Cola Wars

Executive Summary: Coca-Cola and Pepsi are two leading competitors in the soft drinks industry. Both the concentrate producers and the bottlers are profitable. These two move of the business are extremely interdependent, sharing cost in procurement, marketing and distribution. They deal with quasi(prenominal) suppliers and buyers. Yet, concentrate producers are very some(prenominal) more profitable than the bottlers (refer Exhibit 3a, 3b and 4). This was mainly due to the added respect and brand equity developed by the CPs over the past several years. Bottlers do not have much added value. They do not have unique formula or branded products. Their added value stems from their relationship with the CPs in producing and distributing their products.
wherefore did Coke and Pepsi buy their bottlers?
except, CPs successful business was firmly dependent on the bottlers performance. Unlike CPs business, bottling surgery was capital-intensive and involved high-speed production lines that were inter turnable only for products of similar type and size. Between 1970 and 2005, there was major shift in the contract agreements, and the added value of the CPs and the bottlers modificationd (refer Exhibit 5 for change in concentrate prices over time).



Due to declining profits, smaller bottlers were not able to cope up with the changing demands of the CPs (for instance, change in bottle design, new expensive marketing strategies etc). So the CPs had to acquire such bottling networks and infuse them with capital and refranchise them into the CCE prop company, which would only produce Coke products. This is also strategically in favor of CPs, by having monopoly over the bottling networks. Bottlers should upgrade their technology to brood expanded product lines (including non-CSD brands) to stay profitable in future. However CPs helped bottlers by negotiating costs with their suppliers, marketing and advertising costs etc.If you want to get a full essay, order it on our website: Orderessay



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