company returned to India in 1993
when the newly formed government introduced the Liberalization Act. Ever since, it has been addressed
regarding the issues of environment, the health of consumers, and business practices. During the pre-
liberalization era, the company faced many problems which were characterized and distinguished
majorly by the economy of the India. Because in the 1950's, India's economy was more focused towards
the agricultural side, and not towards the globalization and monopolistic side. But, in the current
scenario, issues are of global nature and are due to the diversity of the different nations. Some issues
faced by the company because of global operations are discussed below with the strategies and
maneuverings used by the company to tackle such issues.

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8.1 Health Issues

Health issues are a hot topic with many consumers and, as a consequence, are demand driving factors in
both the directions. In the year 2003, CSE (The Center for Science and the Environment), a non-
governmental organization in New Delhi, issued a vilifying news release which stated that “12 major
cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues.” The CSE, a
New Delhi based research and advocacy group that lobbies for sustainable growth, based its accusation
on tests conducted by the Pollution Monitoring Laboratory between April and August 2003. The tests
found that three samples of 12 PepsiCo and Coca-Cola brands across the city contained pesticide
residues that surpassed global standards by 30-36 times. The pesticides – lindane, DDT, malathion, and
chlorpyrifos – can cause cancer, damage to the nervous and reproductive systems, birth defects, and
severe disruption of the immune system.
The Indian government eventually banned all Coke and Pepsi
products in Parliament and schools. The Sales had also dropped
by 30 to 40 percent as a result. The Coca-Cola Bottling
Company stock dipped $5 on the New York Stock
Exchange, $55 to $50. And this came after a 75 percent five-year
growth trajectory and a 25 to 30 percent year-to-date growth.
This caused arguably the biggest crisis the company has had in
India since the FERA issue.
The company first denied the claims of CSE. Along with
questioning the integrity of CSE's testing methods, Coca- cola also
challenged the accuracy of CSE's data, given the work was done by
its own labs without any outside peer review. Coca-Cola sent the
Indian drink lineup to labs based in Hyderabad, California, and
London and posted the information on its testing and quality
procedures done at labs on the Web site of its Indian
subsidiary.
To reassure the public, the company designed a new
advertising strategy that included “safety guaranteed” stickers,
newspaper ads, and started public tours of the Coco-Cola plants. It
has even offered to take Indian customers on guided tours of its processing plants as a goodwill measure.
The pesticide tussle in India was being driven more by primal emotion directed at big foreign companies
and public fear and to tackle this coca cola started the Pesticide controversy campaign featuring Amir
Khan to regain its lost trust of the people from the cold drink.

8.2 Environmental Issues

Environmental issues always arise when the economy is more focused towards capitalist nature.
Environmental depravity in the form of depletion of the local groundwater table due to the utilization of
natural water resources by the company poses a serious threat to many communities. Coca-Cola's
operations in India have come under intense inspection as many communities are experiencing severe
water shortages as well as contaminated groundwater and soil that some assert are a result of Coca-
Cola's bottling operations.
In March 2004, local officials of Placimada in Kerala shut down a $16 million Coke bottling plant, one
of Coca-Cola's largest bottling facilities in India, blamed for a drastic decline in both quantity and

53
quality of water available to local farmers and villagers. The state of Kerala imposed a ban on colas
from the state only to be quashed by Coca-Cola; the matter is pending in the supreme court.
A similar incident happened in the Mehdiganj town in Uttar Pradesh. The Coca-Cola company has
located one of its bottling plants in Mehdiganj which has been in operation since 1999. The plant has
severely damaged the groundwater resources in the area – both through over-exploitation as well as
pollution of groundwater and the soil. The community in and around Mehdiganj which also relies on the
same groundwater to meet all their water needs starting protesting the Coca-Cola’s plant in Mehdiganj
in 2003, demanding that the company shut down its plant because it is unsustainable. On June 6, 2014,
the pollution regulatory agency – who we worked closely with to make the case against Coca-Cola –
ordered the closure of Coca-Cola’s bottling plant due to violations of the terms of its license. Coca-Cola
has appealed the closure notice and is able to temporarily operate its plant while the courts hear the case.
Also, the government
rejected the company’s
application to expand its
bottling plant in
Mehdiganj in August 2014
due to the campaign led by
IRC(Indian Resource
Center).
Many other similar
constraints have been
imposed on the company
throughout India. In April
2014, another proposed Coca-
Cola bottling plant – in
Charba in Uttarakhand state – was rejected due to community opposition. Recently in 2015, Bowing to
public outrage, the state government of Tamil Nadu in south India has canceled plans for a new Coca-
Cola bottling plant in Perundurai in Erode district. The company also faces significant opposition in
various parts of India where it has located its bottling plant in water-stressed areas, and challenges to
Coca-Cola’s bottling operations are expected to grow as water conditions deteriorate across the country.
Coca-cola has undertaken various measures to overcome the issues and to placate the community’s
strong reservations on the company’s dismal track record on water management and pollution
prevention. Coca-Cola has also embarked upon a very ambitious public relations exercise to counter the
growing opposition to its plant by introducing various corporate social responsibility programs claiming
to conserve water. The coca cola company has appealed to many high courts and the supreme court of
India regarding the restrictions imposed on them and many of the courts.
Many initiatives have been taken by the company to tackle the water scarcity problem. The bottling
partners of Coca-cola are to identify and implement locally relevant projects that will revitalize
watersheds in water deficit areas. Such projects may include – development of water harvesting
structures, check dams, restoration of ponds and natural water bodies as well as supporting agricultural
water use efficiency. Some examples:
1. Rejuvenation of Nalliguda Tank - Bidadi, Karnataka
2. Rejuvenation of Nemam Lake - Nemam, Tamil Nadu
The company has also pledged to heavily invest in technology so that their bottling plants will be able to
recycle and reuse water to the extent possible. Rest of the water is treated to stringent standards, used in

54
secondary applications (examples gardening and toilet flushing) and the balance returned to nature at a
level that supports aquatic life.
Below is shown the company future plans for handling the water problems.

8.3 Business Practices (Land Grab Issue):

Oxfam International in a report stated that suppliers/companies that supply sugar for Coca-Cola products
were mainly responsible for the “land grabbing” from small farmers and communities in developing
countries. The report claimed that the local communities that rely on the land are evicted without
consent or compensation – often violently – to make way for sugar plantations. Land covering an area
the size of Italy has been taken from indigenous communities around the world by suppliers to the
biggest names in the food and drinks industry, according to the report.
In answer to the report, Coca-Cola announced a policy of zero tolerance for land grabbing and
subsequently launched a worldwide audit of its sugar suppliers to examine the allegations. The Coca-
Cola Company also agreed to:
i. Conduct third-party social, environmental and human rights assessments beginning in Brazil,
Colombia, Guatemala, India, Philippines, Thailand and South Africa(which are the primary source of
the sugar)
ii. Adhere to the principle of Free, Prior and Informed Consent across our operations (including
bottling partners) and will require our suppliers to adhere to this principle.
iii. Engage with our suppliers regarding the two case studies cited in Oxfam International’s report and
review the suppliers’ overall policies regarding land rights within their supply chain. We will take action
and use our influence on the final outcome of these disputes.

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