Japan’s economy and the Coco cola company Essay Example

roughly 5 million vending machines, with almost 2 million of them dedicated to dispensing canned beverages. A successful machine has the potential to distribute as many as 10,000 cans annually. Within the research timeframe, the total revenue generated from drink sales at grocery stores was estimated to be US$4.8 million and exhibited a growth rate of 5%.

The growth rate of convenience stores is 15.8%, with an annual revenue of US$3.4 million.

In 1957, when Coca Cola arrived in Japan, it prioritized the cultivation of relationships with leading Japanese businesses such as Mitsui, Mitsubishi, and Kikkoman. To achieve this objective, the company conducted extensive research on Japanese culture and engaged in competition with other companies.

By 1985, Coca Cola had established itself as the top brand in Japan and was dominating a lucrative market. The sales potential for syrup alone was significantly higher than that of the United States. To maintain their reputation, Coca Cola sponsored cultural, educational, and athletic events. Their success in Japan can be attributed to targeted direct marketing towards local retailers and an extensive distribution network with 17 centers serving regions throughout the country.

The demonstration of CCJC's authority is evidence to the Japanese that it is genuine. Nevertheless, success in the market requires more than just domination. Coca Cola understood the importance of investing efforts in all aspects of the product process to secure sales and market share. The establishment of lasting local relationships was one of Coke's key objectives in Japan.

By purchasing a bumper crop of surplus Japanese farmers in 1973 to produce HI-C, Coke established a positive relationship with local producers and helped unify disparate players. Two years later, in 1975, Georgia

introduced ready-to-drink coffee to the market.

Coke's success continued with the introduction of a beverage aimed at young Japanese businessmen, leading the market by 34% in 1987. This allowed Coke to establish themselves in the coffee market. Additionally, in 1983, Aquarius, an isotonic health drink that replenishes fluids and electrolytes, was also introduced.

As of the late 1980's, CCJC had established a strong foothold in certain Japanese markets, while Coke dominated the cola market with a 90% share and held just under 60% of the non-cola market. Yet, in the remaining beverage market, Coke accounted for just 10% of sales.

In terms of profits, Japan outperformed the USA. Producing 21.5% of Coke's global profits, Japan was more lucrative than the USA's contribution of 18%. Additionally, vending machines dominated Coke's distribution channels, with 750,000 machines generating 65% of the company's revenue.

Furthermore, their plan involves incorporating 100,000 extra machines every year, which would amount to US$400 million in annual vending machine expenditures at a cost of US$4000 per machine. In terms of competition, the Japanese beverage market comprises five significant players: Ito En Ltd., Suntory Ltd., Kirin, Hitachi Zosen Corp.

Ito En was the frontrunner in the canned tea industry, while Asahi Breweries Ltd. also played a significant role. Ito En initiated the trend in 1981 and introduced the first green tea can by 1985.

Suntory, the biggest distillery in Japan, has been expanding into non-alcoholic drinks and created an Oolong tea that is ideal for people on-the-go as it can withstand different temperatures, and now it holds 50% of the market share.

Aside from the aforementioned products, Suntory incorporates colas, green tea, and tonics in their product lineup. They are

additionally contemplating venturing into the canned coffee market. On the other hand, Kirin was the pioneer in releasing canned black tea in 1986 and they currently hold a 50% share as the fifth leading brewery in Japan. They remain a top contender in the soft drink industry with annual profits nearing US$1 billion. In essence, Kirin is involved in diverse industries but faces low sales within the canned coffee market.

Hitachi is a conglomerate that operates in various industries such as shipbuilding and biotechnology. They have developed a new type of tea made from the tochu tree that offers health benefits for high blood pressure, liver, and kidney issues. Asahi is responsible for introducing Western-style tea to Japan and is a significant competitor in the canned coffee industry. CCJC faces difficulties when it comes to assessing the tea market.

The manager of CCJC faces the decision of whether entering the tea market would be worthwhile and if the Japanese consumer would favor their product. A comprehensive analysis of the advantages and disadvantages is mandatory to make a clear decision. Additionally, the manager must consider possible challenges in other markets, such as how generic sodas will impact Japan.

Considering whether CCJC should enter the tea market, as well as the potential trend for fruit flavored drinks, CCJC has many options to choose from. They could continue their dominant position in the cola and non-cola markets, or enter the tea market to compete with Japanese companies. Alternatively, they could focus more on fruit flavored drinks, which make up a significant portion of the $18 billion drink industry.

As CCJC already has a strong market share in colas and non-colas, they

are less threatened by generic soda entering the market compared to smaller Japanese competitors. Additionally, their marketing budget is likely much larger than that of any generic soda company.

This suggests that while CCJC may see a slight dip in market share due to the introduction of generic sodas, it is not a major cause for concern. With 90% of the market already owned, maintaining their position will require ongoing attention - something Coke has proven adept at. Additionally, the manager questioned whether ready-to-drink tea is a fleeting trend, despite it being a longstanding tradition in Japanese culture. However, with the increasing modernization of Japan and the need for convenient options in the urban economy, the demand for ready-to-drink tea is still strong. Major players in Japan have recognized this trend and found success by incorporating it into their product lines.

The Japanese tea market is dominated by several major players who are well-versed in Japanese culture and have proven the success of canned tea. Established competitors include Ito En's tea boom, Kirin's black tea, Hitachi's therapeutic tochu tea, and Asahi's Western-style tea. Oolong tea currently holds the majority share with 57% and an annual growth rate of 42%. However, there is no clear leader in black tea, green tea, or Western-style tea markets. Of these three categories, black tea has the most potential for growth with a current market share of 31% and an average annual growth rate of 60%.

Tea represents around 9% of the US$18 billion beverage industry, equivalent to approximately US$1.6 billion. Among this, black tea comprises roughly 31%, amounting to over US$0.5 billion. It is important to mention that these values do

not reflect the yearly growth rate of 60%. Besides, CCJC may consider venturing into the fruit drink market as another feasible alternative.

The drink industry is composed of various market segments with different levels of competitiveness. One of these market segments accounts for 26% of the industry and offers a wide range of juice products that attract many competitors, making it challenging to generate substantial profits.

However, based on our analysis, we recommend that CCJC enter the tea market, which shows promising potential for success. In particular, black tea is an area where CCJC can establish its presence. Although Kirin was first to introduce canned black tea to the market, their focus seems to be on their beer, commanding 50% of the beer market. Therefore, there is an opportunity for CCJC to capture market share, especially considering the market's average growth rate of 60%.

Considering that Coke is headquartered in the West, they might want to explore Western-style tea options in the future.