Coke and Pepsi

Group 3 :

Berman Nathanael, Elizabeth Megawati, Mulyadi, Rery Indra Kusuma,

Ronggo Sulistyohadi, and Sri Marianggoro Kencono

Financial Management

Ekesekutif B 27 C

2

0

10

20

30

40

50

60

1970 1975 1981 1985 1990 1995 2000 2005 2007 2008 2009

Ga

llo

ns

/ca

pit

a

U.S. Beverage Consumption

Coffee

Beer

CSD

Milk

Bottled Water

4Ps Analysis

3

PRODUCT

• Carbonated

soft drinks

• Non-

carbonated

soft drinks

PRICE

• Pepsi value

proposition

• Coke the

“premium” brand

PROMOTION

• Investment in

Trademarks

• Retail Shelf Space

• Ad Campaigns

PLACE

• Retail channels

• Fountain

Outlets

• Vending

Machines

• Mass

merchandise

Historical Timeline

4

1886-1899 1900-1929 1930-1959 1960-1973

1886-John S.

Pemberton

develops original

recipe

1898-Caleb

Brodham creates

Pepsi

• Big name

endorsements

• Iconic contour

bottle

• Bottling plants in

Europe and the

Philippines

• Robert Woodruff

named CEO

• Franchises in 24

states

• Files for

bankruptcy

• Second bankruptcy

• Acquires sugar

plantation in Cuba

• Rebounds by

marketing product

value

• Becomes second in

the cola market

• “Beat Coke”

campaign

• Emerges as cola market

front-runner • C registered trademark

• Price raised from a

nickel to a dime

• Diversifies offerings

(Sprite, Tab)

• Remains #1 in national

cola sales

• Diversifies offerings

(Mountain Dew)

• Merges with Frito-Lay

(PepsiCo) & expands

into the snack food

business

Historical Timeline

5

COLA War Years 1974-1999 2000-2010

• In response to federal nutrition

guidelines and public concern with diet

and obesity offers alternative low calorie

beverages

• Wins Subway account, retains exclusive

deals with Burger King and McDonalds

• Holds big lead over Pepsi in cola market

• In response to federal nutrition

guidelines and public concern with

diet and obesity offers alternative low

calorie beverages

• Supplies all Taco Bell, KFCs and

most Pizza Huts again

• Snack food lines very profitable

• High-fructose corn syrup replaces sugar

• Diet Coke introduced, boosts profits

• New Coke fails, Coca Cola Classic

returns

• Coca Cola Enterprises established

• Maintains lead in cola market share

• The “Pepsi Challenge”

• Pepsi Lite (1 Calorie) introduced

• Enters fast-food business

• Outpaces Coke in food store sales

• High-fructose corn syrup replaces

sugar

• Pepsi Bottling Company goes public

Company Background

The Coca Cola Company

In 1985 , One of the strategy was spin off its

bottling operations to avoid consolidation in

balance sheets and its reflects to the rise of ROE

from 23 % to 57 % over the last two decades

From 1993 to 1998 had consistently garnered the

first or second position in Fortune’s annual market

In 2000 The Coca cola company annual sales

were 20.5 billion and its market value reached

110.1 billions US$

6

The Coca Cola Company

Doug Ivester, CEO on 1997 – 1999, do instituted

7.7% hike on syrups, a rate that double from usual

increase. The bottlers company influenced,

during his 2 years term, net income fell 41%

Dauglas Daft, as the successor doing

organization such as cutting staff and reducing

bureaucracy. But one that important that his

statement to become the dominant players in

non carbonated beverages market

7

Company Background

PepsiCo, Inc

In 200o, PepsiCo, 20 billion company that

involved in snack foods, soft drinks and non

carbonated beverages business.

The company sold and distributed salty and

sweet snacks under the frito-lay trademarks and

manufactured consentrates of Pepsi, Mountain

Dew, and other brands. Also produces and

distributed juices and other non carbonated

beverages.

8

PepsiCo, Inc

Roger A. Enrico, CEO 1996 – 2000, instituted a

massive overhaul at PepsiCo

He sold off fast food chains KFC, Taco bell and

Pizza Huts in 1997

In 1999, he spun off capital intensive bottling

operation into an independent public company,

focus only selling concentrate to bottlers

In the same years, he does some acquisitions,

Tropicana and Quaker oat

During his term, ROE increase from 17% in 1996

and 30% in 2000.

9

Products

10

Fastfood Connection

11

Strategic Analysis - S.W.O.T

12

strengths

opportunities

weakness

threats

S.W.O.T - Strengths

Most valuable brand for 13 years

Distribution in 200 countries

Extensive global dist. network

Leader in fountain accounts

Strong in emerging markets: China,

Brazil, Eastern Europe

Valuable brand

Diversification: “The power of one”

Extensive global dist. network

Leader in non-CSD

Successful marketing campaigns:

celebrity endorsements

13

S.W.O.T - Weaknesses

Declining market share since 2000

CSD focus: only 32% non-CSD

share

Price pressure from mass retailers

(Wal-Mart) : 40% of U.S. packaged

sales

Declining market share in beverages

Overdependence on U.S. markets:

50% of total sales

Low market share in fountain

accounts: 20% vs. Coke’s 69%

14

S.W.O.T - Opportunities

Expand non-CSD: juice, sport, energy, bottled water

VitaminWater, Odwalla (Coke), Gatorade, Naked (Pepsi)

Expand and modify CSD line: Stevia

Sprite Green (Coke), Pepsi Next, Trop50 (Pepsi)

Global expansion in emerging markets: India, China, Brazil (Coke) Russia

(Pepsi)

Innovative offerings tailored to local tastes

Sprite Tea (Coke), herb drinks (Pepsi)

Growing nutritious snacks product markets

15

S.W.O.T - Threats

Changing consumer tastes and preferences

Competition with each other

Threat of substitutes

Price pressure from mass retailers

Price pressure from int'l bottlers

Government restrictions in U.S. and abroad

16

Where are they now?

17

The Coca-Cola Company Overview

Still a beverage focused company: 70% of their revenue comes

from CSD sale

#57 in Fortune 500

International market corresponds 59% net revenue

Reached 1.9 billion servings each day

Present in +200 countries

#3 best global brand - $79.2 billion value

1.4%in sales growth

18

The Coca-Cola Company

19

Portfolio

+500 non-alcoholic beverage brands

Acquired Zico Pure Premium Water

Launched Coca-Cola life in Argentina & Chile: 1st reduced-

calorie cola sweetened w/ a blend of sugar and stevia

Pepsi Co

Overview

It is a diversified company: beverages, snacks and breakfast

#43 in Fortune 500

52% of their net revenue comes from food

US is still responsible for 51% net revenue

38% more revenue than Coca in 2011, but only 12bi came from Soda

20

Pepsi Co

Portfolio

Product mix: 63% food 37% beverage

22 brands that generates 1bi in retail sales each

21

22

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