Cultural Impact on Brand: A Case Study on Coca Cola’s Cultural Issues

in India

Table of ContentsINTRODUCTION..................................................................................................................................................... 3

BACKGROUND OF COCA COLA:........................................................................................................................4

COCA COLA SYSTEM WORLDWIDE AND IN INDIA:....................................................................................... 6

MISSION, VISION AND VALUES:.........................................................................................................................7

CULTURAL IMPACT ON BRAND:.........................................................................................................................9

ETHICAL ISSUES CONCERNING COCA-COLA IN INDIA...............................................................................12

COCA COLA POLITICAL ISSUES IN INDIA:.....................................................................................................14

COCA COLA ENVIRONMENTAL ISSUES IN INDIA:........................................................................................ 16

COMPETITION: .................................................................................................................................................... 19

CASE OBJECTIVES: ............................................................................................................................................20

GLOBAL POSITIONS: ..........................................................................................................................................22

THE COCA-COLA COMPANY SECOND QUARTER AND YEAR-TO-DATE 2013 RESULTS......................23

INNOVATION:....................................................................................................................................................... 35

SEO (Search Engine Optimization and PPC) (Pay-Per-Click) Objectives in India...........................................38

CURRENT SCENARIO:........................................................................................................................................ 41

PROBLEM DEFINITION:...................................................................................................................................... 44

ANALYSIS OF THE SITUATION:........................................................................................................................46

SOLUTIONS AND RECOMMENDATIONS:........................................................................................................48

SUGGESTIONS:................................................................................................................................................... 48

FORECASTS AND PREDICTIONS:.................................................................................................................... 49

CONCLUSION: ..................................................................................................................................................... 50

REFERENCES: ..................................................................................................................................................... 51

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List of Table

Table 1 ............................................................................................................................................................ 25Table 2 ............................................................................................................................................................ 25Table 3 ............................................................................................................................................................ 33Table 4 ............................................................................................................................................................ 33Table 5 ............................................................................................................................................................ 34Table 6 ............................................................................................................................................................ 34Table 7 ............................................................................................................................................................ 35Table 8 ............................................................................................................................................................ 38Table 9 ............................................................................................................................................................ 38Table 10 ...........................................................................................................................................................39Table 11 ...........................................................................................................................................................40

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INTRODUCTION

Ind ia ’s more than one billion people, growing middle class, and low per capita consumption of soft

Drinks made it a highly contested prize in the global CSD (Central Securities Depository) market in

the early twenty-first century. Ten percent of the country’s population lived in urban areas or large

cities and drank ten bottles of soda per year while the vast remainder lived in rural areas, villages,

and small towns where annual per capita consumption was less than four bottles. Coke and Pepsi

dominated the market and together had a consolidated market share above 95%. While soft drinks

were once considered products only for the affluent, by 2003, 91% of sales were made to the

lower, middle and upper middle classes. Soft drink sales in India grew 76% between 1998 and

2002, from 5,670 million bottles to over 10,000 million (See Exhibit 6) and were expected to grow

at least 10% per year through 2012.28 In spite of this growth, annual per capita consumption was

only 6 bottles versus 17 in Pakistan, 73 in Thailand, 173 in the Philippines and 800 in the United

States.

With its large population and low consumption, the rural market represented a significant

opportunity for penetration and a critical battleground for market dominance. In 2001, Coca-Cola

recognized that to compete with traditional refreshments including lemon water, green coconut

water, fruit juices, tea, and lassie, competitive pricing was essential. In response, Coke launched a

smaller bottle priced at almost 50% of the traditional package.

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BACKGROUND OF COCA COLA:

The Coca-Cola Company re-entered India through its wholly owned subsidiary, Coca-Cola India

Private Limited and re-launched Coca-Cola in 1993 after the opening up of the Indian economy to

foreign investments in 1991. Since then its operations have grown rapidly through a model that

supports bottling operations, both company owned as well as locally owned and includes over

7,000 Indian distributors and more than 2.2 million retailers. Today, the brands are leading brands

in most beverage segments. The Coca-Cola Company's brands in India

include Coca-Cola, Fanta Orange, Limca, Sprite, Thumps Up, Burn, Kinley,

Maaza, Minute Maid Pulpy Orange, Minute Maid Nimbu Fresh and the

Georgia Gold range of teas and coffees and Vitingo (a beverage fortified

with micro-nutrients).

In India, the Coca-Cola system comprises of a wholly owned subsidiary of

The Coca-Cola Company namely Coca-Cola India Pvt.Ltd, (Private Limited)

which manufactures and sells concentrate and beverage bases and

powdered beverage mixes, a Company-owned bottling entity, namely,

Hindustan Coca-Cola Beverages Pvt Ltd; thirteen licensed bottling partners

of The Coca-Cola Company, who are authorized to prepare, package, sell

and distribute beverages under certain specified trademarks of The Coca-

Cola Company; and an extensive distribution system comprising of

customers, distributors and retailers. Coca-Cola India Private Limited sells

concentrate and beverage bases to authorized bottlers who are authorized to use these to produce

company portfolio of beverages. These authorized bottlers independently develop local markets

and distribute beverages to grocers, small retailers, supermarkets, restaurants and numerous other

businesses. In turn, these customers make company beverages available to consumers across

India.

The Coca-Cola system in India has already invested USD 2 Billion till 2011, since its re-entry into

India. The company will be investing another USD 5 Billion till the year 2020. The Coca-Cola

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system in India directly employs over 25,000 people including those on contract. The system has

created indirect employment for more than 1,50,000 people in related industries through its vast

procurement, supply and distribution system. They strive to ensure that work environment is safe

and inclusive and that there are plentiful opportunities for people in India and across the world.

The beverage industry is a major driver of economic growth. A National Council of Applied

Economic Research (NCAER) study on the carbonated soft-drink industry indicates that this

industry has an output multiplier effect of 2.1. This means that if one unit of output of beverage is

increased, the direct and indirect effect on the economy will be twice of that. In terms of

employment, the NCAER (National Council for Applied Economic Research; study notes that "an

extra production of 1000 cases generates an extra employment of 410 man days."

As a Company, the products are an integral part of the micro economy particularly in small towns

and villages, contributing to creation of jobs and growth in GDP. Coca-Cola in India is amongst the

largest domestic buyers of certain agricultural products.

As an industry which has strong backward and forward linkages, the operations catalysis growth in

demand for products like glass, plastic, refrigeration, transportation, and Industrial and agricultural

products. The operations also lead to incremental growth for enterprises engaged in post­

production activities like merchandising, marketing and sales. In addition, they share best practices

and technological advancements with company suppliers, vendors and allied industries which often

lead to improvement in the overall standards of quality across industries.

The Coca-Cola Company has always placed high value on good citizenship. Coca basic

proposition entails that Company’s business should refresh the market; enrich the workplace;

protect and preserve the environment; and strengthen the community. The company’s leverage

brand unique strengths to actively support and respond to local needs -- be it the need for

education, health, water or nutrition. They have used distribution network for disaster relief, India

marketing prowess to raise awareness on issues such as PET recycling, and brand presence in

communities to improve access to education and potable water. The Coca-Cola India Foundation

is now taking forward in the community at large, projects and programs of social relevance to carry

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forward the message of inclusive growth and development. For more details on activities of the

Coca-Cola India Foundation, please visit the website of the Coca-Cola India Foundation. 1

COCA COLA SYSTEM WORLDWIDE AND IN INDIA:

At the core of business in India, as in the rest of the world is production and distribution network,

which they call the "Coca-Cola system”. Globally, the Coca-Cola system includes the Company

and more than 300 bottling partners. The Coca-Cola Company manufactures and sells concentrate

and beverage bases. the authorized bottlers combine concentrate or beverage bases as the case

may be with sweetener (depending on the product), water or carbonated water to produce finished

beverages. These finished beverages are packaged in authorized containers bearing trademarks -­

such as cans, refillable glass bottles, non-refillable PET bottles and tetra packs -- and are then sold

to wholesalers or retailers. In India, additionally, the Company also sells certain powdered

beverage mixes such as Vitingo.

Brand beverages reach ultimate consumers through brand customers: the grocers, small retailers,

hypermarkets, restaurants, convenience stores and millions of other businesses that are the final

points of distribution in the Coca-Cola system. What truly defines the Coca-Cola system, and

indeed what makes it unique among businesses, is company ability to create value for customers

and consumers.

In India, the Coca-Cola system comprises of a wholly owned subsidiary of The Coca-Cola

Company namely Coca-Cola India Pvt Ltd which manufactures and sells concentrate and

beverage bases and powdered beverage mixes, a Company-owned bottling entity, namely,

Hindustan Coca-Cola Beverages Pvt Ltd; thirteen licensed bottling partners of The Coca-Cola

Company, who are authorized to prepare, package, sell and distribute beverages under certain

specified trademarks of The Coca-Cola Company; and an extensive distribution system comprising

of brand customers, distributors and retailers. Coca-Cola India Private Limited sells concentrate

and beverage bases to authorized bottlers who use these to produce portfolio of beverages. These

authorized bottlers independently develop local markets and distribute beverages to grocers, small

1 http://www.coca-colaindia.com/ourcompany/company_history.html6 | P a g e

retailers, supermarkets, restaurants and numerous other businesses. In turn, these customers

make brand beverages available to consumers across India.2

MISSION, VISION AND VALUES:

The world is changing all around Coca cola. To continue to thrive as a business over the next ten

years and beyond, India company must look ahead, understand the trends and forces that will

shape business in the future and move swiftly to prepare for what's to come. Coca cola’s must get

ready for tomorrow today. That's what company 2020 Vision is all about. It creates a long-term

destination for business and provides us with a "Road map" for winning together with bottling

partners.

Coca Cola’s Mission:

The Coca Road map starts with Coca Cola’s mission, which is enduring. It declares the purpose

as a Company and serves as the standard against which weigh company actions and decisions.

• To refresh the world...

• To inspire moments of optimism and happiness...

• To create value and make a difference

Visions:

The vision serves as the framework for the Road map and guides every aspect of company

business by describing what they need to accomplish in order to continue achieving sustainable,

quality growth.

• People: Be a great place to work where people are inspired to be the best they can be.

• Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy

people’s desires and needs.

• Partners: Nurture a winning network of customers and suppliers, together to create mutual,

enduring value.

• Planet: Be a responsible citizen that makes a difference by helping build and support

sustainable communities.

2 http://www.coca-colaindia.com/ourcompany/coca_cola_system.html7 | P a g e

Profit: Maximize long-term return to share owners while being mindful of company overall

responsibilities.

Productivity: Be a highly effective, lean and fast-moving organization.

India W inning Culture

The winning culture defines the attitudes and behaviors that will be required of Coca Cola’s

managers to make company 2020 Vision a reality.

Live Brand Values

The values serve as a compass for actions and describe how behave in the world.

Leadership: The courage to shape a better future

Collaboration: Leverage collective genius

Integrity: Be real

Accountab ility: If it is to be, it’s up to me

Passion: Committed in heart and mind

Diversity: As inclusive as company brands

Quality: What they do, they do well

Focus on the Market

Focus on needs of consumers, customers and franchise partners

Get out into the market and listen, observe and learn

Possess a world view

Focus on execution in the marketplace every day

Be insatiably curious

Work Smart

Act with urgency

Remain responsive to change

Have the courage to change course when needed

Remain constructively discontent

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Act Like Owners

• Be accountable for the actions and in actions

• Steward system assets and focus on building value

• Reward the people for taking risks and finding better ways to solve problems

• Learn from outcomes -- what worked and what didn’t

Be the Brand

• Inspire creativity, passion, optimism and fun

CULTURAL IMPACT ON BRAND:

1. Cultural Effect

According to Pukthuanthog and Walker, 2007, everyone who does business in a foreign country

has to be aware of, and responsive to that nation’s culture.

Since satisfying the cultural learned needs of customers is a fundamental objective of marketing,

gaining an intimate knowledge of the social and cultural influences of customers and the

determinants of their purchase behaviour are vital to the success of marketing across cultures.

Having respect and understanding of another culture and as well as ability to set one’s own cultural

mores (values), generally distinguishes successful global marketers from their less successful

counterparts (Bowman and Okuda, 1985).

Perhaps the biggest problem faced by multinational organisations is learning how best to market

products and treat customers in emerging global markets (Miles, 1995). Global marketers will only

be successful if they rise to the challenge of understanding culture and how it impacts on strategic

global market planning and implementation.

Relating to the effect of culture on the people, a global marketer would be looking at addressing the

intricacies of cross cultural consumer behaviours through theories and models that explain cultural

influences, consumer needs and consumer behaviour and then develop methods to compare and

contrast consumers and buyers across cultures and their behaviours.

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Culture can be defined according to Hofstede (1996: 21) as a collective programming of the mind

that distinguishes members of one category of people from those of another. Culture is

multifaceted and is a learned response to recurring situations as members or cultural components

learn, relate or share values to one another.

Culture can also be viewed has having two other layers: Visible and Hidden. Visible, with

representing overt behaviour that can be easily seen like clothes worn and eaten habits and

Hidden, representing values and morals like family values that are not visible and basic cultural

assumptions such as ethnicity and national identity which are not always overt but subject of

sometimes wrong assumption (Hofstede, 1991).

Culture is therefore fundamental to global marketing strategy and marketers should learn how to

take an objective perspective on views; communication and negotiation; and social behaviour.

Culture can therefore also be defined as the patterned ways of thinking, feeling and reacting,

acquired and transmitted mainly by symbols, constituting the distinctive achievement of human

groups, including their embodiment in artefacts, the essential case of culture consists of traditional

ideas and especially their attached values.

Culture comes in d iffe rent form s as

(a) Business specific, which is market planned, controlled and focused within specific rules.

(b) Organization/Employee specific, with varying individualistic cultures of values and beliefs

adopted as one.

(c) individualistic specific, where culture is individualistic imbibed based on interaction with others.

Yeo and Carter 2005, examined effect of culture strength, managerial competencies and their

effect on corporate performance as measured by return on investment and equity. This study

showed that there was a relationship between corporate culture and managerial competencies and

that both have strong influences on corporate effectiveness. This study in conclusion helped

managers identify cultural strengths which might be context and cultural specific.

In recent years, socio- cultural influences have been identified as critical determinants of marketing

behaviour. Cultural components such as language, religion, values and attitudes, education, social

organisation. Aesthetics, technology and political discourse have varying impact and

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communication to consumers perception to a brand or its elements. As a whole, cultural

component are not believed to affect international operations, however the strength lies in the

ability of a global marketer to discover similarities and differences to aid selection and operationso

into new market.3

2. Culture effect India:

Socio Cultural barriers faced by coca cola in India Coca - cola, the world’s largest selling soft drink

company had established its strong presence in the world since 1886. Coca-Cola is the first

international soft drink brand to enter the Indian market in the early 1970’s. Till 1977 Coca-Cola

was the leading brand in India; later, due to FERA (Foreign Exchange Regulation Act), they left

India and didn’t return till 1993. Coca-Cola had to face many issues regarding its quality, resource

exploitation and market exploitation along with price-quality trade-offs. People all over India are

challenging Coca-Cola for its abuse of water resource. Coca-Cola had affected both quality and

quantity of ground water. Due to its waste extracts, Coca-Cola was criticized for polluting the

nearby fresh water and ground water and soil; because of this issue, farmers are suffering from

water scarcity. Despite all these social and cultural issues, customers are using Coca-Cola due to

its strong brand reputation all over the world. This is because Indians are now using more soft

drinks and the youngsters are more in this category. However, with many studies and policy

changes, Coca-Cola will be able to establish its brand reputation and increase its market share in

the near future.

This report is prepared from an organizational point of view. The point here is to prepare a report

from a consultant point of view, as Coca-Cola has hired us to do a market study and analysis on

the cultural factors the company is envisaged to face in the Indian Market. Read further to gain

better understanding about the impact of culture on business processes and activities, and also on

the business performance.4

3 Brunei Business School.( 2012) Cultural Effect towards Brand Extension as a Global Marketing Strategy(1124460). Brunel University West London

4PETER B. SMITH, MARK F. PETERSON AND SHALOM H. SCHWARTZ, 2002. CULTURAL VALUES, SOURCES OF GUIDANCE, AND THEIR RELEVANCE TO MANAGERIAL

BEHAVIOR - A 47-Nation Study. JOURNAL OF CROSS-CULTURAL PSYCHOLOGY, Vol. 33 No. 2, pp. 188-208.

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ETHICAL ISSUES CONCERNING COCA-COLA IN INDIA

Situation Analysis:

In 2003, the community near the Coca-Cola bottling plant in Kerala, India protested against the

water scarcity and polluted water that resulted from its bottling operations. The allegations caused

the closure of the bottling plant. Coca-Cola was banned in the state for these unethical business

practices. Soon after the incident, the Center for Science and Environment (CSE), a Delhi-based

environmental NGO, released a report indicating the presence of pesticides, greatly exceeding

European standards, in a dozen popular beverages sold under the brand names of the Coca-Cola

Company and PepsiCo. This report raised serious protests all over India on the soft drink

industries, especially Coca-Cola and PepsiCo. Together, the companies have 90% of the India's

soft drink market.

In response to the allegations, Coca-Cola denies them by saying their products are safe and

questions the lab reports presented by CSE. The University of Michigan placed the Coca-Cola

Company on probation in 2006, and asked for an independent assessment of its operations in

India. The soft drinks were examined by an independent lab, The Energy and Resources Institute

(TERI). According to the reports the soft drinks were declared safe and pesticide free. However,

the CSE claimed that only the water was tested and not the other ingredients; ingredients such as

artificial flavors and sugar. After the reports from TERI were published the government declared

soft drinks as safe. However, the problems with some bottling plants still remain, due to the

depleting levels of ground water, day by day.

Critical Issues/Problems:

Solid waste and water issue: The communities near the bottling plant in India complained about the

passage of sludge as fertilizer, causing health and environmental damage. The most important

issue concerning these communities is the depletion of water levels caused by the Coca-Cola

bottling operations which have drastically reduced availability of water for irrigation purposes.

Pesticides in soft drinks: The other issue concerning human health caused by Coca-Cola is that

their bottled water and soft drinks contain pesticides which were tested by the reputed NGO, CSE.

Dual product standards: Coca-Cola is accused of having dual standards in terms of their products

and safety measures concerning human health with respect to USA, Europe and India.

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Community issue: These allegations affected Coca-Cola largely with its sales and also caused the

closure of one of their bottling plants in Kerala, India. Additionally, Coca-Cola’s products are

banned in the state of Kerala, India.

Action Taken:

Coca-Cola Company, India thought seriously about its corporate responsibility and witnessing huge

sales losses. In order to gain trust among the local communities near the bottling plant, they

improved their business practices and reduced the water usage by 34%. Through the practice of

rainwater harvesting, Coca-Cola returned substantial water to the aquifers. They have stopped

distributing sludge as Biosolids(fertilizers) to farmers for agriculture use, and have taken initiatives

with the Indian government to encourage the development of additional solid waste disposal sites.

The water used for making soft drinks is treated with activated carbon filtration and run through a

purification process to ensure that the water is free of pesticide residue. The ingredients are also

closely monitored and undergo various quality checks. According to the company’s factsheet, they

strictly follow the product standards which are the same all over the world.

Coca-Cola has also partnered with the NGO’s and the government to provide medical access to

poor people through regular health camps. In addition to their outreach efforts, the company

committed itself to environment responsibility through its business operations. For example by

following the practices of conserving energy and by adhering to the ban on purchasing CFCs,

Coca-Cola exhibited greater corporate responsibility.

The allegations in other ways helped Coca-Cola Company, India to show their corporate social

responsibility and to maintain good product quality standards. The initiatives all over India helped

them reach villages for a good cause and also indirectly marketed their products with establishing a

trust among the public. After all these allegations, the CSE is still not convinced of the quality of the

product. Therefore, Coca-Cola must prove that they have upgraded their lab with sophisticated

instrument which is capable of measuring pesticide residue in soft drinks. As per the recent reports

by CSE, they claim that the pesticide residue has gone up 27 times higher than expected level by

the Bureau of Indian Standards (BIS) (in 2006).5

5 Amit Srivastava . July 10th, 2003.Communities Reject Coca-Cola in India , India Resource Center

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COCA COLA POLITICAL ISSUES IN INDIA:

US drink manufacturer Coca-Cola is facing renewed problems in India after Kerala's state

government recently imposed a temporary ban on water extraction at its Plachimada bottling plant.

The ban, which lasts until June 15, follows a recent parliamentary inquiry that found that soft drinks

manufactured by Coca-Cola and Pepsi contained pesticide residues. These are the latest in a

string of problems that Coca-Cola has faced and signals continued difficulties for the company,

despite its move last December to create an advisory board tasked with navigating its affairs

through the complex local political landscape.

Coca-Cola has chalked up a turbulent history in India, only choosing to return to the country in

1993 after a somewhat unceremonious exit in 1977. That said, 2003 was a particularly difficult year

for the Indian arm of Coca-Cola, with 2004 shaping up to be similarly onerous. Coca-Cola faced

negative press over issues as diverse as contamination; anti-Iraq-war protests; alleged

environmental degradation; and, as 2003 came to a close, an alleged sexual-harassment case

involving a senior company executive and a former Miss Universe with whom the company had

previously had a product-endorsement contract.

The Plachimada issue has now returned to haunt the company and follows a barrage of bad press

over the bottling plant. The ban has come in response to acute water shortages the district is

facing, but is part of a much wider debate over water exploitation. In December, a High Court ruling

saw the Indian arm of US drinks manufacturer Coca-Cola, Hindustan Coca-Cola Beverages Ltd,

ordered to stop extracting groundwater at its southern Indian production facility in Plachimada,

Kerala. Unsurprisingly, the company appealed the decision. The ruling also failed to satisfy local

groups who have been campaigning for years for the closure of the bottling plant, demanding

compensation for the environmental damage that they argue it has caused. The Plachimada

bottling factory opened in 1999, since when locals have complained that water resources have

fallen dramatically - impacting adversely on farming yields - and that the remaining supplies have

been contaminated, rendering them unfit for human usage.

Contamination issues of a similar kind also continue to dog the company. The recent parliamentary

inquiry came in response to findings that the Center for Science and Environment (CSE), a Delhi-

based non-governmental organization (NGO), released last July. In a report on 12 leading soft-

drink brands, the NGO argued that that all contained higher levels of toxins than would be

permitted under European Union regulations. In a move calculated to capture public attention, the

CSE argued that repeat exposure to the likes of pesticide residues could result in cancer and the

14 | Page

immune system's failure. Coke and Pepsi account for more than 80 percent of the market and own

all 12 drink brands. As such, the two companies were the focus of the resultant public protests. The

Indian government attempted to quash the issue in August, releasing a report suggesting that any

pesticide residues found in the drinks were within given guidelines. This failed to satisfy the

opposition, which called for a more thorough report, the findings of which were published in early

February and have subsequently renewed the debate.

Complex issues surround multinationals operating in a country such as India. In light of this, Coca-

Cola has evidently contemplated a phoenix-styled resurrection of its reputation and product sales

with the creation of an advisory board. The board, formed in December, comprises some of the

country's leading professionals in the fields of economics, law and industry, operating under the

chairmanship of former cabinet secretary Naresh Chandra. The group held its first meeting on

December 16 and is expected to convene three to four times a year, both to review the company's

performance in India and guide it on a range of issues, including policy formulation, operational and

environmental matters, corporate citizenship, social responsibility and corporate governance. The

first meeting arrived at the decision to form an Indian environmental council, which will be headed

by former chief justice B N Kirpal.

It is worth noting that some of the problems Coca-Cola has faced and continues to be troubled by

form part of a wider debate, for which the drink giant cannot alone be held accountable.

Environment and health issues feature highly in the Indian psyche, particularly with the continued

publicity regarding the Bhopal disaster in 1984, caused when 27 tons of poison gases escaped

from a Union Carbide pesticide factory, killing thousands within hours and injuring more than

500,000 other people. As such, a significant challenge that foreign companies face is the simple

fact that many of the groups who campaign over environmental issues and the like have powerful

political ties. Their opposition is based not just on environmental and health concerns, but often

also on nationalistic sentiment - targeting these huge multinationals for what is often regarded as

their adverse impact on the local culture. Furthermore, any health scare, particularly one related to

contamination, vividly captures the public imagination, often to the multinational's disadvantage.

A factor that has emerged from the toxin debate is the need for government to address lacking

standards governing the quality of water that is used for soft drinks. Coca-Cola and Pepsi claim

that they are operating to local standards, but - as CSE illustrated - these may not meet those set

by the EU. As such, it is not just large multinationals that need to pay more attention to issues such

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1X

as social responsibility, but also the government.

In light of these issues, Coca-Cola's decision to create an advisory board was an interesting move.

From a cynic's standpoint, it could be argued that the company's decision to create an advisory

council and then populate it with high-profile figures immediately affords it some protection from

criticism, and gives it easy access to the country's decision-makers - a useful asset in the face of

social or legal action. Furthermore, it provides Coca-Cola with the opportunity to create a more

easily identifiable Indian brand, not unlike Hindustan Lever, and as such reduce the propensity for

its market to regard it as "foreign". Less cynically, the creation of an advisory council is something

of a precedent. This is the first such move by a multinational operating in India, and may

demonstrate a realization that foreign multinationals need to be more attentive to local concerns

and show greater awareness of social responsibility if they are ultimately to succeed in the local

marketplace.6

COCA COLA ENVIRONMENTAL ISSUES IN INDIA:

Coca-Cola and Water Use in India: "Good Till the Last Drop”

The marketing executive who came up with Coca-Cola’s popular slogan

in 1908 most likely never expected it would be taken so literally.

However, a hundred years ago there probably weren’t many who

imagined a term like "water wars” could exist in a region that

experiences annual monsoons. On February 25 a complaint was filed in

the New York Supreme Court against the The Coca-Cola Company

alleging that they knew about and sought to cover up human rights

abuses in Guatemala. While that trial gets started, the company’s

controversial practices in India continue involving the over-exploitation coca-coia sucks India dry.

of limited water resources and the contamination of groundwater supplies. In response to public

outcry the soft drink company is now championing itself as a longtime environmental leader and

the business community is eager to advertise their claim. Yesterday CNN Money reported that:

Coke has been a leader when it comes to environmental issues: It is aiming to be water neutral

meaning every drop of water used by the company will be replenished — by 2020.

6 http://www.atimes.com/atimes/South_Asia/FB24Df04.html

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This would come as a surprise to the Plachimada community in the State of Kerala. Ever since

Coca-Cola opened a bottling plant on their land in 2000 they have been faced with chronic drought

and polluted water. In 2006 these residents of a small impoverished community in southern India

began a pitched campaign to evict Coca-Cola from their land which led to fierce battles with local

authorities.In 2003 Indian journalist Arjun Sen wrote in The Statesman:

Three years ago, the little patch of land in the green, picturesque rolling hills of Palakkad yielded 50

sacks of rice and 1,500 coconuts a year. It provided work for dozens of labourers. Then Coke

arrived and built a 40-acre bottling plant nearby. In his last harvest, Shahul Hameed, owner of a

smallholding, could manage only five sacks of rice and just 200 coconuts. His irrigation wells have

run dry, thanks to Coke drawing up to 1.5 million litres of water daily through its deep wells to bottle

Coke, Fanta, Sprite, and the drink the locals call without irony, "Thumbs Up.”

To make matters worse, the bottling plant was producing thousands of gallons of toxic sludge and,

as the BBC reported, disposed of it by selling the carcinogenic material to local farmers as

"fertilizer.” High levels of pesticides were also reportedly found in the soft drink produced in the

region leading to bans across the country. According to The Guardian, some Indian farmers even

chose to spray their fields with Coca-Cola rather than use the more expensive pesticides from

Monsanto.

However, the most serious problem was water use. According to anthropologist Ananthakrishnan

Aiyer writing in the journal Cultural Anthropology the persistent water problems in the region soon

became a crisis after the company’s arrival:

A severe drought in 2004 in Kerala complicated matters as Plachimada was declared a "water

impoverished” zone in 2005. By 2005, the Plachimada situation was being replicated as the

struggle over water and irrigation rights spread to other rural communities across the country,

which led to several agitations and demonstrations against The Coca-Cola Company.

Despite attempts to revoke their license Coca-Cola remained. As Aiyer pointed out, it would have

been foolish not to. The company extracted groundwater nearly free of charge (except for a small

fee for discharging wastewater) and they were able to reap enormous profits as a result. In the late

1990s the average cost of industrial water in the U.S. was about five dollars per 10,000 litres,

whereas in India the price was a mere three cents.

17 | P a g e

Water in India is literally free and highly lucrative for private corporations. Thus, access to cheap

groundwater and the low cost of extracting it in combination with low labor costs and state and

local governments falling over each other to attract "foreign investment,” all play a role in facilitating

the entry of transnational corporations into the water industry.

However, this investment, from Coca-Cola and other multinationals, has come at a significant cost

to the local population:

The rural population has especially suffered the most. The clearest and most visible signs of this

distress, and there are many, are of course the steady numbers of farmer suicides across the

country. By several reliable estimates, there have been anywhere from 22,000 to 25,000 suicides

by farmers in the past decade and the majority of these have taken place in the western and

southern states. This amounts to about seven suicides a day-a situation that would have called for

a national emergency in most Western neoliberal states, but it is certainly not the case in India.

Clearly this trend is the result of larger forces and not just the actions of a single company. Aiyer

highlights the role of the World Bank in promoting the privatization of water throughout the country

that has resulted in multinational companies and wealthy landowners "sidestepping local

government bodies and taking direct control of canals

and irrigation schemes.” In the case of Plachimada, Coca-Cola has become a symbol for these

larger forces at work:

It is little wonder that the struggle by the residents of Plachimada against The Coca-Cola

Company, an eminently concentrated form of capital, galvanized so much support in India and

elsewhere, and that their struggle has been inspirational and played a significant role in generating

opposition to The Coca-Cola Company and PepsiCo in other rural communities in India facing

similar threats from transnational corporations. While the Kerala plant was temporarily closed due

to the popular protest, to this day the people of Plachimada continue their struggle to receive

compensation for contamination and over-exploitation of water resources on their land. Coca-Cola

has shifted their operations to other areas of southern India and continues to produce their fizzy

18 | P a g e

drink in a region that regularly faces chronic drought. More than one hundred years since the

slogan was first used, "Good Till the Last Drop” continues to have lasting relevance.7

COMPETITION:

•I'*'-'

Coca-Cola Classic is a we 11-recognized brand worldwide. Unfortunately, domestic sales do not

reflect Coca-Cola Classic’s true marketing potential. Due to newly introduced beverages and the

growing popularity of the competition, Coca-Cola Classic sales continue to decline.

D irect Competition:

Cola flavored sodas: Pepsi, RC Cola, store brand colas other brands of cola-flavored soda provide

the same experience as Coca- Cola Classic. Non-loyal cola drinkers cannot even taste the

difference between brands.

Ind irect Com petition:

Other carbonated drinks: Dr. Pepper, Mountain Dew, 7-Up, Diet Sodas Other flavors of carbonated

drinks can substitute Coca-Cola Classic. They have the same texture and are consumed with

similar foods: pizzas, burgers, snacks. All of these sodas provide the same benefit to the

consumer: an easily accessible drink that will complement any food.

Functional drinks: Energy Drinks, Enhanced Water/Sports Drinks, Teas Functional drinks are

rapidly growing in popularity among teenagers and young adults. They provide a more

concentrated dose of caffeine, vitamins or nutrients for the students and athletes who are in need

7 AIYER, A. (2007). THE ALLURE OF THE TRANSNATIONAL: Notes on Some Aspects of the Political Economy of Water in India Cultural Anthropology, 22 (4), 640-658 DOI: 10.1525/can.2007.22.4.640

19 | P a g e

of energy. With an overlapping of target market and similar key benefits of providing energy,

functional drinks are taking market share from Coca-Cola Classic.

Non-Soda Com petition:

Other beverages: Any brand of unfortified juice, water or milk there is a wide range of drinks

available to quench thirst or to complement a meal or snack. Water, milk and all other drinks

compete to satisfy the consumer’s next wave of thirst.

CASE OBJECTIVES:

What are psychographic and behavioral characteristics of the target market?

What is the target market’s perception of CSDs and Coca-Cola Classic?

What are the CSD purchase trends among the target market?

What are common lifestyle trends within the target market?

What is the media consumption of the target market?

W hat are the psychographic and behavioral characteristics o f the target audience?

The target audience invests much of its time in social activities. They feel most comfortable when

around others, and they use multiple forms of communication to keep in touch with others. The

target audience values friends highly and prefers to do activities as a group rather than as

individuals.

W hat is the target m arket’s perception o f Coca-Cola C lassic?

Social, conservative and fun are a few words that the target uses to describe the Coca-Cola

Classic brand. They see Coca-Cola Classic as a solid brand that will always be around, though it

may not always adapt well to current trends. The target audience says that Coca-Cola Classic

does not put enough emphasis on what is interesting to them.

W hat are CSD purchase trends among the target market?

23% of the target market is generally loyal to brands but has not yet made a definite brand choice

for soft drink consumption. These customers are ready to make a brand choice but are waiting for

a brand that connects with them. The target market is health-conscious and thus has increased its

consumption of non-soda drinks; however, it has not given up soft drinks entirely.

W hat are com mon lifestyle trends w ith in the target market?

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Health has become a major concern for the target market. It is, however, a matter of perception.

While 96% of respondents consider themselves healthy or somewhat healthy, only 26% watch their

calorie intake. Therefore, while being healthy is trendy, few follow a strict diet. Instead, they make

their consumption decisions based on perceptions of healthiness.

The target is generally receptive to advertising; it is less annoyed by advertising

than the older population. 13-18 year olds look to advertising for current trends. They consider both

advertising and their friends the strongest influences when purchasing the right products.

Dynamics primarily drink soda in social settings with friends and family.

W hat is the media consum ption o f the target market?

91% of the target audience considers itself to be at least somewhat connected to major news and

world events. The target audience spends much of their time on the computer, and sees it as a

valid source of information.

Segmenting through media purchases

Aware of the benefits of segmenting the market, they looked for a divide delineating the target into

two psychographic groups throughout the primary research process. Case found no such distinct

divide. In fact, they see the younger half of the target attempting to emulate the older half, aligning

with their world views and preferences. With no discernable difference in outlook within the target,

any division of the target into primary and secondary sub-groups would be completely arbitrary.

Yet, though their underlying preferences may be similar, a high school student lives in a very

different world from a college student or a young professional. In order to best connect with their

everyday experiences, they plan to segment through media channels, allowing us to tailor

executions to the specific life experiences most relevant to the audience while still maintaining the

underlining message among the target.

Coca Cola Target Market:

The target audience is the Dynamics,13-24 year old non-loyal beverage drinkers seeking

convenience in their active, busy and connected lives. Dynamics engage in several activities that

involve the use of multiple communication media at the same time.

How are they Dynamic:

Non-Loyal - Dynamics are brand loyal, but have not yet decided on a soft drink loyalty.

21 | P a g e

Active - Dynamics are physically active, interested in fitness and health.

Busy - Dynamics are either working, in school, or both. During their chaotic days, they socialize

with others.

Connected - Dynamics utilize lots of technology to maintain their social connections and stay

connected to the world around them.

GLOBAL POSITIONS:

Coca-Cola Enterprises Inc.

Type

Traded as

Industry

Founded

Headquarters

Key people

Public

N Y SE: CCE S&P 500 Component

Beverages

1986

Atlanta, Georgia, U.S.

John F. Brock (CEO), Chairman and CEOW illiam W. Douglas, CFOHubert Patricot, President, Europe Group ^

Products

Revenue

The Coca-Cola Company Products Other Soft Drinks

A U S$7.6 Billion (FY 2012)m

Operating income AU SS1.03 Billion (FY 2011) ^

Net income

Total assets

Total equity

Employees

A US$677 M illion (FY 2012)m

A U S$9.09 Billion (FY2011)m

▼US$2.90 Billion (FY2011)m

13,250 (2011)[4]

22 | P a g e

THE COCA-COLA COMPANY SECOND QUARTER AND YEAR-TO- DATE 2013 RESULTS

1% global volume growth in the second quarter; 3% growth year to date Global volume and value

share gains in total nonalcoholic ready-to-drink beverages as well as sparkling and still beverages

Global brand Coca-Cola volume growth o f 1% in the second quarter; 2% growth year to date

Second Quarter and Year-to-Date 2013 H ighlights

• Second quarter volume grew 1% and year-to-date volume grew 3%. Coca-Cola

Americas grew 1% and Coca-Cola International grew 2% in the quarter.

• Solid global volume and value share gains achieved in the quarter in total

nonalcoholic ready-to-drink (NARTD) beverages as well as global volume and

value share gains in sparkling and still beverages.

• Reported net revenues declined 3% in the second quarter and 2% year to date.

Excluding the impact of structural changes, comparable currency neutral net

revenues grew 2% in both the quarter and year to date.

• Reported operating income declined 2% in the second quarter and 3% year to date.

Excluding the impact of structural changes, comparable currency neutral operating

income grew 4% in the quarter and 5% year to date.

• Currency was a 2% headwind on comparable net revenues and a 3% headwind on

comparable operating income in the quarter.

• Second quarter reported EPS was $0.59, down 3% and comparable EPS was $0.63,

up 4%, including an approximate 2% currency headwind. Year-to-date reported

EPS was $0.98, down 7% and comparable EPS was $1.09, up 4% despite two fewer

selling days in the first half of 2013 and an approximate 4% currency headwind.

ATLANTA, Ju ly 16, 2013 - The Coca-Cola Company today reported second quarter and yearto-

date 2013 results. Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company

said, "Our second quarter volume results came in below our expectations, reflecting an ongoing

challenging global macroeconomic environment and unusually poor weather conditions in the

quarter. While we are not happy with our performance, we did gain global volume and value share

in total nonalcoholic ready-to-drink beverages as well as in sparkling and still beverages in the

quarter. Despite the headwinds in the quarter, we are committed to improving upon our results,

with current dynamics leading us to believe that our performance will be better in the second half of

23 | P a g e

the year. We remain confident in our 2020 Vision and our system's ability to execute with precision

around the world. In this context, we remain firmly focused on investing alongside our global

bottling partners to strengthen our system for the future, to deliver the brands and beverages that

consumers love and to achieve our long-term performance goals.”

PERFORMANCE HIGHLIGHTS

The Coca-Cola Company reported worldwide volume growth of 1% in the second quarter

and 3% year to date, and grew global volume and value share in the quarter in total NARTD

beverages as well as in both sparkling and still beverages. Volume growth in the quarter was

below the Company's expectations due to a confluence of factors that collectively made for a

challenging second quarter. Slow economies in Europe, Asia and Latin America, and historically

wet and cold weather conditions across multiple regions impacted consumer spending and,

consequently, overall NARTD beverage industry performance. Coca-Cola Americas grew

volume 1% in the quarter and 2% year to date, with North America volume down 1% and Latin

America volume up 2% in the quarter. Coca-Cola International grew volume 2% in the quarter

and 4% year to date, with second quarter Eurasia and Africa volume up 9%, Pacific volume up

2% and Europe volume down 4%.

Worldwide sparkling beverage volume was even in the quarter and up 2% year to date.

Despite unseasonably cold and wet weather and continued volatile macroeconomic conditions

in many markets around the world, we grew global volume and value share in sparkling

beverages in the quarter, led by marketing campaigns such as "Share a Coke” in Europe and

"Coca-Cola Open Summer” in North America. Worldwide brand Coca-Cola volume grew 1% in

the quarter and 2% year to date, with growth in the quarter across diverse markets, including

Thailand (+24%), India (+18%), Nigeria (+15%), Russia (+11%), Argentina (+7%) and the

Philippines (+7%). The Coca-Cola Company was recognized during the quarter with the 2013

Creative Marketer of the Year Award at the Cannes Lions International Festival of Creativity,

widely considered to be the world's foremost celebration of creative excellence in brand

communications.

Worldwide still beverage volume grew 6% in both the quarter and year to date, with solid

volume and value share growth across beverage categories, including packaged water, juices

and juice drinks and ready-to-drink tea. Excluding the impact of acquired volume, primarily the

Aujan partnership in the Eurasia and Africa Group, still beverage volume grew 4% in the quarter.

24 | P a g e

Ready-to-drink tea volume grew 10% in the quarter, with continued strong performance of key

brands such as Gold Peak and Honest Tea in North America, Ayataka green tea in Japan and

Fuze Tea across multiple markets worldwide. Packaged water volume grew 6% in the quarter,

as we continue to focus on innovative and sustainable packaging and immediate consumption

occasions that help drive value share growth ahead of volume share growth. Energy drinks

volume grew 5% in the quarter driven by growth across our global portfolio of energy brands.

Juices and juice drinks volume grew 4% in the quarter, with growth across all geographic

operating groups.Table 1

OPERATING REVIEW

Total Company

Eurasia & Africa Europe Latin America North America PacificBottling Investments

Three Months Ended June 28. 2013 % Favorable / (Unfavorable)

Unit Case Volume

Net Operating Revenues Income

ComparableCurrencyNeutral

OperatingIncome

1 (3) (2) 4

9 5 12 19(4) (1) (7) (3)2 6 6 13(1) (1) (3) —

2 (5) (3) —

(16) (10) 38 12

Table 2

Total Company

Eurasia & Africa Europe Latin America North America PacificBottling Investments

Six Months Ended June 28, 2013

% Favorable / (Unfavorable)

ComparableCurrencyNeutral

Unit Case Net Operating Operating Volume Revenues Income Income

3 (2) (3) 4

11 7 9 16(2) (2) (5) (2)3 5 4 11

— (1) (11) (1)2 (5) (2) 1

(12) (7) 31 39

25 | P a g e

Eurasia & A frica

• Our Eurasia and Africa Group's volume grew 9% in the quarter and 11 % year to date (up 6% and

9%, respectively, excluding the benefit of acquired volume primarily from the Aujan partnership),

cycling 10% growth in the prior year quarter. All business units in the group achieved volume

growth in the quarter, led by Middle East and North Africa, up 17% (up 9% excluding the benefit of

acquired volume); Central, East and West Africa, up 10%, and Russia, up 3%. Reported net

revenues for the quarter increased 5%, reflecting a 7% increase in concentrate sales and positive

price/mix of 4%, partially offset by a 6% currency headwind. Comparable currency neutral net

revenues increased 11% in the quarter.

After adjusting for unit case sales without concentrate sales equivalents, concentrate sales in the

quarter slightly lagged unit case sales due to timing, but year to date they are in line.

Reported operating income increased 12% in the quarter. Comparable currency neutral operating

income increased 19% in the quarter, driven by volume, pricing and product mix, as well as

efficient expense management, partially offset by continued investments in the business.

• During the quarter, Eurasia and A frica grew volum e and value share in total NARTD

beverages. Sparkling beverage volume grew 7% in the quarter, led by brand Coca-Cola, which

also grew 7%. This growth was due to a continued focus on driving executional capabilities in the

marketplace, greater consumer choice in package and price options, integrated marketing

campaigns such as "Coca-Cola Crazy for Good” and "Coke with Meals”, as well as the expansion

of the Coke Studio music competition. Sprite volume grew 6% in the quarter and Fanta volume

grew 5% as new campaigns were launched across multiple markets. Still beverage volume grew

15% in the quarter, including the benefit of acquired brands which added eight points of volume

growth to overall Eurasia and Africa still beverages. In Russia, key contributors to volume growth in

the quarter were brand Coca-Cola, up 11%, Fanta Orange, up 9% and Schweppes, up 31%. We

gained volume and value share in total NARTD beverages in Russia, with a strong marketing

calendar tied to the 2014 Sochi Winter Olympics and supported in the quarter by our largest-ever

consumer promotion in the country offering an under-the-cap points program to redeem for Winter

Olympics-themed glassware.

Europe

• Our Europe Group's volume declined 4% in the quarter and 2% year to date, cycling a 4% decline

in the prior year quarter. Although we grew share, the quarter was marked by particularly poor

weather across many countries, including severe flooding in parts of Germany and Central Europe,

26 | P a g e

as well as ongoing weakness in consumer confidence and spending across the region, which have

impacted the entire NARTD beverage industry.

Reported net revenues declined 1% in the quarter, reflecting a 3% decline in concentrate sales and

a 2% currency headwind, partially offset by positive price/mix of 4%. Price/mix includes the benefit

of consolidating the innocent juice and smoothie business starting in May 2013. Comparable

currency neutral net revenues increased 1% in the quarter. After adjusting for unit case sales

without concentrate sales equivalents, concentrate sales in the quarter were in line with unit case

sales. Reported operating income declined 7% in the quarter. Comparable currency neutral

operating income declined 3% in the quarter, reflecting the decline in volume, partially offset by

efficient expense management and the timing of operating expenses.

• During the quarter, the Europe Group grew volume and value share in total NARTD

beverages as well as in sparkling beverages, juices and juice drinks and energy drinks despite

continued weak industry trends. In addition, we gained share in ready-to-drink tea. A key marketing

campaign launched in markets throughout Europe late in the quarter, titled "Share a Coke”, placed

the names of individual consumers on our iconic Coca-Cola bottles and cans. To date, the

campaign has received positive consumer feedback and it has now been extended and expanded

as a result. Although Germany and Northwest Europe and Nordics volume declined low single

digits in the quarter, we gained volume and value share in total NARTD beverages as well as in

sparkling beverages. The Iberia and Central and Southern Europe regions continue to manage

through very tough macroeconomic conditions with ongoing brand-building programs and an

occasion-based package, price and channel segmentation strategy.

Latin Am erica

• Our Latin America Group's volume grew 2% in the quarter and 3% year to date, cycling 3%

growth in the prior year quarter. Volume growth in the quarter was led by Latin Center, up 7%,

South Latin, up 5% and Mexico, up 1%. Brazil volume was even in the quarter, cycling 6% growth

in the prior year quarter and reflecting some consumer uncertainty given the economic slowdown

and protests late in the quarter. Reported net revenues for the quarter increased 6%, reflecting

concentrate sales growth of 2% and positive price/mix of 9%, partially offset by a currency

headwind of 5%. Comparable currency neutral net revenues increased 11% in the quarter.

Reported operating income was up 6% in the quarter, with comparable currency neutral operating

income up 13%, primarily reflecting volume, pricing and product mix, partially offset by increased

investments in support of the 2013 FIFA Confederations Cup and upcoming 2014 FIFA World Cup.

27 | P a g e

• During the quarter, the Latin Am erica Group gained share in total NARTD and sparkling

beverages as well as both volume and value share in still beverages. This performance was driven

by continued activation of brand and category campaigns such as "Crazy for Good” and "140

Calories”, previously launched in Brazil, Mexico and Colombia and now expanded to Central

America, as well as investments in cold-drink equipment and continued segmentation across

multiple price points and package sizes. In addition, late in the quarter we launched Coca-Cola Life

in Argentina, our first low-calorie cola naturally sweetened with stevia leaf extract and sugar. In the

quarter, brand Coca-Cola volume was up 1% and both Sprite and Fanta volumes were up 4%. Still

beverage volume grew 8% in the quarter, driven by growth in ready-to-drink tea, juices and juice

drinks, sports drinks and packaged water. We gained both volume and value share in total NARTD

beverages across multiple markets, including Mexico, Argentina and Colombia.

North America

• Our North Am erica G roup's volume declined 1% in the quarter and was even year to date,

cycling 1% growth in the prior year quarter. Volume was under pressure due to unseasonably cold

and wet weather and the timing of the Easter and July 4th holiday periods as well as weakened

consumer spending that has impacted the overall NARTD beverage industry in North America.

Reported and comparable currency neutral net revenues for the quarter declined 1%, reflecting a

1% decline in "as reported” volume and even price/mix, including positive 1% price/mix for

sparkling beverages. Second quarter reported operating income declined 3%. Comparable

currency neutral operating income was even in the quarter, reflecting the volume performance and

continued investment in our brands as well as the impact of structural changes, offset by efficient

management of operating expenses.

• During the quarter, North Am erica maintained volum e share and grew value share in total

NARTD beverages as we continued to focus on our core strategies o f bu ild ing strong

brands,

creating value with customers and enhancing system capabilities. In addition, we gained volume

and value share in both sparkling and still beverages, with volume and value share gains across

every still beverage category except sports drinks. Sparkling beverage volume declined 4% in the

quarter with sparkling beverage price/mix growth of 1% and value share growing ahead of volume

share, as we remain committed to a rational pricing environment. Still beverage volume grew 5% in

the quarter, led by strong performance across both the ready-to-drink tea and packaged water

categories with brands such as Gold Peak, smartwater and Dasani leading the way. Further, our

28 | P a g e

volume and value share gains in the juices and juice drinks category were driven by 4% volume

growth for Simply and 3% growth for Minute Maid.

Pacific

• Our Pacific Group's volume grew 2% in both the quarter and year to date, cycling 10% growth in

the prior year quarter. Reported net revenues for the quarter declined 5%, reflecting 4%

concentrate sales growth, offset by a 4% decline in price/mix and a 5% currency headwind. The

unfavorable price/mix in the quarter was primarily a result of geographic mix, as we cycled product

launches in Japan in the prior year, as well as shifts in product and package mix within individual

markets. Comparable currency neutral net revenues were even. Concentrate sales in the quarter

were ahead of unit case sales due to timing, primarily in China. For the full year, we expect

concentrate sales to be in line with unit case sales. Reported operating income decreased 3% in

the quarter, reflecting geographic mix and a 2% currency headwind. In addition, reported operating

income reflects a benefit related to structural changes. Comparable currency neutral operating

income was even in the quarter.

• Volume growth in the quarter was w ide ranging, w ith 28% grow th in Vietnam, 22% growth

in Indonesia, 17% growth in Thailand and 1% growth in both Japan and India. Volume

performance was even in both China and the Philippines in the quarter. Sparkling beverage

volume growth was even in the quarter, yet brand Coca-Cola grew 3% and Fanta grew 7%.

Still beverages grew 4% in the quarter, with 7% growth in packaged water, 5% growth in ready-to-

drink tea and 6% growth in sports drinks. Japan's sparkling beverage volume grew 1% in the

quarter, supported by music-themed integrated marketing campaigns such as the "Zero Limit”

campaign for Coca-Cola Zero, up 13%. India volume growth of 1% in the quarter was cycling 20%

growth in the prior year quarter and reflects the impact of an earlier and heavier than normal

monsoon season in 2013 and cycling a later than normal monsoon season in the prior year.

Importantly we gained volume and value share in India in the quarter in total NARTD beverages as

well as in both sparkling and still beverages. The second quarter volume performance in China

continued to be impacted by the economic slowdown, poor weather and competitive activity such

as package upsizing. Despite this, still beverages grew 4% in the quarter, driven by juices and juice

drinks and packaged water. As we look ahead to the remainder of 2013, we continue to expect the

industry and our business to be impacted by China's economic slowdown. However, we are

evolving our strategies in China and we anticipate a return to growth in our business in the second

half of the year.

29 | P a g e

Bottling Investments

• Our Bottling Investments Group's (BIG) volume grew 1% in the quarter and 2% year to date after

adjusting for the net impact of structural changes, primarily the deconsolidation of the Philippine

bottling operations in 2013. BIG volume including the impact of structural changes was down 16%

in the quarter and 12% year to date. The growth in volume in the quarter after adjusting for the

impact of structural changes was led by India, with strong volume and value share gains, as well as

markets within BIG's Southeast Asian operations. Reported net revenues for the quarter declined

10%. This reflects the 1% volume growth and positive price/mix of 1%, offset by a currency

headwind of 1% and an 11% net impact due to structural changes. Comparable currency neutral

net revenues declined 10% in the quarter.

Reported operating income in the quarter grew 38%. Comparable currency neutral operating

income increased 12% in the quarter, reflecting positive pricing and product mix in certain markets,

partially offset by continuing investments in our in-market capabilities.

FINANCIAL REVIEW

Second quarter reported net revenues declined 3%, with comparable net revenues also down 3%.

This reflects a 1% increase in concentrate sales, offset by a 2% impact from structural changes

and a 2% currency headwind. The structural changes in the quarter primarily reflect the

deconsolidation of the Philippine bottling operations in 2013. We achieved solid pricing across key

markets around the world leading to global NARTD value share growth for the 24th consecutive

quarter. Price/mix in the quarter was even, as the benefit of positive pricing was offset by

geographic mix, and as we cycled positive 3% price/mix in the prior year quarter.

Excluding the impact of structural changes, comparable currency neutral net revenues grew 2% in

both the quarter and year to date. We anticipate that the Philippine bottling transaction, together

with the bottling transaction in Brazil which closed earlier this month, will reduce the full-year 2013

net revenues by 3%. Reported and comparable cost of goods sold decreased 5% in the quarter,

reflecting a 1% increase in concentrate sales offset by the impact of structural changes, primarily

the deconsolidation of the Philippine bottling operations in 2013. Currency reduced comparable

cost of goods sold in the quarter by 2%. Excluding the impact of structural changes, comparable

currency neutral cost of goods sold was even in the quarter. Items impacting comparability in the

quarter primarily included net gains/losses on commodities hedging.

30 | P a g e

Reported SG&A expenses declined 3% in the quarter and comparable SG&A expenses declined

2%. Currency reduced comparable SG&A expenses by 1% in the quarter. Excluding the impact of

structural changes, comparable currency neutral SG&A expenses grew 1% in the quarter, including

a strong increase in direct marketing expenses, and we captured two points of operating expense

leverage. The structural changes in the quarter primarily reflect the deconsolidation of the

Philippine bottling operations in 2013. Operating expense leverage in the quarter was impacted by

the reversal of certain expenses related to our long-term incentive plans. A portion of our stock-

based compensation is based on multi-year performance periods and includes the impact of

currency, which we now estimate will be a headwind of 4% on operating income for the full year

versus our expectation at the end of the first quarter of a 2% headwind. We now expect to achieve

low single-digit operating expense leverage for the full year after excluding the impact of structural

changes.

Second quarter reported operating income decreased 2%. Excluding the impact of structural

changes, primarily the deconsolidation of the Philippine bottling operations in 2013, comparable

currency neutral operating income grew 4% in the quarter and 5% year to date.

Items impacting comparability reduced second quarter 2013 operating income by $175 million and

reduced second quarter 2012 operating income by $119 million. Currency reduced comparable

operating income by 3% in the quarter. Including our hedge positions, current spot rates and the

cycling of our prior year rates, we estimate currency will have a 4% unfavorable impact on

comparable operating income for both the third quarter and the full year. Further, we anticipate that

the Philippine bottling transaction, together with the bottling transaction in Brazil that closed earlier

this month, will have a 1% structural impact on our full-year 2013 operating income, with this

decline offset by a corresponding improvement in equity income.

Year-to-date net share repurchases totaled $2.0 billion. We are targeting net share repurchases of

$3.0 to $3.5 billion for the full year. Second quarter reported EPS was $0.59 and comparable EPS

was $0.63. Items impacting comparability reduced second quarter 2013 reported EPS by a net

$0.04 and had no net impact on second quarter 2012 reported EPS. In both periods, these items

included restructuring charges, costs related to global productivity initiatives, transaction

gains/losses, net gains/losses related to our economic hedges, primarily commodities, and certain

tax matters. Items impacting comparability in second quarter 2012 also included charges related to

changes in the structure of Beverage Partners Worldwide (BPW) and charges related to the supply

of Brazilian orange juice.

31 | P a g e

Year-to-date cash from operations was $3,956 million, down 5% versus the prior year, primarily

due to the impact of two fewer selling days in the period, an unfavorable impact from currency, and

an increase in the use of working capital in preparation for the peak season of our growing global

business.

Effective Tax Rate

As discussed in the first quarter 2013 earnings release, we had previously estimated that the

underlying effective tax rate on operations would be 23.5% for 2013. We now anticipate that the

underlying effective tax rate on operations for 2013 will be 23.0%. We expect this rate to remain

unchanged through 2014. We are required to record income tax expense for the first six months of

the year based on the estimated underlying effective tax rate for the full year. To bring the effective

tax rate for the first six months of 2013 in line with the current estimated full year underlying

effective tax rate, we recorded income tax expense at an underlying effective tax rate of 22.6% for

the second quarter.

The reported effective tax rate for the quarter was 23.5%. The variance between the reported rate

and the underlying rate was due to the tax effect of various items impacting comparability,

separately disclosed in this document in the Reconciliation of GAAP and Non- GAAP Financial

Measures schedule.

The underlying effective tax rate does not reflect the impact of significant or unusual items and

discrete events, which, if and when they occur, are separately recognized in the appropriate period.

Items Im pacting Prior Year Results

First quarter 2012 results included a net gain of $0.01 per share due to gains related to equity

investees, partially offset by restructuring charges, costs related to global productivity initiatives,

charges related to changes in the structure of BPW and charges related to the supply of Brazilian

orange juice. Items impacting results had no net effect on second quarter 2012 reported EPS.

These items included a transaction gain and certain tax matters, offset by restructuring charges,

costs related to global productivity initiatives, charges related to changes in the structure of BPWO

and charges related to the supply of Brazilian orange juice.8

8http://www.coca-colacompany.com/press-center/press-releases/the-coca-cola-company-reports-third-quarter-and-year-to-date-2013-results

32 | P a g e

Table 3

Settings | Technicals | ®® Linkto this view

Related Competitor CompaniesTable 4

Related companies

Show: Most Recent Annual -

Company name

CCE Coca-Cola Enterpr..DPS Dr Pepper Snapple..

KO The Coca-Cola Com..

OCCH Coca-Cola Helleni...

COKE Coca-Cola Bottlin. ..

MNST Monster Beverage ...

PEP PepsiCo, Inc.

KOF Coca-Cola FEMSA, .

AKO.A Embotelladora And...

BTVCF BRITVIC PLC

NSRGY Nestle SA Reg Shs...

Valuation

Price Change Chg %

42.15 -0.57 -1.33%

48.21 -0.42 -0.86%

39.83 -0.54 -1.34%

26.59

69.10 +0.27 0.39%

62.29 -0.20 -0.32%

81.90 -0.75 -0.91%

117.83 +0.57 049%

22.32 +0.57 2.62%

9.37 0.00 0 00%

72.06 +0.64 0.76%

Add or remove columns

d | m | y Mkt Cap

10.94B 9.67B

175.89B 9.56B

639.20M 10.44B

125.60B 23.93B

3.52B

2.30B

230.64B

Sector: Non-Cyclical Consumer Goods S. Services > Industry: Carbonated Soft Drinks

More from Revere Data »

33 | P a g e

Table 5

Finance Coca-Cola Enterprises Inc [N Y S E i C C E ) Add to portfolio

Company

Summary

News

Option chain

Related companies

Historical prices

Financials

Markets

News

Portfolios

S to ck screener

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Show : Most Recent Annual ▼ Add or remove columns

Valuation

Company name Exchange Currency Price Change Chg% d | m | y Earnings per share Price-to-

sa les ratio

Mkt Cap

CCE Coca-Co la E n te rp r... N Y SE USD 42.16 -0.57 -1.33%—

2.29 1.38 10.94B

D PS Dr Pepper Snapple ... N Y SE USD 48.21 -0.42 -0.86% 3.09 1.63 9 .67B

KO The Coca-Cola Com ... N Y SE USD 33.83 -0.54 -1.34% 1.93 3.71 175 .89B

OCCH Coca-Cola Helleni... N Y SE USD 26.59 1.01 9 .56B

CO K E Coca-Cola Bottlin NASDAQ USD 69.10 +0.27 0.39% 3 .67 0.39 639.20M

MNST Monster Beve rage . .. NASDAQ USD 62.29 -0.20 -0.32% 1.91 5.08 10.44B

P E P PepsiCo , Inc. N Y SE USD 81.90 -0.75 -0.91% 4.26 1.94 125.60B

KO F Coca-Cola F E M S A , . .. N Y SE USD 117.83 +0.57 0.49% 4.25 0.69 23 .93B

A KO .A Embotelladora And ... N Y SE USD 22.32 +0.57 2.62% *1.19 1.82 3 .52B

B TV C F BR ITV IC P LC O TCM KTS USD 9.37 0.00 0.00% 2 .30B

N SR G Y Nestle S A Reg S h s . .. O TCM KTS USD 72.06 +0.54 0.76% 230 .64B

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Table 6

Historical chart

Dec?, 2015 D tc . f .2 0 1 !

Layout Stacked

CCE42.15 -0 57 (-1.33%) 4:01PM EST Disclaim er

10 11 12 13 14 15 1&

34 | P a g e

Up to 5.Dec. 2013.9

Table 7

INNOVATION:

The third strategic priority in our sustainability plan is "Innovate for the Future” . they want to find

opportunities for innovation, collaboration and partnership which help us to address some of the

business, industry and societal challenges that they face as a corporate citizen.

In company sustainability plan they have set stretching targets in both Company environmental and

social focus areas. To meet these by 2020, they will need innovation. Company stakeholders also

have high expectations of us, as a responsible corporate citizen, to contribute to finding solutions to

the wider societal challenges that arise where Coca cola business touches the world and the world

touches Company business.

Innovation Strategy

Over the past year the company have developed an innovation ‘framework’ based on the key

points in Business value chain where they, as a manufacturer and distributor of Coca-Cola

products, can help to try and answer some of the big questions which will be crucial not only to own

business but also to the future of the planet in the long term.

9 https://www.google.com/finance?ei=ghihUujUEOSowAPMGQ35 | P a g e

o p e n happ iness

They have determined three types of innovation to focus where they believe they have the most to

contribute.

Process innovation - Driving efficiencies in the business

Thought leadership - Developing them understanding of and solutions to new issues and

challenges

Collaboration - with suppliers and customers to find opportunities to co-create new solutions to

existing challenges.

Over the past few years, CCE has already contributed technologies and ways of working in each of

these three areas, and they want to do

Process Innovation

They continually innovate within c

systems and processes to drive

effectiveness. For example, they

equipment such as monitoring

systems which save energy and

production lines and link to SAP for

real-time monitoring. They encourage

them employees to share their ideas

for innovations with us via coca cola

ICON Awards and they have

introduced new plant-based

packaging through technologies such

as PlantBottle across territories.

Thought Leadership

they are working to become thought leaders in recycling. In developing sustainability plan they

identified that 47% of the carbon footprint of coca cola products is embedded in the packaging.

company own

efficiency and

have installed

and targeting

water on the

36 | P a g e

This proportion can be significantly reduced if the packaging is recycled. As a result, if they’re to

deliver on them commitment to reduce the carbon footprint of the drink in your hand by a third by

2020, the first innovation focus has to be on step-changing recycling in them markets. Further data

also indicates that over 70% of them packages tend to be recycled in the home, not on-the-go as

they previously thought. As a result, in 2012, they launched them first thought leadership project on

recycling behaviour, in parnership with the University of Exeter (UK).

The research will begin in 2013, investigating how recycling is influenced by the dynamics of the

household. Click here for further information. This work will build on the project they undertook in

2011 with the Carbon Trust, in which they examined the concept of ‘Personal Carbon Allowances’

and how these could be measured and implemented.

Collaboration

They know that innovation doesn’t happen in a vacuum

and that they need to work with a wide range of partners -

from NGOs to them suppliers and customers - to drive new

ways of thinking and working. In 2012 they launched a

second plastics reprocessing joint venture, following the success of them partnership with

ECOPlastics in Lincolnshire in 2011.

In partnership with them PET Supplier, APPE, they have launched a similar venture which will

significantly increase the availability of recycled plastic in France. In 2012 they also held them third

Supplier Sustainability Summit for them top 60 suppliers, and focused on ways in which they can

deliver, lead and innovate together.In 2013 they plan to

expand this Summit to include stakeholders from across them

value chain and focus on some of the societal challenges

they face, to encourage us to develop new creative ways of1 nworking together.

10 http://www.cokecce.com/corporate-responsibility-sustainability/innovation37 | P a g e

o p e n happ iness

SEO (Search Engine Optimization and PPC) (Pay-Per-Click) Objectives in IndiaTable 8

Coca Cola Outcome Expected

Objective 1 Expand Reach

Objective 2 Beating Competition

Objective 3 Customers Interactions

Objective 4 Increase Brand Value

From 1993 to 2003 Coca cola invested $ 1 Billion in India Coca-Cola to invest $5billin India to

increase market share

Table 9

• Social Media Presence

• 46,051,294 Followers• 636,713 Talking about

• 59,742 Tweets• 584,342 Followers

• Subscribers - 73,187• Videos View - 87,354,253

38 | P a g e

Facebook------------------i

Twitter4

YouTube

Com parisons:

► October 2011

Facebook users - 750 million & Coca cola was ranked number one

Facebook - 34 million fans growing at a rate of 3% monthly

► July 2012

Facebook users 955 million & Coca cola still the no. 1 brand

Facebook - 46 million fans and growing at a rate of more than 5% monthly

Coca Cola Vs Pepsi:

Table 10

S no. Category Coca Cola Pepsi

1 Indexed Pages 56,800,000 32,900,000

2 Facebook Follow ings 46 M illion + 8.5 M illion +

Mobile Optim ized

W ebsite3 Yes No

59,804

tweets4 Tw itter 15,376 tweets

5 Page Rank 8 7

39 | P a g e

Assessment:

► Facebook

► Twitter

► Blog

► Traditional Marketing

Resources:Table 11

TraditionalMarketing

Advertisements

Social Media

Facebook

Othersources

Mobile apps

Print Media Twitter Road Shows

Sponsoring Websites Contests

40 | P a g e

Results :

• 39% volume growth

• 23 % industrial growth 11

CURRENT SCENARIO:

There has been a great competition between refreshment drinks in Indian market. Coca-Cola is the

world’s largest and first soft drink manufacturer. As part of the Globalization program, India has

made it easy for multinational companies to enter the Indian market. Globalization has made the

whole world into one market by reducing the trade barriers and minimizing the risk. It is noticeable

that many multinational companies had failed in Indian market. This failure is mainly due to

improper knowledge about the country and the national culture. It is very important to know about

the people and their consuming behavior. Culture plays an important role in consuming behavior.

Coca-Cola is mainly associated to the issues related to the brand, reputation and Corporate Social

Responsibility (CSR).

Present situation of the country is favorable for multinational companies to start their business in

India. As study already seen that Coca-Cola is the largest selling soft drink in the world, they do

have direct opportunities in the Indian market. Even though it is facing some social problem in

India, Coca-Cola has got good market in India. The main target customers are youth who has

already accepted the taste of the drink.

Coca-Cola should give more importance for the culture of the people because culture is a major

element which decides the consumer behavior and purchasing patterns. India is a country where

people are keener towards the culture. Considering Geert Hofsted’s cultural dimensions here in

this case, it is clear that, uncertainty avoidance India is less and people are not so flexible to adopt

the sudden changes. In India uncertainty avoidance is indexed at 50, which shows that people are

sensitive and emotional towards exploitation and invasions from other people or culture; so that

before entering to the Indian market, it would be a good strategy to avoid such issues by planning

the re-entry as a step by step process. According to Geert Hofstede (2001),12 "culture is the

collective programming of human mind that distinguishes the members of one human group from

11 http://www.coca-colaindia.com/12 Hofstede, G., 2001. Culture's consequences: Comparing values, behaviors, institutions, and organizations across nations. Thousand Oaks, CA: Sage.

41 | P a g e

those of another. Culture in this sense is a system of collectively held values.” It is quite understood

from the bellow given chart that the US and Indian culture had got vast difference. So it is not easy

to cop up with the Indian market. Therefore, it is important to have a detailed analysis on Indian

market so that they can initiate a fail proof and systematic market entry.

Public Relations India

The main and foremost solution is that to communicate openly with the key constituents; including

the public, media, employees, trade channels, state and national government and suppliers. They

should do an open and honest communication to resolve the problems so that issues can be

identified and resolved. An honest and open approach is always appreciated in the Indian society.

Communication is the best method through which consumers can have proper and clear picture

about the company and its product. Efficient public relation is very much equivalent to a smart and

efficient promotion, which eventually make the consumers to buy our products. Communication has

its roots in a person’s behavioral aspects. Behavior is directly linked with culture. As Smith et al.,

(2002), states, a person’s behavior, cultural values and personality can directly affect a business

and the managerial behavior. Therefore it is important to communicate with the customers in

accordance with their cultural status and values. Without proper public relations and

communication there are chances that public may not get good knowledge about products and

they may be left unnoticed.

Enhance Relationship w ith Government

In India; it is widely known that the government systems and procedure lack transparency in its

operations. Therefore it is very important to have very close relation with the government. This can

be done by actively participating in Government driven charity operations and government initiated

infrastructure development. Indian people and government always appreciate any true effort

towards the development of the country. This also helps in building reputation among the people.

India is a country, where reputation and relationships are valued to the core. They believe in

qualitative elements than quantitative elements. (Lothar Katz, 2008). Therefore it is important to

keep good relationship with the government. Ethical issues like water resource exploitation etc. are

believed to be hyped by the media and not the general public. However, it is important for the

company to generate and implement a corporate social responsibility system in India, and operate

42 | P a g e

within the guidelines of that system, which will prevent any such unwanted situations.

Launch Marketing Campaigns

Marketing campaigns are the best way to push a product into Indian market. This will create

awareness among the general public which makes the sales easy. Indians would like to have more

details on everything they choose; let it be soap, or even a television, they would like to know more

about the product. If the product is of optimum value in terms of price and quality, they would

definitely go for it.

Listen To The Customers

Consumer behavior is an important part in any business. In order to find the differences and their

demands, it is very imp0ortant to listen to the consumers. This can be done by initiating a survey or

a feedback system. Listening means, the identification of areas and aspects where the company is

lagging. If the company can make the customers feel that they are valued and considered, then

they would come back to those particular products. Therefore, it is very important to listen to their

comments, make necessary adjustments on service and products and creating a strong customer

base.

Managing Style

Management style and its efficiency decide the quality of management in a particular country.

Multinational companies are believed to have many managing styles and organizational culture.

However, t is important to have a management style tailored to the hosting country’s cultural and

social value. Having an alien management style may create issues with the domestic employees in

the long run. Also, developing a country specific management style will help in delivering quality

and on demand services to consumers and general public; which will eventually help the company

in the future. This will also make the employees feel that they are considered and their opinions are

welcomed.

Pull Back Price- Quality Trade -O ff Plans

Indians are those who give more importance for quality and trust. It is practiced in India for many

long years. Indians rely more upon quality of the product with lower prices. So India is not a place

to follow up with Price - Quality Trade - Off. Even if the prices are higher, Indians may consider

43 | P a g e

this product due to its quality. Indian society and the culture are very much vulnerable to quality

tradeoffs.

The above mentioned are the important solutions and suggestions that company should

concentrate more in Indian market in order to sustaining in this competitive market. It is too

important for a company to have a long life in market; so to attain this they should study the market

at first in detail and the culture and purchasing power of the public.

PROBLEM DEFINITION:

1. Coca-Cola’s Problem

Coca-Cola, deemed the "#1 Brand in the World,” has been a successor in the soft drink industry

for over 100 years. Along with their success they have incurred crises along the way. One in

particular is the Coca-Cola India Case Study. On August 5, 2003, Coca-Cola India was attacked by

The Center for Science and Environment (CSE), an activist group of engineers, scientists,

journalists and environmentalists in India, for unsafe products, said to contain pesticide residues

which surpassed global standards. Coca-Cola India’s products were attacked in a press release

stating: "Twelve major cold drink brands sold in and around Delhi contain a deadly cocktail of

pesticide residues.” The tests done on three samples of 12 PepsiCo and Coca-Cola brands were

said to contain 30-36 times the global standards of pesticide residue. The pesticides found were

known to cause disease such as cancer, birth defects, and severe disruption of the immune

system, among other health conditions.

2. Coca-Cola’s Concerns

As any company this accusation posed great fear and concern for Coca-Cola Company and their

future standing in India. After the discovery of the pesticide residue, the Indian Government banned

Coke and Pepsi products. Thus, Coca-Cola stock dipped $5 in the New York Stock Exchange.

Pepsi and Coke’s response to the accusations were denying CSE’s validity. Pepsi conducted their

own tests independently and results showed no detectable signs of pesticides.

44 | P a g e

3. Company’s Challenges

Because of the attacks by the CSE and NGOs (Non-Governmental Organizations) on Coca-Cola,

the brand faced many challenges. First, being the world’s most valuable brand whose value is

greatly influenced by the image of the company and its products, their primary problem was trying

to rebuilding their image to the Indian public and regaining Indian consumers’ trust. This was a

hard task because NGOs have high instinctive credibility and reliance by the people, making it

difficult for companies to compete with such trustworthiness given to NGOs. Another problem

posed is the socially responsible reputation of Coca-Cola as a corporate company in the U.S. The

United States is a flourishing, developed country; yet, India is a developing nation with a different

set of standards. Should Coca-Cola withhold their social responsibilities internationally? Is the

company economically upheld to do so?

4 .Coca-Cola’s Decisions

Coca-Cola is faced with an enormous crisis so many decisions face them as well. Does action

need to be taken? Is so, what type and how aggressive? The implications of these possible

decisions are outlined below.

5. Im plications fo r profitab ility , corporate reputation and image

Without a doubt, this issue is of great importance to the organization. These allegations are not

only threatening to Coca-Cola’s customers, but to the company’s reputation as well. The effects of

the pesticides could be devastating to Coca-Cola’s customers. Coca-Cola’s advertising and

marketing messages have always given customers a reason to trust their products. "Can’t beat the

real thing” was a longstanding message and is one that proclaims authenticity and authority. The

pesticide claims go against everything Coca-Cola has advertised to their customers. If action was

not taken, Coca Cola’s customer base could diminish, the brand’s name tarnish and their

reputation completely demolished. Revenue could decrease significantly if customers think Coca-

Cola is not a reliable or safe product to drink. The pesticides contain chemicals which have

devastating outcomes, including causing cancer. If customers begin to get ill, this will be a huge

tragedy for Coca-Cola. The customer’s well-being is in jeopardy, as well as the economic

performance of the company. Just within a few days after the initial reports came out, Coca-Cola

stock dipped by $5 on the New York Stock Exchange. Additionally, their sales dropped 30-40% just

45 | P a g e

within two weeks. Prior to the CSE reports, Coca-Cola boasted a 25-30% growth. Financially,

these allegations could lose Coke a significant amount of revenue. Taking action is a necessity

against the pesticide allegations.13

ANALYSIS OF THE SITUATION:

The present situation can be analyzed by SWOT analysis which clearly shows the strengths,

weaknesses, opportunities and threats which the client is envisaged to meet. India is a country

where the cultural diversity and linguistic differences make it difficult to identify how the company is

going to be traded while they enter the Indian market. Indians are those who give more value to

trust , value, quality and so on. Therefore, it is very important that they should give importance for

Price, Quality and Quantity; which means, Indian consumers have more purchasing power for

products like high level of quality with less price; therefore, it is clearly states that the company

should not entertain any price quality trade-offs in Indian market.

The below section explains the SWOT analysis of the company. The analysis shows where the

company is more powerful in the market compared to its competitors and where it is weak and how

to improvise them to get more market share in present market.

1. STRENGTH

• Reputed brand

• Global brand recognition

• Bottling system

• Technological advancement

• Efficient management system

• Good marketing knowledge

2. WEEKNESS

• Lack of knowledge about Indian culture in detail

• Uncertainty avoidance

• Lack of marketing expertise in the Indian conditions

13 Fraser P. Seitel (2010), The Practice o f Public Relations, 11th Edition, Pearson Prentice Hall, Upper Saddle River, New Jersey

46 | P a g e

• Hazardous by products and health issues

• Facing issues with water exploitation and resource exploitation all over the world

3. OPPORTUNITIES

• Huge market

• Advancement in technology

• Growing Indian market

• Good brand name

• International trade barriers has been reduced

• Youngsters’ tendency to adapt to the western culture

4. THREATS

• Threat of substitutes

• Health consciousness of Indian consumers

• Cultural habits

• Price war

• Unstable political condition

• Uncertainty avoidance

• Difference in management styles

• Indian tendency to avoid foreign products

The above mentioned are the strengths, weaknesses, Opportunities and threats of Coca-Cola’s

operations in India. It is very clear from this SWOT analysis that there is good opportunity for Coca-

Cola in Indian market because most Indians have accepted the taste, so that it is very easy to

penetrate the market and to earn more market share in the Indian market. However, this needs to

have clear cut ideas about promotion techniques and public relation activities since the competitors

have strong grounds in India market and needs to overcome the pressure raised by socio-cultural

barriers.

47 | P a g e

SOLUTIONS AND RECOMMENDATIONS:

Coca-Cola need to concentrate in many aspects so that they can grab more market share and earn

respect from the community members. The company’s brand reputation and brand recognition is

not enough for them to grow in the Indian soil. Indians take business so seriously and their

approach is entirely different when it comes to purchasing patterns and habits. Therefore, Coca-

Cola has to adopt alternate branding and promotion strategies to develop its fan base in India.

SUGGESTIONS:

According to Robert Tannenbaum and Warren H Schmidt "management styles are characteristic

ways of making decision and relation to subordinates”. Different management styles can be applied

based on the nature and culture of business, the nature of task, the nature of work force and skills

of the leader. This definition is given to understand management style in general. Every country

has got its own style of management. It is necessary that they should have a correct view about the

management style of particular country. As seen in definition, management varies from business

and their task; so it is very important to understand the task and the business at the most and then

decide the appropriate method of management. As Elenkov and Manev (2005) suggests, it is the

responsibility of top managers to coordinate with the subordinate and innovate in management

styles and thereby improving the efficiency of the system.

India is the country where people give more importance to culture. Based on Geert Hofstede’s

cultural dimension in India uncertainty avoidance and long - term orientation is more. Uncertainty

avoidance means Indians are too slow in accepting the sudden changes and they follow up with

traditional styles so it is more important for the company to do a proper analysis on the consumer

behavior and product requirement. Another important factor which should be taken into

consideration is Long- Term Orientation. India is the place where this is followed more because

Indians are more towards tradition and their customs. It is not easy to make them accept the

sudden changes. So there should properly take consideration of long - term orientation also (Geert

Hofstede, 2001).14

They should also give more importance for Price - Quality Trade- Off issues. Indians are those

14 http://www.geert-hofstede.com/hofstede_india.shtml Accessed on 11th January48 | P a g e

give more value for trust, value and quality. They are keener towards more quality with fewer

prices. They give more value for quality rather price. So it is more important for the company to

give more importance for the quality and their pricing strategy which need to be favorable for their

business too.

In business it is not enough to keep present condition safe to have a long life and they need to

study the market properly in every moment because the nature of market changes as new

competitors come in. So to overcome these fluctuating conditions, they should always keep an

open eye on how the market goes in next moment. For this the company needs to establish a

market analysis team who can conduct on demand analysis of the market or outsource the task to

us. These are all the solutions and recommendations for the company which should be followed. It

is not easy for a company to run business smoothly without considering the issues, especially if the

company is of foreign origin. Therefore they need to understand the market and key trends in order

to sustain in the market.

FORECASTS AND PREDICTIONS:

The Company can definitely establish their presence in Indian market once again, because it has

already got a strong good brand image for long years. As Indians are those who give more

importance for trust and quality, this brand image from past will help for its sustainability in Indian

market. As India’s population is high, they can get a good customer base. Apart from this, in Indian

customers include large number of youngsters who is adopting the modern cultural values and

supporting westernization. Thus, it is easy for the company to make them as target customers. Due

to globalization, many multinational companies had entered Indian market and Indians had

accepted many of those companies which clearly say Coca-Cola still have large potential and

scope in the Indian market. As India is in the stage of modernization and economic reform, the

consumption of soft drinks has been increased so it is a good opportunity for Coca-Cola to make a

proper stand in Indian market. After considering the above mentioned solutions and

recommendations it is sure that the company can make a proper stand in Indian market and re­

establish their operations for ever.

49 | P a g e

CONCLUSION:

Conclusion is the important part of a case study. After doing a detailed study on socio-cultural

barriers of Coca-Cola in India, the most noticeable factor is the company is not following and

considering the social and cultural trend and factors. The main drawback which Coca-Cola is

facing is it is going against environment or exploiting environment. The company is using fresh

water in such a large quantity where there is a crisis for fresh drinking water; apart from that, due to

its waste discharge they have been spoiling the water and soil. Therefore farmers are facing

numerous problems with their crops. Because of these reasons Coca-Cola is facing problems in

India. These problems are indirectly affecting the life of the people staying nearby to the

manufacturing plant. Apart from this culture is the most important factor which company should

keep in mind for further development.

From the above given recommendation, suggestions and analysis, it is clear that the cultural and

economic conditions in India is stable and favorable for the company, but the environmental

problems are making g issues among the public and government. Therefore, as suggested, the

company should employ an efficient corporate social responsibility team to monitor their operations

in the Indian sub-continent and make policies to overcome any such instances. With the help of

these suggestions, Coca-Cola can make a brilliant come back to the market.

50 | P a g e

REFERENCES:

1. http://www.coca-colaindia.com/ourcompany/company_history.html

2. http://www.coca-colaindia.com/ourcompany/coca_cola_system.html

3. Brunel Business School. ( 2012) Cultural Effect towards Brand Extension as a Global Marketing Strategy(1124460). Brunel University West London

4. Peter b. Smith, mark f. Peterson and shalom h. Schwartz, 2002. Cultural values, sources of guidance, and their relevance to managerial behavior - a 47-nation study. Journal of cross-cultural psychology, vol. 33 no. 2, pp. 188-208.

5. Amit Srivastava . July 10th, 2003.Communities Reject Coca-Cola in India , India Resource Center

6. http://www.atimes.com/atimes/South_Asia/FB24Df04.html

7. AIYER, A. (2007). THE ALLURE OF THE TRANSNATIONAL: Notes on Some Aspects of the Political Economy of Water in India Cultural Anthropology, 22 (4), 640-658 DOI:10.1525/can.2007.22.4.640

8. http://www.coca-colacompany.com/press-center/press-releases/the-coca-cola-company-reports- third-quarter-and-year-to-date-2013-results

9. https://www.google.com/finance?ei=ghihUujUEOSowAPMGQ

10. http://www.cokecce.com/corporate-responsibility-sustainability/innovation

11. http://www.coca-colaindia.com/

12. Hofstede, G., 2001. Culture’s consequences: Comparing values, behaviors, institutions, and organizations across nations. Thousand Oaks, CA: Sage.

13. Fraser P. Seitel (2010), The Practice o f Public Relations, 11th Edition, Pearson Prentice Hall, Upper Saddle River, New Jersey

14. http://www.geert-hofstede.com/hofstede_india.shtml Accessed on 11th January

51 | P a g e