Acquisitions at the Coca-Cola Company

Acquisitions at the Coca-Cola Company

Mergers and acquisitions are a way that many businesses use to access larger markets, create a competitive edge in an already competitive market, and grow. Huge companies are involved in the process of acquisition and merging as ways of meeting various business goals. The Coca-Cola Company is an example of such a company that utilizes tactics to expand its businesses. This paper will discuss the acquisitions that the Coca-Cola Company has made in recent years, explaining the circumstance for the acquisition and the viability of the business decision.

Background

The Coca-Cola Company is one of the world’s largest beverage companies and is well known for its soft drink products. The company operates in over 200 territories and has over 500 brands under its company portfolio. The company has had various acquisitions over the years that have been in line with the company’s goals and objectives for long-term growth and market dominance.

Acquisitions

The Coca-Cola Company has made various acquisitions in recent years to help it achieve its long-term mission of disciplined growth. The company has acquired other companies all over the world. A good example is the acquisition of Australia’s Organic & Raw Trading Company. The company gives the rights of ownership of the kombucha brand, Mojo, to Coca-Cola.  The company has also acquired Costa Coffee for $5.1 billion, a coffee shop chain in the United Kingdom.  The company has made this decision to purchase due to various factors that are facing the beverage industry.

The beverage industry is changing over the years. The tastes and preferences of the consumers are changing due to the changing lifestyles of individuals. In the last few decades, carbonated drinks were the in thing and the drinks that everybody wanted t to have for refreshment. That is explained by the drastic growth of companies such as Coca-Cola and PepsiCo. However, scientific research has shown that the products offered by such companies are some of the main causes of health conditions that people suffer from. Conditions such as diabetes and obesity are often associated with sugary foods and products.  The main products of Coca-Cola, such as their sodas, are sugar-based and therefore fall under the category.

Consumers’ tastes are changing as people try to adopt positive lifestyles. People are aiming at taking less sugar and, therefore, are opting for healthier products. Coca-Cola is not well known for healthy beverages such as organic and fruit drinks. Therefore, acquisitions are a way that the company can use to meet the changing needs of its consumers. The acquisition of the Australian organic brand allows the company to produce health-based products for a group of its consumers. It helps create loyalty to the brand and allows the company to have all the products that its loyal consumers may have. The company also acquires other brands as a way of increasing its market share in a given region. In an acquisition, the company gets the resources of the acquired company and its already existing consumers.

Opinion on the Acquisition

The move by Coca-Cola to acquire health drink companies is the right move and the right combination to help the company remain relevant in the changing consumer market and increase its competitiveness. Through the acquisitions, the company can compete with other health brands in the market and have the upper hand due to existing consumer loyalty. The acquisitions are also a good growth strategy as the company can afford them through its massive revenue generated from its brands.  Acquiring health product companies is a good move for Coca-Cola as consumers’ health-conscious mindset will change the market dynamics and render original products of the company unhealthy alternatives.

Advantages of Acquisitions

Through the acquisition, the Coca-Cola Company benefits in m anyways. The first way is the obtaining of quality staff from the company being acquired. That brings in new knowledge and skills into the business, thus creating a competitive edge for the business and increasing efficiency and productivity. The company also has access to valuable assets of the company, which can spur more growth.  For instance, the Coca-Cola Company will have access to the production facilities and consumers of the company that they acquire. That means that the former can have healthier brands without buying more assets that would be used for production. In acquisitions, the company buys a finished product and therefore does not have to cater for the costs of research and development of a new product. That saves on the money that the company would spend on R&D in the long run.

Acquisitions also lead to the diversification of the company product portfolio. The Coca-Cola Company has the kombucha brand under its name and therefore creates healthier alternative brands under its name. The company can use its vast distribution channels to increase the market demand and share of the new products that the area gained through the acquisition. The acquisition also reduces the level of competition in the market. Through acquiring competitors, it puts them out of the competition arena. For instance, Coca-Cola is no longer threatened by kombucha brands on its original brands as it also produces its brand through the acquired Australian company.

Conclusion

Acquisitions and mergers made by Coca-Cola are important to the overall growth and development objectives of the company. Acquiring health-related brands helps the company deal with the rising issues of changes in consumer preferences. The acquisitions are beneficial because they create additional financial and human resources that help increase the productivity and thus, profitability of the firm.

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