Case Study Of Coca-Cola Amatil

2293 Words10 Pages
Section 1: Coca-Cola Amatil downsizes cans to increase sales

The main issue presented in the news story

In the news story ‘Coca-Cola Amatil downsizes cans to increase sales’ (2014) Sue Mitchell points out that the barrier Coca-Cola Amatil faces in Australia Market. Thus AAC Australia is aiming to increase its sales in Australia by offering cheaper 250ml can soft drinks in order to reinvigorate sales as well as build brand equity.

According to CCA and its marketing partner, with the continuingly raising prices as well as the growing computability of other innovative brands, CCA is losing its market share gradually over the past two years. In order to regain its market volume, CCA decide to extend its product variety with more sizes by introducing
…show more content…
Surplus of CCA soft drinks ultimately decreases the income of Coca-Cola Amatil and its partners in Australia, and in such a situation, one possible alternative is to lower its price to reduce its surplus. In Australian market, CCA products are normally 50 cents more expensive than other carbonated soft drinks; therefore, CCA is of very weak compatibility. These products are all substitutes of CCA’s products Coca-Cola, Sprite and Fanta, and as their prices are relatively lower than CCA’s products, as a result, consumers of carbonated soft drinks would automatically choose to buy those products of better cost performance. In the mean time, CCA’s competitors, for instance Pepsi and Schweppes are ultimate beneficiaries since they offer substitutes of lower…show more content…
Smaller size can is cheaper than the traditional sizes; therefore, it may attract more consumers since it has price advantage. Moreover, smaller size may also be appeal to people concern more about health, smaller size may reduce the chance of over intake and thus to reduce the possibility of gaining weight, obesity and other issues.

Nevertheless, downsize cans offers more opportunities for smaller retailers since they may have access to smaller and cheaper product and therefore to compete with supermarket and other bigger retailers. Consumers may directly buy smaller sizes in bakery, convenience shops and food shops rather grocery stores since the advantage it has in price.

It is obvious that with the launch of new sized can, all of the stakeholders except CCA’s competitor may benefit from such an action. The most positive impacted stakeholders probably are CCA and its partners in Australia, smaller retailers and consumers. On the other hand, CCA’s competitor is negative impacted and may face possible loss of market shares and earnings. Such impacts are not long lasting since it offers no fundamental solution to CCA’s loss in volumes and earnings and all impact may loss its at some point. Economic theories/concepts/diagrams that can be applied to this news
Get Access