Will Breon
Regent University
2022-3-22
ECON230
Milestone 1: Coca Cola
Company Overview:
The Coca-Cola Company is a multinational beverage corporation that operates in both production and distribution of their product. Coca Cola has been around for over one hundred years and has bloomed into the largest international beverage corporation in the world.
Coca Cola operates under stock ticker: KO, and main investors include: The Vanguard Group Blackrock, and Warren Buffet’s Berkshire Hathaway. Coke supplies to over 200 various countries worldwide, supplying over 500 different products, manufactured by over 80,300 Coca-Cola employees worldwide.
Comparative Advantage Over Rivals
Coca-Cola does have a clear comparative advantage over its competition as Coca Cola has the highest selling beverage brand in the world (The Coca Cola Company, 2020). There are a multitude of areas to explain the growth and popularity of the Coca-Cola brand, but one that should not be overlooked is the phenomenal advertising, which has “been among the most prolific in marketing history, with a notable and major impact on popular culture and society as a whole” (Stringer, 2015).
Coca-Cola also has a multitude of different drinks and flavors to choose from, keeping them on the forefront of competition in many beverage sectors. The most challenging competitor is PepsiCo with Schweppes likely being a more distant third.
Explaining Supply and Demand
Coca-Cola is a well liked product, as well as many of the other products they make, so the demand should naturally increase with consumer income increases, which should generally happen over time. Coca-Cola also is at huge benefit due to brand loyalty, as many people including family members of mine swear that Coca-Cola is leaps and bounds better than Pepsi, so will never go for a competitor. Additionally health conscious or health restricted consumers have more healthy options such as Coke Zero and Diet Coke—although we know they are hardly healthy.
GDP
Coca-Cola’s largest worldwide market share is found in the United States, with annual revenues of 11.5 billion (MarketUS, 202. The GDP of the United States is $20.9 trillion. Additionally, the countries that make up Europe are a key market for Coca Cola with 2.45 billion in annual revenue, with the GDP of Europe being $15.2 trillion.
How does fluctuations in GDP, economic growth, investments, and patents affect the company’s profitability?
Fluctuations within the economy absolutely has an impact on Coca-Cola, as “The Coca-Cola Company got slammed by the pandemic [covid-19] for its most recent fiscal quarter, with revenue down 28% from last year and earnings down 32%.” (Demetrakakes, 2020).
Fluctuations in the nation’s GDP also affect companies as a healthy economy breeds a more spend-happy consumer. There is no real patent issue in regard to Coca-Cola, as the company guards the recipe as a trade secret and very few people know what ingredients make up the formula.
References:
Europe, Middle East & Africa. The Coca-Cola Company. (2020). https://investors.coca-colacompany.com/about/segments/europe-middle-east-africa.
Demetrakakes, P. (2020, July 22). Pandemic Hits Coca-Cola Hard. Foodprocessing.com. https://www.foodprocessing.com/industrynews/2020/pandemic-hits-coca-cola-hard/.
Market Us. (2021, October 6). Coca-Cola Company statistics and Facts. Market.us. from https://market.us/statistics/food-and-beverage- companies/coca-cola-company/.
Hello Will, I love how you mentioned "Additionally health conscious or health restricted consumers have more healthy options such as Coke Zero and Diet Coke.." I believe it is very important for companies such as Coca Cola to consider the needs of their consumers. With a more 'heath-conscious' society that we are living in today, most people want to have their cake and eat it to without too much deprivation, starvation, or neglecting of the things we love most (to eat). So to cater to such diverse audiences who LOVE a Coke but won't want to pack on the pounds- having Coke Zero's and Diet Cokes are great alternatives to try to go with ebbs and flows of the times. Thanks for posting!
Will,
I agree that Coca-Cola has a comparative advantage over its rivals, but I believe it to be credited to its superior advertising and long-lasting impact on popular culture. Many of the drinks and flavors that Coke produces are mimicked by competitors, so I don’t think having a variety of products is what gives Coke its advantage. Another advantage that you mention is brand loyalty. Coke consumers are very loyal customers, as are your family members. However, I disagree that as consumer income increases, Cola-cola sales will steadily increase. Consumers will reach a maximum consumption level, and coke sales will taper off. To sustain growth, Coke needs to acquire new customers, most likely through outstanding advertising, constantly. If your research supports what you’ve written, you may want to consider citing those sources. I always enjoy learning something new.
Hello Will,
I enjoyed reading your views regarding Coca-Cola and found it fascinating to learn the many factors that affect company growth and performance, such as covid-19, recession, inflation, and the overall effectiveness of the worldwide economy. According to Coca-Cola (2022), contributing factors to the company’s overall growth resulted from investments in acquisitions from 2019 to 2021. “In November 2021, the Company acquired the remaining ownership interest in, and now owns 100 percent of BodyArmor, which offers a line of sports performance and hydration beverages in the United States” (Earnings Release, p. 71). Great post!
References
Coca-Cola (2022). The Coca-Cola Company. All Rights Reserved. Retrieved March 23,
2022 from https://www.coca-colacompany.com/home
Will, I learned quite a lot from reading your milestone! Firstly, your introduction did a good job of making it clear that Coca-Cola is a multinational company, and it succinctly describes what a reader needs to know about the company so they can understand the rest of the information coming after. However, when it comes to comparative advantage, what kind of comparative advantage Coca-Cola has is not made very clear in your milestone. You do mention their advantage in marketing and sheer selection options, but those do not seem to specifically be comparative advantages. Also, when it comes to Coca-Cola's key market, you mention Europe as a whole, but is there a specific country within Europe that Coca-Cola gets a sizeable amount of its revenue from? If so, it might be best to only mention that nation for the sake of relevance. Besides this, your information is succinct and clearly divided, making for easy, informative, and enjoyable reading.