Coca-Cola (KO) Analysis

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Coca-Cola Corporation and its Competitors

Coca-Cola was discovered as a result of an accident. In 1886 a pharmacist named John Pemberton cooked up medicinal syrup. When he was done, he figured he had created a fine tonic for people who were tired, nervous, or plagued with sore teeth. He and his assistant mixed it with ice water, sipped it, and proclaimed it tasty. They wanted some more, and the assistant accidentally used carbonated water to mix the second batch. Instead of medicine, these men had created a fizzy beverage - one that is now consumed around the world. Today people guzzle 1 billion drinks a day from the Coca-Cola Company. But this new beverage was not an instant success. In the first year, Pemberton spent $73.96 promoting his new product but managed to sell only $50 worth.

"The Coca-Cola Company" is now the largest soft drink company in the world. Every year 800,000,000 servings of just "Coca-Cola" are sold in the United States alone. The company takes pride in being a worldwide business that is always local. Bottling plants with some exceptions are locally owned and operated by independent business people who are native to the nations in which they are located. The company manufactures, distributes and markets non-alcoholic beverage concentrates and syrups, including fountain syrups. The product includes primarily carbonated soft drinks, a variety of non-carbonated beverages, juices and juice drinks, and certain water products, such as Dasani. The company supplies the concentrates and beverage bases used to make the products and it provides management assistance to help it's bottler's ensure the profitable growth of their business.

Coca-Cola competes in the nonalcoholic beverages segment of the commercial beverages industry. Based on available data and a variety of industry sources, the estimate is that in 2004, worldwide sales of Company products comprised approximately 10 percent of total worldwide sales of nonalcoholic beverage products. The nonalcoholic beverages segment of the commercial beverages industry is highly competitive, consisting of numerous firms. These include firms that, like Coca-Cola, compete in multiple geographical areas as well as firms that are primarily local in operation. Competitive products include carbonated soft drinks, packaged water, juices and nectars, fruit drinks and dilutables (including syrups and powdered drinks), sports and energy drinks, coffee and tea, still drinks and other beverages. Nonalcoholic beverages are sold to consumers in both ready-to-drink and not-ready-to-drink form. In many of the countries in which Coca-Cola does business, including the United States, the primary competitor is PepsiCo, Inc.

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