Professional Documents
Culture Documents
Topic: Sales and distribution strategies of Coca Cola in African Countries like South Africa
Soft drinks experiences dip in volume growth in 2011 Despite slow economic recovery, South African soft drinks experienced a decline in volume sales growth in comparison to the previous year. This is largely due to the drop in carbonates sales volumes as the category experienced inflated growth in 2010 due to South Africas hosting of the 2010 FIFA World Cup. Carbonates are also losing share of throat to tap water as consumers look to save money as well as for growing health concerns. Health and wellness and convenience continue to impact South African soft drinks in 2011 Consumers continue to seek both convenience as well as health and wellness benefits when purchasing soft drinks. Whilst the number of new product launches is limited due to the recent economic downturn, there have been packaging innovations within existing brands in order to appeal to the demand for convenience. The small number of new launches within the category tended to meet the demand for health and wellness by being rich in antioxidants, vitamins and minerals and containing reduced sugar. Coca-Cola South Africa continues to dominate sales in 2011 Coca-Cola South Africa dominates South African soft drinks, making up more than half of total off-trade volume sales in 2011. The company dominates carbonates, accounting for more than three quarters of total off-trade volume sales. Bromor Foods, a division of Tiger Brands, has a strong concentrates and sports and energy drinks profile. Pioneer Foods, which manufactures Pepsi under licence, and is the holding company of both Continental Beverages (in concentrates) and Ceres Fruit Juices, are also strong players.
Coca Cola is able to gauge per capita consumption of its 239 products by country and region. Cokes marketers can tell the interested lay person, for instance, that the average person in Phuket, Thailand, enjoys only 12 servings of Cokes products annually in comparison to the average citizen of Rome, Georgia, who tosses back 941 eight-ounce Coke products per year.
1|Page
Coke is South Africas most admired brand name, available freely in Johannesburgs posh malls as well as in the hinterlands where people must walk for miles down dirt roads to buy a Coke from the spazza shops that sell rural Africans their basic goods. Here, it is the undisputed leader in overall brand awareness (42%). Its nearest competitor in brand awareness is the state run phone company, Telkom, which follows Big Red at a mere 28%. In an October 2000, survey of South Africans, 91% of respondents in urban areas mentioned Coke as the number one top-of-mind soft drink brand. Coke also owns its nearest brand competitors, Fanta and Sprite. Cokes success in Africa has been due to its savvy advertising as well as its ubiquitous involvement in local community life. City dwellers in South Africa cannot fail to notice the Coke signs installed in every shop and roadside stand, but Coke has taken the initiative to reach poorer South Africans in rural areas as well. To this end it has initiated sports sponsorships, sports development, entrepreneurial development, scholarships and education projects. It has also relentlessly found ways to get its products trucked into even the most remote corners of Africa and has cultivated a reputation for corporate honesty and openness that has won the respect of African businesspeople from Cape Town to Madagascar. If Coke can succeed here, Asia ought to be a snap. Africanizing the Quintessential American Brand Coke, the ultimate American product, manages to assimilate itself into utterly foreign 3|Page
There is still much room for Coke to expand in Africa, which accounted for only 2 percent of the companys US$3.7 billion operating profit last year. Last quarter Africans consumed 10% more Coke than a year earlier, while their counterparts in the US leveled off their Coke purchases. Nonetheless, Africans still lag behind their First World counterparts in consumption. The New York Times quoted Cokes current chairman, Douglas M. Daft, as especially interested in overseas expansion. According to Daft, consumers outside the US drink less than one serving of carbonated soft drinks per week, compared to the one to three sodas American consumers quaff each day. On April 22 of this year, Coke launched a worldwide ad campaign designed to oust its twoyear-old slogan Enjoy and replace it with Life Tastes Good. Its television advertising is embracing a positive, story-telling approach that shows Coke playing a vital part in lifes meaningful moments, whether they are relaxing with friends or getting married. The company has mandated thirteen global creative hubs to create these ads, one of which is in Johannesburg, South Africa. These hubs have been given creative license to tailor their share of the 30, 30-second TV advertisements to fit the profile of their local consumers so long as the resultant ads remain within the companys overall conceptual framework. According to Penny McIntyre, Divisional Marketing Director of Coca-Cola Southern and East Africa, the new advertising approach ought to be extremely effective here in Africa
4|Page
5|Page