In tough times the majority of international companies tend to cut jobs and wind down business projects, but it has nothing to do with Coca-Cola strategies – the global leader in the beverage industry says it eyes to start expanding its business empire by acquisition of smaller drink producers unable to survive now and promoting new brands. Coca-Cola has large scale plans about the Russian market in particular.

Muhtar Kent, the CEO of the Coca-Cola Company knows how to cope with the current situation, as he took the company through similar economic turbulence of 1998 in Russia and 2001 in turkey and South America. He is absolutely sure it’s not the time to sit twiddling your thumbs.

Coca-Cola has already launched an international advertising campaign promoting its brand and is making deals to expand business in China, Russia and South America.

Coca-Cola profit markup in 2008 is reported to reach 13%, though analysts presume much lower rates in future.

The company stakes hopes on Russia, as it is believed to climb to the 5th place from the current 12th in terms of market volume and will bring big profits to Coca-Cola.

Intense competition between Coca-Cola and PepsiCo, which was widely distributed in the Soviet Union and only in the 1990s gave up the leading position on the Russian market, is one of the frontlines for the global leader in beverage industry. Last year Coca-cola accounted for 28% of carbonated drinks market in Russia, while PepsiCo could boast only15%. As for other beverages, he companies go neck to neck in terms of sales volume.

Coca-Cola’s strategy to sweep the Russian market implies introduction of new products to the consumers, e.g. citrus flavored energy drinks, ice tea, juice and traditional Russian Kvass. Thus, the company addresses interest of local consumers, whose fastidious taste make them pass by popular carbonated drinks standing on the shelves in numerous supermarkets and believed to be injurious to health.

Coca-Cola’s promotion of 1.25 and 1.5-litre bottles is aimed to accustom the Russians to drink soft drinks at home when having dinner instead of going to restaurants, where prices is beyond means for many these days. Besides, the company attempts to make less popular and hence cheaper than Coca-Cola and Sprite drinks catch consumers’ eye.

Unlike many other companies hammered by the economic crisis and thus unable to obtain loans they need to pay for deliveries of their goods to supermarkets, Coca-Cola has got its own distribution system which services over 480 thousand shops all over the country. Coca-cola also plans to take hold of vacant advertising spaces – lots of companies have to cut their advertising budget and Coca-Cola has a good chance to take advantage of the situation.

Sources:

    Russian Business

Olga Pletneva