Coca-Cola in Brazil

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1920s and 30s
International expansion
The Company began a major push to establish
bottling operations outside the U.S. Plants were
opened in France, Guatemala, Honduras, Mexico,
Belgium, Italy, Peru, Spain, Australia and South
Africa.

On May 8, 1886, a pharmacist named
Dr. John Pemberton carried a jug
of Coca-Cola® syrup to Jacobs’
Pharmacy in downtown Atlanta, where
it was mixed with carbonated water
and sold for five cents a glass.

In 1942 Coca-Cola entered
the Brazilian market.

 Brazil is Coca Cola’s third largest operation and second largest international market.
 Low average consumption (144 bottles/p/y)
 USA (462 bottles/p/y)
 Mexico (402 bottles/p/y)
 low profitability market  20th position










From 1986 to 2003 nonalcoholic drink consumption AVG yearly growth of 13.92%. 
Per Capita Consumption of Soft Drink in Brazil has increased by average rate of 17.37% per year.
Highly competitive market :

AmBev: main competitor with 17% market share. It partnered with Pepsi increasing sales profitability.

Other competitors have an average market share of 33,5% (within these, there are illegal manufacturers operating without permissions and without paying taxes).
More than 3500 brands of soft drink in Brazil.
More than 700 plants in 2004.
Difficulty to reach rural communities.
POS consumption.








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 most favourite packaging is the disposable bottle from 2 to 2,5 litres with a total percentage average consumption of 72.88*.

Average sales growth rate in brazil between 1986-2003 in parcentage: 5,74 Consumers cares about price, flavor and quality, without being influeced by brand name. Poor distribution channels.

Only 25% of soda sales are through supermarkets.

Scarcity of vending machines.

A- B:

C:

D-E:

Most sophisticated
class.
They have the highest
levels of income and
education

 Typical worker
Lack purchasing power
 Low/middle class
Struggle to afford basic
 Compromise 12,6 million
goods & services
households
 28% of total national
consumption








Worldwide top known brand.
Distribution network (9000 vehicles).
High quality products.
Wide product mix.
Large market share.
Large scale of operations.

 Poor distribution network in rural areas
 Investment reduction in media and
advertising in 67% of product categories
 The price of Coca-Cola is higher than that of competitors  Price cutting strategy has effect only on market
share and not on profitability

 Develop a more accurate distribution network in rural
areas.
 Expanding product range (Guaranà).
 Partnership/acquisition with local brands.
 Sponsoring more social events (Rio 2016) and contribute to social development.
 Coming up with more efficient promotion.
 Leveraging class C.

 Consumer behavior: strong price consciusness and
low level of loyalty
 Intense competition.
 B brands competiting illegally (no legal existence
thus not paying taxes)
 High threat of new entrants (ex. RC Cola)
 High elasticity of demand


 Expanding the output of the company’s product (Guaranà Kuat) planting 200ha of Guaranà:
Pros: they secured the 11% Guaranà market in Brazil.
Pros: they allowed to reach a cost benefit controlling the supply and quality of raw materials.
 Venture into Tubainas territory:
Pros: acquisition and blocking of new competitors.
Cons: acquiring a competitor does not signify securing from its future actions.  Price cutting from $0,65 to 0,45  -30%:
Cons: negative effect on profitability.
 Buying back franchise operations:
Pros: market share back from 48% to 50%.
Cons: negative effect on profitability.


 Partnership with...
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