Pricing considerations of the business
Coca-Cola Amital key competitive advantage is the Coca-Cola brand. Importantly, the brand power allows price increases over time. The drive to keep innovating with new products and packaging as well as the influence from The Coca-Cola Company board members. This allows CCA to keep local market leadership while managing costs better.
While CCA has many goods and services, it does need to purchase the syrup from The Coca-Cola Company, which has been successful in raising prices over time. This detracts somewhat from the margins. The business hedges for aluminium and sugar. Hedging is often considered an advanced investing strategy, but the principles of hedging are fairly simple. With the popularity - and accompanying criticism - of hedge funds, the practice of hedging is becoming more widespread. Despite this, it is still not widely understood. For example, when you take out insurance to minimize the risk that an injury will erase your income, or you buy life insurance to support your family in the case of your death, this is a hedge.
CCA faces short-term pressures when the price of goods and services surge for inputs. Like all manufacturing businesses, increased raw material costs are initially challenging to pass on to customers. This has the potential to reduce margins yet again.
The main risk is if CCA loses its brand power in the key portfolio products and innovative edge within Australia. This would likely prevent CCA from raising prices and increasing any further profits.
Coca-Cola Amital key competitive advantage is the Coca-Cola brand. Importantly, the brand power allows price increases over time. The drive to keep innovating with new products and packaging as well as the influence from The Coca-Cola Company board members. This allows CCA to keep local market leadership while managing costs better.
While CCA has many goods and services, it does need to purchase the syrup from The Coca-Cola Company, which has been successful in raising prices over time. This detracts somewhat from the margins. The business hedges for aluminium and sugar. Hedging is often considered an advanced investing strategy, but the principles of hedging are fairly simple. With the popularity - and accompanying criticism - of hedge funds, the practice of hedging is becoming more widespread. Despite this, it is still not widely understood. For example, when you take out insurance to minimize the risk that an injury will erase your income, or you buy life insurance to support your family in the case of your death, this is a hedge.
CCA faces short-term pressures when the price of goods and services surge for inputs. Like all manufacturing businesses, increased raw material costs are initially challenging to pass on to customers. This has the potential to reduce margins yet again.
The main risk is if CCA loses its brand power in the key portfolio products and innovative edge within Australia. This would likely prevent CCA from raising prices and increasing any further profits.