Impact of the Sugar Tax on Coca-Cola

1042 words (4 pages) Business Assignment

27th Apr 2020 Business Assignment Reference this

Tags: Business AssignmentsFood and DrinkCoca ColaBusinessDecision Making

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Summary of the Case

Coca-Cola has been one of the popular drinks of Americans until 1990. Due to the increase of health diseases such as obesity, diabetes and other weight related problems has led to questioning the ingredients in the product. More than 30 percent of the adults are obese in US. The high sugar content in the product has been the main reason behind this health issues. The government has implied taxes to reduces the usage of high sugar contents in the product. Since 1990 the report says that the sales have been declining. People started to change their attitude towards the product and have given more importance to healthier lifestyle. This change from the consumer has affected the sale of Coca-Cola company and its reputation. What happen in the long run or how they can improve the situation?

1. What is the decision facing Coca-Cola company?

The case says that since 1990 the sales of Coca Cola company has been declining by more than 25 percent. The 2017 report states that consumption of soft drinks has declined 6 percent in US whereas bottled has gone up by 5 percent (Taylor, 2018). In this situation, the decision that Coca Cola Company facing would be that whether the company have to continue selling the product or not.

2. What factors are important in understanding this decision situation?

The important factors which help to understand the decision:

  • One of the major reason behind the low demand of Coca Cola is due to the increase in the the health related diseases which has badly affected the American adults. The report states the more than one-third of the US adults are obese (Steidle, 2019).
  • Other factor is that consumers began to prefer bottled water than soft drinks that’s why the increase in the consumption of bottled water has gone up.
  • The government has taken measure in reducing the use of sugar by bringing soda taxes in the hope of changing the way the company produce and reduce the obesity in the long run. This led the company to shrink the size of the bottle from 1.75 to 1.50 litre. (Wood, 2018
  • The company has also released a statement states that it impacts their business as their consumers are affected by obesity (Steidle, 2019).

3. What are the alternatives?

I believe that the most successful option is to concentrate on enhancing the sale of other drinking products, particularly healthier options they have like diet coke, bottled water or other energy drinks. There is an other option which is more expensive, trying to recreate Coca-Cola by investing more priority for consumer’s health which could help them recreate their image as well. For instance, A&W one of the prominent Canadian fast food chain has taken obesity as their marketing strategy to increase their place in the market as well as their expansion in growth (McGrath, 2018). Similarly, Coca-Cola could try to bring back their face in the market.

4. What decisions do you recommend?

The decisions that I would suggest is that, Coca-Cola company should start investing on advertising more of their other healthier and good products such as Diet coke heavily instead of regular coke. This will give more advantage to the company by changing the consumers mind towards diet coke instead of regular without loosing their revenue. Other suggestion I would like to add is that the company is also selling bottled water. These products are really good for health and the company should start promoting these products more into the markets. These recommendations would help the company to bring back the lost image.

5. What are some ways to implement your recommendation?

To implement the recommendations, first step they have to do is to change the consumer’s perception about their product. Based on my research, the company believes that their product is not the main cause of obesity it is due to the over consumption of calories (Nestle, 2015). By conducting a press release for proving that their product is not the main cause of obesity. Also concentrating the details of healthier aspects of the products to the world. Secondly, the company could also try to produce some fresh and healthier products to bring the attention. It will also help the company keep the consumers focus away from the negative aspects of the product. These strategies will definitely help the company to brink back his reputation and growth.

References

  • Coca-Cola and Obesity | Serial Innovation. (2019). Serial Innovation. Retrieved 26 July 2019, from http://serialinnovation.org/soda/obesity
  • McGrath, M. (2018). A New Frontier for plant-based meat: beyond burger will hit menus at A&W Canada. Forbes.com. Retrieved from https://www.forbes.com/sites/maggiemcgrath/2018/06/21/in-a-new-frontier-for-lab-grown-meat-beyond-burger-will-hit-menus-at-aw-canada/#47b7e2614e52
  • Nestle, M. (2015). Coca-Cola says its drinks don’t cause obesity. Science says otherwise. The Guardian. Retrieved rom https://www.theguardian.com/commentisfree/2015/aug/11/coca-cola-obesity-health-studies
  • Steidle, B. (2019). Coca-Cola and obesity | serial innovation. Serial Innovation. Retrieved from http://serialinnovation.org/soda/obesity [Accessed 26 Jul. 2019].
  • Taylor, K. (2018). People are drinking less Pepsi and Coke than ever — and it reveals the power of the biggest marketing trick of the century. Business Insider. Retrieved from https://www.businessinsider.com/pepsi-coke-decline-while-bottled-water-grows-2018-5
  • Wood, Z. (2018). Coca-Cola to sell smaller bottles at higher prices in response to sugar tax. the Guardian. Retrieved 26 July 2019, from https://www.theguardian.com/society/2018/jan/05/coca-cola-to-sell-smaller-bottles-at-higher-prices-in-response-to-sugar-tax

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