VERTICAL INTEGRATION IN COCA COLA:

The production process of most consumer goods is very vast and usual involves several
companies, all the way from the extraction of raw materials to the sale or delivery of finished
consumer goods. Vertical integration can be either backwards, when a company, more at
the end of the production process acquires a company which is closer to the beginning of
the process, or forward, when a company, more at the beginning of the production process
buys a company with is more at the end.

The Coca-Cola Company, PepsiCo, Inc., and the Dr Pepper Snapple Group sell
concentrates to bottling firms, which subsequently bottle the raw product and distribute it.
Thus, concentrate can be described as an intermediary product, while the bottle filled with a
carbonated soft drink can be seen as the final good. Coca-Cola and PepsiCo are therefore
upstream manufacturing firms, which sell their products to downstream bottling and
distributing firms
2010-2011 brought big changes to The Coca-Cola Company in North America. The Companys
acquisition of the North American operations of Coca-Cola Enterprises, formerly the largest of Cola-
Colas bottlers on the continent, led to the formation of Coca-Cola Refreshments. This vertical
integration increases operating effectiveness and efficiency by combining the current manufacturing
and distribution capabilities into one unified organization. This resulted in a massive vertical
integration that helped produce deeper customer relationships, positive retailer feedback and more
robust financial performance.
Vertical integrations in the carbonated soft drink industry increases consumer surplus and
decreases deadweight loss by reducing retail prices.

http://supermarketnews.com/supplier-news/coca-cola-s-revised-approach-deepens-retail-
partnerships#ixzz2hxaeEXUC

http://www.globalens.com/DocFiles/PDF/cases/Preview/GL1428939P.pdf
http://www.coca-colacompany.com/our-company/sustainability-update-overview