Role of Coca-Cola Company in Obesity Rising - Case Study Example

Coca-Cola Company By: Institution: Course: Instructor: Date of submission: Introduction After its establishment in 1886 in Atlanta, Georgia, Coca-Cola Company has spread to other regions including the Asia-Pacific. Such expansions began in the 1920s. By the time the 21st century was coming to an end, the products of the company were available in almost all the nations in the globe. Recently, the company has been named as the biggest manufacturer, marketer, as well as distributor of non-alcoholic syrups and beverages in the world. However, the company has witnessed massive losses partly because many people fail to buy the products. Like other soft drinks, coke soda and other Coca-Cola Company's products have blamed for an increase in the cases of lifestyle diseases (Kleiman & Popkin 2012, p. 5). This essay will aim at identifying the obesity problem associated with Coca-Cola Company and the strategies the company has taken to address this issue. The problem has attributed to the massive loss witnessed in the enterprise. Role of Coca-Cola Company in Obesity Rising Soft drinks have been blamed for contributing to empty calories, one of the causes of lifestyle diseases. Many people are becoming health conscious and owing to this; they are buying healthy products such as fruit and organic juices. Recently, many organizations across the globe have protested against the Coca-Cola Company. In Sydney for instance, arrests were made against the members of Greenpeace Australia who scaled up the iconic sign of Coca-Cola in King Cross. According to the organization, the company is responsible for increased cases of tooth decay and obesity. Although many Australian many are unable to identify the cause of obesity, majority attribute it to soft drinks such as Coke (Hu & Malik 2010, p. 1). Intake of SSBs (sugar-sweetened beverages) especially carbonated drinks significantly contribute to overweight and obesity epidemics. The Clear association does exist between the intake of soft drink and an increase body weight. The intake of soft drinks is linked to lower calcium, milk, as well as other nutrient absorption. In the US, one in three children, as well as two in every three adults, are obese or overweight. The nation does spend approximately $190 billion per annum to treat conditions related to obesity. Among the major contributor to obesity has been rising consumption of sugary carbonated drinks including Coca-Cola. A 20-ounce soda has been found to contain approximately `15 to about 18 teaspoons of sugar, and its use would lead to additional 240 kilocalories. A 64 ounce Coke drink contribute to about 700 calories. Consumption of these drink does not make people eat less since the drinks do not bring the satiety caused by consuming solid foods. Over time, individuals who drink sugary drinks add weight at a higher level than people who consume little or no non-alcoholic beverages. According to studies, these individuals can add up to about four pounds after every four years. Other studies reveal a direct link between the gaining of weight among children and the consumption of sugary soft drinks. Individuals consuming sugary drinks on a regular basis increases their chance of developing type two diabetes by 26%. Young Adults have a higher risk of experiencing the same condition. Another study targeting a sample of 40,000 men for 20 years revealed that individuals consuming a single can of soft drink each day have approximately 20% risk of developing heart attack than those who did not take these drinks. Similar results were found in another study that targeted women. Consumption of carbonated soft drink also increases the gout risk by about 75% in women and such an elevated risk is also common in men. Weight control can be done by consuming healthy drinks as well as reducing the amount of sugar in such beverages. The information health is making many people divert their attention to healthy products (Hu & Malik 2010, p. 1). Coca-Cola Company is thus faced with one of the major financial challenges owing to the small sale of its products; Coke has come up with several strategies aimed at addressing this problem. As per now, the sales of the famous coke are small, and this is making the management of the company be concerned. In the recent years, the company has been facing stiffer competition from Pepsi, a long time competitor from natural juice companies. Apart from, there has been a decline in the carbonated drinks consumption across the globe. All these are tied to the fact that Coke drink has been linked to the rise in diabetes. Some groups have indicated that Coke is a killer drink, and this has been quoted by the management as one of the causes of weak sales in the company. Many people are diverting their attention from Coca-Cola to healthier products. The obesity problem is becoming severe in many parts of the world. Being obese increases the chance of an individual to develop long-term life-threatening conditions such as diabetes, cancer, and cardiovascular diseases. In 2011, the percentage of obese or overweight people in Australia aged over 18 years stood at 62.8%. Over time, the cases of obesity in Australia has been on the rise. Obesity and overweight are the number two contributor to disease burden after dietary risks (Kleiman & Popkin 2012, p. 15). Strategies Currently, the company is coming up with new strategies for addressing the rising resistance to its products. Among these strategies include the diversification to healthier juice. Recently, the company became a minority shareholder of the Suja Juice Company With such a realization; Coca-Cola partnered with Suja Juice to ensure it is not witnessing the massive small sale from its brand products. The company (Suja Juice) is an organic juice maker and has recently hit headline. This is the latest move of diversification by the Coca-Cola Company, and it was triggered by the slow sales of its products as consumers who are health conscious scale back on coke soda. However, the soda remains the biggest revenue source for the company (70%) (Bailey 2015, p. 1). Coca-Cola Company is also making moves to tap into growing thirst of the consumers for fresher as well as less processed vegetable and fruit juices. Suja utilizes ingredients that are non-GMO and to kill bacteria; the company uses high pressure instead of heat. Cold processing ensures that the beverage is retaining much of its nutritional value and also remain "raw". Three different handcrafted organic juices are offered by Suja juice, and they are Suja Elements, Suja Essentials, and Suja Classics. The top selling drink by Suja is the Mighty Greens, a flavored drink which has 14 different ingredients including kale, alfalfa grass, and apple. Coca-Cola Company has invested approximately $90 for almost 30% shares in Suja, a company based in San Diego. Apart from that, Coca-Cola is making plans to own the entire stake of the Sugar Company. Following its launching in 2012, Suja Company has achieved a rapid growth. In 2014, Suja Company recorded a sale of approximately $42 million, and this was a surprise for Coke, which recorded a sale of $46 million. The company's juices that include flax seed and strawberry sell at approximately $4 to $8, a higher price compared to other brands (Moye, J. 2015, p. 1). Although Suja juice is available in about 12,000 stores across the US, it is planning to expand to other areas such as Australia. With its plans to diversify into other healthy products, Coca Cola is likely to witness a massive growth in its revenues. With such a partnership, it is clear that Coca-Cola Company is considering integrating health products in its portfolio to avoid the losses that have been witnessed in the company in the recent years (Bailey 2015, p. 1). In 2001, Coke had acquired Odwalla Inc, a natural juice company but it (Odwalla) failed to make an impact. The refrigerated trucks of Oldwall will be utilized by the Coke Company to transport Suja juice. Suja juice will potentially compete well with other natural juice. It is likely to attract a higher influence in other areas as it has done in the US. The other strategies that Coke has used to ensure that it is diversifying into health products are acquitting Honest Tea as well as Zico coconut water minority stake. Honest Tea is an organic tea company which has also made an impact on the globe. In 2014, Coca-Cola Amatil and other Coca-Cola Companies began to roll out Fairlife, a premium priced brand of milk, and this was after the company formed a joint venture with various producers of milk. In 2013, Coke also spent approximately $4 billion Keurig Green Mountain Inc, a company specializing in making coffee machines. In 2015, Suja was named by Forbes as the second most promising company, and Coca-Cola is likely significantly benefited from the deal with this endeavor. HPP (High-Pressure Processing) is the primary method utilized by the corporation to produce the organic juice HPP assists in the lengthening the juice's shelf life as well as in the distribution of the juice in many parts of the globe. The juice has been reported to be very nutritious. Today, Suja juice is hugely demanded by the consumers. With the influence from Coca-Cola, Suja juice will benefit from the vast global customer base and at the same time, Coca-Cola will also profit from the company through the generated revenue. Through the partnership, Coke's stake at Suja will help in boosting its revenue. Coke will take advantage of the sale velocity as many consumers are locked into the proportion of Suja. All the Coke's NHB (Natural Health Beverage) brands portfolio such as suja and Odwalla are appearing to the consumers on various beverage occasions (Moye, J. 2015, p. 1). Suja Juice mainly focuses on farm fresh vegetables, and this will help Coke to cope with the growing resistance from health conscious consumers. Although VEB (Venturing and Emerging Brand) team of North America Coca-Cola were responsible for establishing the deal with Suja, other Coca-Cola Bottler Companies across the globe including Coca-Cola Amatil will also benefit from the deal since the company operates as one entity. Coca-Cola established the deal with Suja juice because it (Suja Juice) fits the nutrient rich as well as organic juice trend. Apart from that, Coca-Cola had witnessed the success story of Suja Juice Company in the marketplace. Consumer trends towards consuming healthy food are driving the rapid growth of Suja Juice. Coca-Cola will explore the opportunity for growth in this new venture. Although the portfolio of Coke includes Odwalla, there exist limited intra-portfolio or overlap competition, and the introduction of Suja Juice serves this purpose. This is because Odwalla mainly comprises of fruit ingredients whereas Sujas comprises of vegetable constituents. Coke was given the option of making a complete purchase of Suja Company, three years after the signing of the deal (Bailey 2015, p. 1). Conclusion In Conclusion, only a small percentage of the food sold is organic in nature yet in the latest poll, the approximate majority of the global population have used organic beverages and food to their diet. Coca-Cola Company's long-term plan is to ensure the sale of Suja juice in the already established coke market. It (Coca Cola) has made a distribution agreement with Suja allowing the juice to be made available to Odwalla serviced outlets. The growing demand for Suja products may have helped Coke to reach into such a decision. The juice will be made available to many parts of the globe, and this will help Coca-Cola to raise its revenue higher. Such a move would, in turn, assist in addressing the cases of obesity associated with coke products. The problem will also be resolved through the sale of other healthy products such as Odwalla Juice. The result would be higher sales of the healthy products. Coca-Cola through the partnership will thus help in reaching to more customers, from the current 4% of the people using organic products to over 40%. Bibliographies Bailey, S. 2015. Coca Cola gets healthier with a stake in Suja Juice. Retrieved from http://marketrealist.com/ Hu, B. F., & Malik, S. V. 2010. Sugar-sweetened beverages and risk of obesity and type two diabetes: epidemiological evidence. Journal of Physiological Behavior 100 (1): 47-54. Kleiman, S., NG, S. W., & Popkin, B. 2012. Drinking to our health: can beverage companies cut calories while maintaining profits? Obesity Reviews. 13, 258-274. Moye, J. 2015. Coke take minority stake in fast growing suja juice. http://www.coca-colacompany.com/ Read More