The Coca Cola Company

THE COCA COLA COMPANY

By:

Rachelle L Goude

May 27, 2006

Summary of the History of Coca Cola

On May 8, 1886, Dr. John S Pemberton, a pharmacist in Atlanta, Georgia, USA mixed the syrup that became 'Coca-Cola'. His friend and bookkeeper, Frank M. Robinson, thinking that the two C's would 'look well in advertising', suggested the name 'Coca-Cola'. He wrote the words in his now familiar Spenserian script, and the world's most recognized trademark was born.

Selling his creation from Jacob's pharmacy for five cents a glass, Dr. Pemberton promoted his new product by distributing thousands of coupons that could be exchanged for a complimentary sample. In the first year, he spent $46 on advertising. Pemberton sold the rights for 'Coca-Cola' to Asa G. Candler who founded The Coca-Cola Company in 1892. Candler was a confirmed believer in the power of advertising. He fervently plunged into the world of mass-merchandising, ensuring the 'Coca-Cola' trademark was depicted on countless novelty products such as fans, calendars, clocks, ornate led

glass chandeliers and urns.

His efforts were well rewarded. Just three years after the official incorporation of The Coca-Cola Company in 1892, Candler was proud to announce that 'Coca-Cola' was now drunk 'in every state and territory in the United States'. A major leap considering that in its first year on the market, Coca-Cola had sold on average a mere nine drinks per day. Expansion was so impressive that in 1898, a new headquarters was housed in a large building in Atlanta. Candler naively described the three-storey building as 'sufficient for all our needs for all time to come'. Needless to say, the building was too small after just a decade.

In 1923, Robert Winship Woodruff was elected president of The Coca-Cola Company. A visionary leader, he placed strong emphasis on product quality, establishing a 'Quality Drink' campaign using highly trained service teams. Early advertising discouraged consumers from calling the product Coke. They urged "Ask for 'Coca-Cola' by its full name; nicknames encourage substitution." But people kept asking for Coke and in 1941 the Company gave in to public demand. That year, the trademark 'Coke' received equal prominence in advertising with 'Coca-Cola', and in 1945 Coke was registered as a trademark.

The now legendary promise made by Robert Woodruff to General Eisenhower that every American serviceman would "get a bottle of 'Coca-Cola' for five cents, wherever he is and what ever the cost to The Coca-Cola Company" meant that 'Coca-Cola' went wherever the US troops did, making the brand truly international.

How Coca Cola differentiates itself from its competitors

How the general public perceives them may not be identical in all parts of the world. However, it can rely on a few very important aspects. The quality of its taste, the fiercely protected usage of the word "Coke" and the famous logo penned by Frank Robinson. The Quality aspect deserves special attention as Coca Cola found out at great expense when they announced a change in the formula to a sweeter less tangy taste on April 23, 1985. 87 days later with up to 6,000 complaints a day on the 1-800-GET-COKE line, they reintroduced the original formula

First and foremost, 'Coca-Cola' is the most recognized commercial trademark in the world today. In fact, it is recognized by 94% of the world's population and is the most widely recognized word in the English language after 'OK.' The Coca-Cola Company has pursued a winning policy, ensuring Coca-Cola ubiquity, with powerful global advertising and a highly efficient distribution system. This strategy is based on the company's belief that every day, every single one of the 5.6 billion people who populate this planet is going to get thirsty, and the onus is on The Coca-Cola Company to ensure 'Coca-Cola' is available to satisfy this need.

The dedication of the Coca-Cola distribution system around the world is quite remarkable and bears testimony to the company's determination to provide 'a pause for refreshment' at any time, anywhere. A fine example is the 73-year old Filipino man who refuses to budge from his selling post in his local town market until he has managed to sell at least 50 cases of 'Coca-Cola' every day. A comprehensive network of bottlers peppered across the globe supplies the distributors, who ensure 'Coca-Cola' maintains a worldwide presence. In fact, the Coca-Cola bottling system is the largest, most widespread production and distribution network in the world. As a consequence, Coca-Cola has been able to take full advantage, establishing a firm foothold in new and emerging markets. Today, you can buy a 'Coca-Cola' anywhere from Beijing to Delhi, Moscow to Mexico City.

Current Ratios for the Coca Cola Company for Year Ending December 2005

(All numbers in millions)

1. Current Ratio = Current assets/Current liabilities

=10,250/9,836

= 1.04

2. Inventory Turnover Ratio = Cost of goods sold/ Average Inventory

= 8,195/1,424

= 5.75

3. Accounts Receivable Turnover Ratio = Annual credit sales/Accounts receivable

= 23,104/2,281

= 10.13

4. Debt to Equity = Total Debt/Total Equity

= 5,660/16,355

= 0.346

5. Return on Assets = Net income/ Total assets

= 4,872/29,427

= 0.166

6. Return on Equity = Net income/Shareholder equity

= 4,872/16,355

= 0.298

7. Gross Margin on Sales = (Sales-Cost of goods sold)/Sales

= (23,104-8,195)/23,104

=