The Coca-Cola Company’s distribution strategy

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Authored by Lucius Lu and Sophia Tiwana

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According to official statistics, an amazing 1.9 billion products of Coca-Cola are sold around the world everyday.

The Coca-Cola Company is a global business that operates on a local scale, in every community where they do business. The term is second most well known after okay, making it recognisable in nearly all communities and cultures across the globe. The Company is able to create a global a global reach with local focus because of the strength of its system, which comprises the Coca-Cola Company and their more than 250 bottling partners worldwide.

The system has numerous legal and managerial departments and sections,all independent of each other, and it does not own or control all of it bottling partners worldwide.

While it is generally perceived that Coca-Cola runs all its operations globally it, this process it done through various local channels. The Company manufactures and sells concentrates, beverage bases and syrups to bottling operators. It still however, owns the brand and is responsible for consumer brand marketing initiative. The bottling partners manufacture, package and distribute the final branded beverages to customers and vending partners, who then sell products to consumers.

All bottling partners work closely with suppliers- grocery stores, restaurants, convenience stores, amongst many others- to execute localised strategies developed in partnership with Coca-Cola. More precisely, although Coca-Cola is a global company, its products never have to travel far to reach the final consumer, making the product more local than you may think, the product is made local to the market where it is sold.

Their business is a local business, typically products aren’t shipped more than a few hundred miles; it’s all about being responsive to the customers needs and the local tastes of the consumers in every market. The Coca-Cola Company sells its products to bottling and canning operations, distributers, fountain wholesalers and some fountain retailers. They then distribute them to retail outlets, corner stores, restaurants, petrol stations and many more.

Arrays of points of sales that Coca-Cola products can roughly be categorised into are:

– Wholesalers/ distributers

– Retail/ corner stores/ super markets

– Restaurants/ cafes/ night clubs

– Petrol stations

– Automated teller machines (AMTs)

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The firms distribution system is one of the most well planned and executed compared to all other drinks of the same category. It has such an impact on consumers and is so successful that even wholesalers and distributers need the product for their business’ success. Coke’s position on consumer’s mind makes it essential to retailers and wholesalers. They have achieved their goal due to this high visibility, and to the availability of their products all over the world, even remote places.

Here is a video showing Coke’s innovation in its distribution system:

Coca-Cola’s vending machines are also a way the brand stays true to its identity of #sharinghappiness. Innovations in this channel are numerous, but we have selected a lovely one for you: the hug machine!

References:

http://www.coca-colajourney.com.au/our-company/about-the-coca-cola-system

http://zh.scribd.com/doc/30939798/Distribution-Channel-at-Coca-Cola#scribd

http://scw-mag.com/index.php/sections/distributers/143-the-coca-cola-company

42 thoughts on “The Coca-Cola Company’s distribution strategy”

  1. Good Post.. Coke’s distribution system is one of the most important and is very impressive compared to all other drinks in the category.Coco Cola uses an intensive distribution of its beverages Coco Cola Uses Manual Distribution Centre (MDC) model which operates within densely populated areas as they involve short distances.

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  2. In India Coke’s bottling plants gives agencies to a particular vendor with territory rights who specialise in wholesaling of only coke’s product such as Fanta, Kinley, Limca, coca-cola etc they dont distribute to wholesalers who specialise in other distribution as well, if a wholesaler want to have access he has to get it through agency at the same price what the reatailer is having. The reason could be attributed that it has become a brand of necessity and the brand portfolio has grown very large indluding soft drink, juices, water to manage it efficiently and to better counter the only rival pepsi they have this kind of distribution network in the form of dedicated ageincies.

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  3. Thanks for the Post. One of my friends owns a take away restaurant. She told me that Coca-Cola approached her and provided the refrigerator to her restaurant. There was no cost to the refrigerator. The requirement would be selling Coca-Cola drinks in there, but no Pepsi. I would assume Pepsi is doing the same to Coca-Cola.

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  4. This sounds like an excellent example of ‘intensive distribution’ as per last week’s lecture. Usually for simple, inexpensive, easily shipped items. (ie a soft drink). Also tends to use the pull strategy to pull through the channels of distribution. This is true of Coke as you stated, “Coke’s position on consumer’s mind makes it essential to retailers and wholesalers.” Pull strategy is about building up brand image and loyalty and if Coke hasn’t done that no one has!

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  5. Thank u for your share~
    I think Coca-Cola good use of distribution strategy. In China, you can see Coca-Cola everywhere, they has used three major sales mode of operation: the wholesale, direct marketing, the depth distribution. Meanwhile, Coca-Cola also continues to research the use of new channels for different regions and key channels in different periods, a professional service team to improve service levels to end customers. As they mature, such as supermarkets, schools, markets, Coca-Cola in the region and gradually establish a corresponding professional services team.
    For now, Coca-Cola’s “depth of distribution channels combined with focus on direct sales” model better resolve the conflict “to reduce transport costs,” between “Improving product coverage,”

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  6. I agree with enorton328 – coke is an example of the pull strategy in action. The investment that global Coca Cola makes in continuing developing the brand makes it easy for its partners to move the product. In many ways Coke’s brand is dependent on its bottling partners to make sure its available in the way consumers expect. A relationship that works both ways.

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  7. The other interesting aspect to Coke’s distribution strategy is the exclusive partnerships in which they are engaged with various resellers. A prime example of this is the relationship between Coca Cola and McDonalds, whereby they are almost symbiotic (http://www.nytimes.com/2014/05/16/business/coke-and-mcdonalds-working-hand-in-hand-since-1955.html?_r=0). This mutual dependence and shared values has helped both companies rise to become leaders in their respective industries. Not only have they collaborated on supply chain and logistics issues, but also product development and cross promotion of products. They are an ideal case study on how strengthening both upstream and downstream partnerships can be vital for business growth.

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  8. Coca Cola has distribution covered from ever angle. When you’re one of the most recognised brands in the world, and your product is available in almost every country in the world, you absolutely must have a great distribution model. They have so many different channels that sell coke products, that each channel must have its own dedicated method. From retail, to vending, to convenience and service based ( restaurant, airline, cafeteria, etc) each area has a well planned out method of distribution. Each method is designed to specifically suit the requirements of that channel of sales.

    To top this off many of the channels that coke products are distributed through are exclusively supplied by coke products. This kind of agreement is part of having the rights to sell coke products. Whether it be a corner store that is supplied with coke fridges purely for the display and sale of coke products, or the agreement coke has with places like McDonalds, Hungry Jacks, and Dominos to only stock and sell coca cola beverages, you are required to enter into a contract with coca cola.

    This just goes to show the kind of power a company like Coke has, and the extent to which other businesses are willing to go to in order to have coke products on sale in their outlets. I guess its the kind of power you can wield if you are part of a global dominating brand.

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  9. Very interesting and good blog. I think most people don’t recognize or forget the importance of good distribution systems. And Coca-Cola definitely has one of them. I especially loved the idea of the hug machine. Very cool and funny idea which fits to the whole brand identity and to Coca-Cola’s target group.

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  10. Good job!
    Coca-Cola utilizes the distribution channel as a marketing strategy to bridge the demand and supply gap and ensure that their products reach their different market segments. They use two major channel distribution strategies, direct selling and indirect selling. The strategy of using small retailers to reach their consumers is a form of direct selling where the company supplies their various products to the retailers. Indirect selling is a strategy whereby Coca-Cola engages various distributor agencies, through partnership and the company delivers the products to the distributors who then supply to the direct retailers and this strategy has proved to be more profitable for them.

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  11. I think from the start Coke brand did what many companies do now on social media, which is developing relationships through advertising that a brand is unlikely to have otherwise. In doing so Coke has related well with consumers and have established a cool, fun personality that consumers want to be attached to. Coke ads create fun and happiness and is always engaging, much like luxury brands

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    • I absolutely agree with you here. Coke has been innovative from the beginning, they didn’t just connected with the market but also with the emotions of the consumers. I am a big fan of Coca Cola advertisements.

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  12. Well the statistics says it all.
    It’s a pretty decent blog. You have beautifully explained the distribution system at coca cola and the best part is how they have reached the remote areas of the world. I remember when i was a kid and whenever i use to visit my grand parents at my village, i was always greeted with a chilled Coke bottle. Anyways i was kid at that moment and i had no idea what coca cola is and how come it reached my village.
    I loved the Coke’s hug machine idea, since i am a soccer fan the best innovative ad so far by coke was :

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  13. Good post guys! Coca- cola never cease to amaze me with their success! They are so innovative in whatever they do. The ads that they come up with for their products are very captivating and their distribution channels are just as successful. Their success has been a global one because they use intensive distribution means wherever their products are sold. The fact that coca cola products are distributed to all sorts of retailers including small convenience stores works in their favour because it means their products can be found in any store.

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  14. Ya very good blog. I was knowing this that success factor for Coca-cola is their distribution network ,because of which they are market leaders world wide .Although they have seen some failures through re-branding or re-positioning of their brand ,but because of their distribution network they have overcome all those hurdles and enjoying the dominance in many countries .

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  15. I really like the way in the examples you provided that Coke used their distribution outlets as was to engage with their customers- they always seem to be looking for new ways to connect.

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  16. Interesting post. distribution strategy is one of the essential factors that makde Coca Cola what it is today. Depending on the type of product being distributed there are three common distribution strategies available:
    1. Intensive distribution Used commonly to distribute low priced or impulse purchase products eg chocolates, soft drinks.
    2. Exclusive distribution Involves limiting distribution to a single outlet. The product is usually highly priced, and requires the intermediary to place much detail in its sell. An example of would be the sale of vehicles through exclusive dealers.
    3. Selective Distribution A small number of retail outlets are chosen to distribute the product. Selective distribution is common with products such as computers, televisions household appliances, where consumers are willing to shop around and where manufacturers want a large geographical spread. if you research Coca Cola’s history, then you will realise that it basically adopt all these three type of distrubtion strategies according to its company size as well as market situation since its is not so well-known and successful back then.

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  17. I think one of the most amazing things Coke did is that they put the refrigerated vending machines everywhere, at work places, universities, shopping centres, airports, and even hospitals. It services the right pack size at the right price, in the right place at the right time. For example, it focuses on high traffic locations such as railway stations and bus stand.

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  18. Good post

    I think Coca-Cola good distribution channel strategy used. In China, everywhere can see Coca-Cola, they use three major sales: wholesale, direct, depth distribution. At the same time, Coca-Cola also continue to study the use of new channels of different regions and important channels of different periods, professional service team to improve the level of customer service terminal.
    Now, Coca-Cola’s depth distribution channels combine direct sales model better resolution to reduce transportation costs, between the increase product coverage,

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  20. Good Blog. I like the way the Coco cola company attracts people by some innovative ideas. The main reason for any company to get success is the way how they reach their customers by distributing and advertising. I think coco cola company has already achieved its success in all the innovative ideas of advertising they made till now. Hope they maintain it in the coming years.

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  21. Thank you for sharing. This is very good example of product distribution.Coca-Cola, the world’s largest nonalcoholic beverage producer. When your brand is recognized all over the world, logistic system becomes playing a big component in your business and a key to run your business smoothly, you pretty much need to have a very well distribution function.

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  22. In my opinion,the key to success of Coca-Cola is the correct using of intensive distribution strategy. According to the features of their product：low priced, Coca-Cola directly pulls their products to customers, which bulids excellent word of mounth and reputation among customers. As a result, more and more partners seek corporation with Coca-Cola forwardly.

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  23. Coca-Cola is a large business in the global market; it is similar to McDonald; they will respond to the preferences of the customers in each country and change their ingredients; the amount of sugar of Coca-Cola products is different in different country. I’ve been to Japan before; Japan always produces some interesting product; Coca-Cola launched a huge can size of Coca-Cola; it is very cute and the retail stores in Hong Kong import it and sell it in Hong Kong; it is quite popular and creative.
    Coca-Cola has been view as a product which is very easy to get anywhere; as you mentioned above, people can get this from retail stores, petrol stations and restaurants. There are many automated teller machines are selling Coca-Cola’s products; the machines can be on the street; school area or working office. It is very convenience for people to buy their products.
    Thank you for providing this funny example for the marketing strategy of the Coca-Cola ‘Hug Me’ machine; it is very interesting. In my opinion, I like this idea very much. This machine satisfied the curiosity of the customers; customers would like to try to use this machine even they are not prefer to drink it that moment; the reason is it is quite attractive. One of the fact is that most of the restaurants prefer to sell Coca-Cola rather than Pepsi; I have worked for part time in café, fish and chips, two Japanese Izakaya and one fast food shop; they all do not sell Pepsi but many different kind of Coca-Cola.
    For personal preferences, I think Coca-Cola taste better than Pepsi as well.
    Thank you for your sharing.

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  24. Hi.. Great blog..
    As I read the words ‘availability of their products all over the world, even remote places’, I had to smile as about 10 years ago lived in one of the poorest most remote places on the planet ‘Guinea Bissau’, never heard of it right?

    And one thing that never ceased to amaze me was the abundance of Coca-cola available.. I mean, you would find somewhere selling coke (warm) before somewhere with fresh water! And in my eyes, that says something about how well you’ve marketed and distributed your brand!

    Thanks for posting..

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  25. Coca cola , well known brand for its innovations, cheesy marketing advertisements, wide range of products, catchy one liners, besides their far stretched reach to even the remotest place. The palate and taste, each to its own and what more can one ask for, if utmost care is given to their local tastes and satisfaction.

    Unlike the conventional bottled supplies, they came up with tinned cans, vending machines to give out the fresh ones!

    Their distribution model is one of the most talked about given the expanse they achieved across the globe.

    These background facts simple amaze us !

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  31. I am already doing business as AMC IN COCACOLA but now i am interested in distribution.Earlier i had repeatedly requested but received no reply from your end..so please sort out the issue.
    sujit kumar
    simri bakhtiyar pur
    9570420222

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