The Power Of Coca Cola

The Coca-Cola Company is one of the biggest beverage companies in Atlanta, United States and was started in 1886 by John Pemberton. It is primarily involved in the manufacture and distribution of sparkling and still beverages such as packaged water and juice. It was later purchased by Asa Candler who saw the company open its operations in Cuba, Canada and Panama. The first Coca-Cola product was Fanta orange whose encouraging sales encouraged the company to buy the Minute Maid Corporation as the first juice product. During its early years of establishment, this company has made several innovations including the development of a 12-ounce packet and six-bottled cartons. Sprite became the third best selling product in 2008 with two billion cases

In this case, the wholesalers buy these products in large quantities offering them an opportunity to bargain for better deals. With a decrease in the preference of unhealthy drinks, the customers can also obtain bargaining power for soft drinks. The major suppliers of Coca Cola are the bottlers and suppliers of ingredients such as color, flavor additives and sugar. Since they produce the same products over time, the suppliers have a low bargaining power. The recent increase in the costs of sugar production and packaging has made Coca Cola lower its profits. Bottling is done by Coca Cola Enterprises, which is the largest bottler in the world. Initially it was independent from Coca Cola Company although Coca Cola had majority of the shares. Coca Cola Enterprises is also involved in the distribution and marketing of Coca Cola products. However in 2010, Coca Cola Company and Coca Cola Enterprises merged thus lowering its bargaining

It is affected by factors such as availability of substitutes. In beverage industry, the market is flooded with substitutes. In this case, if Coca Cola increases their prices, the consumers shift to substitutes such as aerated drinks implying that the elasticity of demand is elastic and greater than 1. Time also affects the elasticity of demand of Coca Cola such that if it is long, the consumers will take a long time to shift to substitutes and it will be elastic. However if the change in prices is too short, the elasticity of demand will be inelastic. The elasticity of demand in consumers affects the purchasing power whereby; an increase in price exerts pressure on the consumer’s