The Coca-Cola Company
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The Coca-Cola Company is the world's biggest drinks company, controlling more than half the global market in carbonated soft drinks as well as a substantial chunk of the somewhat larger non-carbonated segment. It owns four of the world's five best-selling soft drinks. Its principal brand is of course Coca-Cola itself, the world's best-known and most valuable brand. But the company also sells almost 500 other beverage brands ranging from variants like Diet Coke and sister products such as Fanta and Sprite to a vast range of carbonated and non-carbonated juice-based drinks, bottled waters, iced teas and coffees. Increasingly Coca-Cola has found that its sheer size works against it. Competition authorities now watch the company's every move, effectively ruling out the acquisition of anything other than marginal products; and market saturation and economic downturns in both emerging and mature markets caused sales growth to stall for more than a decade. Since 2006, though, the company's performance has begun to fizz once again, mainly through aggressive development of non-cola products, including bottled water.
Advertising: Click here for agency account assignments for Coca-Cola Company from Adbrands.net. AdAge estimated global measured advertising expenditure of $3.03bn in 2012. Including unmeasured media, the company declared its total advertising expenses for 2012 to have been $3.34bn. In the US, Kantar (in Advertising Age) reported measured expenditure of $385m for 2012, out of an estimated total of $613m. Biggest spending brands were the Coke & Diet Coke family (measured spend $243m), Minute Maid ($31m), Glaceau ($24m) and Simply ($21m). In the UK, Nielsen / Marketing estimated measured media spend of £44m in 2010. In France, Kantar (in Strategies) estimated measured media spend of E120m in 2012. In Germany, Nielsen estimated measured expenditure of E142m in 2011. See also
The Coca-Cola Company
Several other unconnected companies have the local license in other parts of the world. One of the biggest is the soft drinks division of brewery giant SABMiller, which is Coke's licensee in much of Africa and parts of Latin America. A further substantial quantity of beverage base is supplied in syrup or concentrate form to "fountain" wholesalers and retailers for dilution on-site in restaurants (such as McDonalds or Burger King), bars and other hospitality providers. This is a substantial market in the US, and accounts for just under a third of the company's sales there. It is less important elsewhere, contributing only 5% of international sales.
Total worldwide sales for the company's entire drinks system, including the sales generated by its various bottling partners, were estimated at 27.7bn unit cases in 2012. Volumes have been rising at between 2% and 4% per year each year. Sparkling beverages accounted for 75% of total volumes and the Coke Family alone for 48% (or 13.3bn cases). The US accounted for 19% of total system volumes in 2012, with Mexico, China, Brazil and Japan the next biggest markets.
In the key US market, industry watcher Beverage Digest estimated a 34.0% overall share in 2012 of the liquid refreshment category, which includes bottled water and other soft drinks as well as carbonated products (but not refrigerated juices like Minute Maid and Simply). Volumes rose by 0.9% year-on-year to 5.24bn cases, but percentage share was unchanged year-on-year. In the key carbonated segment, Coca-Cola scored 42.0% share, up slightly despite a 1.0% decline in volumes. However it remained comfortably clear of second-placed PepsiCo in both the overall liquid refreshment sector and the carbonated segment. Coke and Diet Coke held onto the top two places among carbonated drinks; and Sprite and Fanta both featured among the top ten. The Coke family was also clear leader within the wider liquid refreshment category. Sprite ranked as #6 and Dasani water as #8.
Coca-Cola and Diet Coke are respectively the #1 and #3 soft drinks worldwide (see separate profile). Alongside them sit a variety of other spin-off products. Sitting immediately below the Coke family sit two secondary brands, Sprite and Fanta, also among the global top five. At the next level sits a sometimes bewildering variety of other, often regional brands, more than 500 in all excluding their different variants or flavours. Many are the inventions of local bottling partnerships, catering to domestic tastes or taking up spare production time; others are house brands gradually being rolled out globally. The US has its own extended regional portfolio: cherry cola Mr Pibb (originally launched in 1972), Mello Yello citrus drink (first introduced in 1978), root beer Barq's (acquired 1991), caffeine-free Citra (launched 1997) and Surge (launched 1998). Several of the group's smaller but more promising products in North America are overseen by Venturing & Emerging Brands, a dedicated unit which aims to identify the next generation of potential billion-selling brands. They include Fuze, Honest Tea, Illy Issimo and Zico coconut water. See more below.
Sports & energy drinks: Coke introduced sports drink Powerade in the US in 1990, and in Europe a decade later, to counter Gatorade, now owned by Pepsi. To match its rival's introduction of an associated vitamin-enriched water Propel, Coke acquired independent vitamin-fortified brand Glaceau Vitaminwater for a generous $4.1bn (around 11 times 2006 revenues). This and associated product Smartwater now partner Powerade in the wider "active hydration" segment. Although Powerade continues to lag some way behind Gatorade, Vitaminwater has given the group a considerable lift. By June 2011, data from Nielsen indicated that Coca-Cola's share of the active hydration segment by retail value had risen from under 14% in 2006 to almost 37%, while PepsiCo's in the same period slipped from 77% to 61%. In the pure sports drink market, Nielsen figures for mid 2012 suggested 21% share for Powerade (up from 16% in 2006) to Gatorade's 73%.
The group first entered the energy drink sector with pineapple-flavoured Burn, launched in Australia during the 2000 Olympics and subsequently rolled out selectively in Europe. It is known as Buzz in Japan. The company introduced its first US competitor to energy drink Red Bull in 2000, with KMX. This was replaced five years later with Full Throttle, and Coke also signed a deal to take over distribution for fast-growing newcomer Rockstar. It lost that contract to Pepsi in 2009. Other caffeine-enriched beverages in the portfolio include Relentless in the UK and Australia, Shock in India, Play in South Africa, Nalu in Belgium and Samurai in Vietnam. In 2008, the group agreed to acquire rights to Northern European energy drink Battery, which has a strong following in Scandinavia and neighbouring markets, from Carlsberg. It also signed a distribution deal with US company Hansen Natural to distribute its Monster energy drink in Europe.
Juices: Minute Maid is the world's #2 refrigerated juice business, but worldwide sales lag well behind the market leader, PepsiCo-owned Tropicana. Formed in 1946, the business was acquired by Coke in 1960. Traditionally, Minute Maid had always held a distant second place in the US market, but the launch of premium sister brand Simply Orange and a higher priced "Pure Squeezed" variant of Minute Maid, combined with missteps by Tropicana, allowed Coca-Cola to close the gap considerably in 2008 and then overtake its long-time rival. According to Nielsen data, Simply & Minute Maid had captured 34% of the US combined chilled juice & juice drinks market by mid 2012 (up from 29% in 2009), while Tropicana/Dole had fallen in the same period from 31% to 26%. SymphonyIRI figures for traditional retail channels (ex Walmart) put Tropicana/Dole at 30% of the refrigerated juice category for the ye Jan 2013, compared to 33% for Coca-Cola.
Key regional brands include Minute Maid Pulpy, a top-selling variant across Asia; Del Valle in Mexico & Brazil, Maaza in India and Rani across the Middle East. The group's other juice-based brands include Hi-C (the US and across Asia), 5 Alive (mainly Europe), Cappy (in central and eastern Europe), Montefiore (Latin America), Sonfil and Qoo. The latter, a non-carbonated fruit-juice drink for kids, was first launched in Japan in 1999, and has been rolled out very successfully in several Asian territories. It made its first appearance in Europe in 2003, launching in Germany.
Another still juice drink, Kapo, first launched in Chile and has been extended across Latin America under that name or as Bibo. It launched in Singapore as Juggy and most recently in Canada and South Africa. Coke also markets non-carbonated grape flavoured Delaware Punch in the US and Mexico. Fruitopia competes in the so-called "new age" non-carbonated sector, with a range of unusual and intense fruit-based flavours. In addition to the US, it is marketed in countries including Spain and Australia. In 2008, the group launched a bid to acquire HuiYuan, China's biggest juice maker, for around $2.4bn. However, that offer was rejected by Chinese regulators in March 2009 after several months of consideration. It was more successful soon afterwards in securing a shareholding of between 10% and 20% in much admired British smoothie marketer Innocent for £30m. In 2010, that shareholding was increased to 58%, and the group announced plans to acquire all the remaining equity during 2013. In 2012, Coca-Cola acquired a majority stake in US coconut water Zico for an undisclosed sum.
Mickey's Adventures (or Mickey Aventuras) is produced under a licensing deal with Disney, a range of fruit-based or milk-based still drinks first introduced in Mexico in 2002, and later rolled out in Europe. In the US, the group produces another juice product, Disney Hundred Acre Wood under license from Disney. There are also numerous carbonated fruit-based drinks in the portfolio. The Fresca name, withdrawn in the US in 1969, was reused in Mexico for an new carbonated grapefruit drink launched in 1994, and since rolled out in several other markets. It relaunched in the US in late 2005 as a diet flavour brand. Fruit-flavoured Aquarius originally launched in Japan, but is now marketed in 15 countries in Asia and Europe. Others include Lift in Europe and Latin America, Lilt in the UK, Manzana in Mexico, Smart in China and many others. In 2005, Coca-Cola together with bottler Coca-Cola HBC acquired a 50% stake in Russian fruit juice business Multon which markets the Dobriy, Rich and Nico brands. It acquired rival juice company Nidan in 2010 to build around 31% local market share in Russia's juice sector.
Iced tea & coffees: Ready-to-drink (RTD) tea Nestea is produced by Beverage Partners Worldwide, a joint venture with Nestle which operates in several countries worldwide (see separate profile). Originally the only market excluded from the deal was Japan, though the business has more recently narrowed its focus further. Japan is probably the world's most competitive soft drink market, with more than 7,000 different soft drinks available for sale, from 500 different manufacturers. Some 1,000 new soft drinks are launched every year. But Coca-Cola Japan is the country's top bottler with 25 widely differing brands and 60 flavours. Georgia is the long-established market leader in canned coffee and coffee-flavoured drinks; Ayataka, Ko Cha Ka Den, Marocha, Sokenbicha Happy and Saryusaisai are all RTD tea brands. In 2004 the group introduced Zu, a canned coffee drink with added ginseng, in several Asian markets. Later it experimented with Coca-Cola Blak, a coffee-flavoured variant of its lead drinks franchise, in several European markets and the US. In 2008, Coca-Cola agreed a new joint venture with Illy Coffee of Italy to develop and market premium RTD coffee products through a new entity, Ilko Coffee International, based in Italy. This unit markets a range of chilled coffees under the Illy Issimo name, now distributed in more than 20 global markets. Cafe Blak is an instore vending system marketed by the group in Mexico and a few other Latin markets.
Other highly localised products in Japan include Ambasa and Lactia (lactic "white water" drinks introduced in 1981 and 1996 respectively), health drink Calo (1997), Perfect Water mineral water (1997), Real Gold herb drink, Shpla citrus drink (1996) and Vegitabeta peach drink (1991). The group also markets tea-based or coffee-based RTDs in other countries, such as Imperial Orchid Tea in Singapore. In 2008, Coke agreed to acquire a 40% stake in US-based Honest Beverages, which makes premium organic bottled teas. However the company's main inhouse alternative to Nestea in the US and other non-BPW markets is Fuze, originally a "new age" fruit beverage brand acquired by Coca-Cola in 2007. In 2012, the group launched an expanded range of tea-based Fuze variants in the US and 24 other non-BPW markets, mainly in Latin America and Asia.
Many of the company's local brands joined the portfolio from acquisition during the 1990s. For example, Coke acquired leading Indian soft drinks Gold Spot, Limca, Maaza and Thums Up in 1993. In Latin America, El Salvador's Tropical was bought in 1994, Ecuador's Fioravanti in 1991, Chinotto and Frescolita in Venezuela in 1991. Other Latin American brands include Quatro (Argentina and Chile), Hit (Venezuela), Inca Kola (Peru and other markets), Guarana flavoured energy drinks Tai and Kuat (Brazil), pear flavoured Tai (Colombia) and Nordic Mist ginger ale and tonic water (Chile). South Africa's Coke business also markets Iron Brew, Sparletta cream soda and Spar-Berry fruit drinks, and Stoney ginger beer; Royal Tru-Orange is one of the Philippines' longest established drinks, launched 1922; Germany has the Mezzo Mix orange-cola drink; Kuli children's drink is available in Scandinavia; Fei Yang teas were launched in Taiwan in 1997.
Coca-Cola is also present in the alcoholic mixers market. Following a deal agreed in 2000 with what was then Cadbury Schweppes the company owns the Schweppes and Canada Dry brands in several non-American markets, as well as Dr Pepper. In the US, it acquired in 2001 a license to market Seagram's Mixers, and also sells a similar range under license as Bacardi Mixers. It also extended its Kinley brand in Germany into this segment.
Mineral water: For several years, the group's fastest-growing market has been mineral water. Coca-Cola has been determined not to allow rivals Nestle, Danone or Pepsi to have leadership of this sector, especially in key markets. BonAqua mineral water was first launched in Austria in 1970, and extended to Germany in 1986. Since then it has been rolled out to 50 other markets around the globe. Its strongest territories are in eastern Europe and Scandinavia. Coca-Cola introduced a sports variant of Bon Aqua in Germany in 2002, with added vitamins and minerals, and tied up a sponsorship to make Bon Aqua Sports the "official water" of the 2004 Olympics. Another fruit-flavoured mineral water, cheekily named Ipsei, was introduced in Germany and the Netherlands in 2004, and was being considered for a UK launch. Pepsi warned it would launch a legal challenge to the name if Coke continued to market the brand, and so it was discontinued.
An even simpler water product was introduced into North America for the first time in 1999 under the the brand name Dasani. The product is essentially local tap water, filtered and remineralised by regional bottling plants. The simplicity of the production process allowed Coke to undercut competitors' prices. An unprecedented push in the US after 2001 saw the brand climb to the #1 spot by 2007, overtaking Nestle's regional giant Poland Spring and PepsiCo's Aquafina. Revenues were estimated at $1.2bn in 2009, equivalent to 11% value share (or around 6% by volume). Nestle remains the overall #1 with a collection of local brands whose total combined share was approximately 35%, and its value-priced Pure Life overtook Dasani and Aquafina to become the top-seller by volumes in 2009. Beverage Digest estimated volumes of 354m 192-oz cases for Dasani in 2012, up 9% on the previous year, but still well below Nestle Pure Life. In 2001 Coca-Cola agreed a joint venture deal with Danone, under which it took control of marketing and distribution of Evian and other bottled waters in the US and Canada. Sales remained small, however, and Danone took back control of Evian in North America in 2009.
One of the biggest challenges Coke has faced in mineral waters came with the launch of Dasani into Europe in early 2004. The debut market was the UK, but the British media roasted the brand when they discovered it was derived from ordinary tap water. Worse was to follow when unhealthy levels of the chemical bromate were discovered in the entire launch supply and it was withdrawn overnight. In the light of this PR disaster, Dasani's launches in France and Germany, were cancelled (even though it was to be made from genuine mineral water in both these markets, rather than remineralised tap water). Instead, in 2006, Coca-Cola acquired leading German bottled water brand Apollinaris, previously owned by Cadbury Schweppes. The group's other water brands include Kinley in several markets around the globe, Soo Soon 100 in Korea, Ciel in Mexico, fitness water Aquana in Belgium, Tian Yu Di in China, Joy in Vietnam, Multivita in Poland, Valser in Switzerland, Neverfail Springwater in Australia, Ades in Indonesia, Chaudfontaine in Belgium and Valpre in South Africa. It agreed to acquire UK mineral water Abbey Well in 2008, as well as Scandinavian brands including Ramlosa and Kurvand. Its most significant mineral water in Japan is I Lohas.
The group has also dabbled in other potentially lucrative areas. Perhaps the most significant of these has been the research and development of new packaging materials. "PlantBottle" is a newly formulated form of recyclable plastic partly derived from natural plant materials, thereby reducing carbon emissions. Coca-Cola spent an estimated $150m on the project, but has begun to license the bottle to other manufacturers, starting with Heinz, which has adopted the technology for its Tomato Ketchup.
Financials: Sales have generally demonstrated steady growth since 2007 after several years of flat performance. That development was enhanced in 2010 and 2011 by the bolt-on of previously separate bottling operations. The first full-year contribution from that business caused revenues to jump by 33% in 2011 to $46.5bn (compared to around $31bn in 2009). However attributable net income slipped 27% to $8.6bn. Comparison with the prior year was distorted by an exceptional $6bn gain in 2010 generated by the acquisition of CCE. For 2012, revenues rose 3% to $48.02bn and net income by 5% to $9.02bn. North America is the biggest market by far, with sales of $21.68bn in 2012, including the contribution from bottling. However, despite a slight decline in volume sales during the year, Europe is still the most profitable region, contributing operating income of $2.96bn on revenues of just $5.12bn.
However 2013 saw the first decline in topline since the late 2000s, partly as a result of the deconsolidation of some bottling operations in Asia as well as currency fluctuation. Net revenues for 2013 slipped 2% to $46.85bn, while net attributable income fell 5% to $8.58bn.
Management: Muhtar Kent is chairman & CEO of The Coca-Cola Company. Other senior officers include Gary Fayard (EVP & CFO), Alex Cummings (EVP & chief administrative officer) and Alexander "Sandy" Douglas (SVP & global chief customer officer). Following a reshuffle of the operating structure at the end of 2013, Coca-Cola comprises three distinct operating divisions of Coca-Cola North America, Coca-Cola International and Bottling Investments Group. Coca-Cola North America is overseen by Sandy Douglas, supported by Katie Bayne (president, North America brands), Brian Smith (president, Latin America) and Glen Walter (president, Coca-Cola Refreshments). Ahmet Bozer is president, Coca-Cola International, which is in turn divided into three regional groups led by James Quincey (president, Europe group), Glenn Jordan (president, Pacific group) and Nathan Kulumbu (president, Eurasia & Africa). Irial Finan is president, Bottling Investment Group & supply chain. Former Latin America head Jose Octavio Reyes is now president, Coca-Cola Export Corp, which serves as an advisory body for local regional businesses. Javier Goizueta is president of a dedicated McDonald's division, which maintains the global strategic alliance with the group's biggest customer.
Joe Tripodi is EVP & global chief marketing & commercial officer. Other senior marketers include Wendy Clark (SVP, integrated marketing communications), Stuart Kronauge (SVP, Coca-Cola trademark brands), Jonathan Mildenhall (SVP, North America marketing communication & creative excellence), Ivan Pollard (VP, global connections), Rebecca Messina (VP, global marketing capability & integration), Mike Dillon (VP, global marketing strategy), David Butler (VP, innovation), Stan Sthanunathan (VP, global marketing strategy & insights), Carol Kruse (VP, global interactive marketing), Stefanie Miller (VP, strategic partnership marketing), Brynn Bardacke ( global group creative director), Guy Duncan (global creative director, Coca-Cola brand), Sarah Madden Armstrong (director of worldwide agency operations) and Emmanuel Seuge (group director, worldwide sports & entertainment marketing).
Deryck Van Rensburg is president & general manager of the Venturing & Emerging Brands unit, supported by Matthew Mitchell (business development director), Matt Hughes (commercial director), Mary-Ann Somers (VP, marketing)
Background: Coca-Cola was invented in 1886, but ownership of the brand passed through several hands over the next few years. [see Coca-Cola brand profile for more]. Former drugstore clerk Asa Candler became owner in 1891. He saw the drink's full potential and secured distribution throughout soda fountains in the United States, Canada and Mexico by the end of the century. Less sure that customers would buy the drink for home consumption, he offloaded the production problem by selling bottling rights to Benjamin Thomas and John Whitehead, also for $1. They promptly established a national chain of franchised plants and made their own fortune. In 1919, Candler's family sold the company (against his wishes) to Atlanta businessman Ernest Woodruff, for $25 million. Woodruff part-financed the deal by selling part of the shareholding to the public. Coca-Cola had gone public.
For the next sixty years, the key figure in the development of Coca-Cola was Woodruff's son, John, who became president of the company in 1923, aged 33. He was then the youngest executive of any major corporation, but he built it into a truly global business through a massive commitment to advertising, and international expansion in the wake of the US Army's involvement in World War II. The company had begun to establish overseas bottling plants in the 1920s, but quality and sales were both disappointing. Aware of the power of Coke as a symbol of home, Woodruff announced in 1941 that every US serviceman overseas would be able to get a bottle of Coke for 5 cents, wherever in the world he was. In 1943, General Eisenhower placed an order for ten bottling plants to be set up in Europe; by the end of the war, a total of 64 plants had been established around the globe to fulfill Woodruff's pledge. When the war ended the plants remained, having developed an infrastructure of their own, and they traded off the new enthusiasm for all things American.
As competition increased, Coca-Cola was forced to rethink its dependence on a single brand, and embarked on a policy of systematic diversification during the 1960s. Fanta, which had been invented in Germany during the war, was introduced into the US in 1960 and the company also spent $72.5m buying up juice manufacturer Minute Maid. This was followed by the launch of Sprite in 1961 (the company's reply to 7-Up), diet drink TAB in 1963, and several other low sugar or high protein brands including Fresca and Saci. But a heath scare over the artificial sweetener used in these and most other low sugar drinks caused an industry-wide panic. TAB and Fresca were both withdrawn in 1969.
For the rest of the 1970s, Coca-Cola was plagued by political problems relating to treatment of workers, difficult negotiations with bottling plants over terms, and the devastating impact of the Pepsi Challenge [see Pepsi profile]. In 1981, the ageing Woodruff handed over the company's reins to protege Roberto Goizueta in the hope that Coke's image could recover from the battering it had received. Overall, Goizueta's reign was enormously successful, marred by just one disastrous marketing error. In 1985, in an attempt to see off the Pepsi Challenge, he "improved" the formula for Coca-Cola, only to find that consumers preferred old Coke to new Coke. But otherwise the company prospered. Coca-Cola acquired film studio Columbia Pictures in 1982 for $750m, only to sell it to Sony seven years later at a profit of almost $1bn. The same year, the company returned to the low-sugar arena with Diet Coke, which quickly came to dominate this new sector. In 1986, the company grouped together the bottling interests it owned, mostly in the US, as Coca-Cola Enterprises and floated the majority shareholding of the business.
During the 1990s Goizueta encouraged a continuing process of rationalisation within the bottling businesses, who were at least part of the secret behind Coke's success. Coke's idea has always been to have supplies of the drink within, as John Woodruff famously put it, "arm's reach of desire". In practice that meant within five minutes traveling time of most consumers. As a result, the group built up an unparalleled international network of largely independent bottling businesses in every local territory, aggressively wading into one country after another. Coke took a minority stake in most and supported increased rationalisation among them to strengthen the local business. With these and other moves, Goizueta transformed the company. Between 1981 and 1997, when Goizueta died, the value of The Coca-Cola Company had risen from $4bn to $145bn.
In 1997, Coca-Cola and its sister brands achieved an average of more than 1 billion servings per day for the first time. As the company proudly announced, it had taken 22 years to sell the first billion servings of Coca-Cola. Now, they were selling a billion drinks a day. That resulted in record sales and profits, not just in core territories but on new frontiers as well. In China, the world's largest market, volume rose by 30% in just one year. But the good news was not to last. The next three years proved difficult for the company. A sudden economic downturn in emerging markets, combined with the massively successful launch of Procter & Gamble's rival drink Sunny Delight in Europe caused sales in all international markets to stall. Coke issued three profit warnings in six months during 1998 and 1999.
The company strengthened its global hand considerably late in 1998 with the acquisition of Cadbury Schweppes' soft drink brands in various non-US territories. Cadbury's original plan had been to sell all its non-US drinks to Coke for $1.85bn, but the deal was hampered by competition authorities in several of the countries affected on grounds that it would further increase Coke's sizeable market share. The EC, where Coke was already the focus of several anti-competitive investigations, proved a major obstacle. There followed months and months of negotiations with regulators in each of the objecting territories. In order not to delay the entire process, the two companies agreed the transfer of the first chunk of the drinks business in July 1999, with Coca-Cola taking control of more than 20 brands in 155 countries. This deal, recast with a price tag of $700m, excluded the United States, Norway, Switzerland and the European Union member nations, with the exception of the United Kingdom, Ireland and Greece. A few months later, South African and New Zealand regulators also approved the purchase. After a year of further wrangling, plans to sell the brands in Canada, Australia and Mexico were abandoned in July 2000.
In addition to the wrangling over the Cadbury Schweppes brands, Coke was plagued by a series of other problems in Europe. In 1998, the company agreed the purchase of Orangina from French group Pernod-Ricard. However the deal was quickly blocked by the French government, supported by some heavy lobbying from Pepsi (bottled in France by Orangina). Coke and Pernod-Ricard spent a year attempting to appease regulators before finally abandoning the deal in late 1999. (Orangina was later bought by Cadbury instead). Worse followed, as the group had to deal with contamination problems and further lawsuits relating to anti-competitive practices. Regulators also held up the merger of Coca-Cola Beverages, the bottler serving several European territories, with its Greek counterpart Hellenic Bottling Company. Reflecting the company's troubled year, CEO Douglas Ivester stepped down in January 2000, to be replaced by Douglas Daft. His first action was to announce a sweeping job-cutting programme, disposing of 6,000 jobs, or around 21% of the workforce.
In 2000, Coke tussled with PepsiCo to acquire Quaker Oats, the food and drink group whose brands included Gatorade, the best-selling US sports drink. PepsiCo's initial offer was turned down, leaving Coke the apparent favourite. But Quaker's shareholders balked at the idea of selling to topdog Coke, despite a higher offer. Pepsi walked off with the prize after all. The group also had to resolve a discrimination lawsuit brought by African-American employees who alleged the company treated black employees unfairly and consistently paid them less than their white counterparts. Coke paid out $192.5m, the largest sum ever paid by a US company in a discrimination case.
The beginning of 2001 was marked by two major announcements. The company established a joint venture with Nestle to market Nestea as an independent business, Beverage Partners Worldwide, with a brief to expand its operations globally. More significant still was a plan to spin off Minute Maid juice into a new $4bn joint venture with Procter & Gamble. Both developments were in no small part designed to head off increased competition from arch-rival PepsiCo. Yet the P&G deal later went flat in face of opposition from investors who felt they were getting poor value. After attempts to recut terms, the partnership was eventually abandoned in 2001.
The company was embarrassed in 2003 after it was revealed that some employees within the group's US fountain sales division had tried to manipulate the results of tests three years earlier to sell a new product, Frozen Coke, through Burger King outlets. This led to a full restructuring of the fountain division and Coke paid a handsome $21m to Burger King in compensation. Overall performance was also disappointing, especially in the US market. After a growth in volume during 2002 as a result of new launches, volumes for Coke slipped again in 2003, as the novelty effect of Vanilla Coke and Diet Coke with Lemon wore off. Early in 2004, chairman & CEO Douglas Daft announced he too would step down. He was replaced by Neville Isdell, a veteran of Coca-Cola's international operations, who came out of retirement to take the job. Steven Heyer, formerly president & COO, had been the sole internal candidate for Daft's job, but was effectively sidelined during the recruitment process. He announced his departure from Coke shortly after Isdell's appointment.
The group's various European antitrust disputes were finally settled in summer 2005 after six years of litigation. No fines were levied provided Coca-Cola execute a number of anti-competitive measures. For example, it was barred from offering volume-linked rebates or agreeing exclusivity deals with retailers, and was forced to allow rival products to take up to 20% of space in its coolers and vending machines. The company is also prohibited from offering discounts on top-selling brands such as Coca-Cola or Fanta in order to encourage retailers to sell its less popular products. If Coke breaks any of these conditions it will face steep penalties of up to 10% of worldwide annual revenues. However the group's problems spread to India and Latin America, otherwise regarded as a key potential growth markets. For many years, Coca-Cola and Pepsi had both faced criticism from consumer groups over their over-use of precious local water resources in developing countries, and Coke in particular is the subject of a boycott by many student associations in First World countries for its alleged abuse of human rights, especially in Latin America. In 2006, sales of both brands were temporarily suspended in India after an independent research company claimed to have found high levels of pesticides in 11 different soft drinks brands made by the two groups.
There was a further shake-up in the senior management team in early 2007 when Muhtar Kent, previously head of the international division, was named as group president, and likely successor to Neville Isdell. Shortly afterwards, Mary Minnick, president of global marketing, innovation and strategy, and widely tipped until then as a future CEO of the company, announced her resignation. Isdell handed over the role of CEO to Kent in July 2008, and stepped down as chairman in April 2009.
Last full revision 18th March 2013; updated 18th February 2014
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