COCA~COLA ENTERPRISES,
INC.
ANALYSIS
COMPANY BACKGROUND
Coca-Cola Enterprises Inc., (CCE)
manufacturer of carbonated soft drinks, soft
drink syrups and concentrates, is headquartered
in Atlanta, GA which markets business to
businss. CCE is the world's largest marketer,
producer and distributor of Coca-Cola
products, operating in 46 U.S. states and
Canada. They are the exclusive Coca-Cola
bottler for all of Belgium, continental France,
Great Britain, Luxembourg, Monaco and the
Netherlands. CCE’s sales represent 18 percent
of The Coca-Cola Company's worldwide
volume.
Sparkling soft drinks, i.e. carbonated
soft drinks, is the company’s heritage, but the
portfolio now encompasses a full range of
other beverage categories, including energy
drinks, still, juices, sports drinks, fruit drinks,
coffee-based beverages and teas.
First listed on the New York Stock
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Exchange in 1986 (NYSE: CCE), the company roots go back to the birth of the Coca-Cola
bottling business in the 19th century. Today, CCE serves a population of 414 million,
representing approximately 81percent of the people in North America and the entire
populations of Belgium, continental France, Great Britain, Luxembourg, Monaco and the
Netherlands.
PRODUCT OR SERVICE TO BE PRESENTED
On Monday, June 2005 the third core brand and another line extension was introduced.
Coca-Cola Zero, a no-calorie version of its trademark soft drink was launched in the United
States. The drink is sweetened partly with a blend of aspartame and acesulfame potassium.
Aspartame is a key ingredient in Diet Coke, but Coca-Cola Zero has a unique taste.
THE MARKET
The Wellness Revolution in 2002 demonstrated the desire for another soft drink
product in a study highlighting wellness as a mega trend for beverage consumers. Beverage
consumption continued to grow and diet carbonated soft drink represented over 29% of the
healthy beverage business with 23% of the consumers wanting less sugar stated Paul Zane
Pilzer: The Wellness Revolution 2002, ADA Trends survey 2002, Goldman Sachs Global
Investment Research March 2004, Canadean eq volume, AC Nielsen Strategic Planner 52
weeks ending 1/24/04, FMI Trends 2003. Coca-Cola Zero has the real Coca-Cola taste, zero
calories with no sugar. It appeals to the Classic Coke Adults aged 18-34. The launch of
Coca-Cola Zero had no impact on Coca-Cola North America’s ongoing support for Diet Coke,
America’s #1 diet soft drink, as the target audiences were different.
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With the rollout of Coca-Cola Zero, there totaled half-dozen different versions of
trademark Coca-Cola on the market. There were also several different varieties of Diet Coke,
including the recently announced rollout of Diet Coke sweetened with Splenda. Coca-Cola
Zero was sweetened with a blend of aspartame and acesulfame potassium (ace-k), and
distributed in a broad range of package sizes.
To quickly penetrate the market and gain support for their new product, Coke Zero
was offered in food service, lodging, amusement, convenience retail, wholesale, and retail
channels, etc., in 20-oz. and 12-oz. packaging. With its steady growth the product reached
public acceptance. Coke Zero continued to gain loyal customers and can now be found in 2
liter packaging and, as of Fall 2007, could be enjoyed at local restaurants with the introduction
of bag in the box for fountain consumers
COMPETITIVE ANALYSIS
Initially competition was non-existent. There were no other beverage companies that
were similar or could be substituted for Coke Zero. However, Purchase, N.Y.-based PepsiCo
Inc. also has several different varieties of Pepsi and Diet Pepsi, including a one-calorie cola
called Pepsi One, which is sweetened with Splenda. The company did not have any current
plans for a zero-calorie version of Pepsi, thereby becoming the first brand competitor for
Coca-Cola’s new product. Yet, two years later, in June of 2007 Pepsi introduced Diet Pepsi
Max, a product aimed at the 25-34-year-old demographic as well as anyone who is
transitioning from sugary soda to diet soda.
Diet Pepsi Max has zero calories and is fortified with extra caffeine and a little bit of
ginseng to help "adults to get through the day." Pepsi hopes the new product will compete
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directly with Enviga, a carbonated tea, and other similar energy drinks that have dominated
the beverage market in recent years, but Coke Zero is the real competitor. Now, almost three
years after the launch of Coke Zero, generic competitors still have not surfaced.
Coca-Cola Enterprises relays on the market research from the Coca-Cola North
American for their demographics and target market segementation.
ENVIRONMENTAL FACTORS
Secondary environmental scanning was produced by Paul Zane Pilzer when he
published; The Wellness Revolution-How to make a Fortune in the Next Trillion Dollar
Industry which highlighted wellness as a mega trend for consumers. Beverage consumption
continued to grow and diet carbonated soft drinks now represent almost a third of the healthy
beverage business. His observations and market research gave companies like Coca-Cola and
Pepsi valuable information.
Coca-Cola was proactive in their approach to offer consumers the product they were
seeking―a no sugar, low calorie beverage. The success of Coke Zero illustrated the
significance and accuracy of the wellness trend.
In addition, Coca-Cola extended its proactive approach and continued to shape and
influence the environment. In 2006 Coca-Cola initiated a program for elementary, middle,
and high schools which limited the calories per servings offered to students. Thus, this
program banned schools from selling regular carbonated soft drinks to students. In 2007 the
American Beverage Association adopted Coca-Cola’s guidelines which will become
mandatory by August 2009. Allowances through the guidelines are as follows, elementary
schools are only offered water while middle schools are offered water and single servings of
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juice. High school students find a bigger variety but sports drinks and vitamin fortified
options are portion controlled if the calorie measurements exceed 50 calories per 80-oz
serving. However, diet carbonated soft drinks in 20-oz packaging are allowed.
Some schools refused this new policy and switched to Coca-Cola’s competitor, thus
decreasing Coca-Cola’s market share within the education sector. However, the company
shows no signs of reverting back to old standards, so for now students choosing a Coca-Cola
product will make a healthier choice.
The rising unemployment has reduced buying power, thus resulting in declining
consumer and business spending. CCE and other competitors need to follow market trends to
capture as much market share as possible to try to counteract this tendency. Since wellness is
the trend during this time of recession, it is important for CCE to offer products the consumer
wants.
In addition, other environmental factors effect how CCE goes to business. For
example, like most businesses the price of fuel has increases the company costs and decreased
the profits. As the price of fuel increases so does the price of other raw goods which goes into
producing the soda syrup. One example is the such as the cost of corn. Besides increases in
fuel to deliver corn, the demand has increased also because of the product being used to make
fuel.
More recently, Coca-Cola sales have been under fire for its bottled water. Many
advocates lobby against bottled water because of the fuel use to produce the product and
because the product is filtered water. Yet, consumers have continued to purchase bottled
water because it is an item of convenience
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SOCIAL
Another fast growing movement is for companies to be “green” or environmentally
friendly. The Coca-Cola Company invests in the world’s Largest Bottle-to-Bottle Recycling
Plant. On September 5, 2007 in Atlanta, Coca-Cola announced it is investing more than $60
million to build the world’s largest plastic-bottle-to-bottle recycling plant to support recycling
efforts in the U.S. The goal of the investment is to recycle or reuse 100 percent of the
Company’s PET (polyethylene terephthalate) plastic bottles within the U.S.
United Resource Recovery Corporation (URRC) and The Coca-Cola Company plan to
build the world’s largest plastic bottle-to-bottle recycling plant in Spartanburg, S.C. The plant
will produce approximately 100 million pounds of food-grade recycled PET (polyethylene
terephthalate) plastic for reuse each year. The new 30-acre Spartanburg facility is scheduled
to open in 2008 and will be fully operational in 2009. It is part of a continuing effort by CocaCola to support recycling in key markets. In addition to their efforts in the United States,
Coca-Cola has also invested in recycling facilities in Switzerland, Mexico, Austria and the
Philippines.
The company website states, “Recycling plastic for reuse yields financial benefits,
requires less energy than producing bottles with virgin materials, and reduces waste and
greenhouse gases. Over the next ten years, the Spartanburg recycling plant is expected to
eliminate the production of one million metric tons of carbon dioxide emissions – the
equivalent of removing 215,000 cars from the road.”
Besides being environmentally concise, Coca-Cola invests in its community through a
program called, Camp Coca-Cola, a program designed to increase the odds of success for
high-potential youth coming from risk-filled environments. The two week camp inspires
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them to pursue personal success, and prepares them for leadership roles in college, work and
their communities.
POLITICAL
The Coca-Cola Company’s political ties helped the company to promote its product.
During the Carter administration, through the president’s help, Coca-Cola was launched
globally, making it the most recognized brand.
More recently, the Associated Press reports the Coca-Cola Co. spent more than $1.7
million in 2007 to lobby on marketing regulations, school nutrition legislation, trade issues
and immigration reform, as well as other industry-related issues. They reported that in the
second half of 2007 and thus far in 2008 they spend roughly 1,720,000 to lobby members of
Congress and federal agencies.
Although, a separate company from Coca-Cola Enterprise, Inc. the two work in
tandem to identify their consumers’ wants and needs and ensure they are met. The company’s
continued involvement will help ensure Coke Zero’s continued success within the beverage
industry.
TECHNOLOGICAL
Through the years Coca-Cola has evolved with technological advancements, thus
allowing their soft drink to be offered in a variety of packaging outlets. History states CocaCola was originally designed and created as a medicine, not a refreshing beverage. Yet, by
adding carbonation and bottling technology the Coca-Cola beverages became readily
available.
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Bottling in Vicksburg, Mississippi revolutionized the Coca-Cola product. Still today,
the product can be found in many convenient packaging options. In addition, the invention of
vending machines allowed consumers to purchase the product more conveniently.
Technology has helped Coca-Cola to advance its products for the last one hundred and
twenty years, including their new low calorie, no sugar product, Coke Zero.
STAGE OF LIFE CYCLE
In June 2008 Coke Zero will celebrate its third birthday. The demand and change in
buying patterns encouraged the line extension of Classic Coke because of the wellness trend.
In the last two years the product has continued to grow and is slowly reaching the level of Diet
Coke sales. Currently, Coke Zero is in the growth stage of the life cycle because sales are
rising rapidly and profits have not reached a peak or started to decline. Since the product has
been launched in the bag-in-the-box packaging and because it has been launched
internationally, sales are continuing to grow.
Although, Coke Zero has been on the market for almost three years, there has only
been one brand who has introduced a competitive drink, Diet Pepsi Max .
DISTRIBUTION STRUCTURE
Like other Coca-Cola products, Coke Zero is offered in through many different
channels. CCE uses an intensive distribution system, using all available outlets to
distribute a product. This type of distribution is common for convenience products with
high replacement rates. This provides accessibility, reduces search time and increases
availability of the product.
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Full-Line Forcing is not part of CCEs distribution process, but there are businesses
that chose to participate in exclusive partnerships, forbidding an intermediary to carry
products of a competing manufacturer which allows retailers to gain better pricing and
partnership.
PRICING
CCE practices price and nonprice competition. Although, they can meet or match
competitors pricing they often choose to emphasize factors other than price to distinguish a
product from competing brands . These may include distinctive features, service, product
quality and Coca-Cola’s brand image, its packaging of the contour bottle, and their patented
Dip Strip technology for the bag in the box package which ensures no product waste. Some of
their features are easy to imitate, but the contour bottle is recognized as an exclusive CocaCola product.
The line extension of Coke Zero offers benefits to consumers, no sugar additives, and
is priced at the same level as other Coca-Cola products.
PROMOTIONAL
CCE does not have a formal marketing department. All marketing of the Coca-Cola
products is created and developed through the Coca-Cola Company. In June 2005 Coca-Cola
attempted to create awareness for the Coke Zero product, but its advertising message seemed
to suggest the company was struggling with its brand image. Then in 2007 its message,
including print, radio, and television advertisements became consistent and understandable.
Although Coke Zero was a low calorie, no sugar carbonated beverage, the company
highlighted its taste as being similar to Classic Coke. Once the message become clear, the
product adoption process and interest in existing brands and products began to expand thus
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resulting in primary and selective demand creatioin for carbonated beverages and for Coke
Zero.
Promotions still encourage product trials through product samples to foster consumer
evaluation of a product and to help identify prospects and retain loyal customers, frequent
users and facilitate reseller support.
Advertising has helped promote the product. The lawyer ad campaign boosted sales
by demonstrating to consumers the taste of Coke Zero is so similar to Classic Coke the
company was trying to sue itself. In addition, Coke Zero has been the sponsor of racing teams
and the March Madness Basketball tournament, and has displayed visible branding during
football games and the Super Bowl. The buzz has created excitement for the new Coca-Cola
product. The product is a solution to customers’ demands. Since the product is a line
extension of a very popular and recognized brand, and because it has been launched
internationally and is now being offered on the fountain, it is safe to say that it has shown
itself to be a great brand success for the company.
Coke Zero was introduced as a low calorie, no sugar drink, for women ages 18-34 who
wanted a healthier choice, but the target market has grown and evolved and now more men are
enjoying the product. Classic Coke was introduced 120 years ago, Diet Coke 20 years ago,
and Coke Zero three years ago, now the red, silver and black product scheme decorates the
shelves, coolers, vending machines, and fountain systems seen throughout the world.
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