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The Coca-Cola Company

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The Coca-Cola Company
Company typePublic (NYSE: KO)
IndustryBeverage
Founded1892 (1892) by Asa Griggs Candler
HeadquartersUnited States Atlanta, Georgia, USA
Area served
Worldwide
ProductsCoca-Cola
Carbonated soft drinks
Water
Other Non-alcoholic beverages [1]
RevenueIncrease USD 28.857 Billion (2007) [1]
Increase USD 7.252 Billion (2007) [2]
Increase USD 5.981 Billion (2007) [3]
Total assetsIncrease USD 43.269 Billion (2007)
Total equityIncrease USD 21.744 Billion (2007)
Number of employees
90,500 (2008)
Websitewww.TheCoca-ColaCompany.com
One of the Coca-Cola Company's headquarters buildings in Atlanta

The Coca-Cola Company (NYSE: KO) is the world's largest beverage company, largest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups in the world, and one of the largest corporations in the United States. The company is best known for its flagship product Coca-Cola, invented by pharmacist John Stith Pemberton in 1886. The Coca-Cola formula and brand was bought in 1889 by Asa Candler who incorporated The Coca-Cola Company in 1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers nearly 400 brands in over 200 countries or territories and serves 1.5 billion servings each day.[2]

The company operates a franchised distribution system dating back to 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory.

The Coca-Cola Company is headquartered in Atlanta, Georgia. Its stock is listed on the NYSE and is part of DJIA and S&P 500. Its current president and CEO is Muhtar Kent.

History

The Coca-Cola Company was originally established as the J. S. Pemberton Medicine Company, a co-partnership between Dr. John Stith Pemberton and Ed Holland.[3] The company was formed to sell three main products: Pemberton's French Wine of Cola (later known as Coca-Cola), Pemberton's Indian Queen Hair Dye, and Pemberton's Globe Flower Cough Syrup.[3]

In 1884, the company became a stock company and the name was changed to Pemberton Chemical Company.[3] The new president was D. D. Doe while Ed Holland became the new Vice-President.[3] Pemberton stayed on as the superintendent.[3] The company's factory was located at No. 107, Marietta St.[3] Three years later, the company was again changed to Pemberton Medicine Company, another co-partnership, this time between Pemberton, A. O. Murphy, E. H. Bloodworth, and J. C. Mayfield.[3]

Finally in October 1888, the company received a charter with an authorized capital of $50,000.[3] The charter became official on January 15, 1889. By this time, the company had expanded their offerings to include Pemberton's Orange and Lemon Elixir.[3]

Revenue

According to the 2005 Annual Report,[4] the company sells beverage products in more than 312 countries or territories. The report further states that of the more than 50 billion beverage servings of all types consumed worldwide every day, beverages bearing the trademarks owned by or licensed to Coca-Cola account for approximately 1.5 billion. Of these, beverages bearing the trademark "Coca-Cola" or "Coke" accounted for approximately 78% of the Company's total gallon sales.

Also according to the 2007 Annual Report, Coca-Cola had gallon sales distributed as follows:

  • 37% in the United States
  • 43% in Mexico, Brazil, Japan and China
  • 20% spread throughout the world

Bottlers

Main article: list of assets owned by The Coca-Cola Company

In general, The Coca-Cola Company (TCCC) and/or subsidiaries only produces (or produce) syrup concentrate which is then sold to various bottlers throughout the world who hold a Coca-Cola franchise. Coca-Cola bottlers, who hold territorially exclusive contracts with the company, produce finished product in cans and bottles from the concentrate in combination with filtered water and sweeteners. The bottlers then sell, distribute and merchandise the resulting Coca-Cola product to retail stores, vending machines, restaurants and food service distributors.

One notable exception to this general relationship between TCCC and bottlers is fountain syrups in the United States, where TCCC bypasses bottlers and is responsible for the manufacture and sale of fountain syrups directly to authorized fountain wholesalers and some fountain retailers.

In 2005, The Coca-Cola Company had equity positions in 51 unconsolidated bottling, canning and distribution operations which produced approximately 58% of volume. Significant investees include:

  • 36% of Coca-Cola Enterprises which produces (by population) for 78% of USA, 98% of Canada and 100% of Great Britain (but not Northern Ireland), continental France and the Netherlands, Luxembourg, Belgium and Monaco.
  • 40% of Coca-Cola FEMSA, S.A. de C.V. which produces (by population) for 48% of Mexico, 16% of Brazil, 98% of Colombia, 47% of Guatemala, 100% of Costa Rica, Ecuador, Nicaragua, Panama, Peru and Venezuela, and 30% of Argentina.
  • 24% of Coca-Cola Hellenic Bottling Company, S.A. which produces (by population) for 67% of Italy and 100% of Armenia, Austria, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Macedonia, Moldova, Montenegro, Nigeria, Northern Ireland, Poland, Rep. of Ireland, Romania, Russia, Serbia, Slovakia, Slovenia, Switzerland and Ukraine.
  • 34% of Coca-Cola Amatil Limited which produces (by population) for 98% of Indonesia and 100% of Australia, Indonesia, New Zealand, South Korea, Fiji and Papua New Guinea.
  • 20% of Coca-Cola Içecek AŞ. which produces (by population) for 100% of Turkey, Kazakhstan, Azerbaijan, Kyrgyzstan, Jordan, Syria, Iraq & Turkmenistan.
  • 27% of Coca-Cola Bottling Co. which is the second largest Coca-Cola bottler in the United States. The company was incorporated in 1980, and "its predecessors have been in the soft drink manufacturing and distribution business since 1902." [4]

Products and brands

Main article: Coca-Cola brands

The Coca-Cola Company offers nearly 400 brands in over 200 countries, besides its namesake Coca-Cola beverage. This includes other varieties of Coca-Cola such as:

Tab was Coca-Cola's first attempt to develop a diet soft drink, using saccharin as a sugar substitute. Introduced in 1963, the product is still sold today, however its sales have dwindled since the introduction of Diet Coke.

The Coca-Cola Company also produces a number of other soft drinks including Fanta (introduced circa 1942 or 1943) and Sprite. Fanta's origins date back to World War II when Max Keith, who managed Coca-Cola's operations in Germany during the war, ran out of the ingredients for Coke, which could be supplied only from the United States. Keith resorted to producing a different soft drink, Fanta, which proved to be a hit, and when Coke took over again after the war, it adopted the Fanta brand as well. The German Fanta Klare Zitrone ("Clear Lemon Fanta") variety became Sprite, another of the company's bestsellers and its response to 7 Up.

During the 1990s, the company responded to the growing consumer interest in healthy beverages by introducing several new non-carbonated beverage brands. These included Minute Maid Juices to Go, Powerade sports beverage, flavored tea Nestea (in a joint venture with Nestle), Fruitopia fruit drink and Dasani water, among others. In 2001, Minute Maid division launched the Simply Orange brand of juices including orange juice.

In 2004, perhaps in response to the burgeoning popularity of low-carbohydrate diets such as the Atkins Diet, Coca-Cola announced its intention to develop and sell a low-carbohydrate alternative to Coke Classic, dubbed C2 Cola. C2 contains a mix of high fructose corn syrup, aspartame, sucralose, and Acesulfame potassium. C2 is designed to more closely emulate the taste of Coca-Cola Classic. Even with less than half of the food energy and carbohydrates of standard soft drinks, C2 is not a replacement for zero-calorie soft drinks such as Diet Coke. C2 went on sale in the U.S. on June 11, 2004, and in Canada in August 2004. C2's future is uncertain due to disappointing sales.

Coca-Cola is the best-selling soft drink in most countries. While the Middle East is one of the only regions in the world where Coca-Cola is not the number one soda drink, Coca-Cola nonetheless holds almost 25% marketshare (to Pepsi's 75%) and had double-digit growth in 2003.[5] Similarly, in Scotland, where the locally produced Irn-Bru was once more popular, 2005 figures show that both Coca-Cola and Diet Coke now outsell Irn-Bru.[6] In Peru, the native Inca Kola has been more popular than Coca-Cola, which prompted Coca-Cola to enter in negotiations with the soft drink's company and buy 50% of its stakes. In Japan, the best selling soft drink is not cola, as (canned) tea and coffee are more popular.[7] As such, the Coca-Cola Company's best selling brand there is not Coca-Cola, but Georgia.[8]

Some claim Coke is less popular in India due to suspicions regarding the health standards of the drink. However, marketshare data does not back this view. Specifically, in 2005, Coca-Cola India's market share was 60.9%.[9] However, Thumbs Up, a brand acquired by The Coca-Cola Company, contributes a major part of this market share rather than Coke per se, which lags both Thumbs Up and Pepsi.

On July 6, 2006, a Coca-Cola employee and two other people were arrested and charged with trying to sell "highly classified" information to the soft drink maker's competitor, PepsiCo for $1.5 million. The recipe for Coca-Cola, perhaps the company's most closely guarded secret, was never in jeopardy. Instead, the information was related to a new beverage in development. Coca-Cola executives verified that the documents were valid and proprietary. At least one glass vial containing a sample of a new drink was offered for sale, court documents said. The conspiracy was revealed by PepsiCo, which notified the authorities when they were approached by the conspirators.[10]

The company announced a new "negative calorie" green tea drink, Enviga, in 2006, along with trying coffee retail concepts Far Coast and Chaqwa.

On May 25, 2007, Coca-Cola announced it would purchase Glaceau, a maker of flavored vitamin-enhanced drinks, flavored waters, and energy drinks, for $4.1 billion in cash.[11]

On September 3, 2008, Coca-Cola announced its intention to make cash offers to purchase China Huiyuan Juice Group Limited with an offering of HK$12.20 per share. [12]

Criticism

Main article: Criticism of Coca-Cola

The Coca-Cola Company has been involved in a number of controversies and law suits related to its perceived relationship with human rights violations and other perceived unethical practices.

A number of law suits have been issued in relation to its allegedly monopolistic and discriminatory practices, some of which have been dismissed, some of which have caused The Coca-Cola Company to change its business practices, and some of which have been settled out of court.[13] It has also been involved in a discrimination case. There have been continuing criticisms regarding the Coca-Cola Company's relation to the Middle East and U.S. foreign policy.

In regards to environmental issues in India, there has been a controversy over pesticides possibly showing up in the product, as well as the company's overuse of local water supplies in some locations, that have sometimes led to severe shortages for regional farmers. Packaging used in Coca-Cola's products have a significant environmental impact but the company strongly opposes attempts to introduce mechanisms such as container deposit legislation.[14]

There are charges that the Coca-Cola Company was involved in the violent repression of a union at several of its bottling plants in Colombia, South America. As of August 2005 when PBS's Frontline ran a story on the controversy, Coca-Cola was strenuously denying all allegations of union-busting and murder of union leaders. Shareholders and U.S. colleges[15][16] have boycotted Coca-Cola to try to put pressure on the company to approve a full-scale, independent investigation of the charges.[17]

In January of 2009, a U.S. consumer group filed a class action lawsuit against the Coca-Cola company. The lawsuit was in regards to claims made along with the company's flavors of Vitamin Water. Claims say that the 33 grams of sugar are more harmful than the vitamins and other additives are helpful. the Coca-Cola company calls the ongoing dispute "ridiculous". [18]

Sponsorship

Coca-Cola has sponsored the English Football League since the beginning of the 2004-05 season (beginning August 2004). Other major sponsorships include NASCAR, the NBA, the PGA Tour, NCAA Championships, the 2008 Beijing Olympics, the NRL and the UEFA European Football Championship.

References

  1. ^ Coca-Cola Products: New Coca-Cola Products, Brands of Beverages & More
  2. ^ Coca-Cola - Press Center - Press Release
  3. ^ a b c d e f g h i Reed, Wallace Putnam. "History of Atlanta, Georgia, with Illustrations and Biographical Sketches of Some of Its Prominent Men and Pioneers." Syracuse, NY: D. Mason & Co., 1889. p. 465-466
  4. ^ "Coca Cola Company Form 10-K 2005". SEC. Retrieved 2006-05-11.
  5. ^ "Coke and Pepsi battle it out". AME Info. April 8, 2004. Retrieved 2006-05-11.
  6. ^ Terry Murden (January 30, 2005). "Coke adds life to health drinks sector". Scotland On Sunday. Scotsman. Retrieved 2006-05-11.
  7. ^ Japan Soft Drink Association
  8. ^ Coca-Cola West Japan IR report (in Japanese), 2008.
  9. ^ "Fizzical Facts: Coke claims 60% mkt share in India". The Economic Times. Retrieved 2006-05-11.
  10. ^ "3 Accused In Theft Of Coke Secrets". The Washington Post. Retrieved 2006-07-15.
  11. ^ Stanford, Duane (2007-05-25). "Coke to buy Glaceau in $4 billion deal". Atlanta Journal-Constitution. Retrieved 2007-05-25.
  12. ^ "THE COCA-COLA COMPANY OFFERS TO BUY HUIYUAN JUICE GROUP".
  13. ^ "Daily Briefing". Atlanta Journal-Constitution. 2001-05-11. p. C2. WKMX Inc., an FM radio station, filed a lawsuit, alleging that Atlanta-based Coca-Cola Co. and its biggest bottler stole the station's name and colors for its KMX energy drink. In a federal suit filed in Dothan, WKMX said it's the top station for young adult listeners in its market and has used those call letters since 1974.
  14. ^ Coca-Cola: Shareholder Resolution
  15. ^ "Coca-Cola Ban Goes Into Effect at New York University". New York University - Office of Public Affairs. 2005-12-08.
  16. ^ Warner, Melanie (2005-12-31). "U. of Michigan Becomes 10th College to Join Boycott of Cokepublicers". The New York Times.
  17. ^ "Background on Violence Against Union Members in Colombia". USLEAP.
  18. ^ "U.S. group sues Coke over VitaminWater health claims". YAHOO!.
  • Zyman, Sergio: The End of Marketing as We Know It. New York: HarperBusiness (1st edition (June 1, 1999) ISBN 0-88730-986-0).

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