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Home » Business » Coca-Cola SWOT Analysis Matrix: Opportunities and Weaknesses

Coca-Cola SWOT Analysis Matrix:

Opportunities and Weaknesses
Apr 3, 2021 by Brandon Gaille
A company synonymous with strong branding and ubiquitous availability, The
Coca-Cola Company is one of the leading corporations in the world. Its
products can be found in nearly every country (excluding North Korea and
Cuba) with its familiar red-and-white branding.

In this article, we jump into the Strengths, Weaknesses, Opportunities and

Threats of one of the world’s largest beverage manufacturers, The Coca-Cola
Company.

Strengths
1. The Coca-Cola Company has one of the world’s largest brand
identities and brand valuations.
Wherever you travel in the world, you will no doubt spot the ubiquitous red-
and-white logo of The Coca-Cola Company. Branding and advertising
campaigns of Coca-Cola have taken over World Cup tournaments, capitalized
on the festivities of Christmas, and driven one of the strongest advertising
rivalries in the marketing world.
The Coca-Cola Brand is valued at $84 billion. (Statista)
2. The Coca-Cola Company enjoys a commanding lead in market share
in North America.
Coca-Cola remains an industry benchmark, with many imitation products
cropping up over time. Regardless, its customers continue to seek the original
taste of its main product, Coca-Cola, and that of its main product offerings.
This authenticity buffers itself from its competitors to some level. However,
this does not hinder indirect competition from health drinks, bottled water and
hot drinks from impacting its market share.
Coca-Cola commands 35% of the North American soft drink market. (Statista)

3. One of the most recognizable brands, The Coca-Cola Company’s

brand equity is one of the strongest in the world.
Brand loyalty of The Coca-Cola Company and its perceived quality reinforce
the image of The Coca-Cola brand. The company has remained in its position
for more than a century. To achieve this, it has had to ensure that its
marketing and advertising is at the top of its game and continues to be as the
world’s refreshment needs change. Even though the packaging and corporate
identity of The Coca-Cola Company have changed many times over the
years, the lineage remains exceptionally strong.
Coca-Cola spends $280 million on advertising every year. (Statista)

4. Beverages from The Coca-Cola Company are available in over 200

countries around the world.
With the exception of North Korea and Cuba due to political sanctions,
products from The Coca-Cola Company can be found across the world. The
distribution network has been known to include some of the most innovative
and localized methods of distribution to penetrate its products into some of the
most remote areas in the world.

More than 1.9 billion servings of products from The Coca-Cola company are
served every day in 200 countries around the world. (Coca-Cola)

5. As The Coca-Cola Company has such wide market penetration, its

distribution system is one of the most efficient and refined in the world.
Getting a product to market is possibly one of the most cost-intensive aspects
of a product life cycle, and with Coca-Cola, it is no different. The company
relies on an incredible local partner network to ensure expediency and
efficiencies when it comes to its distribution system. Resilience is key to the
success of this system, as products from The Coca-Cola Company are
distributed into some of the most remote and hostile environments on the
planet.
Coca-Cola operates 900 bottling plants worldwide. (The Coca-Cola Company)

6. Due to its size, The Coca-Cola Company can react to the market
through acquisitions and buy-outs.
Should the market position of The Coca-Cola Company come under
increased pressure from direct or indirect competition, it can (and has)
asserted itself by performing strategic acquisitions. An example of this is The
Coca-Cola Company’s acquisition of Costa Coffee in order to gain exposure in
the market of Tea and Coffee, a segment that is seen as an indirect
competitor. This strategy has exposed Coca-Cola to not only the Tea and
Coffee segment, but bottled water through its acquisition of Dasani juices and
energy drinks.
The Coca-Cola Company purchased Costa Coffee for $5.1 billion.
(Investopedia)

Weaknesses
1. The Coca-Cola Company fails to demonstrate sustainable practices.
The Coca-Cola Company’s reliance on single-use plastics has led to it being
considered one of the world’s worst polluters. This, coupled with its heavy
reliance on water, is bad for its image. There is an opportunity for The Coca-
Cola Company to strengthen its commitment to sustainable production, which
would greatly benefit its brand.
45.2% of Coca-Cola’s product line is packaged in PET plastic bottles.
(Statista)

2. The Coca-Cola Company faces stiff competition.

The Coca-Cola Company faces direct competition in the carbonated soft drink
category, as well as indirect competition in the form of hot drinks, bottled
water and nutritional drinks. Furthermore, The Coca-Cola Company continues
to counter competitive action from its largest institutional competitor, The
Pepsi-Co. This rivalry has earned its own name, The Cola Wars.

Pepsi-Co has a market capitalization of $188.6 billion, while The Coca-Cola

Company has a market capitalization of $185.8 billion. (Investopedia)

3. Although Coca-Cola has a wide range of beverages available, it has

not diversified into any other market segment.
Unlike its primary competitor, The Coca-Cola Company has had few attempts
at entering into industries other than that of beverages. Competitors have
gone into various industries, such as Pepsi-Co’s entrance into the snack
market, a move which has helped it diversify its offerings away from the
carbonated beverages industry. Moving beyond beverages could help Coca-
Cola reinforce its position as a market leader.
The Coca-Cola Company owns more than 500 beverage brands worldwide.
(The Coca-Cola Company).

4. The nutritional value of products from The Coca-Cola Company is a

leading reason for customers to move away from the company.
The Coca-Cola Company has indeed attempted to produce Cola-type
products that include less sugar, no sugar and sugar replacement products,
but its image is still strongly entrenched as one of an unhealthy product.
These attempts have led to the creation of products like TAB and Coke Life,
which replace sugar with Stevia, which is seen as healthier. Interestingly,
these brands are among the brands that The Coca-Cola Company decided to
discontinue recently in order to streamline its operations.
One 12-ounce serving of Coca-Cola contains ten teaspoons of sugar. (Very
Well Fit).

5. In order to penetrate all corners of the world, The Coca-Cola Company

has high distribution costs.
In order to ensure that its products are available in the 200 countries that sell
Coca-Cola products, the company maintains an exceptionally intricate supply
chain system. The Coca-Cola Company’s business model revolves around
independent bottling companies that add carbonated water to a syrup that is
supplied by The Coca-Cola Company. The filled bottles are then distributed to
customers and regions in order to fill orders. In this model, the actual bottling
process is completed by the bottling partners, while the syrup production and
distribution of the final product are executed by the company itself.

The Coca-Cola Company distributes over 3,500 different beverage options to

over 200 countries. (Market.US)

6. Water is a key input for Coca-Cola, and this is becoming increasingly

valued.
Water is identified as a key national resource, and one of strategic importance
for many countries. The production of Coca-Cola products is incredibly water-
intensive, with one hundred liters of the product requiring ninety-one liters of
water to produce. As ecological impacts of water usage and environmental
resilience gain increasing importance, The Coca-Cola Company will need to
address its water usage in its manufacturing processes.
The Coca-Cola Company uses 295 billion liters of water in its operations per
year. (Statista)

Opportunities
1. The Coca-Cola Company can focus more of its marketing efforts on
emerging markets.
There has been a massive growth in net income per capita in large parts of
the world, in territories where Coca-Cola had not previously focussed its
expansion efforts. This offers the opportunity for expansion in underexposed
markets in emerging economies. Expansion into the European, Middle East
and African markets poses a great opportunity to Coca-Cola.

The Europe, Middle East and Africa markets represent 16.8% of The Coca-
Cola Company’s revenue. (Statista)

2. The Coca-Cola Company can introduce non-beverage items into its

product line.
Following on from the diversification strategies of its competitors, The Coca-
Cola Company can diversify its range of offerings into products beyond its
legacy products of beverages. This strategy has proven to be an effective way
of mitigating the risk of downturns in product-specific markets, such as
carbonated beverages. Furthermore, The Coca-Cola Company can leverage
its vast and efficient distribution network for products in a similar segment to
that of carbonated beverages, such as snacks.
It costs an estimated $71 million to introduce a new product into a market
within the beverages and snack segment. (Signals Analytics)

3. Continued innovation in Coca-Cola’s supply chain can open up new

opportunities.
As global supply chains continue to develop and innovate, this offers The
Coca-Cola Company the opportunity for further efficiencies in its distribution
strategies. The Coca-Cola Company is seen to be taking advantage of these
technological advances, with the adoption of blockchain technology in its
supplier and distribution technological infrastructure. The use of
cryptocurrencies such as Ethereum will further contribute to the efficiencies,
effectiveness and accountability of the company’s networks.
The Coca-Cola Company’s supply chain processes 160,000 orders per day.
(All Things Supply Chain)

4. The Coca-Cola Company can focus more of its product range on

health drinks.
The global trend toward a healthier existence, as well as the continued health
pandemic manifesting itself in obesity, diabetes and other diet-related health
concerns, is driving the market away from sugary, carbonated drinks toward
alternatives that are perceived to be healthier. These include smoothies,
bottled water, teas and coffees. The Coca-Cola Company has recently
entered into the market for hot beverages through the acquisition of Costa
Coffee. Furthermore, they have representation in bottled water through their
stake in Dasani. However, there is further potential for expansion into this
segment.
The global health drinks industry is estimated at $478 billion. (Cision US Inc)

5. Recycled plastic is an environmental imperative for the future.

Conscious consumption is becoming an incredibly important corporate value
for consumers worldwide. The Coca-Cola Company is currently seen as one
of the world’s greatest contributors to plastic pollution. Single-use plastic is still
very much a part of The Coca-Cola Company’s supply chain. This offers the
opportunity to change its image by setting itself targets of reducing not only
single-use plastics in their product lines, but reducing plastic altogether.
Targets have been set for 100% recycled plastic by 2030; however, a return to
glass packaging offers an even greater opportunity.
60% of The Coca-Cola Company’s plastic is recycled. (The Coca-Cola
Company)

6. Cost-cutting measures can reinforce The Coca-Cola Company’s

position as a top beverage producer.
Due to its intricate, costly supply chain, The Coca-Cola Company has the
opportunity to refine its operations to a more efficient operation. The company
has started improving this operation by getting rid of products that do not
contribute to its bottom line, as well as outsourcing its bottling operations to
third parties. The Coca-Cola Company has seen reduced revenues in the
2010s; however, they have retained a growth in profitability due to cost-cutting
and efficiency-seeking pursuits.

The Coca-Cola Company will cut 2,200 jobs globally. (eMedia Holdings
Company)
Threats
1. It may be unable to grow its customer base over the long term.
The Coca-Cola Company’s marketing efforts have been so successful in the
markets that it has concentrated on, a level of market saturation has been
reached, where it has become difficult to attract new customers to its legacy
offerings. This phenomenon presents itself not only to The Coca-Cola
Company, but also to its competitor, The Pepsi-Co.
The Coca-Cola Company net operating revenue decreased by a third
between 2012 and 2018. (Statista)

2. Many of The Coca-Cola Company’s products are outdated and not

very profitable.
The vast majority of The Coca-Cola Company’s product lines contribute to a
very small percentage of the company’s sales. This exposes the company to
significant market-related risks, which may affect its few volume-based
brands.
Half of The Coca-Cola Company’s brands contribute only 2% of the overall
sales. (Nasdaq)

3. Customers of The Coca-Cola Company are increasingly seeking more

nutritious choices in their beverage consumption.
Without the further development of its own health-focused brands, or further
acquisitions of established brands that offer a healthier alternative to
carbonated sugary drinks, The Coca-Cola Company will experience a
decrease in sales of its core, volume-based product lines.
The carbonated soft drink consumption of the average North American has
experienced a 19% year-on-year drop. (M3 USA Corporation)

4. Water is becoming an increasingly more valuable resource, and water

is a big input of The Coca-Cola Company.
As worldwide freshwater resources become increasingly threatened, The
Coca-Cola Company will experience an increased cost of its main production
input: water. The company will need to refine its production process in order to
cut down on the amount of water required in its operations in order to remain
profitable and in operation.
The Coca-Cola Company uses 91 liters of water to produce 100 liters of
product. (The Coca-Cola Company)

5. The beverage industry is one of the most competitive industries in the

world.
The Coca-Cola Company has faced some of the fiercest competition in its
existence. The so-called Cola Wars between The Coca-Cola Company and
Pepsi-Co has led to the establishment of two behemoths in the beverage
space. This mutually identified competition ensures a strategy of continuous
innovation to ensure survivability.

29% of The Coca-Cola Company’s sales were that of low or no-calorie drinks.
(Statista)

6. The Coca-Cola Company’s use of single-use plastics could become

legally restricted or illegal.
Pressure is mounting from the market, supply chains, as well as government
regulation against the incorporation of single-use plastics in The Coca-Cola
Company’s manufacturing process. An alternative packaging solution will
need to be sourced in order for the company to continue to supply at its
current levels. Its current reliance on single-use plastics is not sustainable.
The Coca-Cola Company produces three million tons of plastic packaging a
year. (BBC)

While consumers move to more conscious nutrition, can Coca-Cola maintain

its market position? Through its current marketing strategy, effective cost-
cutting measures, and a finger on the pulse of the market, Coca-Cola will
remain in a strong position moving forward. There are great opportunities
available to the company to increase competitiveness and drive growth.

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