Arekta BizComp Team HSBC Intra IBA Case Competition 2023
Abstract
With a long history of operating in the Chinese market, Coca-Cola has acquired a significant market
share in the beverage industry. However, in the face of changing consumer preferences, growing
competition, and government regulations restricting power moves, Coca-Cola needs to decide on
whether they want to continue towards merger and acquisition or opt for In-house production for
innovative product alternatives.
SWOT Analysis
Strength: Strong Distribution Channel (40% Weakness: The product itself (carbonated
Market Share in the Carbonated Beverage beverage) (Drop in Market Share from 18.4%
Market), Brand Image as we are the market in 2012 to 13.9% in 2014), the existing brand
leader in the carbonated segment. image of high sugar content beverages.
Opportunity: Using the strong distribution Threat: Government Policies and Regulations
channel to leverage the consumer mindset shift posed limitations (Failed M&A attempt with
towards consuming healthier beverages and Huiyuan), fast growing competitions inside
having an active lifestyle (Growth in Revenue China
in every healthier alternative market)
Market Trends
Trends Inferences
Healthier Life-Style resulting in a shift towards Drop in percentage consumption of carbonated
healthy drinks. drinks
Local companies like Wahaha & global
Growing trend of Merger & Acquisitions companies like Pepsi tried to get into M&A
but most ventures ended in failure
Entrance of new local companies with a Every beverage company started developing a
diversified product portfolio diversified portfolio of healthier alternatives.
Identification of Problem
Symptoms Core Issue
Fall in market share of carbonated soft
drinks
Rise in the demand for healthier drink
Consumer mindset and preferences
options
shifting towards a healthier lifestyle
Entrance of new competitors to leverage the
change in consumer perceptions and utilize
the gap
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Arekta BizComp Team HSBC Intra IBA Case Competition 2023
Evaluation Of Alternatives
Alternatives
Factors
M&A In-house
Mitigating the fall of the No to minimum control over Full Control over the health risk
carbonated soft drinks the product of the acquired mitigation factor by offering lower
market company, leading to no sugar content products (i.e. Coke
Quality Control Assurance Zero, Diet Coke, etc)
Leveraging the growing As Government won’t allow As we have a strong distribution
demand of healthier a merging or acquisition of channel in the already established
beverage options market leaders of the carbonated beverage product, we
healthier beverage can use that to streamline our
alternatives the marginal inhouse healthier beverage
benefit of this option is not alternatives
significant
Competition of new We have to work with the We get to invest in R&D to procure
companies existing portfolio of the healthier alternatives based on the
merged/acquired company shifting consumer preference
Recommendation
In-house product development will allow Coca-Cola full control over the production and
innovation of healthier alternatives, by leveraging the existing strong distribution channel to keep
up with the shifting consumer preferences.
As all 3 of these factors address the symptoms of our core issue, and in-house product
development provides a more convenient path toward producing healthier beverage
alternatives, in-house production is our recommended alternative.
Plan of Action
1. Conducting market research to understand 2. Investing in R&D to produce a prototype of
consumer preference(i.e. Taste, texture, the product and packaging
consistency, etc.)
3. Market Testing, Feedback & Product 4. Proper Distribution Channel & marketing
Finalization communication
Conclusion
Standing at the point of an inevitable shift in consumer preference, Coca-Cola needs to take
immediate steps to hold tight to the brand’s legacy and evolve with the customers. Coca-cola must
face the challenges thrown towards the brand from China and potentially in other countries in the
future. We believe that Coca-cola must choose the In-house production alternative as its next course
of action to keep true to the brand’s core values.
