Problem Analysis of Cott Corporation

Topics: Coca-Cola, Soft drink, Private label Pages: 9 (2157 words) Published: April 7, 2013
Group Assignment #1:
Problem Analysis of Cott Corporation

Group Assignment #1 – Cott Corporation


Cott was found by a Montreal clothier, Harry Pencer in 1955. The company imported bottled and canned soft drink into Quebec from the US. After Harry Pencer's death in 1983, his three sons, Samuel, Gerry, and Bill, inherited Cott. Once Gerry Pencer became CEO of Cott in 1988, he transformed Cott into the largest supplier of private label soft drinks in the world. Under his leadership, Cott increased the competitiveness of private label soft drinks by lowering the production costs, raising quality, and improving its packaging. After the death of Garry Spencer in 1998, Frank Weise was named Cott's CEO. To further grow the market share outside Canada, Cott made several acquisitions since its inception. Cott purchased the Cola Company, Royal Crown (RC) Cola's beverage concentrate business as well as propriety technology and a manufacturing facility from Cadbury Schweppes. In July 2001, with the acquisition, Cott secured control of concentrate formula, a key ingredient of its core products. The acquisition of Macau Holding Ltd. in the UK in 2005 ventured its business expansion in Europe. For diversifying its core products, Cott also manufactures juice and juice-based products, bottled water, ice teas, organic drinks, energy drinks, and flavoured beverages. Cott is the leader of supplying retailer-brand soft-drinks. It produces and sells beverages under its own brand names such as Cott, Stars & Stripes, Vess, and Vintage. However, the majority of Cott's products are sold under the brand names of its retailer customers such as "Great Value' cola for Wal-Mart, 'President's Choice' cola for Loblaw's, 'Master Choice' for Metro (former of A&P). In 2004, Cott was ranked number four in market share of retailer-brand soft drinks, after Coca Cola, Pepsi, and Cadbury Schweppes in the world.

Problem Statement

The problem that Cott Corporation potentially faces in the future is that it does not have a sustainable competitive advantage. While it is true their products sell for prices significantly lower than competing brands in the industry, they need to find a way to be able to sustain this advantage in the long-run, while still continuing to grow and expand in the industry. •Continue to be a cost leader or pursue different approaches? •Realize the importance of maintaining valuable customers (like Wal-mart, representing 40% of business for Cott) If this problem is not addressed, Cott risks existing competitors gaining more of the market share in the industry.


Internal (company)STRENGTHS
-Cost leader
-Offer variety of products
-Valuable customers (Wal-mart, Loblaws)
-Private labelWEAKNESSES
-Not enough advertising
-Too much focus on cost leadership
External (environment)OPPORTUNITIES
-Improve packaging even more, make distinct
-Cott benefits when their customers grow
-Make products more available (available at more locations) -Product placement in storesTHREATS
-Loyalty to Pepsi, Coke (customers are more familiar with these brand names, trust them, are comfortable buying them) -Cott is dependent on its customers, especially Wal-mart and Loblaws because they represent the majority of Cott’s customers -Competitors’ emphasis on quality and familiarity (ex. Classic Coke in glass bottles)

Quantitative analysis

Income Statement Analysis – Cott Corporation (1999 – 2004) YearNet Profit MarginPercentage Change from Previous YearCumulative Percentage Change from 1999 20044.8%-12.7%152.6%

Although Cott has increase from its base year of 1999 by 152%, it has not been a steady climb. This could...
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