Non-Alcoholic Industry Under Covid-19


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Date: Mar 24, 2023 Name: Yiche Liu, Xu Su

Topics: Wordle Puzzle | Trend Analysis | Data Modeling


The COVID-19 pandemic has had a significant impact on various industries, and the non-alcoholic beverage industry is no exception. With lockdowns, social distancing measures, and a decline in away-from-home consumption, companies within this sector had to adapt to the new normal and devise innovative strategies to maintain their market presence. This paper aims to analyze the non-alcoholic beverage industry's performance under the unprecedented challenges brought by the pandemic, focusing on two leading companies, Coca-Cola and PepsiCo, as prime examples. We will examine their financial performance, inventory management, and marketing strategies in response to the pandemic and explore how these major players managed to navigate the crisis while maintaining their competitive edge in the industry.

Coca-Cola's Financial Performance under COVID-19:

The pandemic initially led to a decrease in Coca-Cola's current assets in 2020, mainly due to disruptions in the company’s operations. According to Coca-Cola's 2020 10-K report, the pandemic had negative impacts on its business, and it expected these effects to continue. In March, Coca-Cola saw significant changes in consumer purchase patterns, including substantial declines in away-from-home channels (Hammond, Apr 2020). However, Coca-Cola's current assets increased significantly (17.18%) in 2021 compared to 2020, indicating a recovery from the pandemic. The company's recovery can be attributed to the increasing availability of vaccines, rising vaccination rates, and the gradual return of consumers to their pre-pandemic routines, such as socializing and traveling.

Despite the pandemic, Coca-Cola experienced a 25% increase in Selling, General, and Administrative expenses in 2021 compared to 2020. The increase was primarily due to higher annual incentive and stock-based compensation expenses, increased charitable donations, and increased marketing spending. These expenses reflect the company's commitment to retaining and rewarding employees, supporting charitable causes, and investing in marketing campaigns to promote its products during the pandemic. For instance, in 2021, the Coca-Cola Foundation contributed $109.2 million to approximately 350 organizations globally.

Coca-Cola experienced a 17.09% increase in net sales/revenues and a 19.98% increase in gross profit in 2021 compared to 2020, indicating a successful recovery from the COVID-19 pandemic. The company also managed to maintain high net sales/revenues and gross profit despite a 45.53% increase in tax expense in 2021 compared to 2019. According to Coca-Cola's 2021 10-K report, the company is subject to income tax in the United States and numerous other jurisdictions in which it generates profits.

Comparison with PepsiCo:

Coca-Cola's cash and cash equivalents increased from 7.8% of the asset in 2020 to 10.3% of the total asset in 2021. In contrast, PepsiCo's cash and cash equivalents decreased from 8.8% in 2020 to 6.1% in 2021. This suggests that Coca-Cola improved its cash position relative to PepsiCo during the pandemic, demonstrating better cash flow generation capabilities. According to Coca-Cola's 2021 10-K report, the company uses debt financing to lower its overall cost of capital and increase its return on shareholders' equity.

Coca-Cola's inventory decreased from 3.7% to 3.6% of its total asset in 2021, while PepsiCo increased from 4.5% to 4.71% of its total asset in 2021. This indicates that Coca-Cola managed its inventory more efficiently than PepsiCo during the pandemic. Coca-Cola's micro-fulfillment model at a local scale enabled the company to distribute its beverages effectively, reducing excess inventory.

Coca-Cola's gross profit increased from 59.3% to 60.3% of net sales in 2021, while PepsiCo's gross profit decreased from 54.8% to 53.3%. This improvement in Coca-Cola's profitability can be attributed to favorable pricing initiatives, favorable channel and package mix, and the gradual recovery in away-from-home channels in many markets throughout 2021.


In conclusion, despite the significant challenges posed by the COVID-19 pandemic, the non-alcoholic beverage industry has shown remarkable resilience and adaptability. Companies such as Coca-Cola and PepsiCo have demonstrated their ability to navigate the crisis by adjusting their operations, investing in marketing campaigns, and efficiently managing their inventories. As vaccination rates increase and the world gradually recovers from the pandemic, consumer behavior is expected to return to pre-pandemic patterns, leading to a resurgence in demand for non-alcoholic beverages. This, coupled with the innovative strategies and lessons learned during the crisis, suggests a bright future for the industry. The non-alcoholic beverage sector is poised to emerge stronger and better-equipped to thrive in a post-pandemic world.