IMD-5-0767 © 2011
Walsh, John; Woolfrey, Alyson; Coughlan, Sophie
(This is an shortened description of the case IMD-5-0741.) In the year 2009, TCCC kept its market leadership of the international sparkling soft drinks market in 2009, but continued to battle a host of fragmented opponents across the other drink types, including bottled water and energy drinks. Bottling partners made their own business decisions and some manufactured and distributed their own products or those of beverage companies other than TCCC. In 2007 alone, TCCC added more than 450 new still drink products to its portfolio (including those got through acquisitions) and it had no plans to slow its growth and product diversification. TCCC depended on bottlers to carry and deal out these in introducing new products. But what was the motivator for a bottler to agree to distribute these – In particular, if it had a competitive brand? TCCC’s response was a multi-pronged growth and innovation strategy: it partnered with Nestlé to develop products including ready-to-drink (RTD) teas in a joint venture named “Beverage Partners Worldwide”. Additionally, it added stronger advertising support for still drinks like Dasani water (launched in 1999).
The Coca-Cola Company (Abridged) case study solution
Acquisitions were significant, particularly in the still beverage category. Many of these acquisitions were done with the bottler, while others were acquired entirely by TCCC. But how many new products could it introduce via its bottlers? How could TCCC ensure profit maximization for itself as well as its bottlers? In this manner it would be able to better control new product introductions. Was this a sign that it was abandoning its franchise model? Learning objectives: The objective of the instance is to: 1) exemplify the advantage-light franchise model of “The Coca-Cola System”, i.e. the relationship The Coca-Cola Company has with its network of bottlers; 2) summarize The CocaCola Company’s historical success in sparkling drinks and its recent major moves into non-sparkling classes; 3) investigate how The Coca Cola business can grow and optimize profits, through product innovation and distribution, given its present supply system.
Subjects: Franchise; Retailing; Brand strategy
Settings: Global ; Soft drinks market ; USD 68.7 billion ; 1986-2009
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