The Soda Industry

The Soda Industry
Brought to You By:
Heather Terry
Bernie Melchor
Gerard Yparraguirre
Poyeh Hadjian
Anthony Kimani
Nicholas Mucks
Introduction
 Natural
Mineral Water and Carbonation
 The first modern sodas
 The ABA
 Economic Effects
Dominant Economic Forces
 Dominant
•
•
•
•
•
Economic Forces
1. Market Size
2. Competition
3. Stage in Life Cycle
4. Number of Companies in the Industry
5. Industry Profitability
Dominant Economic Forces

•
1.
2.
3.
4.
5.
Market Size
The soft drink industry has been
dominated 3 Companies
Coca Cola : 44%
Pepsi
: 31%
Cadbury Schweppes: 15%
Cott: 3.1%
Hansen: 0.3%
Dominant Economic Forces
Competition

•
Competition is increasingly fierce among the big competitors. The
leaders in the industry are Coca Cola, Pepsi and Cadbury
Schweppes
•
Coca Cola, the market leader has over 350 different brands in over a
hundred and eighty countries. Their most popular brands are Coke,
Diet Coke, Fanta, Sprite, Coke Zero and many more
•
Pepsi, the second largest and Coca-Cola’s biggest competitor also
has an array of soft drinks in its name. The most popular are Pepsi,
Diet Pepsi, Mountain Dew, Mirinda, Pepsi One and many more
Dominant Economic Forces

Stage in Life Cycle
• The life cycle of popular soft drinks like Pepsi,
Coke, Sprite, etc. is in the maturity stage, the
popularity of these products is still strong,
however; there is an increasing trend towards
healthier soft drinks.
Dominant Economic Forces
Reasons For the Maturity Stage
 Recently, there has been a growing demand for alternatives to
sugar-heavy soft drinks. “Regular” soft drinks today contain high
fructose corn syrup, and have been blamed for contributing to
various diseases
 A study from Harvard shows that soft drinks may be responsible for
the doubling of obesity in children over the last 15 years
• As the soda pop fight rages on companies are increasingly relying
on new products like non carbonated beverages like Fruit punch,
Lemonade, Iced tea, etc. to take them to the next level.
Dominant Economic Forces
 Industry
•
•
Profitability
The soft drink industry will remain profitable as long as companies like
Coca-Cola and Pepsi continue to develop new products to remain
competitive, improve technology (especially in production) to reduce cost
per unit
According to People’s Daily Newsletter; Coca-Cola made a profit
of $2.71Billion last year in the first six months, Pepsi did as well,
taking into consideration of its size compared to Coca-Cola by
bringing home an estimated $1.27 Billion just in the first six
months.
Six Forces Analysis I
 Threat




of New Entrants
Economies of Scale
Product Differentiation
Capital Requirements
Access to Distribution Channels
Six Forces Analysis II
 Rivalry



Among Existing Firms
Number
Rate of Industry Growth
Product Characteristics
 Threat
of Substitute Products
Six Forces Analysis III
 Bargaining
Power of Buyers
 Bargaining
Power of Suppliers
 Relative
Power of Other Stakeholders
Competitive Position of Major
Companies and Competitor Analysis
 Competitive
Position of Major
 Brief overview of some major companies
in the soda industry
Competitive Position of Major
Companies
 In
terms of 2005 US Market Share
2005 Market Share (United States)
according to Beverage-Digest.Com
5.20%
0.30%
Coca-Cola Co.
5.40%
Pepsi-Cola Co.
14.60%
43.10%
Cadbury Schweppes
Cott Corp
Hansen Natural
Rest of the industry*
31.40%
* Comb ined market share of
National Beverage, Red Bull,
Big Red, Rockstar, Monarch
Co., and Private lavel/other
Competitive Position of Major
Companies (cont’d)
 Top
3 Companies: Coca-Cola Co.,
PepsiCo., and Cadbury Schweppes =
89.1% of U.S. Market Share
 Redbull energy drink sales surging during
2004-2005
 Brand recognition
 Exclusive Contracts
Competitor Analysis
 Brief
description of Coca-Cola Co.,
PepsiCo., Cadbury Schweppes., Cott
Corp., and Hansen Natural
 What sets a company apart from the top
competitor, Coca-Cola.,
Industry Trends
 Less
Soda, more Alternatives
 Increase in bottled Water Consumption
 Energy and Sports Drinks
 Portable Packaging
TRENDS:
Less Soda, more Alternatives

Increased sales in alternative beverages caused drop in carbonated
beverages.
TRENDS:
Simply Water, Simply Delicious
 1990’s
water sales: $5.7 billion
2004’s water sales: $9.2 billion
 16% annual growth rate
 Projected to be top selling drink by 2010
TRENDS:
Energy and Sports Drinks
 Marketed
to teenagers & young adults
image and brand loyalty is everything
 Over 10 billion liters sold in 2005
 Pepsi’s Gatorade dominates Sports Drinks
 Red Bull holds 70% of Energy Drink
 Energy Drinks estimated to grow 30% by
end of 2006
TRENDS:
Portable Packaging
 PET
bottles are small and easy to store
 Companies fill end of registers with
portable 8oz bottles to entice sales.
 Companies increased sales with PET
bottles by selling their portability and light
weight qualities.
Key Success Factors
 Marketing


Targeting younger generation
Market monopoly
 Innovation

Able to adapt to trend changes and customer
needs
 Globalization


U.S. market is saturated with soft drinks.
Ability to be successful in global market.
Industry Prospects and
Overall Attractiveness
 Factors


Mature market; stable and good investment
Expanding product lines allow for growth
 Factors

Making the Industry Unattractive
Industry is oversaturated
 Future

Making the Industry Attractive
Prospects of the Industry
Changing consumer tastes will change products
Conclusions
 Past
 Present
 Future