coca-cola-pestel-analysis

Coca-Cola PESTEL Analysis

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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Coca-Cola Business Strategy

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Coca-Cola follows a business strategy (implemented since 2006) where through its operating arm – the Bottling Investment Group – it invests initially in bottling partners operations. As they take off, Coca-Cola divests its equity stakes, and it establishes a franchising model, as long-term growth and distribution strategy.

Who Owns Coca-Cola

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Coca-Cola’s top investors include Warren Buffet’s company, Berkshire Hathaway, with 9.23% of shares, and other mutual funds like The Vanguard Group, holding 7.9% of shares, and BlackRock owning over 6.45% of shares of the company. Other individual investors like Herbert A. Allen, director of The Coca-Cola Company since 1982, and Barry Diller, Chairman of the Coca-Cola board since 2002. And former CEO Muhtar Kent. 

Coca-Cola Revenue

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Coca-Cola generated over $43 billion in revenue in 2022, compared to over $38 billion in 2021.

Coca-Cola Profits

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Coca-Cola generated $9.54 billion in net profits in 2022. Compared to over $9.7 billion in net profits in 2021.

Coca-Cola Revenue vs. Profits

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Coca-Cola generated over $43 billion in revenue in 2022 and over $9.5 billion in net profits.

Coca-Cola Mission Statement

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Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in people’s lives, communities, and our planet.”

Coca-Cola SWOT Analysis

coca-cola-swot-analysis
Coca-Cola is the market leader of the soft drink industry. It is also the most widely recognized brand, with a Business Insider study revealing that a staggering 94% of the world population recognizes the red and white logo. However, Coca-Cola faces significant challenges with increasingly health-conscious consumers and less access to water resources.

Coca-Cola PESTEL Analysis

coca-cola-pestel-analysis

What Does Coca-Cola Own?

what-does-coca-cola-own
The Coca-Cola Company is an American multinational beverage corporation founded in 1892 by pharmacist Asa Griggs Candler. Many consumers associate the company with its signature soda in a red can or bottle. In truth, however, The Coca-Cola Company owns a plethora of soft drink, juice, tea, coffee, and other beverage brands. 

Coca-Cola Competitors

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The Coca-Cola Company has 21 different billion-dollar brands or brands that generate more than $1 billion or more in revenue each year.  The company also sells its products in nearly every country in the world, with Cuba and North Korea the only two countries where it is not sold officially. What’s more, the Coca-Cola brand is worth $87.6 billion, making it one of the most valuable among all companies. Though these figures allow Coca-Cola to enjoy market dominance in many countries, the company is nevertheless subject to intense competition.

Coca-Cola vs. PepsiCo

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Coca-Cola generated over $38 billion in revenue, compared to PepsiCo’s over $79 billion. 

What Does PepsiCo Own?

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PepsiCo was founded in 1902 by American pharmacist and businessman Caleb Bradham as the Pepsi-Cola Company. Bradham, who hoped to emulate the success of Coca-Cola, marketed the beverage from his pharmacy and registered a patent for its recipe the following year. Today, Pepsi is a global company with a portfolio of 23 billion-dollar brands, or brands earning more than $1 billion in annual revenue. Sixteen of these brands are beverage-related, while the remaining seven are associated with snacks and other food products.

Pepsi Competitors

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In 1965, PepsiCo acquired Frito-Lay in what the chairmen of both companies called a “marriage made in heaven”. The resultant company transformed PepsiCo from a soft drink organization and set it on a path to becoming one of the world’s leading food and beverage companies.  Today, PepsiCo claims to operate in more than 200 countries and territories around the world with seven distinct divisions and many successful brands.

Read Next: Pestel AnalysisSWOT AnalysisPorter’s Five ForcesSTEEP AnalysisSOAR AnalysisBCG MatrixAnsoff Matrix.

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eBay Organizational Structure

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IBM Organizational Structure

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IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Sony Organizational Structure

sony-organizational-structure
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

facebook-organizational-structure
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

google-organizational-structure
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

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McDonald’s Organizational Structure

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Walmart Organizational Structure

walmart-organizational-structure
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

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Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

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