coca-cola-pestel-analysis

Coca-Cola PESTEL Analysis

Background

The Coca-Cola Company is one of the world’s leading non-alcoholic beverage companies.

It operates in virtually all of the world’s countries, offering more than 500 brands across bottled water, soft drinks, energy drinks, tea, and fruit juice.

The vast global reach of Coca-Cola means it is not immune to external marketplace factors. Indeed, company revenue has been in steady decline since 2013.

Understanding the Coca-Cola PESTLE analysis

Political

Cuba and North Korea are the only countries where Coca-Cola products cannot be bought or sold illegally. Both countries are currently subject to sustained United States trade embargoes.

The company is not immune to challenges in the rest of the world either. Steel and aluminum tariffs imposed by Mexico, Canada, and the European Union have increased raw material costs.

Coca-Cola is also vulnerable to sugar taxes imposed by bodies such as the Food and Drug Administration (FDA).

Economic

Sourcing adequate water is a major problem for the Coca-Cola company. In many parts of the world, water scarcity is affecting manufacturing operations. Higher costs also impact the company’s bottom line.

Currency fluctuations are also an economic factor. Hyper-inflation in countries such as Venezuela has eroded profits for the company.

Social

Consumer preference for soft drinks has been on the wane for several years or even decades in some cases. In response, Coca-Cola has taken steps to appeal to more health-conscious customers with low sugar beverages and marketing campaigns designed to change public brand perception.

The company also faces social pressure in many Middle Eastern countries where anti-American sentiment is high.

Technological

Social media advertising has been a boon for Coca-Cola as it attempts to engage with the next generation of adult consumers. Many products also have QR codes that consumers can scan to unlock experiences and prizes.

Furthermore, the company is using artificial intelligence and big data to analyze market trends and optimize its global supply chain.

Legal

Coca-Cola is no stranger to litigation. And in the future legal claims might affect the company’s financial viability.

Environmental

Coca-Cola has been touted as the biggest consumer of fresh water in the world. In India, underground aquifers have been depleted to the detriment of the local population.

The company is taking steps to use water more efficiently. In Africa, smart agricultural programs like CARE and RAIN teach farmers to increase yields sustainably.

In the face of climate change however, Coca-Cola faces an uncertain feature given their products are predominantly water.

Key takeaways

  • Coca-Cola is one of the world’s leading non-alcoholic beverage companies with over 500 brands for sale in all but two countries. However, its vast global reach poses many challenges.
  • Access to raw materials is perhaps the most significant challenge. Metals have seen tariff increases in many countries and access to water is a continual point of contention.
  • Despite many consumers becoming more health-conscious, the company has been able to engage with the next generation using social media to offer lower-calorie beverages.

Read Also: Coca-Cola Business Model, Coca-Cola SWOT Analysis.

Read Next: Pestel Analysis, SWOT Analysis, Porter’s Five Forces, STEEP Analysis, SOAR Analysis, BCG Matrix, Ansoff Matrix.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"