A PROJECT REPORT ON CONSUMER PREFERENCE FOR COKE V/S OTHER BRANDS [pic] JAN. -MAR. 2010 By MD. TAOSEEF QURAISHI REPORT Submitted to BHARATI VIDYAPEETH UNIVERSITY In partial fulfillment of the requirements For the award of the DEGREE of MBA Bharati vidyapeeth University, PUNE Bonafide Certificate Certified that this project report titled “CONSUMER PREFERENCE FOR COCACOLA V/S OTHER BRANDS”is the bonafide work of Mr. MD. TAOSEEF QURAISHI, who carried out the project report under my supervision from 4th of jan. to 10th april2010.
Date:Signature of the student Place: Pune Declaration I hereby declare that the project report entitled “CONSUMER PREFERENCE FOR COKE V/S OTHER BRANDS”. Submitted in partial fulfilment of the requirement for Post Graduate diploma in RETAIL MANAGEMENT, is my original work and not submitted for the award of any other degree, diploma, fellowship, or any other similar title or prizes. Place:Pune Date MD. TAOSEEF QURAISHI PREFACE Market provides a key to gain actual success only to those brands which match best to the current environment i. e. imperative” which can be delivered what are the people needs and they are ready to buy at the right time without any delay. It is perfectly true but this also depends on availability of good quality products and excellent taste and services which further attract and add a golden opportunity for huge sales. This also depends on the good planning approach and provide ample opportunity plus sufficient amount of products for sales in the coming next financial year. This survey report introduces study of consumer’s preferences for COCA COLA.
After going through a detail analysis of market behavior and future prospect, it may also provide an opportunity to COCA COLA to frame a good future plan to satisfy maximum needs of the customers and established its guiding role in the market of pune city in particular and through out the country as a whole. The study report will also provide an opportunity to delineate its market potential business areas, products & services are to be offered by the company to the customers. This study report also provides the various factors affecting the services.
Marketing Division of COCA COLA has to keep in mind various factors specially while preparing a plan for marketing its product or services. Detail description along with analysis of surveyed data is being presented in this report CONTENTS Objectives of the study……………………………………. 7 Executive summary ………………………………………. 8 Chapter-1 Introduction……………………………………………….. (9-) 1. 1 An overview of soft drink industries…………………11 1. 2 Factors for success of soft drink industries………….. 14 1. 3 Company profile………………………………………. 15 1. . 1Core brands………………………………………… 15 1. 3. 2brand in indian origin…………………………….. 16 1. 3. 3advertisements and punchlines of cocacola………17 1. 3. 4fabulous facts about coke…………………………. 18 1. 4history of coke…………………………………………… 19 1. 5history in india………………………………………….. 20 1. 6competitors of coke……………………………………… 21 Chapter-2product profile & 4p’s…………………………………….. (23-) 2. 1product……………………………………………………. 24 2. 2price……………………………………………………….. 25 2. place……………………………………………………….. 27 2. 4promotion…………………………………………………. 28 Chapter-3marketing strategies of coke………………………………. (29-) 3. 1strategies adopted by coke &pepsi………………………. 29 3. 2pepsi vs. coke………………………………………………31 3. 3pepsi and coke’s market share in india…………………. 32 3. 4the cola wars………………………………………………. 33 3. 5Advertising history and commercials……………………. 34 3. 5. 1slogans…………………………………………………36 3. 5. 2celibrities playing part into the sales…………………41 3. battle of the beverages…………………………………….. 43 Chapter-4Introduction of research work……………………………(53-) 4. 1researsh methodology……………………………………. 53 4. 2analysis and findings…………………………………….. 55 4. 3reason to purchase a cold drink…………………………69 Chapter-5 Findings………………………………………………….. 73 Suggestions………………………………………………75 Conclusion………………………………………………. 76 Limitation……………………………………………….. 77 Bibliography…………………………………………………………78 Annexure- Questionnaire…………………………………………… 79 OBJECTIVE OF THE STUDY To study the consumers preferences for Coca Cola. • To know the percentage of males and females that are aware about bingo • To know which brand’s advertisement mostly people have seen. • To know the reason to buy cola drinks. • To know why was the advertisement being noticed by the consumer? • To create a top of mind awareness about COCA COLA in PUNE by providing the information to consumers. 1. EXECUTIVE SUMMARY The objective of the project is to know the consumers preferences for Cola Drinks, to study the Market Potential of COCA COLA and The report contains a brief introduction of Coca Cola.
The company COCA COLA has interests in various sectors and they provide consistent quality products to meet our costumer’s requirement worldwide. This report clearly mentions objective of the study and the research methodology utilized. both primary data and secondary data. The data collection method used is structured non disguised questionnaire in which the types of questions used are open ended, multiple choice and close ended. The report contains a detailed view of the tasks, which have been undertaken to analyze the market of COCA COLA.
Various sets of questionnaire have been prepared to know the PREFERENCES of consumers about the COCA COLA. Some of the research areas are pune’s katraj, dhankawadi, m. g, koregaon park etc.. This project reveals one of the important findings like more and more displays of the window hiring and can be given to the retail outlets as it has been said that “JItna Dikhega Utna Bikega”. To increase its consumption, more schemes like ‘Seasonal Schemes’ and other schemes can be given to the consumers. A detailed survey of the consumers was carried to find out their preferences for COCA COLA.
The details of the methodology are stated below. Area are pune’s katraj, dhankawadi, m. g, koregaon park etc. research design: Exploratory and descriptive. Sources of information are primary and secondary data. Data collection method structured non designed questionnaire. Types of questions used open ended, multiple choice and close ended. Sampling method is random sampling. In this study I found that most of the consumers prefer PEPSI as their 1st preference and then COCA COLA. INTRODUCTION: In the modern urban culture consumption of soft drinks particularly among younger generation has become very popular.
Soft drinks in various flavors and tastes are widely patronized by urbane population at various occasions like dinner parties, marriages, social get together, birthday calibration etc. children of all ages and groups are especially attracted by the mere mention of the word soft drinks. With the growing popularity of soft drinks, the technology of its production, preservation, transportation and or marketing in the recent years has witnessed phenomenal changes. The so-called competition for this product in the market is from different other brands.
Mass media, particularly the emergence of television, has contribute to a large extent of the ever growing demand for soft drinks the attractive jingles and sport make the large audience remember this product at all times. It is expected that with the sort of mass advertising, reaching almost the entire country and offering various varieties annual demand for the product is expected to rise sharply in the times to come. In any marketing situation, the behavioral / environmental variables relating to consumers, competition and environment are constantly influx.
The competitors in a given industry may be making many tactical maneuvers in market all the time. The may introduce or initiate an aggressive promotion campaign or announce a price reduction. The marketing man of the firm has to meet all these maneuver and care of competitive position of his firm and his brand in the market. The only route open to him for achieving this is the manipulation of his marketing tactics. In today’s highly competitive market place, three players have dominated the industry; The New York based Pepsi Company Inc. The Atlanta based coca- cola and U. K. ased Cadbury Schweppes. Through the globe, these major players have been battling it out for a bigger chunk of the ever –growing soft drink market. Now this battle has been evolved up to India too with the arrival of these three giants. Soft drink industry is on amazing growth; ultimately these are only one person who will determine their fortunes. The Indian consumer. The real War to quench his thirst has just begun. SOFT DRINK INDUSTRY: AN OVERVIEW It all began in 1886, when a tree legged brass kettle in Hohn Styth pemberton’s backyard in Atlanta was brewing the first P of marketing leged.
Unaware the pharmacist has given birth to a caromel colored syrup, which is now the chief ingredient of the world’s favorite drink. The syrup combined with carbonated the soft drink market. It is estimated that this drink is served more than one thousand million times in a day. Equally oblivious to the historic value of his actions was Frank Ix. Robinson, his partner and book keeper. Pemberton & Robinson laid the first foundation of this beverage when an average nine drinks per day to begin with, upping volumes as sales grew.
In 1894, this beverage got into bottle, courtesy a candy merchant from Mississippi. By the 1950’s Colas were a daily consumption item, stored in house hold fridges. Soon were born other non- cola variants of this product like orange & Lemon. Now, the soft drink industry has been dominated by three major player – (1) The New York based Pepsi co. Inc. (2) The Atlanta based coca cola co. (3) The united Kingdom based Cadbury Schweppes. Though out the glove these major players have been battling it. Out for a bigger chunk of the ever-growing cold drink market.
Now this battle has begun in India too. India is now the part of cold drink war. Gone are days of Ramesh Chauhan, India’s one time cola king and his bouts of pistol shooting. Expect now to hear the boon of cannons when the Coca Cola & Pepsi co. battle it out for, as the Jordon goes a bigger share of throat. By buying over local competition, the two American Cola giants have cleared up the arena and are packing all their power behind building the Indian franchisee of their globe girdling brands. The huge amount invested in fracture has never been seen before.
Both players seen an enormous potential in his country where swigging a carbonated beverage is still considered a treat, virtually a luxury. Consequently, by world standards India’s per capita consumption of cold drinks as going by survey results is rock bottom, less than over Neighbors Pakistan & Bangladesh, where it is four times as much. Behind the hype, in an effort invisible to consumer Pepsi pumps in Rs. 3000 crores (1994) to add muscle to its infrastructure in bottling and distribution. This is apart from money that company’s franchised bottles spend in upgrading their plants all this has contributed to substantial gains in the market.
In colas, Pepsi is already market leader and in certain cities like Banaras , Pepsi outlets are on one side & all the other colas put together on the other. While coke executive scruff at Pepsi’s claims as well as targets, industry observers are of the view that Pepsi has definitely stolen a march over its competitor coke. Apart from numbers, Pepsi has made qualitative gains. The foremost is its image. This image turnaround is no small achievements, considering that since it was established in 1989, taking the hardship route prior to liberalization and weighed down by export commitments.
Now, at present as there are three major players coke, Pepsi and Cadbury and there is stiff competition between first two, both Pepsi and coke have started, sponsoring local events and staging frequent consumer promotion campaigns. As the mega event of this century has started, and the marketers are using this event – world cup football, cricket events and many more other events. Like Pepsi, coke is picking up equity in its bottles to guarantee their financial support; one side coke is trying to increase its popularity through. Eat Food, enjoy Food. Drink only coca cola. Eat cricket, sleep cricket.
Drink only coca cola. Eat movies, sleep movies. Drink only coca cola. On the other side of coin Pepsi has introduced AMITABH BACHHAN for capturing the lemon market through MIRINDA – Lemon with “ zor ka jhatka dhere se lage”. But no doubt’ that UK based Cadbury is also ecognising its presence. So there is a real crush in the soft drink market. with launch of the carbonated organize drink Crush, few year ago in Banaras . , the first in a series of a launches , Cadbury Schweppes beverage India (CSBI) HAS PLANNED:- The world third largest soft drink marketers all over the country.
CSBI o wholly owned subsidiary of the London based $ 6. 52billion. Cadbury Schweppes is hoping that crush is going well and well not suffer the same fate as the Rs. 175 crore Cadbury india’s apple drink Apella. CSBI is now with orange (crush), and Schweppes soda in the market. As orange drinks are the smallest of non-cola categories that is Rs. 1100 crore market with 10% market share and cola heaving 50% is followed by Lemon segment with 25%. The success of soft drink industry depends upon 4 major factors viz. ? Availability Visibility ? Cooling ? Range AVAILABILITY Availability means the presence of a particular brand at any outlet. If a product is now available at any outlet and the competitor brand is available, the consumer will go for the at because generally the consumption of any soft drink is an impulse decision and not predetermined one. VISIBILITY Visibility is the presence felt, if any outlet has a particular brand of soft drink say- Pepsi cola and this brand is not displayed in the outlet, then its availability is of no use.
The soft drink must be shown off properly and attractively so as to catch the attention of the consumer immediately Pepsi achieves visibility by providing glow signboards, hoarding, calendars etc. to the outlets. It also includes various stands to display Pepsi and other flavours of the company. COOLING As the soft drinks are consumed chilled so cooling them plays a vital role in boosting up the sales. The brand, which is available chilled, gets more sale then the one which is not, even if it is more preferred one. RANGE This is the last but not the least factor, which affects the sale of the products of a particular company.
Range availability means the availability of all flavors in all sizes. COMPANY PROFILE Keeping in view of tapping the Indian soft drink market and also developing soft drinks as a drinking product among Indians. The Coca-Cola in India has setup an independent organizations which is H. C. C & B. C. C with a capital of 350 U. S. $ each by virtue of sellout decision of the passed managing director Sh. S. C. Aggarwal. Hindustan Coca-Cola bottling (N-W) Pvt. Ltd. Najibabad took the complete possession of this plant, land, machinery, & intellectuals on February 14’ 1998 and since then H. C.
C, looking after all its affairs under company owned bottling plant to establish integrated marketing system in the area. [pic] CORE BRANDS : Coca-Cola: Developed in a brass pot in 1886, coca-cola is the most recognized and admired trademark around the globe. Not to mention the best selling soft drink in the world. Sprite: In 1961, a citrus-flavored drink made its U. S debut, using “Sprite Boy “as inspiration for its name. This elf with silver hair and a big smile was used in 1940s advertising for Coca-Cola. Sprite is now the fastest growing major soft drink in U. S and the world’s most popular lemon-lime soft drink.
Fanta : The name “fanta “ was first registered as a trademark in Germany in 1941 ,when it was used for a few year for a soft drink created from available materials and flavors . The name was then revived in 1955 in Naples, Italy, when it was used for the:” fanta “orange drink we know today. It is now the trademark name for a line of flavored drinks around the world. Diet coke: The extension of the coca-cola name began in 1982 with the introduction of diet coke (also called coca-cola light in some countries). Diet coke quickly become the number – one selling low –calorie soft drink in the world.
BRAND IN INDIAN ORIGIN GOLD SPOT: this orange cardonate soft drink was introduceB in the early 1950c, and acquired by the coca-cola company in 1993, its tangy taste has been popular with Indian teenagers LIMCA: It is thirst-quenching beverage features a fresh and light lemon-lime taste and lighthearted attitude. The limca brand was introduced in 1971 and acquired by the coca-cola company in 1993. MAAZA: Maaza, launched in 1984 and acquired by the coca-cola company in 1993, is a non carbonated mango soft drink with a rich, juict & natural mango taste.
THUMPS UP: in 1993, the coca-cola company acquired this brand, which was originally introduced in 1977. Its strong and fizzy taste makes it unique carbonated Indian cola. BRAND IN INDIAN [pic] [pic][pic] [pic] [pic] [pic] [pic] [pic] [pic] [pic] [pic] [pic] ADVERTISEMENT AND PUNCH LINE OF COCA-COLA 1936 – It’s The Refreshing Thing To Do . 1942 – It’s The Real Thing . 1943 – Global High Sign. 1959 – Be Really Refreshed. 1962 – Thing Go Better With Coke. 1969 – It’s the Real Thing. 1970 – I`D Like To Buy The World A Coke . 1976 – Coke Add Life . 1982 – Coke Is It . 986 – Catch The Wave. 1989 – You Can’t Beat the Feeling. 1993 – Always Coca-Cola 1998 – Eat Music, Sleep Music, And Drink Only Coca-Cola. 1999 – Jo Chaho Ho Jaye Coca-Cola Enjoy. 2000 – I Want Hritik And I Want Coke. 2002 – Thanda Matlab Coca-Cola 2003 – Jiyo Thanda Piyo Thanda . FABULOUS FACTS ABOUT COCA-COLA 1. The world’s largest spherical coca-cola sign is in Nagoya, Japan a top the dial – Nagoya building in front of the Nagoya railway station. The sing is a double sphere constructed from more then 46 tone of steel, more 940meter of neon tubing, and more then, 879 light bulbs.
The outer shape features the coca-cola logo and contour bottle, while the inner sphere portrays a comic scene with twinkling planets and stars. 2. One of the world’s largest signs for coca-cola is located on a hill called “ELHACHA” in America, Chile. It is 400 feet wide and 131 feet high and is made from 70,000, 26 ounce bottles. 3. The first out door paint sign advertising coca-cola still exists. It was painted in 1894 in Cartersville, Georgia. 4. Coca-cola is one of the world’s most recognizable trademarks recognized in countries that account for 98 percent of the world’s population. . If all the coca-cola ever produced were in 8- ounce bottles. And these bottles were distributed to each person in the world. There would be 678 bottles or over 42 gallons for each person. 6. If all the coca-cola ever produced were in 8 – ounce bottles, placed side by side and end to end to from a lane highway, it would wrap around the earth 82 times. 7. If all the coca-cola ever produced were flowing over Niagara fall at its normal rate of 105 million gallons per second instead of water, the falls would flow for about a day and a half 38 hours and 46 minutes. 8. he largest representation of the world’s best known package 100 foot tall glass contour bottle is located at world of coca-cola, LAS VEGAS HISTORY OF COCA-COLA Jon Styth Pemberton first introduced the refreshing taste of Coca-Cola in Atlanta, Georgia it was May 1861 when the pharmacist concocted a caramel colored syrup in three–legged brass kettle in his backyard. He first distributed the new product by carrying Coca-Cola in a jug cown enjoys in a glass of Coca-Cola at the soda fountain. Whether by design or accident, carbonated water was teamed with the new syrup, producing a drink that was proclaimed “Delicious and Refreshing”.
Dr. Pemberton’s Partner and bookkeeper, Mr. Frank Robinson, suggested the name and penned as “Coca-Cola” in the unique flowing script that is still famous worldwide today. Dr. Pemberton’s sold 25 gallons of syrup, shipped in bright Red wooden kegs. Red has been a distinctive color associated with the No. 1 soft drink brand ever since. For his efforts, Dr. Pemberton grossed $ 50 and spent $ 73. 96 on advertising, by 1891, Atlanta chemist as a G. Canler had acquired complete ownership of the Coca-Cola business. He purchases it from the Dr. Pemberton family for $ 2300.
With in 4 year his merchandising flair helped to expand the consumption of Coca-Cola to over $25 million. Robert W. woodruff become the president of the Coca-Cola company in 1923 and his more than six decades of leadership took the business of commercial success making Coca-Cola an institution the world over. Coca- Cola begins as a never tonic, but candy merchant Joseph A. Biedenharn of Mississippi was looking for awry to serve refreshing beverages. He responded to this demand began offering bottle Coca-Cola using syrup shipped from Atlanta, during a hot summer in 1894.
HISTORY IN INDIA The coca-cola company reintroduced coca-cola in India on October 23, 1993, after an absence of 16 years. The coca-cola company received approval from the government in July 1996 to set up a holding company to invest US $ 700 million in downstream operation of beverages In July 1997 the holding company was permitted by the government to operationally its bottling subsidiaries. The bottling subsidiary currently owns and operates twenty-six bottling plants and sixty distribution centers across India.
In addition, it uses 20 contract packers to augment its production capacity and cater to the increasing demand for its wide portfolio of beverage. PROMISE BY COCA-COLA The coca-cola company exists to benefits and refresh every one it touches. The basic proposition of our business is simple , solid and timeless . when we bring refreshment , value , joy and fun to our stakeholders then we successfully nurture and protect our brand , particularly coca-cola . that is the key to fulfilling our ultimate obligation to provide consistently attractive to the owner so four business.
More then a billion times every day , thirsty people around the world reach for coca-cola products for refreshment. They deserve the highest Quality – every time . our promise to deliver that quality is the most important promise we make . and it involves a world-wide , yet distinctively local , network of bottling partner , supplier , distributor and retailers whose success is paramount to our own. Our investment in local communities in over 200 countries totals billions of dollars in jobs, facilities , marketing, the purchase of local good and services, and local business partnership.
Always and every where , we pursue continuous innovation in the products we offer the processes we use to make them, the package we develop and the way we bring them to market . Competitor of Coke PEPSICO [pic] PepsiCo is one the largest companies in the U. S. It figures amongst the largest 15 companies worldwide according to the number of employees hired. Its has a U. S. Fortune rank of 50. The company profits for 1997 were $2. 14 billion on revenues of $20. 92 billion and Pepsi is bottled in nearly 190 countries. PepsiCo is a world leader in the food chain business.
It consists of many companies amongst which the prominent once are Pepsi-Cola, Frito-Lay and Pepsi Food International. The group is presently into two of the most profitable and profitable and growing industries namely, beverages and snack foods. It has scores of big brands available in nearly 150 countries across the globe. The group has established for itself once of the strongest brands in various segments of its operations. The beverages segment primarily markets its Pepsi, Diet Pepsi, Mountain Dew and other brands worldwide and 7-UP outside the U. S. markets.
These are positioned in close competition with Coca-Cola Inc. of USA. A point which is worth a mention is that Coca-Cola gets 80% of its profits for International operations while the same figure for PepsiCo stands at 6%. The segment is also in the bottling plants and distribution facilities and also distributes the ready to drink tea products of Lipton in North America. In a joint venture with orient spray juice products PepsiCo also manufactures and distributes fruit juices. The snack food division manufactures and distributes and markets chips and other snacks worldwide.
The international operations of this segment extends to the markets of Mexico, the UK and Canada. Frito-Lay represents this segment of PepsiCo. The restaurant segment earlier primarily consists of the operations of the worldwide Pizza Hut, Taco Bell and KFC chains. PFS. Pepsi Co’s restaurant distribution operation, supplies company owned and franchise restaurants in the U. S. The company ventured into restaurant business with Taco Bell, KFC, Pizza Hut ended last year when they were spinned off from the company. A packaged goods company comprised of Pepsi-Cola Company and Frito-Lay will continue to bear the PepsiCo name.
The move should enhance both corporations ability to prosper with their own fully dedicated structure and management team. 4. PRODUCT PROFILE sINDIAN PRODUCT RANGE |Flavour |Ingredients |Pack |Product |Company | |Cola |Cola Flavour carbonated water |200Ml. |Coke, |Coca-Coal | | |sugar |300Ml. |Thumsup | | | | |500Ml. | | | | |1 Litre | | | | | |1. 5 Litre |Pepsi |Pepsi | | | |2 Litre | | | |Orange |Orange Flavour + Carbonated Water+|200Ml. Fanta |Coca-Cola | | |Sugar |300Ml. | | | | | |500Ml. | | | | | |1 Litre | | | | | |1. Litre |Mirinda |Pepsi | | | |2 Litre | | | |Fruit Juice |Mango Pulp+ Treated water+ sugar |250 ML |Maaza |Coca-Cola | | | | | | | | | | |Slice |Pepsi | |Cloudy Lemon |Lemon Flavour + Carbonated Water+ |200Ml. |Limca |Coca-Cola | | |Sugar |300Ml. | | | | | |500Ml. | | | | | |1 Litre | | | | | |1. Litre |Mirinda Lemon |Pepsi | | | |2 Litre | | | |Clear Lemon |Lemon Flavour+ Carbonated Water +|200Ml. |Sprite |Coca-Cola | | |Sugar |300Ml. | | | | | |500Ml. | | | | | |1 Litre |7’Up | | | | |1. Litre |Dew |Pepsi | | | |2 Litre | | | MARKETING STATEGIES OF COKE a) PRODUCT Coke was launched in India in Agra, October 24, in ’93’, soon after its traditional all Indian launch of its Cola. at the sparking new bottling plants at Hathra, near Agra. Coke was back with a bang after its exit in 1977. Coke was planning to launch in next summer the orange drink, Fantawith the clear lemon drink, sprite, following later in the year. Coke already owns more brands than it will over need, since it has bought out Ramesh Chauhan.
Coke just needs to juggle these brands around dextrously to meet its objectives, to ensure that Pepsi does not gain market share in t Today, Coke’s product line includes, Coca-Cola, Thums Up, Fanta, Gold Spot, Maaza, Citra, Sprite, Bisleri Club Soda and Diet Coke. PACKAGING Coca-Cola India Limited (CCIL) has bottled its Cola drink in different sizes and different packaging i. e. , 200 ml bottle, 300 ml. Bottle, 330 ml. Cans, 500 ml. Bottle fountain Pepsi, and bottles of 1 and 2 ltr. PRODUCT POSITIONING One important thing must be noticed that Thums Up is a strong brand in western and southern India, while Coca Cola is strong in Northern and Eastern India.
With volumes of Thums Up being low in the capital, there are likely chances of Coca Cola slashing the prices of Thums Up to Rs. 5 and continue to sell Coca Cola at the same rate. Analysts feel that this strategy may help Coke since it has 2 Cola brands in comparison to Pepsi which has just one. Thums Up accounts for 40% of Coca Cola company’s turn over, followed by Coca Cola which has a 23% share and Limca which accounts for 17% of the turn over of the company. (Thums up being the local drink, its share in the market is intact, forcing the company to service the brand, as it did last year Mr. Donald short CEO, Coca Cola India, said that, ” we will be absolutely comfortable if Thums Up is No. 1 brand for us in India in the year 2000.
We will sell whatever consumers wants us to”. Coca Cola India has positioned Thums up as a beverage associated with adventure because of its strong taste and also making it compete with Pepsi as even Pepsi is associated with adventure, youth. b) PRICE The price being fixed by industry, leaving very little role for the players to play in the setting of the price, in turn making it difficult for competitors to compete on the basis of price. The fixed cost structure in Carbonated Soft Drinks Industry, and the intense competition make it very difficult to change or alter the prices. The various costs incurred by the individual company’s are almost unavoidable.
These being the costs of concentrates, standard bottling operations, distributor and bottlers commissions, distribution expenses and the promotional and advertising expenditure (As far as Coke is concerned, it had to incur a little more than Pepsi as Pepsi paved its way to India in 1989 while Coke made a come back in 1993. )Currently a 300 ml. Coke bottle is available for Rs. 6 to8 The 330 can was initially available for Rs. 13 and now, since the price has gave up to Rs. 18 per can. The prices of 500 ml. , 1 ltr. and 2ltr being Rs. 15 Rs. 23 and Rs. 40 respectively( according to the current survey). Dating back to ‘93′, when Pepsi hiked the price of Pepsi – Cola from Rs. 5 to Rs. 6 per 250 ml. bottle in some parts of the country-including Agra. Coke penetrated the market with price of Rs. 5 for a 300 ml. bottle, making it cheaper by Rs. 1 and 50 ml. than Pepsi.
Coke’s strategy at that time being able to expand the availability of soft drinks even in rural India. Coke’s priority being to first increase the number of drinks per drinker, and then the number of drinkers itself. Pepsi also tried this but was trapped by a series of competitive price increase and changes in bottle sizes by Parle. But the prices of soft drinks have shot up since Pepsi’s arrival and the current prices are being mentioned as under. Price list |Name |Bottle size |MRP(in Rs. ) | |Coke per bottle |200ml. 6 | |Coke |300ml |8 | |Coke |500ml(bottle/glass) |15 | |Coke |2 liter |35 | However, the trends may have been in the early ’90’s, now the prices of Pepsi and Coke are the same making it difficult in future and present to compete on the basis of price. c) PLACE Coke may have gained an early advantage over Pepsi since it took over Parle in 1994. Hence, it had ready access to over 2,00,000 retailer outlets and 60 bottlers. Coke was had a better distribution network, owing to the wide network of Parle drinks all over India. Coke has further expanded its distribution network.
Coke and its product were available in over 2,50,000 outlets (in contrast with Pepsi’s 2,00,000). Coke has a greater advantage in terms of geographical coverage. But Coke has had problems with its bottlers as the required profits for the bottlers have not been forthcoming. This is more so because Coke has hiked the price of its concentrate by Rs. 8 Further, Coke’s operations in India are 100% FOBOs. Now, it plans to convert then into COBOs. This is straining the relationship between the Coke and its bottlers. The company had decided to create a fund to reimburse performing bottlers for the extra costs incurred on account of the hike in prices of soft drink concentrates. Mr.
Short also realized that India is a price sensitive market and the company would have to absorb in the increase in excise duty and said that in the long run Coke will have to slash prices for the benefit of the consumers and said that they were considering a cut in the prices of their fountain soft drinks. Coke and Pepsi have devised strategies to get rid of middlemen in the distribution network. However, 50% of the industry unfortunately depends on these middlemen. As of now, around 100 agents are present in Banaras . Bottlers of the 2 multinationals have strongly felt the need to remove these middlemen from the distribution system, but very little success has been achieved in doing so. d)PROMOTION It must be remembered that soft drinks purchases are an “impulse buy low involvement products” which makes promotion and advertising an important marketing tool. The 2 arch rivals have spent a lot on advertising and on promotional activities.
To promote a brand and even to spend a lot on advertising, the company must be aware of the perceived quality of the brand, its brand power (if at all there is) since consumers make purchase decision based on their perceptions of value i. e. , of quality relative to price. According to Paul Stobart, Advertising encourages customers to recognize the quality the company offers. Price promotions often produce short-term sales increases. Coca Cola has entered new markets and also developing market economics (like India) with much-needed jobs. Coke attributes its success to bottlers, the Coca Cola system itself, i. e. , its executive committees, employees, BOD, company presidents but above all from the consumer. Coke’s red color catches attention easily and also the Diet Coke which it introduced was taking the Cake, as Pepsi has not come out with this in India.
Ever since Coke’s entry in India in 1993, Coke made a come back (after quitting in 1977), in October 24 in Agra, the city was flooded by trucks, there wheelers, tricycle cards-all with huge red Coke-emblazoned umbrellas. Retailers were displaying their Coke bottles in distinctive racks, also with specially-designed iceboxes to keep Coke bottles cold. This was one big jolt to Pepsi. STRATEGIES ADOPTED BY COCK AND PEPSI [pic] [pic] The Pepsi Process: Despite being a global brand, Pepsi has built its success on meeting the Indian consumer’s needs, particularly in terms of making the brand synchronize with localized events and traditions. Instead of harping on its global lineage, ergo, it tries to plug into ethnic festivals, use the vernacular indifferent part of the country, and blend into the local fabric.
Pepsi is using both national campaigns-such as the Drink Pepsi, Get Stuff scheme, which offers large discounts on other products to Pepsi-buyers as well as local . The Coke Copy: Instead of creating a bond with the customers through small but high-impact events, Coca-Cola chose to associate itself with national and international mega events like the World Cup Cricket, 1996, and world cup football 1998. But now coke is also entering into local actions. Coke is also trying to make their brand synchronize with localized events traditions and festivals. Coca-Cola new tag line in this advertisement is “Real shopping, Real refresher”. In this way Coke is copy Pepsi. EMPOWERMENT
The Pepsi Process: Once of the strongest weapons in Pepsi’s armory is the flexibility it has empowered its people with. Every manager and salesperson has the authority to take whatever steps he, or she, feels will make consumers aware of the brand and increase its consumption. The Coke Copy: Flexibility is the weapon that Coca-Cola, fettered as it is by the need for approvals from Atlanta for almost everything. In the past, this has shown up in its stubborn insistence on junking the franchisee network it had acquired from Parle; in its dependence on its own feedback mechanism over that of its bottlers;’ and on its headquarters-led approach. PRICE
The Pepsi process: Pepsi has consistently wielded its pricing strategy as in invitation to sample, aiming to turn trial into addiction. It launched the 500 ml bottle in 1994 at Rs. 8 versus Thums Up’s Rs. 9, in April, 1996, its 1. 5 litre bottle followed Coke into the marketplace at Rs. 30 – Rs 5 less than Coke’s . But it couldn’t continue the lower price positioning for long. The Coke Copy: Initially, coke carbon-copied the strategy by introducing its 330ml cans in January 1996, at an invitation price of Rs. 15 before raising it to Rs. 18. By this time, it had realised that the Coca-Cola brand did not hold enough attraction for customers to fork out a premium.
The 200ml Coke, launched so far in parts of eastern, western, and northern India, is priced at Rs. 5, lowering the entry-barriers. To really drive the market, as Coke wants to you must go down to Rs. 3’. PEPSI VS. COKE $28 BILLION TURNOVER $16 BILLION 32% INT. SALES AS % 70% ` OF TOTAL SALES RS. 5OO CRORES TOTAL INVESTMENT RS. 250 C IN INDIA RS. 300 CRORES PROPOSED RS. 2,400C INVESTMENTS 2400 NO. OF EMPLOYEES 140 13 NO.
OF OWNED NIL BOTTLING PLANTS 18 NO. OF FRANCHISES 53 4000 NO. OF FOUNTAIN 1500 N. A. TOTAL INVESTMENT Rs 125 CR BY BOTTLERS 6 NEW PLANTS PLANNED N. A. PEPSI AND COKE MARKET SHARE IN INDIA [pic][pic] COLA : 60% CLEAR LEMON : 4% Pepsi : 26. 5 7-UP : 2. 5% Thums-up : 17. 5% Citra : 0. 5% Coke :10% ORANGE : 16% OTHERS : 8% Mirinda : 7. 5% Other Brands : 16. 5% Fanta : 6% Gold Spot : 1%
Crush : 1% CLOUDY LEMON : 12% Limca : 9% Mirinda lemon + Duke’s : 1. 5% Schweppes lemon : 0. 5% [pic]The Cola Wars[pic] OVER A CENTURY OF COLA SLOGANS, COMMERCIALS, BLUNDERS, AND COUPS There’s little doubt that the most spirited and intense competition in the beverage world is between Coca-Cola and Pepsi. These two American companies long ago took their battle worldwide, and although there are other colas in the market, these giants occupy this high-stakes arena by themselves. The impact of Coke and Pepsi on popular culture is indisputable, and I have observed in my time managing this web site that America has not become jaded about the cola wars.
The memorabilia, the jingles, the trivia – all still popular. So I am offering this page in an attempt to assuage a wee bit of the Coke and Pepsi thirst that is thriving on our planet. IT ALL STARTED . . . . Coca-Cola was invented and first marketed in 1886, followed by Pepsi in 1898. Coca-Cola was named after the coca leaves and kola nuts John Pemberton used to make it, and Pepsi after the beneficial effects its creator, Caleb Bradham, claimed it had on dyspepsia. For many years, Coca-Cola had the cola market cornered. Pepsi was a distant, nonthreatening contender. But as the market got more and more lucrative, professional advertising became more and more important.
These soda companies have been leading the way in advertising ever since. ADVERTISING HISTORY & COMMERCIALS Pepsi has definitely leaned towards the appeal of celebrities, popular music, and young people in television commercials, while Coke relies more heavily on images of happiness and togetherness, tradition, and nationalism, perpetually trying to cash in on its original lead. In a simplified sense, you could sum up the strategies as Coke: Old, Pepsi: New. In fact, as we will see, when Coca-Cola tried something new, it was disaster. The first magazine ad for Coca-Cola appeared in Munsey’s in 1902. Advertisements began to appear on billboards, newspapers, and streetcars.
Soon there were serving trays with images of people enjoying Coca-Cola, and glasses with the cola’s name on them. At this time, Coca-Cola and Pepsi were served in drugstore soda fountains. In 1909, Pepsi used its first celebrity endorser, automobile race driver Barney Oldfield, in newspaper ads. In 1921, Pepsi went bankrupt, but continued to appear on the scene, although not nearly so successfully as Coca-Cola. In 1931, Pepsi went bankrupt again, but the new owner, Roy Megargel, would hit upon an idea that would finally give Coca-Cola some competition. In 1934, he marketed Pepsi in a 12-ounce bottle for a nickle. At the time, Coca-Cola was sold in a 6-ounce bottle for ten cents. Voila! Profits for Pepsi.
Pepsi racked up another first by airing the first radio jingle in 1939. It was so popular that it was played in jukeboxes and became a hit recordCoca-Cola hit the airwaves in 1941. In 1946, inflation forced Pepsi to increase prices. And in 1950, Pepsi offered a larger 26-ounce bottle to court the young American housewife. In the 1960’s, the cola ad wars moved to television. Coca-Cola employed a host of celebrity singers to promote the product, including Connie Francis , Tom Jones, The New Beats, Nancy Sinatra, and The Supremes. As we moved through the years, both colas incorporated some of their best slogans (“Pepsi Generation” and “the Real Thing”) into subsequent commercials.
In the 1970s, market research showed that consumers preferred the taste of Pepsi over Coke. The Pepsi Challenge is still being conducted today. But Coke came up with what is arguably the best of all cola commercials, the 1971 I’d Like to Buy the World a Coke ad. This landmark was recalled in Christmas versions in 1983 and 1984, and a 1990 Super Bowl ad, which was enough to make some Baby Boomers weep with nostalgia. In the 1980’s, Pepsi lined up the celebrities, starting with Michael Jackson, then Madonna, Michael J. Fox, Billy Crystal, Lionel Ritchie, Gloria Estefan, Joe Montana, and others. Coke signed on Michael Jordan, New Kids on the Block, Aretha Franklin, Elton John, and Paula Abdul.
In 1985, responding to the pressure of the Pepsi Challenge taste tests, which Pepsi always won, Coca-Cola decided to change its formula. Bill Cosby was the pitchman. This move set off a shock wave across America. Consumers angrily demanded that the old formula be returned, and Coca-Cola responded three months later with Classic Coke. Eventually, New Coke quietly disappeared. Pepsi, meanwhile, had its own flop, Crystal Pepsi, which was supposed to catch the strange wave of the times when everything colorless was clean and desirable (Zima, bottled water). And then there was Pepsi Lite with the lemony flavor and one calorie, introduced in 1975. Remember that one?
Apparently they didn’t expect us to because later they gave us Pepsi One, using the same concept, but a completely different taste. And, extending the idea even further, we are now getting Pepsi Twist, a new product with a twist of lemon flavor. In 1991, Ray Charles sang, “You got the right one baby, uh-huh! ” Also in the 1990s, Cindy Crawford and the Spice Girls pitched Pepsi. And then Pepsi aired commercials featuring the aggravating little girl (Hallie Eisenberg) with her troubling male voice. In the new century, both colas continue to battle it out on the television screen. And celebrities continue to be important promoters. Recently, Pepsi has had commercials by Bob Dole and Faith Hill, among others. SLOGANS
It’s clear in looking at the slogans over the years that Coke and Pepsi have very different targeting strategies. Coke is touting itself as the original, the authentic, and appealing to a sense of tradition, positioning itself as an integral part of daily American life. Pepsi, on the other hand, is promoting itself as something new, young, and hip, which seems a little odd after over 100 years. But Coke was first, after all. Pepsi has always targeted the youth market more aggressively than Coke. COCA-COLA 1886 – Drink Coca-Cola 1904 – Coca-Cola Satisfies 1904 – Delicious and Refreshing 1905 – Coca-Cola Revives and Sustains 1905 – Good All the Way Down 1906 – The Drink of Quality 1906 – The Great National Temperance 907 – Delicious Coca-Cola, Sustains, Refreshes, Invigorates 1907 – Cooling . . . Refreshing . . . Delicious 1908 – Sparkling – Harmless as Water, and Crisp as Frost 1909 – Delicious, Wholesome, Refreshing 1910 – It Satisfies 1910 – Quenches Thirst as Nothing Else Can 1911 – It’s Time to Drink Coca-Cola 1911 – Real Satisfaction in Every Glass 1912 – Demand the Genuine – Refuse Substitutes 1913 – The Best Beverage Under the Sun 1913 – A Welcome Addition to Any Party – Anytime – Anywhere 1914 – Exhilarating, Refreshing 1914 – Demand the Genuine by Full Name 1914 – Pure and Wholesome 1916 – Just One Glass Will Tell You 1917 – Three Million A Day 1919 – Quality Tells the Difference 1920 – Drink Coca-Cola with Soda 922 – Thirst Knows No Season 1922 – Thirst Can’t Be Denied 1922 – Thirst Reminds You – Drink Coca-Cola 1923 – Refresh Yourself 1924 – Pause and Refresh Yourself 1925 – Six Million A Day 1925 – The Sociable Drink 1926 – Stop at the Red Sign 1927 – Around the Corner from Anywhere 1928 – A Pure Drink of Natural Flavors 1929 – The Pause that Refreshes 1930 – Meet Me At the Soda Fountain 1932 – Ice-Cold Sunshine 1933 – Don’t Wear a Tired, Thirsty Face 1934 – Carry a Smile Back to Work 1935 – All Trails Lead to Ice-Cold Coca-Cola 1936 – What Refreshment Ought to Be 1936 – The Refreshing Thing to Do 1937 – America’s Favorite Moment 1937 – So Easy to Serve and So Inexpensive 938 – The Best Friend Thirst Ever Had 1938 – Pure Sunlight 1938 – Anytime is the Right Time to Pause and Refresh 1939 – Coca-Cola Goes Along 1939 – Make Lunch Time Refreshment Time 1939 – Makes Travel More Pleasant 1939 – The Drink Everybody Knows 1939 – Thirst Stops Here 1940 – Bring in Your Thirst and Go Away Without It 1941 – Completely Refreshing 1942 – Refreshment That Can’t Be Duplicated 1942 – Whoever You Are, Whatever You Do, Wherever You May Be, When You Think of Refreshment, Think of Ice-Cold Coca-Cola. 1943 – The Only Thing Like Coca-Cola is Coca-Cola Itself. It’s the Real Thing 1943 – A Taste All Its Own 1943 – That Extra Something 1944 – How About a Coke 945 – Passport to Refreshment 1945 – Whenever You Hear “Have a Coke,” You Hear the Voice of America 1947 – Coke Knows No Season 1947 – Serving Coca-Cola Serves Hospitality 1948 – Where There’s Coke, There’s Hospitality 1949 – Coca-Cola . . . Along the Highway to Anywhere 1950 – Help Yourself to Refreshment 1951 – Good Food and Coca-Cola Just Naturally Go Together 1952 – What You Want Is a Coke 1953 – Dependable as Sunrise 1954 – For People on the Go 1955 – America’s Preferred Taste 1956 – Coca-Cola – Making Good Things Taste Better 1956 – Feel the Difference 1957 – Sign of a Good Taste 1958 – The Cold, Crisp Taste of Coke 1959 – Be Really Refreshed 960 – Relax With Coke 1961 – Coke and Food – Refreshing New Feeling 1962 – Coca-Cola Refreshes You Best 1963 – Things Go Better With Coke 1965 – Something More Than a Soft Drink 1966 – Coke . . . After Coke . . . After Coke 1970 – It’s the Real Thing 1971 – I’d Like to Buy the World a Coke 1974 – Look Up, America 1976 – Coke Adds Life 1979 – Have a Coke and a Smile 1982 – Coke Is It! 1984 – Just For the Taste of It (Diet Coke) 1985 – Just For the Free of It (Caffeine Free Coke) 1985 – We’ve Got a Taste For You (New Coke) 1985 – America’s Real Choice (Coca-Cola Classic) 1986 – Catch the Wave (New Coke) 1986 – Red, White and You (Coca-Cola Classic) 987 – You Can’t Beat the Real Thing 1989 – Can’t Beat the Feeling 1990 – Can’t Beat the Real Thing 1993 – Always Coca-Cola 1993 – Taste it All PEPSI-COLA 1903 – Exhilarating, Invigorating, Aids Digestion 1907 – Original Pure Food Drink 1909 – Delicious and Healthful 1915 – For All Thirsts – Pepsi-Cola 1919 – Pepsi-Cola – It Makes You Scintillate 1920 – Drink Pepsi Cola. It will satisfy you. 1928 – Peps You Up! 1932 – Sparkling, Delicious 1934 – Refreshing and Healthful 1939 – Twice As Much For A Nickel Too 1943 – Bigger Drink, Better Taste 1949 – Why take less when Pepsi’s best? 1950 – More Bounce to the Ounce 1950 – The Light Refreshment 1954 – Refreshing Without Filling 958 – Be Sociable, have a Pepsi 1961 – Now It’s Pepsi, For Those Who Think Young 1963 – Come Alive! You’re In the Pepsi Generation 1967 – Taste That Beats the Others Cold 1967 – Pepsi Pours It On 1969 – You’ve Got a Lot to Live and Pepsi’s Got a Lot to Give 1973 – Join the Pepsi People Feelin’ Free 1975 – Have a Pepsi Day 1978 – Catch That Pepsi Spirit 1981 – Pepsi’s Got Your Taste For Life! 1983 – Pepsi Now! 1984 – Pepsi, the Choice of a New Generation 1992 – Gotta Have It 1993 – Be Young, Have Fun, Drink Pepsi 1995 – Nothing else is a Pepsi 1999 – The Joy of Cola CELIBRITIES PLAYING PART IN TO THE SALES PROMOTION OF THE PRODUCT: CELIBRITIES OF PEPSI: AMITABH BACHHAN ? SHAHRUKH KHAN ? PREETY ZINTA ? SACHIN TENDULKAR ? SAIF ALI KHAN ? SAURAV GANGULY ? RAHUL DRAVID ? MOHD. KAIF ? ZAHEER KHAN ? HARBHAJAN SINGH ? YUVRAJ SINGH CELIBRITIES OF COKE: ? SALMAN KHAN ? AISHWARYA RAI ? AMIR KHAN ? VIVEK OBEROI ? BIPASHA BASU ? AKSHAY KUMAR COKA COLA, PEPSI IN CALORIE BATTLE Arch rivals plan salvos of new diet colas, Pepsi ONE and Coca-Cola Zero. March 22, 2005: NEW YORK (CNN/Money) – The beverage aisle is about to get more crowded as Pepsi and Coca-Cola debut new diet colas. Coca-Cola is adding a fourth diet cola to its line this June with Coca-Cola Zero, with no calories, the company announced Tuesday.
And this spring Pepsi is relaunching its one-calorie Pepsi ONE with Splenda sweetener rather than aspartame. Reformulated Pepsi One, available on shelves and coolers in late March, is part of Pepsi’s focus on diet soft drinks this year, said Katie Lacey, Pepsi- Cola North America’s vice president of carbonated beverages, in a statement While for Coke, “Coca-Cola Zero is exactly what young adults told us they wanted,” said Dan Dillon, vice president, Diet Portfolio, Coca-Cola North America, in a statement. Apparently America’s youth wanted a cola sweetened with sugar subsaspartame and acesulfame potassium. The new cola will not replace Diet Coke, favored by a different group of cola swiggers, according to the company. Both Pepsi’s (up $0. 08 to $52. 4, Research) and Coke’s (up $0. 06 to $41. 66, Research) new diet brews are aimed young adults, mostly male, according to Adage. com. Apparently, more men are gulping reduced-calorie and zerocalorie beverages to stay trim, the article says. Along with Diet Coke and the new Zero, Coke’s diet selection includes a Splenda-sweetened Diet Coke, Diet Coke with lime and C2, launched last year. For the curious, Coca-Cola Zero will auction off a sample pack of the cola on eBay in April. Coke vs. Pepsi: the new cola wars NEW YORK (CNN/Money) – The Beatles or the Backstreet Boys? Star Trek or Star Wars? Yankees or Mets? They say you must like either one or the other.
Shares of Coca-Cola (KO: Research, Estimates) and PepsiCo (PEP: Research, Estimates) have been on a tear this year, with each posting solid gains in an otherwise dismal market. Coke has surged 20. 3 percent year to date while Pepsi is up 7. 2 percent. The two currently are trading just a hair off their 52-week highs. But some analysts and fund managers think the trendier Pepsi has more fizz left in its stock than Coke. Coca-Cola is launching a new product, Vanilla Coke, next week (May 15) while Pepsi recently announced that it will start selling a berry flavored cola, Pepsi Blue, in August. With Vanilla Coke, the company seems to be banking on nostalgia. John Travolta’s character in “Pulp Fiction” ordered a Vanilla Coke at a 50’s themed diner, for example. ) Pepsi Blue, on the other hand, seems to be a concerted attempt to reach out to the hipper, younger demographic that drinks Pepsi’s Mountain Dew. And embracing that demographic has worked. The launch of Code Red, a cherryflavored version of Mountain Dew, last year helped Pepsi increase its market share. According to the Beverage Market Corporation, unit volume for all of Pepsi’s soda brands (including Diet Pepsi and Mountain Dew for example) increased 1. 3 percent in 2001 while volume for Coke’s carbonated beverage brands (Diet Coke, Cherry Coke and Sprite among others) declined by . percent. “This is a mistake for Coke. Pepsi is going after the right market. Younger audiences are going to buy more of Pepsi Blue. I don’t see any edge in vanilla,” says Ted Parrish, co-manager of the Henssler Equity Fund. As of April 30, Pepsi was the fund’s second-largest holding. The fund does not own Coke. BATTLE OF THE BEVERAGES: [pic] PEPSI IS NOT AS PRICEY Regardless of which soda you like better though, Pepsi seems the better value than Coke right now. Coke is trading at a nearly 20 percent premium to Pepsi based on 2002 P/Es even though the two companies’ earnings growth rates are nearly identical. (Pepsi’s are actually a shade higher. And when you look at revenues, the gap is even more dramatic. Coke is trading at 7 times estimated 2002 sales while Pepsi is trading at 3. 5 times 2002 revenue estimates. Both companies are expected to post slight declines in sales this year and an increase of about 4 percent in 2003. Due to this disparity in valuation, Jeff Kanter, an analyst with Prudential Securities, says he has a “buy’ rating on Pepsi and “hold” on Coke. Prudential does not do investment banking. To be sure, Coke is still the market share leader in soft drinks. One of the main reasons the stock has outperformed Pepsi this year was because it reported a better than expected gain in unit volume in the first quarter.
And the company has taken steps to cement its carbonated beverage lead as well gain ground in the bottled water market. (Coke and Pepsi both have their own brands of water, Dasani and Aquafina, respectively. ) On Tuesday, Coke announced that it was acquiring the Seagram’s line of mixers, tonic, ginger ale and seltzer from Diageo and Pernod Ricard. And last month, Coke entered into an agreement with Group Danone to distribute Evian bottled water in North America. Some pretzels with that soda? But while Coke relies solely on beverages for growth, another factor in Pepsi’s favor is its diversity. “What attracts me to Pepsi is I have more faith in their ability to grow earnings.
Not only are they successful on the beverage side but they are successful with salty snack foods,” says Crit Thomas, director of growth equity for National City Investment Management Co. , the subadvisor for Armada Funds. As of March 31, Pepsi was the seventh-largest holding in the Armada Tax Managed Equity Fund and the tenth-largest holding in the Armada Equity Growth Fund. In fact, Pepsi’s carbonated beverages are not even the biggest generator of sales and earnings for the company. Pepsi’s Frito-Lay brand of snack foods, which include Fritos, Doritos and Rold Gold, accounted for 61. 2 percent of revenue and 65. 3 percent of operating profits in the first quarter. Pepsi’s soft drink business made up 19 percent of sales and 23. 2 percent of operating profit.
Pepsi also owns Gatorade and Quaker Foods, having acquired Quaker Oats last year. One potential risk for both Pepsi and Coke is the economy. No, not if it goes back into a recession. If the economy continues to improve, the stocks could fall victim to what is known as sector rotation, the selling of defensive companies like food and beverages in order to buy more economically sensitive companies in the financial services and technology sectors. To that end, shares of Pepsi and Coke fell slightly on Wednesday during the Ciscoinduced market rally. Still, Thomas says signs that the dollar is starting to weaken compared to other currencies should prop up both stocks.
That’s because a weaker dollar helps boost the profits of international subsidiaries, since profits made in a foreign currency are converted back to dollars. The majority of Coke’s sales are from its international operations, with just 38 percent of revenue coming from the U. S. last year. Pepsi is not as big globally but currency fluctuations are still a factor, as international sales accounted for 29 percent of revenue in 2001. More than just two soda stocks But if you’re not a fan of either Pepsi or Coke, there actually are several other beverage stocks out there. And they’re trading at lower valuations. Cadbury Schweppes (CSG: Research, Estimates), the British onfectioner, owns the Dr Pepper, 7 Up, A&W and Royal Crown brands of soda. It too is joining the new round of cola wars, introducing Red Fusion, a fruit flavored version of Dr Pepper, Friday. Red Fusion will hit the market in July. Cadbury Schweppes’ stock trades at a sizable discount to Coke and Pepsi, with a P/E of 16. 7 based on 2002 earnings estimates. Earnings are expected to increase 12. 5 percent this year. Cott (COTT: Research, Estimates), the largest maker of private label sodas, trades at 26 times 2002 earnings estimates but it’s growth prospects for this year and next are better than Coke and Pepsi. Analysts expect Cott’s earnings to increase 34. 5 percent this year and 23 percent in 2003.
Finally, for you Shasta fans out there (we know there are some), there is National Beverage (FIZ: Research, Estimates), which owns Shasta and Faygo, a brand of carbonated beverages popular in the Midwest. The stock is thinly traded and has no analyst coverage, but for what it’s worth it is trading at less than one times last year’s sales. PRODUCT The term soft drink was originated to distinguish the flavored refreshment from hard liquor. Soft drink was flavored to change the habits of earlier Americans who used to have hard liquor. The fruits and vegetable juices are not considered soft drinks. Pepsi is a pure soft drink, which is enjoyed in our 195 countries.
It is made of artificial flavors and contains no fruit juice or fruit pulp. How soft drinks are made: Soft drink consists of carbonated water and syrup. Adding carbonated gas to water under pressure produces carbonated water. The gas makes the water bubble and fizz in most cases. Syrup is made of a concentrate and sweetener. A concentrate is a blend of flavor and acid. In concentrate for most soft drinks also include coloring. The concentrate contains a unique blend of ingredients, which give Pepsi its distinctive flavor. Syrup can be also being prepared directly from individual ingredients. Carbon dioxide gas gives beverage its sparkle and tangy taste and prevents spoilage.
While it has not been conclusively proved that carbonation offers a direct medical benefit, carbonated beverage are also used to alleviate post operative nausea when no other food can be tolerated. Carbon dioxide is supplied to soft drinks by manufactures in a liquid form maintained under approximately 1,200 pounds per square inch pressure in heavy steel containers. Many of the flavorings found in soft drinks come from natural sources such as fruits juices and oils obtained from roots, citrus fruit peels, and leaves of various plants. Some flavoring are artificial, but a similar to natural flavoring in taste. Citric acid and phosphoric acid give soft drink a tart taste. Caramel is usually used as a coloring in cola drinks. The sweeteners may come from maize, sugar beet or sugarcane.
Artificial sweetener, such as saccharine and aspartame is used in Diet Pepsi and Diet Coke. The mixing is carried out under the highest standards of quality control and accordingly to precise instructions in order to insure that every consumer always receives a product of the same trusted quality. The bottling of Pepsi in modern plants such as there are in India is carried out at the rate of 600 bottles a minutes. Pepsi is approved by the National Health Authorities of every country in which it is sold. Packaging Pepsi is supplied in – “ Returnable glass bottles (200 ml, 250 ml, 300 ml, 500 ml, 1 lt. ) which is supplied in molded plastic shells. “ 1. litre PET bottles, “ 330 ml of cans, “ PMX machines (Fountain Pepsi) Fountain Pepsi (F P) Dispenses soft Drinks in plastic cups. There are two methods of vending soft drinks. 1. Pre-mix system – In the premix system, the finished beverage is prepared by the soft drink manufacturers and filled into 5 to 10 gallon 70 stainless steel tanks. The tanks of the beverage are attached to the vending machine where the b
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