Describe in detail the value chain of the soft drink industry. Critically evaluate the decision to buy

Fantastic news! We've Found the answer you've been seeking!

Question:

Describe in detail the value chain of the soft drink industry.

Critically evaluate the decision to buy coca-cola enterprises (CCE). Specifically mention the pros and cons of the decision.

How is the ‘still beverages’ market different from the ‘sparking beverages’ market? how would these differences influence the soft drink industry?

What should the CEO do going forward? Specifically describe all options and choose the best option.

How is this case related to the concepts/tools discussed in class?

Muhtar Kent, CEO of The Coca-Cola Company (Coke), breathed a sigh of relief. On October 3, 2010, he had finally closed the largest acquisition in the company's history: the $12 billion purchase of the North American operations of Coca-Cola Enterprises (CCE), Coke's largest franchised bottler. With the acquisition, Coke now controlled approximately 90% of its total North American volume, reversing its 1986 decision to separate itself from the bottling business.

For most of the last 125 years, Coke had manufactured concentrate and focused on driving demand and customer loyalty through heavy investments in brand marketing. The capital-intensive job of producing drinks, running trucks, and supervising distributors mainly resided with Coke's franchise bottlers. This business model had served the company well. Coke had become the world's largest soft-drink company, selling 1.7 billion servings of beverages every day to consumers in over 200 countries through more than 300 bottling partners. Coke was considered the most recognized, powerful brand in the world, valued at 570 billion in 2010?

At the same time, Coke faced several challenges in the US. market, which prompted Kent to re-think the strategy. Selling sodas was no longer enough to quench American consumers thirst and taste preferences. Carbonated soft drinks, which represented 76% of Coke's global volume, had lost some of their fizz amid anti-obesity campaigns and active lifestyle movements. Consumers sought alternative non-carbonated beverages, ranging from teas to coconut water, which involved different production and distribution methods from Coke's traditional system. Broader issues surfaced as well, including environmental concerns about packaging and rising commodity costs (see Exhibit 1 for the challenges facing Coca-Cola). Digital media and social networks were also changing the marketing landscape: Coke could no longer rely on traditional media alone to drive brand preference.