Coca Cola’s (NYSE: KO) Survival Kit
As consumer awareness is on the rise, carbonated drinks seem to have taken a fall. The consumers of the 21st century not only demand to have full knowledge of what they are consuming but because they are paying more attention to their health now. This is one of the major reasons why Coca Cola (NYSE: KO) has faced a difficult year. In the past few health advocates have come out to expose the harms of drinking carbonated soft drinks to the public.
The company is also trying to find a way around this dilemma through which it could curb the sugar content in the drinks. Up till now nothing seems to have been fruitful as a great number of consumers keeps lowering consumption. Evaluation of the stock shows a 4% decrease in the stock as compared to last year.
At this stage the company is planning to spend $2.5 billion in order to maintain and enhance further business opportunities. But even with such a large sum, success isn’t guaranteed until the company doesn’t plan well and has a recovery plan. Let’s briefly look into what the company plans to do with the $2.5 billion.
- Coca Cola (NYSE: KO) needs to find a way around the advocates who are trying to put them out of business. The company needs to work on changing its brand image from being unhealthy to healthy. The product should cater to changing consumer needs. A quick analysis of the past few years reveals that Coca Cola (NYSE: KO) till this year had no problem gaining per capita consumption till 2013. Which further lingered on into 2014.
- As the company only witnessed a 1% increase in its carbonated soft drink consumption for the year, they know they are standing in hot water. So the company is coming up with new and innovative strategies to tackle the problem. For example the introduction of Coke Life. It’s a drink containing less calorie count, low sugar with the help of stevia and cane instead of fructose corn syrup.
At this stage, the drink is only available in limited stock in the US. Even though this is more of a rebranding effort instead of a reinvention of the product, Coke Life still contains a high concentration of sugar. But with these slight changes and an effective market Coca Cola (NYSE: KO) might be able to lure consumers back.
- Another approach that Coca Cola (NYSE: KO) is working on is establishing new channels for its distribution. The aim behind this is to partner up with other soft drink companies, Keurig Green Mountain for example, to reignite the desire for soft drinks, despite the health concerns.
- Lastly Coca Cola (NYSE: KO) is working towards diversifying its product. For this purpose, the company purchased a 16.7% stake in Monster Energy earlier this year. A deal among two companies was reached, in it Coca Cola (NYSE: KO) transfered its energy drinks like Burn, Power Play, Relentless and a few others to Monster.
This was in return for its non-energy labels like Peace Tea, Hansen’s Juice Products and natural Sodas. Furthermore, it’s also working on acquiring healthier drinks like Zico coconut water to its portfolio of non-carbonated drinks.
At this stage, Coca Cola (NYSE: KO) is thoroughly investigating its options and planning step by step how to overcome these hard times.