Abstract

In mid-September 2018, reports surfaced that The Coca-Cola Company (Coca-Cola) was monitoring the cannabis industry and was interested in producing cannabis infused drinks using the non-psychoactive ingredient in marijuana that treated pain but didn’t get the user high. Coca-Cola was in search of new alternatives to offset the drag on its soft drinks sale caused by consumer aversion toward carbonated, sugary drinks and it reportedly considered the booming marijuana industry to be a good source of revenue and profits for the company. According to the reports, this decision was taken as a punt for the distant future, when there would no longer be any soda-drinking customers to fall back upon. Is it worth the risk for Coca-Cola to enter into the cannabis market? This case study discusses the several reasons that could have triggered Coca-Cola’s interest in entering the cannabis market by producing cannabis infused drinks. It also hints at the potential of the cannabis market, the growing interest of beverage companies in this space, and its expected growth in future. The case discusses the potential implications which this deal might have on the company, thereby enabling the students to discuss whether it would be a feasible option for Coca-Cola to adopt.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand issues and challenges provided by the business environment.
• Identify the key motives/reasons why companies go for diversification.
• Understand the challenges in launching new products.
• Understanding diversification as a growth strategy.

Keywords

Business Environment; Legal environment of business; Ansoff Matrix; Growth Strategy; Diversification; cannabis industry; carbonated drinks market; cannabis infused drink market; Marketing Management; Product Management; Evaluating market potential; Forecasting demand; Market Planning; Business Strategy; Coca-Cola