History and Importance of Coca-Cola Trademark

free essayOne of the most widely recognized logos in the world is the Coca-Cola logo. This company has been able to build a soft drink empire with the vigorous protection of its intellectual property, achieving unimaginable success over the years. Being a universally recognized brand, Coca-Cola has been a part of the national and global culture for over a century. The Coca-Cola success is greatly attributed to the complexity that comes with the integration of legal protections, such as copyrights, trade secrets, and patents. The company’s trademark is the most protected asset, which value approximation is over eighty billion dollars.

History of the Coca-Cola Trademark

The Coca-Cola trademark history is quite extensive. The look and feel of the trademark cannot be mistaken even if it is written in different fonts, languages, and forms. However, the classic quality of the logo has never been lost, which has assisted the company in building the global soft drink brand. The logo’s history dates back to the late 18th century when the founder John Pemberton and his bookkeeper Frank Robinson in Atlanta Georgia came up with the name Coca-Cola (The Coca-Cola Company, 2012). In 1886, they opted to start using the name for beverage advertising with a simple serif font. A year later, there was a need to create a proper logo owing to the increasing popularity of the drink. Between 1888 and 1893, the logo kept on being scripted in different designs with the penmanship of Pemberton’s bookkeeper even though the patenting office had not recognized any drink. The first trademark was granted to Coca-Cola from the patenting office on Jan 31, 1893 (Fine Print NYC Blog, 2015). From that date henceforth, the Coca-Cola brand appeared with the word ‘trademark’ added underneath.

The word ‘drink’ would then appear in the upper side of the logo in the mid-1920s. From 1941 onwards, this trademark was moved from what is considered the tail of the letter C and centered below the words ‘Coca-Cola’. In the early 1950s, the designation for the trademark was made simple and resulted in “Trade-mark ®”, the use of which was popular in the 1960s. In the 1950s, the logo was often placed inside a hot-red circle with bottle portrayed behind it (Fine Print NYC Blog, 2015). Then, the company created the fishtail logo in 1958 where the script logo was placed in an Arciform shape.

The Arden square logo was introduced in 1969 with a red square featuring the renowned logo and a classic ribbon device (The Coca-Cola Company, 2012). From 1985, other popular drinks such as Pepsi had hit the market, which forced the company to come up with a bold new design. In particular, Coca-Cola snubbed its script logo and introduced a slab and bold serif font for its new rebrand called Coke (Fine Print NYC Blog, 2015). Nevertheless, this change was unsuccessful; therefore, the company had to restore the classic logo formula in 1987. However, it added the word ‘classic’ below the logo and integrated it with the ribbon graphics.

Between 1993-2002, the company reinstated its circular logo with the addition of the bottle in it and the word ‘always’ placed above the logo. Such a design was mainly used for retail and corporate advertising. In 2002-2007, a dynamic ribbon graphic began to appear on the Coke brand along with an additional yellow ribbon. During the period 2007-2009, the company introduced the classic red disc. From 2009 to present days, a high-tech streamlined approach of the company’s logo was adopted where all trademarks, slogans, and graphics were scrapped off to pave ways for the script, the ribbon, and the trademark symbol ® (Fine Print NYC Blog, 2015). Finally, the most recent change is the addition of people’s names to the logo with the words ‘share a coke’.

Value of the Coca-Cola Trademark

Having a well-known and respected trademark, Coca-Cola is in a position as a company to charge higher prices for its products, which leads to higher profit margins, price-sales ratios, and firm values. The larger price premium charged by a company results in an equally greater value of the brand (Damodaran, 2006).

Different approaches can be used to evaluate the value of the company’s trademark. According to Damodaran (2006), the value of a brand name/trademark can be written as:

Value of brand name = {(V / S)b-(V / S)g} * Sales

(V/S)b = Value of Firm / Sales ratio with the benefit of the brand name

(V/S)g = Value of Firm / Sales ratio of the firm with the generic product

Value of Coca-Cola Brand (Damodaran, n.d.)

Coca-Cola Generic Cola Company
AT cost of debt 4.16% 4.16%
AT Operating Margin 18.56% 7.50%
Cost of capital 12.13% 12.13%
Cost of equity 12.33% 12.33%
D/(D+E) 2.35% 2.35%
E/(D+E) 97.65% 97.65%
Expected growth 20.16% 8.15%
Length 10yrs 10yrs
Reinvestment rate 65.00% (19.35%) 65.00% (47.90%)
ROC 31.02% 12.53%
Sales/BV of Capital 1.67 1.67
Value/sales ratio 6.10 0.69

Thus, the value of Coke’s trademark = (6.10 – 0.69) * ($18,868 million) = $102 billion The value of Coke as a company = 6.10 * ($18,546 million) = $115 billion. Furthermore, approximately 88.69% of the value of the company can be traced to the trademark value in 2009, (Damodaran, n.d.). However, in 2015, the company’s trademark was valued at $83.84 billion dollars, suggesting fluctuations in trademark value due to fluctuations in changes in the ratio (Statistica, n.d.).

Balance Sheet and other Costs Included

Balance sheets are often made of the assets and liabilities sections. Being an asset, the company’s trademark should appear in the assets section of the balance sheet. However, it is often not included in the Coca-Cola’s balance sheet. On the contrary, it is a part of the historical cost, showing how much the company has paid for acquiring it, and often appears as a goodwill in most of the Coca-Cola’s balance sheets. The company’s trademark is a part of intangible assets; therefore, the goodwill value should be added to the cost of the trademark. The goodwill is simply a value that Coca-Cola Company derives from the trademark and its brand name. However, it is not always accounted for in most company’s balance sheets. Instead, it appears in the company’s books after being acquired in a business acquisition. It is the difference between the price paid for a company as a going concern and the fair market value of its assets minus liabilities. Considering that the Coca-Cola trademark is worth $83.84 billion, its goodwill cost should be added to its base to determine its actual value.

Conclusion

The aim of this paper was to describe the history and value of Coca-Cola trademark as its valuable asset. An asset is a resource or thing owned by a company, hence being a company’s property. Therefore, a trademark is fit enough to be termed as an asset. It is often referred to as an intangible asset since it lacks physical substance and is hard to evaluate.

The paper has determined that the value of Coca-Cola trademark is approximately 120 billion dollars. The founders of Coca-Cola, John Pemberton and Frank Robinson, came up with the name and logo. Despite numerous transformations, the original taste and purpose of the logo has never been lost. The latest revision of the logo was done in 2009. The logo has a more streamlined approach, which was adopted where all trademarks, slogans, and graphics have been scrapped off for the script, ribbon for a simple ® trademark symbol. In other parts of the world, the addition of people’s names accompanies the logo with the phrase “Share a Coke”.

It is crucial for the Coca-Cola to protect its trademark as it is an effective tool for communication because it conveys much intellectual information about the company. It makes it easy for customers to recognize the company since trademarks are often unique. It also allows the Coca-Cola to utilize the internet and social media effectively since most companies are searched online using their logos. Trademarks can easily arouse positive feelings in peoples’ minds making hiring much easier (Rubinstein, 2014). They never expire and they are a bargain one can obtain easily. Therefore, there is no reason a company should not obtain a trademark.