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Introduction
The following report described the activities carried out during a five week full time internship at the Hindustan Coco-Cola Beverages Private Limited, Cochin, Kerala. The document contains the information about the organization and the responsibilities performed during the period between April and May 2015. More than a plain account of tasks, the objective of this account of text is to reflect upon the experiences collected during the internship of an MBA student in Marketing and Operations.
The first part of the report offers an overview of the organization, followed by the working plan initially agreed upon with the Splash bar division of the Hindustan Coco-Cola Beverages Private Limited. Following, it proceeds to describe in some detail the most relevant tasks carried out and their respective analysis. Finally, the report wraps- up with a few closing remarks and conclusion from the experience.
Background
The second semester MBA students of the Kerala University are required to complete four weeks of internship as part of the course curriculum program. The basic premise of an internship is that the management students should work outside the traditional campus environment to gain practical job experience.
Objectives of the internship
1. To sensitize the nuances of the workplace and to understand the group process and dynamics in organizations in first person perspective.
2. To apply concepts learned in classrooms, out of the comfort zone and experience real life learning.
3. To develop a network of corporate contacts for future career enhancements.
a. Industry Overview
The soft drink industry is composed of two distinct sub industries, by classification standards, under the manufacturing industry title. The first industry is the Flavoring Syrup and Concentrate Manufacturing Industry and the second is the Soft Drink Manufacturing Industry.
Flavoring Syrup and Concentrate Manufacturing Industry
As of 2015, there are 100 plus companies in the Indian. soft drink industry that manufacture flavoring syrup concentrates, powdered concentrates, and related products for use in soda fountains or for manufacturing soft drinks. Their products are sold primarily to soft drink producers and grocery wholesalers.
Soft Drink Manufacturing Industry
Leading Indian companies with direct and allied interests in the non-alcoholic beverage industry have come together to form the Indian Beverage Association (IBA). These companies include Dabur India Ltd, Red Bull India Pvt. Ltd, Tetra Pak India Pvt. Ltd, Pearl Drinks Ltd, Bengal Beverages Ltd, Jain Irrigation Systems Ltd, Coca-Cola India and PepsiCo India Holdings Pvt. Ltd. These are the industries that blend ingredients such as water, liquid beverage bases/syrup, and sweeteners, and then package and distribute these beverages for sale. Excluded from this industry grouping are alcoholic beverage producers and companies that only produce beverage ingredients or distribute beverages.
Market Leaders
Flavoring Syrup and Concentrate Manufacturing Industry
The flavoring syrup and concentrate manufacturing market (see Figure 1) is dominated by two main players, who made up 73% of the total Indian. Market share in 2010: the Coca-Cola Company (40%) and PepsiCo, Inc. (33%).The remaining 27% of the market is composed of a variety of smaller companies like Dabur, Parle, and Neera etc.
Soft Drink Manufacturing Industry
The Soft Drink Manufacturing market in India is dominated by three players, who accounted for 66% of the total market share in 2010: the Coca-Cola Company (28•6%), PepsiCo, Inc. (26•8%), and the Dr Pepper Snapple Group (8•6%).4 The remaining 36% of the market includes many small soft drink manufacturing companies (see Figure 2). Among the other companies: J Cott Corporation (3•3% market share) – This company is the world’s largest manufacturer of retailer-brand (private-label) soft drinks and the fourth largest soft drink maker in the world. National Beverage Corporation (1•3%) – This company is a holding company that focuses on holding and developing strong regional brands, especially within the carbonated soft drink (CSD) segment. Its managed subsidiaries include Faygo Beverages, Lacroix Water, Everfresh Beverages, and Shasta Beverages.
Flavoring Syrup and Concentrate Manufacturing Industry
Flavoring syrup and concentrate manufacturing is an $8 billion industry in the United States based on revenue. It was forecast to generate a profit of $1•4 billion in 2010. The industry’s annual growth rate declined by 1•4% from 2005 to 2010, but is expected to increase 0•8% from 2010 to 2015.
Soft Drink Manufacturing Industry
Soft drink manufacturing is a $47•2 billion industries in the United States based on revenue. It was forecast to generate a profit of $1•7 billion in 2010. The industry’s annual growth was 1•8% from 2005 to 2010, and it is expected to maintain this growth rate between 2010 and 2015.
Product Segments and Major Market Brands
Products produced in this industry are broadly referred to as soft drinks but can be further divided into six main segments based on industry revenue:
1. Carbonated Soft Drinks (CSDs)
• 45% of industry revenue
• Includes well-known brands and lesser-known household and private label brands sold in supermarkets and discount chains
• Top brands: Coke (Coca-Cola), Pepsi (PepsiCo), Mountain Dew (PepsiCo), and Dr Pepper (Dr Pepper Snapple Group)
2. Fruit Beverages
• 15•2% of industry revenue
• Includes 100% fruit juices, juice drinks (which contain less than 100% juice), and fruit-flavored drinks with no juice
• Top brands: Tropicana (PepsiCo) and Minute Maid (Coca-Cola)
3. Bottled Waters
• 12•6% of industry revenue
• Includes bottled spring and filtered water along with flavored waters and waters enhanced with vitamins and minerals
• Top brands of enhanced waters: Kinley (Coca-Cola) and Aquafina (PepsiCo)
4. Functional Beverages
• 11•3% of industry revenue
• Includes energy drinks, relaxation drinks, and ready-to-drink (RTD) teas and coffees
• Top brands of energy drinks: Red Bull (Red Bull) and Monster Energy (Hansen Natural)
• Top brands of RTDs: Arizona (Hornell Brewing), Lipton (PepsiCo), Snapple (Dr Pepper Snapple Group), and Nestea (Coca-Cola)
5. Sports Drinks
• 8•7% of industry revenue
• Includes both liquid and powdered sports formulas
• Top brand: Gatorade (PepsiCo)
6. Other
• 7•2% of industry revenue
• Includes ice manufacturing, dairy-based drinks, and soy-based drinks
Major Markets
The final products of soft drink production are distributed to six main segments. Supermarkets and general merchandisers represent the largest channel the ultimate consumer utilizes to purchase soft drinks, accounting for 48% of the market. The remaining five segments included in the soft drink market are:
a. Food Service and Drinking Places (E&D)
• 20% of market
• Includes fast-food outlets, takeout outlets, full-service restaurants, and bars.
b. Convenience Stores and Movie theaters
• 12% of market
• Includes stand-alone convenience stores and stores attached to movie theaters
c. Vending Machine Operations
• 11% of market
• Includes vending machines in transportation outlets or other areas of convenience
d. Other
• 8% of market
• Includes smaller outlets such as drug stores, community centers, and private clubs
b. Company Overview
The Coca-Cola Company is an American multinational beverage corporation and manufacturer, retailer and marketer of nonalcoholic beverage concentrates and syrups, which is headquartered in Atlanta, Georgia. The company is best known for its flagship product Coca-Cola, invented in 1886 by pharmacist John Stith Pemberton in Columbus, Georgia. The Coca-Cola formula and brand was bought in 1889 by Asa Griggs Candler (December 30, 1851 – March 12, 1929), who incorporated The Coca-Cola Company in 1892. The company operates a franchised distribution system dating from 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory. Originally intended as a patent medicine when it was invented in the late 19th century by John Pemberton, Coca-Cola was bought out by businessman Asa Griggs Candler, whose marketing tactics led Coke to its dominance of the world soft-drink market throughout the 20th century.
Its current chairman and CEO is Muhtar Kent.
Acquisitions
The company has a long history of acquisitions. Coca-Cola acquired Minute Maid in 1960, the Indian cola brand Thums Up in 1993 and Barq's in 1995. In 2001, it acquired the Odwalla brand of fruit juices, smoothies and bars for $181 million. In 2007, it acquired Fuze Beverage from founder Lance Collins and Castanea Partners for an estimated $250 million. The company's 2009 bid to buy a Chinese juice maker ended when China rejected its $2.4 billion bid for the Huiyuan Juice Group on the grounds that it would be a virtual monopoly. Nationalism was also thought to be a reason for aborting the deal. In 1982, Coca-Cola purchased Columbia Pictures for $692 million. It sold the movie studio to Sony for $3 billion in 1989.
Revenue
According to the 2005 Annual Report, the company sells beverage products in more than 200 countries. The report further states that of the more than 50 billion beverage servings of all types consumed worldwide every day, beverages bearing the trademarks owned by or licensed to Coca-Cola account for approximately 1.5 billion (the latest figure in 2010 shows that now they serve 1.6 billion drinks every day). Of these, beverages bearing the trademark "Coca-Cola" or "Coke" accounted for approximately 78% of the company's total gallon sales.
Also according to the 2007 Annual Report, Coca-Cola had gallon sales distributed as follows:
• 43% in the United States
• 37% in Mexico, India, Brazil, Japan and the People's Republic of China
• 20% spread throughout the rest of the world
In 2010, it was announced that Coca-Cola had become the first brand to top £1 billion in annual UK grocery sales.
1.Bottlers
In general, The Coca-Cola Company and its subsidiaries only produce syrup concentrate, which is then sold to various bottlers throughout the world who hold a Coca-Cola franchise. Coca-Cola bottlers, who hold terrestrially exclusive contracts with the company, produce the finished product in cans and bottles from the concentrate in combination with filtered water and sweeteners. The bottlers then sell, distribute and merchandise the resulting Coca-Cola product to retail stores, vending machines, restaurants and food service distributors.
One notable exception to this general relationship between The Coca-Cola Company and bottlers is fountain syrups in the United States, where the company bypasses bottlers and is responsible for the manufacture and sale of fountain syrups directly to authorized fountain wholesalers and some fountain retailers. The Coca-Cola Company currently owns Coca-Cola Refreshments, the anchor bottler of Coca-Cola products in North America. Coca-Cola Refreshments consists of bottlers formerly owned by Coca-Cola Enterprises.
Brands
1. Tab
Tab was Coca-Cola's first attempt to develop a diet soft drink, using saccharin as a sugar substitute. Introduced in 1963, the product is still sold today, although its sales have dwindled since the introduction of Diet Coke. The Tab soft drink is difficult to locate in recent times, due to its de facto replacement by Diet Coke.
2. Other soft drinks
The Coca-Cola Company also produces a number of other soft drinks including Fanta (introduced circa 1941) and Sprite. Fanta's origins date back to World War II during a trade embargo against Germany on cola syrup, making it impossible to sell Coca-Cola in Germany. Max Keith, the head of Coca-Cola's German office during the war, decided to create a new product for the German market, made from products only available in Germany at the time, which they named Fanta. The drink proved to be a hit, and when Coke took over again after the war, it adopted the Fanta brand as well. Fanta was originally an orange flavored drink which can come in plastic bottles or cans. It has become available in many different flavors now such as grape, peach, grapefruit, apple, pineapple and strawberry.
In 1961 Coca-Cola introduced Sprite, another of the company's bestsellers and its response to 7 Up.
Coca-Cola South Africa also released Valpre Bottled "still" and "sparkling" water.
3.Columbia Pictures
Coca-Cola bought Columbia Pictures in 1981 owing to the low monetary value of the studio. The film company was the first and only studio ever owned by Coca-Cola. During its ownership of the studio (their introduction to the film industry), the studio released many popular films including Ghostbusters, Stripes, The Karate Kid, and some others. However, after the 1987 film Ishtar, Columbia was sold to Sony Pictures Entertainment.
4. Breakmate
No longer manufactured, the Coca-Cola Breakmate was a three-flavor dispenser introduced by Coca-Cola and Siemens in 1988. Intended for use in offices with five to fifty people, its refrigerated compartment held three individual one-litre plastic containers of soda syrup and a CO2 tank. Like a soda fountain, it mixed syrup in a 1:5 ratio with carbonated water. In North America, Coca-Cola discontinued spare Breakmate parts in 2007 and stopped distributing the syrup in 2010.
5. Healthy beverages
During the 1990s, the company responded to the growing consumer interest in healthy beverages by introducing several new non-carbonated beverage brands. These included Minute Maid Juices to Go, Powerade sports beverage, flavored tea Nestea (in a joint venture with Nestle), Fruitopia fruit drink and Dasani water, among others. In 2001, Minute Maid division launched the Simply Orange brand of juices including orange juice.
In 2004, perhaps in response to the burgeoning popularity of low-carbohydrate diets such as the Atkins diet, Coca-Cola announced its intention to develop and sell a low-carbohydrate alternative to Coke Classic, dubbed C2 Cola. C2 contains a mix of high fructose corn syrup, aspartame, sucralose, and Acesulfame potassium. C2 is designed to more closely emulate the taste of Coca-Cola Classic. Even with less than half of the food energy and carbohydrates of standard soft drinks, C2 is not a replacement for zero-calorie soft drinks such as Diet Coke. C2 went on sale in the U.S. on June 11, 2004, and in Canada in August 2004. C2's future is uncertain due to disappointing sales.
Starting in 2009 The Coca-Cola Company invested in Innocent Drinks, first with a minor stake, increasing to 90% in the first quarter of 2013.
6. Best selling
Coca-Cola is the best-selling soft drink in most countries, and was recognized as the number one global brand in 2010.While the Middle East is one of the only regions in the world where Coca-Cola is not the number one soda drink, Coca-Cola nonetheless holds almost 25% market share (to Pepsi's 75%) and had double-digit growth in 2003.Similarly, in Scotland, where the locally produced Irn-Bru was once more popular, 2005 figures show that both Coca-Cola and Diet Coke now outsell Irn-Bru. In Peru, the native Inca Kola has been more popular than Coca-Cola, which prompted Coca-Cola to enter in negotiations with the soft drinks company and buy 50% of its stakes. In Japan, the best selling soft drink is not cola, as (canned) tea and coffee are more popular.
7. Green tea
The company announced a new "negative calorie" green tea drink, Enviga, in 2006, along with trying coffee retail concepts Far Coast and Chaqwa.
8. Glaceau
On May 25, 2007, Coca-Cola announced it would purchase Glaceau, a maker of flavored vitamin-enhanced drinks (vitamin water), flavored waters, and Burn energy drinks, for $4.1 billion in cash.
9. Huiyuan Juice
On September 3, 2008, Coca-Cola announced its intention to make cash offers to purchase China Huiyuan Juice Group Limited (which has a 42% share of the Chinese pure fruit juice market) for US$2.4bn (HK$12.20 per share). China's ministry of commerce blocked the deal on March 18, 2009, arguing that the deal would hurt small local juice companies, could have pushed up juice market prices and limited consumers' choices.
10. Coke Minilmini
In October 2009, Coca-Cola revealed its new 90-calorie mini can that holds 7.5 fluid ounces.
Use of stimulants in formula
When launched, Coca-Cola's two key ingredients were cocaine and caffeine. The cocaine was derived from the coca leaf and the caffeine from kola nut, leading to the name Coca-Cola (the "K" in Kola was replaced with a "C" for marketing purposes). Coca-Cola once contained an estimated nine milligrams of cocaine per glass. In 1903, it was removed.
After 1904, instead of using fresh leaves, Coca-Cola started using "spent" leaves – the leftovers of the cocaine-extraction process with trace levels of cocaine. Coca-Cola now uses a cocaine-free coca leaf extract Kola nuts contain about 2.0 to 3.5% caffeine. Coca-Cola contains 9.8 mg of caffeine per 100 ml.
Competitors [Global]
Pepsi, the flagship product of PepsiCo, The Coca-Cola Company's main rival in the soft drink industry, is usually second to Coke in sales, and outsells Coca-Cola in some markets. RC Cola, now owned by the Dr Pepper Snapple Group, the third largest soft drink manufacturer, is also widely available.
Around the world, many local brands compete with Coke. In South and Central America Kola Real, known as Big Cola in Mexico, is a growing competitor to Coca-Cola. On the French island of Corsica, Corsica Cola, made by brewers of the local Pietra beer, is a growing competitor to Coca-Cola. In the French region of Brittany, Breizh Cola is available. In Peru, Inca Kola outsells Coca-Cola, which led The Coca-Cola Company to purchase the brand in 1999. In Sweden, Julmust outsells Coca-Cola during the Christmas season. In Scotland, the locally produced Irn-Bru was more popular than Coca-Cola until 2005, when Coca-Cola and Diet Coke began to outpace its sales.
In India, Coca-Cola ranked third behind the leader, Pepsi-Cola, and local drink Thums Up. The Coca-Cola Company purchased Thums Up in 1993.As of 2004, Coca-Cola held a 60.9% market-share in India. Tropicola, a domestic drink, is served in Cuba instead of Coca-Cola, due to a United States embargo. French brand Mecca Cola and British brand Qibla Cola are competitors to Coca-Cola in the Middle East.
In Turkey, Cola Turka, in Iran and the Middle East, Zamzam Cola and Parsi Cola, in some parts of China, China Cola, in Slovenia, Cockta and the inexpensive Mercator Cola, sold only in the country's biggest supermarket chain, Mercator, are some of the brand's competitors. Classiko Cola, made by Tiko Group, the largest manufacturing company in Madagascar, is a serious competitor to Coca-Cola in many regions. Laranjada is the top-selling soft drink on Madeira.
Common terminology used in the industry
COLTJ For the order of stacking, Cola, Orange, Lemon, Thums up, Juices, Water.
SKU Sales Keeping unit.
I.C Instant consumption [200ml, 400ml,maaza, tetra pak, flavored and juices];
6 bottle is 1 SKU
OTG On The Go [750ml,600ml]
4bottle is 1SKU
FC Future Consumption [1.15l,1l,2.25l,2l]
4bottle is 1SKU
RGB Returnable Glass Bottles
BBD Best Before Days
BPPC Brand Pack Product Consumer
RTM Route to Market
PJP Permanent Journey Plan
YTD Year Till Date
FTD For The Day
c. Internship Details
RGB Revolution
During the 19th Century the world saw the RGB revolution from the Coca-Cola Company. Across the globe, Coca- Cola was delivered to the end customer through glass bottles. In the early days, coke started business by offering a drink in glass from the fountain bar. Later the business prospered to glass bottles and that reached the world. But this had its origin in the west.
PET Bottle Revolution
Towards the end of 20 th Century the world saw coke in PET [polyethylene terephthalate] Bottles .Where higher quantities of Coke and subsidiary products began reaching the homes. This further took the sales historically to the next level. This era also saw the rise of canned drinks that flooded the markets through convenient stores, super markets and automated vending machines. Again the idea came from the west.
What Next?
This was the question that had been pushing coke for a while now. The Hindustan Coca – Cola Beverages Private Limited pondered the idea, developed the idea after years of research to bring out the Splash bar concept to the market. Till date 11.5 million Splash bar had been deployed across the Indian sub continent. My role, in Hindustan Coca – Cola Beverages Private Limited was to deploy Splash bar in the Central Kerala market Zone. I was responsible for marketing, sales and operation of the Splash bar units.
Splash bar
Paying the tribute to the olden days Fountain Bar, HCCBPL reiterated the idea of selling coke in paper cups to the end customers for the lowest price and at a decent margin for the outlet handler. Splash bar was designed for HCCBPL with the Haier Group which is a Chinese multinational consumer electronics and home appliances company. The machine had a cooling unit with two dockets that would lend out Coca-Cola and Sprite. Apart from the feed bottles the device had the capacity to chill three other stock bottles. The device was designed to be the most power saving chilling unit that would consume only a maximum of two units of electricity, if the machine is run consecutively throughout.
The idea
It is astonishing to understand that the bottom of the pyramid of the Indian society who have never tasted coke or other beverages amounts to 65%. The reason may differ from region to region. Being a global soft drink leader the Coca-Cola Company decided to reach the BOP customers at the lowest price point Coke has ever been offered .At a price point of Indian rupees 5, a paper cup of 100ml coke was vended out directly from a 2.25l bottle of F.C category. The taste and the quality were never compromised. Unlike, the predecessor fountain concept, here the drink was not made at the instant instead delivered from the F.C PET Bottle.
A 2.25l PET bottle could expend 22 cups, that would in fact bring an outlet dealer rupees 110 for an expense less than rupees four, earning him a profit of one rupee per every five rupee cup.
The paper cups are also delivered by HCCBPL for 75 paisa per cup; this is to ensure that the quality is never compromised. Cheaper cups available in the markets change the flavor of the drink, or contaminate the drink with the dye that colors it as the cup soaks in with the drink.
The tasks and responsibilities of an intern:
• Learn the Marketing and Sales of Coca-Cola
• Understand the information management system for SKU billing.
• Understand the logistics and stock billing pattern.
• Work with Pre-sellers to learn, understand and operate their Permanent Journey Plan (PJP)
• Develop PJP for the Splash bar operations.
• Understand the Splash bar Project.
• Implement the Splash bar project.
• Develop the RTM for the Market area.
• Finding the hot spots for the Splash bar.
• Marketing the Splash bar.
• Report the daily prospects.
• Follow up the leads of hot prospects.
• Required document collection, verification and dispatch.
• Ensure Installation of Splash bar.
• Train the outlet vendors on operation and sanitization of the machine.
• Track the stock and sanitization record.
• Communicate with the pre-seller and the STL of the route on updates and progress.
• Special Task1: Cover and operate Thrissur poorem Flow sales. Stock operation, sales team management and accounts handling.
• Special Task2: Assist the BOP Sales Head and the STL for the national Audit of Splash bar.
Objectives:
I. Identify 4-6 hot spot location for splash bar per day.
II. Collect all required documents.
III. Place splash bar order
IV. Install Splash bar
V. Monitor the sales.
RTM Covered:
• Kuutahttukulam
• Piravom
• Chalakudy
• Vaikkom
• Angamaali
• Athirapilly
• Eeraatupetta
• Thodupuzha
• Muuvattupuzha
• Pala
• Kodungaloor
• Kothamangalam
• Talayoolaparambu
• Attani
Achievements:
I. Identified 178 hot spots.
II. Established big business deals [bulk purchase order] with City tower Textile shops, Joy Alukkas chain, Malabar gold chain, Silver storm water theme park and Dream world water theme park.
III. Bridged direct company sales for BTC College of Engineering.
IV. Collected 48 documents.
V. Placed 14 Splash bar orders.
VI. Installation pending, as splash bar units were out of stock and pending orders were to be placed.
VII. Achieved record sales for Thrissur Poorem driving the splash bar sales.
VIII. Received appreciation for coordinating the National Audit.
IX. Received appreciation from the National Splash bar Head for giving insights and challenges on the splash bar launch in Kerala.
An average day:
Every working day would have been charted on the PJP after discussion between the STL and pre-seller. The RTM and the PJP have to be submitted to the BOP of Sales on an advance date. Pre-seller is informed on the day before of the meeting point and the objectives. The route is explored and researched for hot spots. The typical working day usually with a pre-seller would be to check the outlet stock, inform the slab available for the SKU and bill the order for dispatch by the distributer team. Every pre-seller would be having a daily target for the product line. The minimum SKU to be punched daily is 130 units. Achieve the daily target is of prime importance.
The ultimate purpose of the intern is the splash bar project, which is the primary objective. Scout the area for conventional Splash bar hot spots. A hot spot is defined to be an outlet that is in the prime spot of the town, with ample space, manpower and hygiene nature. They should have at least 400 foot falls or more; or should have the same at some point of a business day if not throughout the day.
School localities, College canteens, Hospital localities, Bus stations, Bus Waiting hubs, Diary booths, Railway stations localities, Students hangout places, places of Pilgrimage importance, Catering providers and event managers, non conventional stores like mobile recharge outlets, tuition / coaching centers, Hostel localities, fancy stores, other eat and drink outlets etc were all the target spots.
Understand the outlet business nature, check the feasibility of installation, introduce the product, explain the profit story, convince the outlet dealer, and gather the required documents. Dispatch the same with the pre-seller. Follow up on the previous day’s route and report the current days status along with informing the next day’s route to the corresponding person ends a typical working day.
Learning Summarization:
• Learned how an MNC FMCG works on a daily basis.
• Learned how the business network is expanded.
• Worked on client handling, grievance handling, Best Before Days (BBD) management and Business development.
• Understood and practiced Market pitching and Sales.
• Learned how to gauge a vendor and extend a business proposal.