SHANTI BUSINESS SCHOOL

[Document subtitle]

Written Analysis Communication

Company Analysis Report on Hindustan Coca-Cola Beverages

Submitted to- Submitted by- Sec B

Prof. Neha Singh Shriya Agrawal
Prazavi Jain
Bashubhi Sharma
Princy Khandelwal
Mriganka Kothari

Date of submission: February 24, 2020

 Acknowledgement

We would like to express our special thanks of gratitude to our Professor Neha Singh, who
gave us the golden opportunity to do this wonderful project on the Company Analysis, which
also helped us in doing a lot of research and we came to know about so many new things
which will help us during our final placement process. We are really thankful to her.

Secondly the completion of this project could not have been possible without the
participation and assistance of each group member. Their contribution are sincerely
appreciated and gracefully acknowledged. However, the group would like to express their
deep appreciation and indebtedness to each member for their endless support, kind and
understanding spirit during our report preparation.
Table of contents Page
Acknowledgement -
History of Coca- Cola 1-3
About CEO 4
Main Areas of Business 4- 5
Organisation Structure 6-7
Major Competitors 7-9
Market Growth & Strategy 9-11
Achievement, Rewards & Recognition 12
Financial Analysis 13-15
History of Hindustan Coca-Cola Beverages Limited

Hindustan Coca Cola Beverages (HCCB) Pvt. Ltd., today one of India’s top
FMCG companies, entered into the Indian market in 1993 with a simple aim of
making beverages for India of 21st century. It incorporated on 14th February.
The company is originally from Atlanta, United States of America.

Over two decades, the company established its name in the Indian market with
approximately 65 manufacturing plants currently working including its external
bottling partners, over 7000 Indian distributors and more than 2.2 million
retailers.

The company originally entered into the Indian market before 1993 but due to
certain government restrictions and policies had to go back. The company re-
entered the Indian market through its wholly-owned subsidiary Coca-Cola India
Pvt. Ltd. and re-launched its product in 1993 after opening up of the Indian
economy to foreign investment in 1991.

The major products of the company are Coca-Cola, Fanta, Limca, Sprite,
Thums Up, Burn, Kinley, Maaza, Minute Maid Pulpy Orange, Minute Maid
Nimbu Fresh, Georgia Gold range of tea and coffee, Vitingo, etc.

There are thirteen licensed bottling partners of the Coca-Cola Company, who
are authorized to prepare, pack, sell and distribute beverages under certain
trademarks of Coca-Cola Company.

The company in 2002, initiated work to launch a juice manufacturing line that
was capable of hot-filling the products in PET package and by 2004, the
company successfully managed to launch India’s first hot-fill juice
manufacturing line in factories at Chittoor and Bareilly.

Then in 2005, it started working on juice manufacturing lines that would be

capable of bottling real fruit pulp in packaged juice and by the mid of 2007, it
successfully inaugurated the country’s first juice product with real fruit pulp-
Minute Maid Pulpy Orange. In the same year, it also introduced the tetrapak
juice manufacturing line in its Dasna and Ameenpur factories.

By 2008, HCCB grew even larger with more capacities at its various factories
and by introducing various bottling lines in its factories. In 2010, it ventured
into manufacturing 11 different kinds of fruit juices and drinks under the Minute
Maid and Maaza brand line.

In 2013, HCCB commenced a project work to establish the first Greenfield

factory at Bidadi, Karnataka. By 2014, it introduced the country’s first 720 bpm
(bottle per minute) line at Bidadi factory.

In 2015, it initiated a project to introduce the world’s first ASSP package and by
2017, it inaugurated it and fetched the HCCB global awards for innovation. In
the same year, it started manufacturing the vapour distilled- Smart water- at its
manufacturing line in Bidadi factory.

In 2018, HCCB inaugurated its 18th factory in Sanand, Gujarat and commenced
the manufacturing of it’s first-ever juice + dairy product, with the launch of
Minute Maid Smoothie, from its Vijayawada factory. Along with this the
HCCB also achieved the target of meeting 40% of energy requirement at its
factories through renewable sources in the same year.
In 2019, it added more than 1 million outlets. It's Ameenpur and Pirangut
factories were conferred with the prestigious JIPM Excellence in Consistent
TPM Commitment Award. It is Sanand factory in Gujarat became only 1 of 9
Gold Certified green buildings amongst the Food Industrial facilities in India.
HCCB is amongst the largest domestic buyers of certain agricultural products.

The company since started never looked back and grew stronger and stronger
with almost every Indian using one or the other of its products.
About CEO

James Robert B.Quincey is a British businessman in the U.S. He was born on

8 January 1965 in London, England. He lived in Latin America and he worked
for Coke in Mexico, where he led the acquisition of Jugos Del Valle after that,
he became the president of the Northwest Europe & Nordics Business Unit from
2008 until 2012 after in 2013 he became the president of Coca-Cola's Europe
Group.
In Europe, he started his career at Bain & Co, and then he joined Coca Cola
Company in 1996 and then after working there for years he became the CEO of
this company and now his estimated net worth $25 million as of 24 February
2015 and he owns over 286,584 units of the Coca Cola Co stock worth over
$8,311,554 and over the 7 years he scold stock worth over $0.He makes
$16,701,300 as a chairman of the board and chief executive officer at this
company.
He, first acts as CEO and he announced reducing 1200 corporate positions as
part of a plan to invest in new products and also to done manufacturing and to
restore the year’s revenue and profit growth from 4% to 6%.
He also wanted to rid the coke company’s culture of over cautiousness
concerning risk. When he was appointed on the post of CEO, he becomes the
largest shareholder in Coke Warren Buffet supported Coca Cola decision as a
smart future investment.

Main Areas of Business

Fanta-
Fanta is a brand of fruit-flavoured carbonated drinks.
-Created by Coca-Cola Deutschland under the leadership of German
businessman Mars Keith. The name Fanta is shortening of the word
Fantasie(German of fantasy).
All the products of Fanta are-
-Fanta Orange
-Fanta Lemon
-Fanta fruit twist
-Fanta zero orange
-Fanta Fruit Twist Zero
-Fanta Grape Zero
-Fanta Pink grapefruit zero
In 2018, the Fanta brand held a market share of 2.7% in the United States.
The Fanta brand is one of the leading four brands of the coca-cola company.
Market Share-

Year % (market share)

2018 2.7%
2017 2.7%
2016 2.5%
2014 2.2%
2013 2.0%

Sprite-
Sprite is a colourless, caffeine-free, lemon and lime-flavored soft drink created
by the Coca-Cola Company. It was developed in West Germany in 1959 and
was introduced in the United States under the current brand name sprite in 1961
as a competitor to 7 up.
Flavours of Sprite-
-Sprite-Cherry
Organisation Structure
The Coca-Cola Company has a corporate (Head Office) segment that is
responsible for giving the Company an overall direction and providing support
to the regional structure. Key strategic decisions at The Coca-Cola Company are
made by an Executive Committee of 12 Company Officers.

The company’s aspects associated with mechanistic model structure are the
centralization and the high standardization, the company’s stability and
flexibility. Therefore it is the mechanistic organic, as for the organic model is
concerned with efficiency, high low standardization, responsiveness
specialization, high low integrating mechanisms ,the simple complex
centralization, the high low communication and the top to down (Dawson and
Harpert,2009). The putting together of both types of structure appears to be very
ideal for the organization.

The information in the company is moving smoothly in almost every direction,

this is because the upper management is able to have easy access to the
information hastier than it did before; this is viewed as the modernistic
advantage, adding to the company’s flexibility and high responsiveness. The
modern changing towards a thorough decentralized and organic structure
correspond with the instability of the company’s environment .the main
strategic structural dynamics that the company had to go through in the recent
past has Influenced it positively, the sales has very highly increased and
employees were more satisfied.
Major Competitors
PEPSI- the biggest and closest competitor of Coca-Cola; its arch-rival PepsiCo
was formed after the merger of Pepsi and Frito lay in 1965. The brand has seen
growth in organic revenue in 2017, it has 20 billion-dollar brands in its product
portfolio. The US it's the largest market where it is engaged in intense
competition with Coca Cola. Its net revenue in 2017 was 63.5 billion dollars
and GP 28.8 billion dollars. The two brands compete across several categories
including sod beverages, health, and energy drinks.

RED BULL- Red Bull despite its limited product portfolio is a major
competitor for the energy drink products of Coca-Cola. It is a famous brand that
sells across 171 countries and now is focusing on core markets of Western
Europe and the USA for further growth, in 2017, the brand sold more than 6.3
billion cans and its turnover reached 6.282 billion euros. Red Bull saw its sales
booming in 2017 in five major markets including Turkey, India, Netherlands,
and Northern Europe and the United Kingdom. Red Bull is the toughest
competitor for the energy drinks by Coca Cola.
Dr. Pepper Snapple –Pepper Snapple has a portfolio of more than 50
refreshing brands. These brands include carbonated soft drinks, juices, tea,
mixers, waters, and other beverages.
The brand is a major competitor for coca-cola in the US market. Its
2017 revenue was 6.4 billion dollars of which 90% was earned from the US
market, Dr. Pepper Snapple has made a series of strategic acquisitions over the
last three decades to grow its business and customer base.
NESTLE – While Nestle is not a direct competitor of Coca-Cola, still it
competes with the brand across some specific product categories like bottled
water. It's Nestle Pure Life and Poland Spring are two bottled water brands that
are quite popular and major competitors for Coca Cola Dasani.
-Sprite Cranberry
-Sprite Tropical flavoured
-Cucumber flavoured sprite
In 2018, sprite brand’s U.S. market share amounted to 7.1%.
Demographic segmentation sprite mainly focuses on people range of 12 to 35
because of research that people with the range are one of the major consumer
group of drinks.
Minute Maid-
Minute Maid is a product line of beverages, usually associated with lemonade
or orange juice, but which now extends to soft drinks of many kinds, including
Hi-C. Minute Maid is sold under the Cappy brand in Central Europe and under
the brand “My Family” in Russia.
Minute Maid was the first company to market orange juice concentrate,
allowing it to be distributed throughout the US and served year-round.
The Minute Maid Co. is owned by the Coca-cola company, the world’s largest
marketer of fruit juices and drinks. The firm opening its headquarters in Sugar
Land Town square in Sugar Land, Texas, the United States on February 16,
2009.
Product offering-
-Minute Maid pulpy offers a variety of fruit flavours juices.
-Apple
-Oranges
-Mango
-Lemon
-Tropical.
Diet Coke-
Diet Coke or Coca-Cola light is sugar-free and no-calorie soft drink produced
and distributed by the Coca-Cola Company. It contains artificial sweeteners
instead of sugar.
Diet Coke and Diet Pepsi have capitalized on the markets of people who require
low sugar regimens, such as diabetes and people concerned with calorie intake
volume sales of Diet coke hit 11.47 million litres in the week ending 31 March
2018 and rose again to 11.49 million litres by the week ending 21 April.
In 2018, Diet coke brand’s US market share amounted to 7.6%.
Fresca-
Fresca is a lime and grapefruit-flavoured citrus soft drink created by the Coca-
Cola Company. Borrowing the word Fresca from Spanish, it was first
introduced in the United States in 1968.
Since 2019, it has been marketed in the U.S. as “Sparkling soda water”, rather
than as a soft drink.
The statistic shows that the share of Americans who drank Fresca is 16.04% of
respondents aged 18 to 29 years in 2018.

Market Growth Strategy

Hard goals

In terms of its growth strategy, which is their market position in the beverage
industry, Coca Cola Company is concentrating in opening more opportunities in
developing markets by leveraging the scale & reach of the Coca Cola system to
shape & capture value. The company intends to accomplish it by sharpening
their execution at the point of sale and expanding the brand portfolio. The
company has projected that these developing markets are expected to contribute
approximately 20 percent of incremental population growth over the next 10
years. Personal expenditure per capita in these markets is expected to increase
by 65% over the next decade. Furthermore, Coca Cola company anticipates that
developing markets will contribute approximately ¼ of the incremental unit
case volume by 2020.

Rationale

The coca cola company’s long term growth strategy of investing in emerging
markets, is related to the Coca Cola Company projections in these markets. The
CCC attributes this to a positive correlation between wealth and the increase in
consumption of Nonalcoholic ready-to-drink(NARTD) beverages. From now to
2020, more than 1 billion people will join the middle class, and the per capita
wealth for individuals will increase by nearly 30 percent. They have the ability
to invest in new plants in places like china & India. Over the next 3 years Coca
Cola company plans to invest $2 billion, 3 new plants are expected to be
finished in that time period. The company clearly understands in order for
intended strategy to be attained, consumer access and system alignment is key
to their growth in these emerging markets. This means placing more coolers
throughout these countries, in order to drive on-the-go consumption.

Mission:
This is Coca Cola’s mission statement “To refresh the world. To inspire
moments of optimism and happiness. To create value and make a difference.”
Coca Cola company mission statement clearly defines the purpose for which
and reason why they exist as an organization. The employees must be feel they
are a part of an organization that knows where it is heading, in terms of the
language it uses with their mission statement. “To create value & make a
difference” resonates with belonging to an organization that wants to create a
culture of empowerment and continuous improvement.

Vision
Coca Cola Company’s vision statement is a guide to what the company needs to
accomplish so it can achieve sustainable and quality growth. The CCC vision
statement is based on what we will call the six P’s (people, portfolio, partners,
planet, profit, productivity)

People: Be a great place to work, where people are inspired to the best they can
be

Portfolio: Bring the world a portfolio of quality beverage brands that anticipate
& satisfy people’s desires & needs.

Partners: Nurture a winning network of customers & suppliers, together we

create mutual enduring value.

Planet: Be a responsible citizen that makes a difference by helping build &

support sustainable communities.

Profit: Maximize long-term to shareowners while being mindful of our overall

responsibilities.

Productivity: Be a highly effective, lean & fast-moving organization.

Achievements, Rewards and Recognitions.
-The creator of Coca-Cola, Thums Up and Sprite circulated aerated beverages
and Maaza mango drink is found out to have auctioned off 10% of its
organization claimed packaging tasks in four markets in North India to its
current establishment bottlers.
-The producer of Coke and Sprite soda pops and Minute Maid juices said that in
an inside realignment of its packaging activities in North India, Hindustan
Coca-Cola Beverages Pvt. Ltd (HCCB), its bottler for most of India, will move
its business tasks into four domains in North India to existing bottlers.
-Veteran Tamil artist Ilaiyaraaja makes his first-since forever corporate song of
praise for Hindustan Coca-Cola Beverages.
-The combined value of the deals in the first phase of the selloff is estimated at
Rs 1,500-2,000 crore, one of the officials said. HCCB has 18 plants and
accounts for two-thirds of Coca-Cola India’s volumes.
-India is the 4th largest market globally for premium water brand 'SmartWater'.
Introduced in 1996 in the US, SmartWater was acquired by the Coca-Cola in
2007 and is now available in several countries including the UK, Australia,
Canada, and the Middle East.
Air Pollution: H&M, Dabur, Coke say telecommute
-H&M conveyed an email to its Delhi office representatives that they should
work out of the home on Monday and they can arrive behind schedule or leave
early Tuesday onwards until November 15.
Refreshment bargain blending between Coca-Cola and CCD
-Coca-Cola is in selective converses with getting a critical stake in Café Coffee
Day (CCD) as the soda pops monster hopes to increase a toehold in...
-Cultivating keeps Coca-Cola's Shehnaz Gill grounded; it needs to go through a
day with Ratan Tata at the homestead.
Drink bargain preparing between Coca-Cola and CCD -
-Coca-Cola converses with getting a noteworthy stake in Café Coffee Day
(CCD) as the soda pops mammoth hopes to increase a decent footing in.

Financial Analysis

The soft drink giant reported fourth-quarter earnings that met expectations, but
it forecast that 2019 earnings per share could rise or fall by 1 percent —
meaning less than the $2.08 per share it earned in 2018. Wall Street’s consensus
projects were earnings of $2.23 per share in 2019.

Earnings per share: 43 cents vs. 43 cents expected

Revenue: $7.06 billion vs. $7.04 billion expected

Net sales dropped 6 percent to $7.06 billion, but still topping expectations of
$7.04 billion. The company attributed the revenue decline to the impact of
currency and refranchising its bottling operations, a project that is nearly done.

Sales of its sparkling soft drinks dropped 1 percent during the fourth quarter,
despite its popular Coca-Cola Zero Sugar drinks once again are seeing double-
digit growth.

Unit case volume for the quarter was unchanged from last year. Quincey
attributed the flat volume to focusing on “value over volume” in some markets.
Unit case volume in North American sales dropped 1 percent as the effects of
the midsummer price increases finally hit the consumer, he said on the
conference call.

Currently, 56% or 13 analysts out of 23 analysts rate Coca-Cola stock a “buy”

while the rest rate it a “hold.” Meanwhile, 33% or seven out of 21 analysts have
a “buy” recommendation for PepsiCo stock. Thirteen analysts have
recommended a “hold” while one has a “sell” rating.
Currently, analysts see more upside in Coca-Cola stock over the next 12
months. Coca-Cola’s stock has a target price of $58.76, with a potential upside
of 7.4% for the next 12 months. PepsiCo’s stock has an average target price of
$139.67, with a potential upside of around 2% over the next 12 months.

Shareholder returns

PepsiCo and Coca-Cola are widely referred to as “dividend aristocrats,” as they

have been increasing their dividends for more than 25 consecutive years.
PepsiCo has raised its dividend for 47 consecutive years now. Comparatively,
Coca-Cola has increased its dividend for 57 years in a row.

This year, PepsiCo raised its quarterly dividend per share by 3.0% year-over-
year to $0.96 (or annualized dividend per share of $3.82). Meanwhile, Coca-
Cola raised its dividend per share by 2.6% this year to $0.40 (or annualized
dividend per share of $1.60). As of December 24, PepsiCo’s dividend yield was
2.8%, while Coca-Cola’s dividend yield was 2.9%.

PepsiCo repurchased $2.3 billion of its common stock in the first nine months
of fiscal 2019. It plans to repurchase shares worth $3 billion by the end of fiscal
2019. Thus, it intends to return around $8 billion to its shareholders, including
dividends of about $5 billion in 2019. In comparison, Coca-Cola repurchased
13.7 million shares for $635 million and paid $3.4 billion in dividends in the
first nine months of 2019.

The consumer staple giants expect to improve their performance, backed by

innovations and technology-aided productivity savings. Higher global volume
growth, specifically in emerging markets, is also expected to drive their
performance.
Annexures:

1. Some information related to the financial analysis has been taken from
the Annual Reports which includes the profit margin and sales figures as
well as the other information.