Consider the following case: Pharmacist John S. Pemberton invented a soft drink

Question

Consider the following case: Pharmacist John S. Pemberton invented a soft drink in 1886 that eventually became not only an integral part of everyday life in the United States but also a symbol of consumerism worldwide. In 1929 the first Coca-Cola vending machines were installed in Germany, and in 1930, the German branch of the Coca-Cola Co. opened in Essen Germany was a growing market for Coca-Cola, along with other countries in Europe, before World War II With the previous data given, calculate the company's sales growth rate for each time period in the following table Years Growth Rate 1934-1936 102.86% Coca-Cola sales in Germany were 243,000 cases in 1934, 1 million cases in 1936, and 4.5 million cases in 1939 1936-1939| 79.8% 1934-1939 (Source: "Coca-Cola GmbH and World War Two," www.gettherealfacts.co.uk/docs/gmbh.pdf) During World War II, Coca-Cola Co. cut off all syrup sales to Germany in 1940, reslting in no sales from 1943 to 1945. If Coca-Cola's sales had grown from 1939 to 1945 at the same rate that they grew between 1934 and 1939, its sales in 1945 would have been approximately present value.) cases. (Hint: Use sales data from 1939 as the 313 million 2.62 billion 5.41 million 149.42 million

Explanation / Answer

NOTE: All Sales Figures are assumed to be end of Year values.

(a) 1934 Sales = 234000, 1936 Sales = 1000000 and 1939 Sales = 4500000

Compounded Annual Growth Rate (CAGR or sales growth rate) between 1934-36 = [1000000 / 243000]^(1/2) - 1 = 1.0286 or 102.86 % where the figure 2 in bold lettering is the time period being considered which is 1934-36 or 2 years.

CAGR between 1936-39 = [4500000 / 1000000]^(1/3) - 1 = 0.65096 or 65.096 %

CAGR between 1934-39 = [4500000 / 243000]^(1/5) - 1 = 0.7928 or 79.28 %

(b) CAGR between 1934-39 = 79.28 %

1939 Sales = 4500000

1945 Sales = 4500000 x (1.7928)^(6) = 149418225.7 ~ 149418226 or 149.42 million cases

(c) CAGR between 1939-2008 = 10.26 %

2011 worlwide sales = 26.7billion

2053 worldwide sales = 26.7 x (1.1026)^(42) = 1614.61 billion approximately.

Share of Great Britan in 2053 worlwide sales = 12 % (assuming sales shares remain constant between 2011 and 2053)

2053 Great Britain Sales = 0.12 x 1614.61 = 193.75 ~ 194 billion cases.

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