1. Briefly summarize the major characteristics of the Brazilian soft drink market. • There were more than 3500 brands of soft drink in Brazil, manufactured in more than 700 plants in 2004. From 1986 to 2003 nonalcoholic drink consumption lead to 11.6 billion liters with average year to year growth of 13.92%. • Post economic stabilization in Brazil, per capita consumption of soft drinks shot up 60% from 1994 to 1999. • According to Brazilian Market Research Association classification of five social classes, class C accounts for 28% of the total national consumption of soft drinks and these class C people favor price affordability at comparable quality. • Per Capita Consumption of Soft Drink in Brazil is increasing by average rate of 17.37% per year. In year 2003 it was 95.3 liters & projected 104.9 liters in 2008 indicating growth. • As of 2003, the Coca Cola brand (regular and diet) was the leader in the Brazilian soft drink market with 35.6% market share. Second closest was Guarana Antartica with 7.9% market share followed by Fanta with 7.1% market share. • Coca Cola is the leader in Brazilian market holding 50.1% market share, AmBev with 17.2% market share is at 2nd position and others-Tubainas accounting for the rest (Dec’ 2003). • The cola flavor accounted for 45% of the Brazilian soft drink market. • Tubainas is low price soft drink as compared to other big brands. The main reason being that they are manufactured by small manufacturers with low operational & administrative costs. Also the major factor is that these manufacturers did not have legal existence & did not pay taxes. • Majority of Brazilian population resided in urban area & due to underdeveloped distribution channel soft drink market is untapped. • Cola was the Brazilian favorite flavor (41.8%) followed by Guarana (23.9%) and Orange (11.4%). • Soft drinks were sold in variety of containers made of glass, PET and aluminum, having capacities that varied from 200 ml to 2.5 liters. • The far away communities in Brazil are still untapped due to accessibility and cost issues. • Supermarkets accounted only for quarter of the category sales in Brazil whereas half of soft drink volumes were consumed at or near the point of sales. • Soft drink vending machines were not readily available in the Brazilian market.
3. What are the pros and cons of the several strategies the Coca-Cola Company implemented in Brazil?
|Strategy |Pros/Cons |Description | |Product Mix |Pros |Increase in Product Mix by expanding the product line through new flavors such as citrus & strawberry. This helped| | | |Coca Cola to increase its visibility in market and cater to different taste needs of people. | |New product |Pros |Looking at increasing market share of Guarana flavor, Coca Cola renovated production facility & planted 200 | |introduction | |hectares of Guarana. This will give Coke cost benefit with control on raw materials, supply & quality. | |Brand promotion |Pros |Coca Cola is trying to build the good will & image in local communities by sponsoring and participating in local, | | | |regional and national events. This will help Coke to increase social acceptance in community. | |Product packaging |Pros |Coca Cola introduced returnable glass bottle to reduce the cost of packaging. | | |Cons |Inherent costs associated with transporting, cleaning and storing bottles could null any apparent savings | |Acquisition of |Cons |Coca Cola acquired few competitors to stop the growth of Tubainas, but this strategy might not succeed as there is| |Tubainas | |no entry barrier for new comers & former owners....
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