Coca-Cola Plans Aggressive Global Expansion

NACS Daily News

Coke plans to spend more than $30 billion over the next five years to grow its brand globally.

ATLANTA – In an effort to grow its brand globally, Coca-Cola announced investments totaling more than $30 billion in markets around the world over the next five years, the Atlanta Journal-Constitution reports.

The move coincides with a major world population shift, as more than 2 billion people are expected to move from rural and farming areas into big cities.

The investment commitment will be done in partnership with Coca-Cola’s bottling partners and will become part of the company’s “2020 Vision,” an initiative to double the company’s revenue in the next eight years (it stood at $100 billion in 2010).

The expansion won’t come without challenges. Growth in China and India has eased of late, while developing nations lack necessary infrastructure, such as roads or reliable electricity.

“Infrastructure is a challenge, but this can be overcome — to a certain extent,” said Mike W. Peng, Jindal Chair of Global Strategy at the University of Texas at Dallas. “What Coke cannot overcome is wars, poverty and corruption. Thankfully, guns have been largely silent in most of Africa (except in Libya lately). Poverty and corruption as problem areas seem to be getting (at least slightly) better. Countries not fighting civil wars make Coke’s operations less disruptive, and new roads penetrating the jungle can obviously elevate sales.”

Coca-Cola is likely to encounter its main rival, Pepsi, along the way, as the latter is also investing billions to grow its brand globally.

Currently, Coca-Cola has 53.1% of the international carbonated beverage market share, compared to 21.7% for Pepsi, according to Beverage Digest.

In June, Coca-Cola announced plans to begin distributing in Myanmar, one of only three (!) countries in which it does not sell its products (the other two are Cuba and North Korea).

Working with countries testing democracy is fraught with risk, said Ravi Ramamurti, a professor of international business and strategy at Northeastern University in Boston.

“A big challenge in countries like Myanmar is finding strong local partners for production and distribution,” he said. “What happens to Coke’s fortunes if the ‘in’ crowd is thrown out after a regime change? Coke must hedge its bets so it can thrive under diverse scenarios.”

A critical part of Coca-Cola’s expansion strategy will be partnering with bottlers or buying some outright that can help distribute the company’s product.