Brief history of the Coca Cola company
The Coca Cola company was created at the end of the 19th Century and in the beginning was marketed as a medicine in the form of syrup prepared from coca leaves and cola nuts, hence the name given to this globally known drink. It was in 1916 that the famous glass bottle that made the drink such a success made its debut and became its trademark.
Even today, and in spite of competition, the Coca Cola Company is the largest non-alcoholic drink distributor and producer throughout the world, in front of its direct competitor “Pepsi”.
What is the average turnover of the Coca Cola Company and how is it distributed?
The Coca Cola Company generates more than 7 billion dollars profit each year from a total of almost 40 billion dollars in net income. But the production of this company must be divided in two large sectors.
The first of these sectors which represents the largest profit share of course relates to the sale of drinks. As opposed to what one could believe, the Coca Cola Company does not produce only soda of the same name but also distributes other well known drinks such as Sprite, Fanta, Minute Maid and Nestea. This sector by itself represents nearly 73% of the total benefit.
As for the second sector, it relates to the bottling. At the beginning, this part of work was entirely sub-contracted, but, since the Seventies, the Coca Cola Company decided to buy out the majority of the bottling factories in order to manage the entirety of its production without external providers. This part therefore relates to the 27% remaining sales turnover.
Of course, the majority of the Coca Cola Company sales are from abroad with nearly 75% of the sales turnover on a world level, whereas its competitors are much more present in the United States.
The Coca Cola Group shares are priced on the New York Stock Exchange or NYSE. Historically, the price of this share has evolved from 39 to 65 U.S. dollars since its IPO in 2005.
The major competitors of Coca-Cola:
It is important that you know precisely which are Coca-Cola’s global competitors in order to better prepare your stock market trading strategies for this asset. Here therefore are details on its competitors:
Pepsi is of course currently the major competitor of Coca-Cola and holds 43% of the soft drinks market in the United States. But Pepsi is the world leader in still soft drinks worldwide and holds 50% of the market compared with only 23% held by Coca-Cola in this specific sector.
However Coca-Cola also has other competitors in this sector such as Re Bull, Oasis, Orangina as well as Lipton, Schweppes and a number of others. But these brands remain below the leader Coca-Cola and do not represent a real threat compared to Pepsi.
The fizzy and still soft drinks market should be monitored closely to detect any movements in the market prices of any of the major groups that are represented. Any mergers or acquisitions are particularly interesting in this sector.
The major partners of Coca-Cola:
Coca-Cola is also proficient in using partnerships to keep its position on the highly popular soft drinks market. For example, in 2014 it signed an agreement with Facebook for a digital strategy on all its brands. Coca-Cola has also been a partner of Nestle since 1991.
Finally, the Coca-Cola Group is also a favoured partner of Disney, notably the DisneyWorld Parks that sell its drinks worldwide.
It should be noted that Coca-Cola also acts as partner in numerous major sporting events throughout the world which greatly contributes to its renown with an acrued visibility to the public and a well established marketing strategy.
The factors in favour of a rise in the Coca-Cola share price:
Although Coca-Cola shares are among the most traded on the stock markets worldwide this does not mean that an analysis of this asset is easy or simple. In fact, to be able to anticipate future movements in the Coca-Cola share price you will need to summon all your resources and try to understand the current factors in favour of a rise in this asset as well as those in favour of its fall. This is exactly what we shall examine here in this article starting with an examination of the arguments in favour of a rise in this company’s share price which corresponds to the advantages of the Coca-Cola Company in its market.
- Firstly, and undoubtedly the most attractive positive point for the investors it should be remembered that the Coca-Cola group is nowadays a strong and reputable brand and is the leader in the drinks sector in terms of worldwide sales and easy access in various countries. This gives it a certain advantage against the competition and confers a strong brand image around the world.
- Of course, the fizzy soft drink that we all know under the name Coca-Cola is not the only brand produced and distributed by this company that does in fact own numerous extremely popular and easily recognisable brands among its range of products. This brings us to the second argument in favour of a rise in this asset price which relates to the diversity of the group’s brands. Coca-Cola actually owns the following brands: Fanta, Kinley, Limca, Maaza and Minute Maid among many other renowned brands which all demonstrate its strong presence in this market. In total this group owns and operates over 500 different brands which makes it a giant in the drinks industry.
- Still relating to the presence of the Coca-Cola Group in its particular activity sector, we can of course mention the fact that this group is an international, indeed worldwide group given the fact that it distributes its products in over 200 different countries throughout the world. The group is therefore not subject to effects from local economy and consumer crises in certain countries as it generates its income globally.
- Of course, in order to assure the production and distribution of its products throughout the world, the Coca-Cola Group can also count upon a large workforce and extensive production capabilities. The group currently employs more than 150,000 people around the world and benefits from a strong and effective supply chain that enables the company to ensure the availability of its products in accordance with demand from even the most remote parts of the world.
- To achieve this level of growth and development the Coca-Cola Group can also count upon its communications and advertising strategy which has already proved its worth over time and continues to attract its clients. Using advertising in various types of media, the use of celebrities as brand ambassadors and the association of this brand with numerous popular international sporting events with high media coverage as well as sports sponsorship and promotions, this group has proved its ability to use all methods available to it to increase the brand’s popularity and visibility and benefit from a huge recognition and reputation with the general public.
- It should also be noted that among the factors more in favour of a long rising trend of this asset Coca-Cola does not simply rest upon its laurels in the food and drinks sector but has developed and invested heavily in the diversification of its activities in other sectors. Over recent years this has been notably in the sector of conservation and water recycling as well as health and education. These associated activities have enabled the group not just to increase income but also to improve its brand image and protect itself against the risks related to a single source of income.
- Finally, and still relating to the positive points of the Coca-Cola Group, we can of course draw your attention to the packaging techniques used by this brand that emphasize re-use and recycling. In the current situation and with the ecological pressures and challenges the world is facing at present this of course represents a clear and considerable advantage for the company.
The factors in favour of a drop in the Coca-Cola share price:
It can be tempting to think that the Coca-Cola share price can only increase over the coming months and years especially given the positive points and advantages that this company boasts. However, even though the weak points of this company are few they are nonetheless very real and could strong influence the decisions of large investors. It is therefore extremely important that you take these weak points into consideration when completing your analyses prior to taking positions on this company’s share price. Here are details relating to the two principal arguments in favour of a drop in this asset or a slowdown in its rising trend.
- Firstly, although the Coca-Cola Group benefits from an overall positive brand image worldwide, this reputation could rapidly diminish through certain current events and news. This was notably the case a few years ago when an independent study revealed the presence of pesticides in the famous sweet soda drink. Clearly the slightest hint of another scandal like that could again seriously impact the popularity of this company and its range of drinks.
- And finally, the second and last argument in favour of a drop in the share price of the Coca-Cola Company relates this time to the strong competition in the drinks and soft drinks market. Of course, this competition originates above all from its principal American adversary, the PepsiCo Group that exercises very similar activities to that of Coca-Cola and continues to dispute the leadership of this market sector worldwide.
As you may have observed, these two arguments remain potential highly impactful factors and should therefore be seriously taken into account before implementing a trading strategy with this asset.