Pestle analysis of coca cola. Coca Cola is a US multinational soft drink producing company. John Stith Pemberton was the founder of Coca Cola and he established the company on May 08, 1886. Later he sold Coca-Cola to a businessman, Asa Griggs Candler. Asa applied all of his business skill to Coca Cola and made it the world’s top soft drink company. Nowadays, the headquarter of the company is situated in Atlanta, USA.
The company uses two major ingredients in its manufacturing; Kola nuts and Coca leaves. The company has released many experimental and recreational recopies. But the main formula, the company has always kept it secret.
Some of the main products/services of Coca Cola are; Gold Peak Tea, Honest Tea, Georgia, Mello Yello, Fair Life, Minute Maid, Fanta, Odwalla, Del Valle, Powerade, Simply Beverages, Dasani, Glaceau SmartWater, Sprite, Ciel, Suge, Coke Zero, Glaceau Vitamin Water, Diet Coke, and Zico.
According to a report by Business Insider, 94% of the people across the world are familiar with the logo of the company (red & white). They consume more than 10,000 Cola soft drinks every second of every day throughout the year. According to a study conducted by Forbes, Coca Cola has employed approximately 86200 people to run various operations worldwide.
Some of the major competitors of Coca-Cola are; Mountain Dew, Gatorade, Nestle, Dr. Pepper Snapple, Parle, Pepsi, Redbull, and many other local brands.
Today, we’ll study the pestle analysis of coca cola that macro and external factors impact the world’s top carbonated soft drink company. If you want to learn about the internal factors of the company; check out the swot analysis of Coca Cola. Here’s the pestle analysis of Coca Cola as follows;
Political Factors Impacting Coca Cola
Involved in Political Lobbying
According to the data published on Coca-Cola’s website, the company engages in political lobbying over the years. The reason businesses and companies spend millions of dollars on lobbying are to make sure that the politicians consider them while legislating any laws. They use techniques like directly advocating any politicians, making contributions in their campaigns, and joining trade associations.
Support from the Trump Administration
Former American President, Donald Trump, said in his interview that he has a special fondness for Coke. Even he has a special button in the white house office to order for Coca Cola. This may seem like an ordinary thing, but the American President is conveying the message to use the US drinks. It also shows the influence of the company that the ruling government was supporting the brand.
Banned in Some Countries
As a multinational brand, the company is operating its business across the world. The rules and regulations of different government impact the company. For instance, Burma’s government banned the sale of Coca Cola in her country. The ban had lasted for 6 decades and finally ended in 2012. Countries like North Korea and Cuba still don’t allow the sale of Coca Cola in their countries. It’s because of the political conflict they had with the US government.
Conflict with China
The conflict between the Chinese government and the Trump administration resulted in the form of a trade war between the two countries. It lasted for 4 years. During this time, the prices of the canned packing of Coca Cola and the cost of Aluminum and Steel were at its peak.
Economical Factors Impacting Coca Cola
Drop-in Revenue Due to Covid-19 Pandemic
According to a report published by macrotrends.com, Coca-Cola has had tremendous growth in 2018 and 2019 of 415.54% and 38.64% respectively. But the lockdown and shutdown of businesses have decreased the annual revenue and net income of the company by 8.74% and 7.55%. It’s because of the covid-19 pandemic in 2020.
According to an estimate by macrotrends.com, the annual revenue and net income of Coca-Cola in 2020 was $33.471 billion and 8.333 billion dollars.
Shift in Demand
As we know that the three countries like the US, Canada, and Mexico have a free trade agreement among them. It means that they can freely trade their products in the region. But the demand and interest of the customers have shifted towards the low calories and less sugary drinks.
According to an estimate, the retail value of Coca Cola’s products like Sugar Zero and Diet Coke has increased by approximately 8% in 2018. Hopefully, its demand would rise in the upcoming years because the customers are becoming health conscious.
Closure to Refine Supply Chain
As we know that the supply chain and the distribution network is a very important part of the retail industry. Coca Cola started closing down its factories worldwide in 2017 to refine and improve its supply chain system. The brand has also closed down some of its factories in Australia in 2019 for the same purpose.
Social Factors Affecting Coca Cola
Overweight & Obesity Issues
If we study the latest lifestyle and diet statistics, obesity and overweight are two major issues across the world. Such issues have affected a large proportion of the population. Easy and convenient lifestyle and fast foods are the two major reasons behind it.
However, Coca-Cola has launched low calories and less sugary carbonated soft drinks like Coke Zero and Diet Coke to address this issue. The company would also introduce many other diet products in the future to target the health-conscious market.
Share a Coke Campaign
Coca Cola launched a very successful social media campaign by the name of share a coke. It encouraged people to buy a bottle for their loved ones with the customized name of it and ask them to do the same. They also share their experience on social media with the hashtag of #shareacoke. The company connected with people by using personalized marketing.
Refresh the feed Campaign
Coca Cola launched another successful social media campaign on World Kindness Day by the name of refresh the feed. The brand revamped all of its social media accounts to prove itself an optimistic brand. The purpose of all of these campaigns is to increase the customers’ engagement and connect with the people at a personal level.
Technological Factors Impacting Coca Cola
Adapting Latest Technology
Whether it’s the “bridge program” or any other system, Coca Cola has a very good history of adopting and accepting the latest tech trends. Later on, the company applies the latest technology to its production and distribution system to gain a competitive edge.
Coca Cola promotes the innovative culture by inviting people to play a game to stay forever young, current, and current. It allows people to create their drink by using any of the combinations. It helps Coca-Cola to find the taste of people without doing any market research.
Legal Factors Affecting Coca Cola
Healthy Food Regulations
The government regulations put great pressure on the food and drink to use healthy ingredients. It’s a good thing that companies shouldn’t use toxic chemicals in the production processes. Two clergymen filed a lawsuit against Coca-cola and the American Beverage Association. They claim that both of these companies are deceiving the people that carbonated drinks contain a high level of sugar in them.
Coca Cola makes significant political contributions to comply with the rules and regulations of the governments. The purpose of these contributions is to avoid conflict with the law.
Low Wages Allegations
Many labor unions have claimed that Coca Cola treats its employees poorly and pays low wages to them. It has attracted a lot of criticism of the brand. There was also a lawsuit of racial discrimination against the company.
There was an incident when Coca-Cola mislabeled its products as blueberry and pomegranate juice, instead of grape and apple juice. It caused a lot of legal trouble for the company because mislabeling and selling products under disguise is a serious offense.
Environmental Factors Impacting Coca Cola
According to an estimate, Coca Cola sells approximately more than 100 billion plastic bottles annually. The company planned to use recyclable plastic bottles of approximately 50%. It shows the company’s ambitions and commitment towards the environment and avoids ocean pollution.
Ground Water Issue
Coco-Cola has faced great criticism in India for draining the groundwater. It’s because clean and fresh water is a rare and scarce commodity in many parts of the world. The company has come up with a new method of Rain & Care to use less water.
Coca-Cola is also installing solar panels at its production facilities to reduce the company’s carbon footprint. The purpose is to reduce waste and manufacture environmentally friendly products.
After a detailed study of the pestle analysis of Coca Cola, we have realized that the company has good political and legal relations. The company is also moving towards low calories and healthier products. The brand is also taking steps towards eco-friendly products. It’s a good thing that the company is moving in the right direction.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.