Marketing Assignment Coca-Cola Great Britain Repaired)

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Management Consultancy

Coca-Cola in Great Britain Live On The Coke Side of Life

Table of Contents

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Introduction..............................................................................................................3 PESTLE Analysis of the macro-environment..............................................................4 SWOT Analysis.....................................................................................................5 BCG Matrix...........................................................................................................6 SPICC..................................................................................................................7 Suppliers...........................................................................................................7 Publics..............................................................................................................7 Intermediaries....................................................................................................7 Competition.......................................................................................................8 Customers, consumers and markets....................................................................10 Soft Drinks Market............................................................................................10 Table 1: Soft Drinks UK Market Segmentation......................................................11 Market for smoothies.........................................................................................12 Table 2 : Forecast of UK retail sales of smoothies, 2001-11....................................13 Table 3 :Brand manufacturers sales of the smoothies market, 2001-06.....................14 Table 4 : UK value sales of smoothies by type, 2001-06.........................................15 Table 5: Consumption of fruit and vegetable juice 2002-2006..................................17 Table 6: Consumption of drinks – 7-14-year-olds, 2001-05.....................................17 Marketing Mix (4Ps)................................................................................................19 Product..............................................................................................................19 Price..................................................................................................................21 Table 7 :Average prices of soft drinks in the UK in £ per litre, 2001-06......................22 Place.................................................................................................................22 Table 8: UK retail sales of smoothies, by type of outlet, 2001-06..............................23 Promotion...........................................................................................................23 Action Plan............................................................................................................26 Appendix 1.............................................................................................................27 Appendix 2.............................................................................................................27 Appendix 3.............................................................................................................29 References............................................................................................................30 Bibliography...........................................................................................................35 Bibliography

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Introduction

The Coca-Cola Company was established in 1886. It owns four of the world’s top 5 nonalcoholic sparkling beverages brands. The Coca-Cola Company operates with more than 2,800 products in more than 200 countries. One of those countries is Great Britain. (The Coca-Cola Company Website) Coca-Cola Great Britain (CCGB) is responsible for marketing 21 brands which contain over 100 products to consumers in Great Britain. CCGB is also responsible for developing new brands, extending existing brands and protecting Coca-Cola trade marks in GB. Furthermore, there is also the Coca-Cola Enterprise Ltd. (CCE) which is the local bottler. CCE is responsible for the manufacturing, distributing, sales and trade marketing of the brands of CCGB throughout Great Britain. Together, CCGB and CCE form the so-called “The Coca-Cola System”. (CCBC Website) This report provides a marketing audit on which a marketing objective is based. Finally an action plan for 14 months is provided.

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PESTLE Analysis of the macro-environment1 SWOT Analysis2 Political Strengths • One of the EU founder states No tariffs on brands, drinks and (Free ➢ •World’s leading suchfood as CocaTrade Zone) Cola, Fanta and Diet Coke • UK has not introduced the Euro. Stillrecognition has its Pound Sterling ➢ Brand • VAT on food is 0%, otherwise 17,5% to Interbrand, highest brand ➢ According •value Due increasing obesity among in to 2007 (65,324$m) children, the UK government banned fizzy drinks from primary ➢ Availability schools Ofcom introduced new regulations ➢ •Relationship with the Coca-Cola on TV advertisement on food and Company

Economic

Environment

• Weakness •

➢

Growing recycling awareness Green consumerism trend • Use less water and energy for Unbalanced portfolio (In 2006, Coca-Cola production Company used 290 billion liters of Lack of product diversity water for their beverage production) Lack of bottled water  3 litres of water necessary to make 1 litre coke • reliant Reduce Heavily on waste carbonated drinks • Environmentally friendly Disasters like Dasani water packaging

➢

Market failures Sprite 3G

➢

Consumers perceive Coca-Cola as an unethical company

➢ ➢ ➢ ➢

Operation focused on the developed •markets Economy rose by 0.6% in Q4 2007 ➢ Lack of innovation, mainly variants • Employment rate increased to ➢ Advertising 74.8% ➢ Highly focused on The Coca-Cola • Average earnings including Company ➢ Extensive distribution capacity and bonuses rose by 3.7% in the year strong production network ➢ Shift in consumption to January 2008 Consumer Price Index annual the ➢ •Launch of Coke Zero, respectively ➢ Mature market inflation was 2.5% in February whole Zero range 2008 (2.2% in January 2008) Technology ➢ •Recycling (Pilot programme) On 7th Zone of January Bank of England reduced its official Bank Rate to • Introduction of lighter-weight 5.25% bottles • Innocent is lobbying the 1 For more information on VAT and EC legislation • More efficient production machines see Appendix 1 • New vending machines 2 See Appendix 2 for more detailed information ➢

Legislation •

• •

•

Smoking ban creates new on-trade opportunities for soft drink companies UK Soft Drink Regulations Food Standard Agency (labeling, hygiene, packaging etc.) EC legislation on food and drink labeling2

Social • •

• •

•

Growing and aging population Consumer show a preference for healthier soft drinks UK consumers take a compensatory attitude towards dietary habits

Obesity, especially among children Strong economy boosts discretionary spending among UK consumer

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Sponsoring of sport events

Opportunity

Threats

➢

Growing bottled water market

➢

➢

Fast growing markets for pure juices/fruit juices, and especially for smoothies

Mature market - Decline in carbonated drinks

➢

Intense competition

➢

Growing market for healthier drinks

➢

Own labels

➢

Recycling initiatives

➢

Consumers are increasingly concerned about health and obesity

and other possible acquisitions

➢

School ban on carbonates

➢

Smoking ban

➢

Fear of benzene in diet drinks

➢

Aging population

➢

Consolidation of retail

➢

Healthy drinks in schools

➢

Acquisition activities of rival companies

➢

Challenging cost environment

➢ Possible acquisition of Highland Spring

BCG Matrix3

3Based on information from Global Market Information Database

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Powerade Functional Drink Minute Maid Fruit/Vegetable Drinks Malvern Bottled Water Kia-Ora Fruit/Vegetable Drinks Sprite Carbonates Dr Pepper Carbonates Schweppes Carbonates Diet Coke Carbonates

Five Alive Fruit/Vegetable Drinks Oasis Fruit/Vegetable Drinks Capri Sun Fruit/Vegetable Drinks (CCE) Appletizer Carbonates(CCE) Coke Zero Carbonates Lilt Carbonates Fanta Carbonates Coca-Cola Carbonates

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SPICC

Suppliers Coca-Cola tries to strengthen and develop the relationship between the company and its suppliers; thus Coca-Cola has developed the Supplier Guide Principle Program for their direct suppliers. Additionally, Coca-Cola expects their suppliers to fulfil the Code of Business Conduct for Suppliers, Workplace Right Policy and Human Rights Statement. Furthermore, Coca-Cola tries to operate locally where possible. (CCE Website & The Coca-Cola Company Website) Publics Coca-Cola attaches great important on promoting a positive image of its products and activities, spending a huge amount on advertising. However, Coca-Cola is still perceived as an unethical company by many activist groups e.g. Killer Coke and Coke Watch. (Waronwant Website)

Intermediaries In order to distribute all products CCE works with a variety of customers, namely: •

Retailers – ranging from large supermarkets to corner shops, etc.

•

Organisations – schools, universities, pubs, clubs, cinemas, cafes, restaurants and workplaces

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•


Wholesalers

The relationship with these companies has always been mutually beneficial. All those businesses are valued highly by CCE. (CCE Website)

Competition4 Coca-Colas largest competitor in Great Britain is Britvic Plc. Britvic is the franchise of PepsiCo in the UK. Britvic Brand

Market

Market share in respective market for 2006

Pepsi

Carbonates

10.8%

Tango

Carbonates

2.1%

J2O

Juice Drinks

6.7%

Fruit Shoot

Juice Drinks

12.3%

Tropicana

Fruit Juice

21.5%

•

Britvic has a strong and diverse portfolio, especially in fruit juices/juice drinks and carbonates.

•

Britvic has important distribution deal with PepsiCo, which ensures high share in carbonates sector

GlaxoSmithKline Brand

Market

Market share in respective market for 2006 (for

4All information is retrieved either form Mintel Intelligence Report or Global Market Information Database. Detailed list can be found in the reference list

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Management Consultancy Ribena) and for 2007 (for Lucozade)

Lucozade

Sports Drinks

59.5%

Ribena

Juice Drinks

13.8%

•

Company owns two of the most well-known drinks brand in the UK

•

Both brands hold strong share in the respective market

PJ Smoothies Brand

Market


PJ Smoothies

Smoothies

18.7%

Brand

Market


Volvic

Bottled water

15.7%

Evian

Bottled water

13.7%

•

Cut prices in 2008

Danone Waters

•

Is in a good position due to the two top-selling brands

•

Tap water is very popular among those people after the age of 55 years

The Red Bull Company Brand

Market

Market share in 2007(estimated)

Red Bull

Energy and Stimulant Drink

42.5%

respective

market

for

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•

Flagship global brand with one single core brand

•

Lack of variety and single sector focus

AG Bar Brand

Market


Irn-Bru

Carbonates

4.1%

•

High brand loyalty for carbonates brand Irn-Bru

•

Extended portfolio (bottled water)

•

Irn-Bru’s main strength is through impulse channels

•

Irn-Bru performed less well in supermarkets

Innocent Brand

Market


Innocent

Smoothies

61.9%

•

Dominates the UK smoothies market

•

Beat first mover PJ Smoothies

•

Known for having a strong ethical and sustainable business stance

•

Donates 10% of its profits to charities in countries where it sources fruit.

Customers, consumers and markets

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Soft Drinks Market

Coca-Cola changed its strategic direction, by presenting itself as a “total beverage” company, in an attempt to distance itself from a reliance on carbonates. In 2006, the company continued its above-the-line campaign promoting all its brands together, with the purpose of communicating to the consumer that it is more than just a carbonates manufacturer. (Global Market Information Database)

According to Mintel Market Intelligence Reports, the soft drink market can be divided into:

•

Carbonates

•

Fruit Juices

•

Juice Drinks

•

Sports Drinks

•

Energy and Stimulant Drinks

•

Smoothies

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Table 1: Soft Drinks UK Market Segmentation

200 0

2003

2005

2006 (est)

% chang e

£m

%

£m

%

£m

%

£m

%

200006

Juice & juice drinks

2,09 1

24. 7

2,47 3

21. 9

2,84 6

24. 4

3,095

25. 9

+48.0

Bottled water

1,14 8

13. 6

1,58 2

14

1,70 0

14. 5

1,733

14. 5

+51.0

Energy & stimulant drinks

615

7.3

940

8.3

1,04 9

9

1,125

9.4

+82.9

39

0.5

98

0.9

137

1.2

150

1.3

+284.6

Smoothies

8

0.1

43

0.4

79

0.7

134

1.1

+1,575 .0

Carbonates

4,57 0

53. 9

5,39 3

54. 6

5,72 7

50. 3

5,856

47. 9

+28.1

Total

8,4 71

10 0

10,5 29

10 0

11,5 38

10 0

12,093

10 0

+42.8

Sports drinks

(Mintel Reports)

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Market for smoothies

As consumer turn more and more to healthy eating and especially the pursuit of 5-A-day fruit and vegetable consumption, the market for smoothies is experiencing continuing rates of exceptional growth. (Mintel) As Coca-Cola has no smoothies in its product rage, this would be a great opportunity to follow the trend.

Facts about the market for smoothies: •

Between 2001 and 2005 retail sales of smoothies increased by 267%

•

Untapped market, 31% of the adult population buy smoothies

•

The young 15-19 and 25-34 age groups are the main consumers 5 of smoothies. Those groups should be considered as the target group.

•

Smoothies are most popular in London and the South

•

Introduction of one-litre pack boosted sales, and in-home consumption

•

Market is segmented into fruit, dairy and functional smoothies

5 For more information on buyers and non-buyers of smoothies see Appendix 3

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•

Market penetration is rising

•

Market is led by Innocent and PJ Smoothies

•

Expenditure on fresh fruit and vegetables has increased (Mintel)

Table 2 : Forecast of UK retail sales of smoothies, 2001-11

Volume

At Current Prices

At 2006 prices

m litres

Index

£m

Index

£m

Index

2001

6.3

19

21.5

16

22.6

17

2002

9.4

28

31.8

24

33.1

25

2003

11.4

34

41.4

31

42.6

32

2004

12.4

36

46.0

34

47.0

35

2005

24.0

71

79.0

59

79.8

60

2006 (est)

34.0

100

134.0

100

134.0

100

2007 (fore)

48.9

144

151.8

113

149.5

112

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2008 (proj)

58.7

173

175.3

131

169.8

127

2009 (proj)

71.0

209

204.9

153

195.0

145

2010 (proj)

85.0

250

218.3

163

203.9

152

2011 (proj)

97.3

286

235.28

176

215.5

161 (Mintel)

Table 3 :Brand manufacturers sales of the smoothies market, 2001-06

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Management Consultancy 2001

2003

2005

2006

% change

% change

£m

%

£m

%

£m

%

£m

%

2001-03

2003-06

Innocent

3.5

16

11.2

27

47.4

60

83

62

+220

+641

PJ Smoothies

8.6

40

14.1

34

14.3

18

25

19

+64

+77

Own-label

9.0

42

14.9

36

15.8

20

23

17

+66

+54

Others

0.4

2

1.2

3

1.5

2

3

2

+200

+150

21.5

100

41.4

100

79.0

100

134.0

100

+93

+224

Total

(Mintel)

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Table 4 : UK value sales of smoothies by type, 2001-06

2001

%

£m

2003

%

£m

2005

%

2006 (est)

%

£m

% change 2001-05

Fruit

15.7

73

31.9

77

63.2

80

107.2

80

+582.8

Dairy

5.2

24

6.6

16

7.9

10

10.7

8

+105.8

Functional

0.6

3

2.9

7

7.9

10

14.7

11

+2,350

Total

21.5

100

41.4

100

79.0

100

134.0

100

+523.3

2001

%

2003

%

2005

%

2006 (est)

%

% change

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Management Consultancy m litres

m litres

m litres

2001-06

Fruit

4.7

75

9.3

82

20.6

86

39.6

86

+742.6

Dairy

1.4

23

1.4

12

1.7

7

2.8

6

+100.0

Functional

0.1

2

0.6

5

1.7

7

3.7

8

+3,600

Total

6.3

100

11.4

100

24.0

100

46.0

100

+630.2 (Mintel)

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Table 5: Consumption of fruit and vegetable juice 2002-2006 Base: adults aged 15+ 20 02

20 04

20 06

%

%

%

All users

58. 8

56. 0

56. 3

Heavy users

5.0

5.3

6.1

11. 6 40. 2

12. 5 38. 1

13. 4 36. 8

Drunk in last 12 months:

Medium users Light users

41. 44. 43. 2 0 7 Taken from the TGI survey of around 25,000 adults Non-users

(Mintel)

Table 6: Consumption of drinks – 7-14-year-olds, 2001-05

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Base: youths aged 7-14

20 01 %

20 03 %

20 05 %

Fruit juice & fruit drinks Flavoured milk

84

85

86

63

61

56

Fizzy drinks

93

92

88

Bottled water

42*

53*

74

Ever drink:

* 11-14s only Taken from the Youth TGI survey of around 6,000 youths aged 7-19

(Mintel)

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Marketing Objectives

A marketing strategy is the means by which an organisation sets out to achieve its marketing objectives.

(Weeks 2007, p. 393)

There are

many different objectives for companies. However, if the objective is growth, the Ansoff’s growth matrix (see Fig. 1) suggests four different possibilities. Product Market New Current Diversification Market Product Market Penetration Development

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Figure 1 Ansoff’s growth matrix

In the case of Coca-Cola diversification or concentric diversification would be the possible growth and as the corporate objectives are clearly set to expand the product portfolio and to lead the soft drinks and beverage category in which Coca-Cola competes. (Euromonitor)

The new SpecificMeasurableAchievableRealisticTimed marketing objective for Coca-Cola Great Britain is to introduce smoothies in the UK and to gain 1% of the market within 12 months of its launch.

Marketing Mix (4Ps) Product

Augmented product

Product planners need to think about the product on three levels (see figure 2) Each level adds more customer value.

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Actual product Core benefit

Figure 2: The anatomy of a product Based on Kottler & Armstrong, 2004, p. 279 Hill, 1997, p. 122

Core benefit

Health benefit and convenience

quick, nutritious and portable

Facilitate the consumption of fruit in a convenient format Pleasant health treat Actual product

Brand name Quality

100% fresh fruit

Packaging

Bottles and cartons

Design Features

Different flavours (soft fruit and exotic fruit) Seasonal flavours

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Management Consultancy Guarantees

No additives No sugar No water

Service

Product hotline

Image

Coca-Cola’s image for healthy living

Branding Branding has become so strong that today hardly anything goes unbranded. Brand names help consumers identify product which might benefit them; they also tell the buyer something about the product quality. Consumers who always buy the same brand know that they will always get the same features, benefits and quality. (Kotler & Armstrong, 2004, p.285) A branding strategy according to Coca-Colas mission should be developed, namely: The Coca-Cola Company Mission •

To refresh the world - in mind, body and spirit

•

To inspire moments of optimism - through our brands and actions, and

•

To create value and make a difference - everywhere we engage (CCBC Website)

Packaging

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Packaging is an important part of the product which not only serves a functional purpose, but also acts as a means of communicating product information and brand character. (Weeks, 2007, p.580) The primary function of the package is to contain and protect the product, however, the package needs to grab the consumer’s attention and involve them with the product. (Weeks, 2007, p. 581) The smoothies should be distributed in many different packages, namely 1-litre cartons, 250ml bottles as convenient portable formats are more and more demanded, and other formats including 330ml, 500ml and 750ml as well as 90g pouches and multipacks of small cartons for lunch boxes. Almost 50% of the new product launches in 2005 were 250ml bottles, as well as the smaller multi-packs for children (Mintel)

Labeling Labels may range from simple tags attached to products to complex graphics that are part of the package. The label can identify the product or brand, promote the product and also describe several things about the product. (Kotler & Armstrong, 2004, p.288) Furthermore, food labeling is now of growing importance in the UK as can be seen by the increase in those who avoid foods with artificial additives. (Mintel)

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Price Pricing is one of the most important elements of the marketing mix, as it is the only mix which generates a turnover for the company. Pricing a product too high or too low could result in a loss of sales. Pricing should consider external influences like competitors, demand and price elasticity, customers and consumers, channels of distribution and internal influences like costs, marketing objectives and organisational objectives.(Weeks, 2007, p.612, 618) Furthermore, it is very important to get the launch price right, as it is difficult to change the price later. Price skimming and competition-based pricing Coca-Cola should consider the strategy of price skimming in order to establish a quality brand image. If the initial price is too high, it can be slowly lowered until an appropriate level is found. (Weeks, 2007, p.626) In 2005, the average branded 1-litre bottle or carton was sold at £2.99. The smaller 250ml bottles were retailed at £1.75, which pushed up the average price per litre. However, it has to be taken into consideration that PJ Smoothies are repositioning with a new strategy to open up the market. A recent survey revealed that 42% of consumers said that the price was the biggest barrier to consumption. The PJ Smoothies are now priced at 99p for 250ml and £1.99 for 1 litre. (Talkingretail.com) Initially, the price for the product should be at £3.19 for the 1-litre pack and at £1.79 for the 250ml bottles. The average price suggests psychological pricing, whereas the £3.19 suggests more quality and product difference.

Table 7 :Average prices of soft drinks in the UK in £ per litre, 2001-06 2001

2002

2003

2004

2005

2006 (est)

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Smoothies

3.41

3.38

3.63

3.70

3.29

3.94

Juice drink

0.85

0.85

0.84

0.87

0.90

0.90

Fruit juice

1.20

1.22

1.23

1.23

1.23

1.22 Source: Mintel

Place Distribution Channels As Coca-Cola has sophisticated and fully developed distribution channels, it should make use of the existing channels to distribute the smoothies. Those channels are: •

Multiple Retail

•

Licensed

•

Cold

•

Wholesale

The multiple retail channel ranges from off-licence to forecourts, video stores, high street chains and corner shops to the UK's top Grocery chains like Tesco, Sainsbury, Asda, Safeway, Somerfield, Waitrose, Morrisons, Co-op, Iceland & the continental discounters.(CCE Website)

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The licensed channel includes licensed wholesale (including Scottish Courage and Coors) and licensed retail (including pubs and bars such as JD Wetherspoon, and high street restaurants such as Pizza Express). (CCE Website) The cold channel is responsible for the key national account customers across a wide range of sub-channels including cinema, theme parks, fast food, workplace, education, travel, health & fitness and hotels.(CCE Website) The wholesale channel includes the Cash & Carry and Delivered Wholesale customers. (CCE Website)

2001

Grocery multiples Others*

2003

2005

2006 (est)

% change

£m

%

£m

%

£m

%

£m

2001-06

8.8

41

19.0

46

47.6

60

83.1

+844.3

12.7

59

22.4

54

31.4

40

50.9

+300.8

Table 8: UK retail sales of smoothies, by type of outlet, 2001-06 * includes independents and convenience stores (Tesco Metro, Sainsbury’s Local are included in grocery multiple figures)

Logistics Not only the distribution channels are fully developed at Coca-Cola but also its

Total

21.5

100

41.4

100

79.0

100

134.0

+523.3

logistics, of which Coca-Cola should make use.

Coca-Colas logistics is made up of three distinct areas – Logistics Planning, Customer Logistics and Logistics Strategy & Analysis . (CCE Website)

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Promotion The recommended promotion strategy for this product would be the pull strategy. A promotion strategy that calls for spending a lot on advertising and consumer promotion to build up consumer demand. If the strategy is successful, consumers will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers will ask the producers. (Kotler & Armstrong, 2004, p.483)

Advertising Advertising is one of the most important promotion tools for Coca-Cola. In 2006, the company spent $2.6 billion on print, radio, internet and television advertisement worldwide. (The Coca-Cola Company Website) Advertising Message The advertising message for the smoothies should be product-oriented. Advertising Media Television, print media, online media, outdoor and ambient media and sponsorship should be used to convince consumers to buy the smoothies. Television Television’s impact can be high, as it not only intrudes into the consumer’s home but also offers a combination of sound, colour, motion and entertainment that has a strong chance of grabbing attention and getting a message across. Television advertising does present a tremendous communication opportunity, enabling a seller to communicate to a broad range of potentially large audiences. (Weeks, 2007, p.712)

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Initially, a nationwide TV campaign during breakfast and peak time should be started. After a couple of months Coca-Cola could try to get product placements. Furthermore, reminder and reinforcement advertising should be used after a while to remind consumers that the product exists.

Print Media In order to target the consumer, ads should be placed in several health, food and lifestyle magazines. One example would be Health and Fitness, Men’s Health.

Online Media The ad could be placed on selected websites (banners etc.), like Facebook etc. Outdoor and Ambient Media Coca-Cola could use the transport-orientated advertising media and place their ads on buses, metro and tube.

Sponsorship

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Sponsored events would also be an effective promotional tool to create awareness and brand loyalty among consumers. CocaCola has been a very successful global sponsor.

Consumer Promotion Coca-Cola could use trade promotions to get retailers to carry the new product and consumer promotion like product sampling to gain market share. In-store promotions should be taken into consideration. Price promotions should be used from time to time to encourage new consumers to enter the sector.

Action Plan May Market Research Research Monitoring Feedback Product Start production Bottle Design Label Design Product Launch Promotion Create TV Spot Create Print Ad Create Online Ad Create Outdoor and Ambient

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

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Media Create Trade Promotion Run TV Spot Run Print Ad Product Placement Run Online Ad Run Outdoor and Ambient Media Run Trade Promotion Sponsored Events Product Sampling In-Store Promotion Price Promotion Distribution Negotiate with Wholesalers Negotiate with Grocery Multiples Negotiate with Retailers Negotiate with Vending Distributors Negotiate with Restaurants and Pubs

Appendix 1 European Commission (EC) legislation, introduced in July 2007 but yet to be implemented, includes a list of approved health and nutritional claims permitted on food and drink labelling. Manufacturers will need to ensure their claims on energy and functional beverages, in particular, fall within the EC’s definitions. Innocent is lobbying the Government, with the British Soft Drinks Association (BSDA) backing, for the VAT on fruit juices and smoothies to be cut from 17.5% to 5% in reflection of their positive contribution to the health debate. Fruit juice volume sales have suffered since late 2006 as a result of volatile raw material costs, according to BSDA, with the price of orange juice doubling since 2004.

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Appendix 2 SWOT Analysis Strengths Relationship with The Coca-Cola Company – Coca-Cola Enterprises Inc's strength lies in its powerful relationship with The Coca-Cola Company. The Coca-Cola Company's expansive portfolio of brands in carbonates and their brand equity are the cash cow of Coca-Cola Enterprises. The Coca-Cola Company's rapid expansion in non-carbonates also gives Coca-Cola Enterprises a wider platform to operate in the soft drinks industry. Operation focused on the developed markets – Coca-Cola Enterprises's territories are well established economies which offer strong purchasing power and stable economies. Therefore, the company operates in a relative predictable and well regulated environment, which is beneficial to setting up of long-term strategies and planning. Distribution capacity – Coca-Cola Enterprises has extensive distribution networks and large production capacity which allows the company to win business deals over rival companies. Weaknesses Heavy reliance on The Coca-Cola Company – Coca-Cola Enterprises's financial success is dependent upon its relationship with The Coca-Cola Company which can make Coca-Cola Enterprises susceptible to The Coca-Cola Company's brand performance. The hit rate of The Coca-Cola Company's carbonates brand extensions can directly impact on Coca-Cola Enterprises's operating profits. Consumption shift – Coca-Cola Enterprises's cash cow business remains carbonates, and consumers' consumption shifts have negatively affected volume growth.

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Maturity of the market – Coca-Cola Enterprises's territories are developed soft drinks markets and the consumption is rather saturated in these markets, meaning that the potential growth in total consumption can be limited. Opportunities The Coca-Cola Company's acquisition activities – The Coca-Cola Company's commitment in developing diet carbonates and expansion in non-carbonates provide good growth opportunities. Additionally, Coca-Cola Enterprises can benefit from The Coca-Cola Company's aggressive acquisitions in the non-carbonates sector and diversify the product portfolio. Healthy drinks in schools – many schools in developed market have started to ban or restrict the consumption of carbonates within the school premises. This is a challenge for Coca-Cola Enterprises's carbonates business; however, it has also opened a new door for the company to develop juices and water. Threats Consolidation of retail – the retail industry is in the process of consolidation and players are armed with increasing purchasing power, which potentially can squeeze Coca-Cola Enterprises's operating margin. Negotiation with these retail giants is an ongoing challenge. Acquisition activities of rival companies – rival bottlers and brand owners are actively acquiring non-carbonates companies thus posing a potential threat to Coca-Cola Enterprises's market shares. Challenging cost environment – increased expenditure on energy, raw material and packaging mix has also negatively affected the operating margin. (Source: Global Market Information Database)

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Appendix 3 Buyers and non-buyers of smoothies, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commerical TV viewing, supermarket usage, household size, and terminal education age, June 2006

Base: 1,047 adults aged 15+ Buyers %

Nonbuyers %

All

31

69

Gender: Men Women

31 32

69 68

15-19 15-24 20-24 25-34 35-44 45-54 55-64 65+

49 44 39 48 42 24 23 8

51 56 61 52 58 76 77 92

Social grade: AB C1 C2 D E

39 37 27 23 17

61 63 73 77 83

Marital status: Married Not married

30 34

70 66

Lifestage: Pre-/no family Families Third age Retired

47 41 21 9

53 59 79 91

Age of own children: Children aged 0-4

44

56

Children aged 5-9 Children aged 10-15 Children any 0-15 No children

46 38 41 28

54 62 59 72

Special Groups: ABC1 pre-/no family ABC1 families ABC1 third age ABC1 retired

56 49 24 12

44 51 76 88

41 38 46 31 10

59 62 54 69 90

21 38 34

79 62 66

ITV region: London/South London South Anglia/Midlands South West/Wales Yorkshire/North East North West Scotland

44 43 41 32 23 17 24 31

56 57 59 68 77 83 76 69

ACORN group: A Wealthy Achievers B Urban Prosperity C Comfortably Off D Moderate Means E Hard Pressed

30 42 28 24 38

70 58 72 76 62

Working status: Working Full-time Part-time Not working Retired Tenure: Owned outright Buying home Renting

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Technology users: Internet users Satellite/cable/digital TV

38 33

62 67

Daily newspapers: Broadsheet readers Mid-market tabloid readers Popular tabloid readers

40 30 33

60 70 67

Commercial TV viewing: Heavy (5+ hours/day) Medium (2-5 hours/day) Light (0-2 hours/day)

30 32 31

70 68 69

Supermarket usage: Asda Co-op Iceland Marks & Spencer Morrisons Sainsbury's

34 30 32 32 28 34

66 70 68 68 72 66

Somerfield Tesco Waitrose Any discounter eg Aldi, Lidl, Netto Household size: 1 person 2 people 3 people 4 people 5+ people

33 35 41 26

67 65 59 74

29 22 34 43 42

71 78 66 57 58

5 24 34 39 46

95 76 66 61 54

Age finished full-time education: 16 or under 17-18 19-20 21+ Still studying

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