Beverage Competition

The soft-drink industry capitalizing on creating the best product. Each product has a different taste, formula, and color to entice the consumer. It is important for the product to remain innovative in order to keep the consumers interested. The suppliers can easily differ, because they do not hold much value or put

The soft drink industry is one of the most highly profitable industries in the USA. Also, the competitive market is a very large market. Americans consumed about 53 gallons of soft drinks per person a year in 2000 by $ 60.3 billion!! Comparing with the market in 1990, since it was 47 gallons. In recent years, the market growth has slowed.

Meijer Superstore, Speedway, and Walgreens are the locations used at the center of research to compare and contrast several brands of single serving-size, refrigerated, water and tea. During this exploration, the marketing mix; product, price, placement, and promotion were observed among the several brands. Coca-Cola will benefit from the research where unique observations emerged. These observations include the placement of flavoring drops to add to water, the availability of Vitamin Water in both the water and sport drink sections, and the price and placement of PepsiCo products vs. Coca-Cola products, which included both water and tea, in the Meijer Superstore.

The threat of substitutes is high for the beer industry, and specifically for this strategic group. According to the trade group Beverage Industry, alcohol beverage consumption per capita has risen since 2000 at around one percent per year, which suggests that consumers on average are not substituting non-alcoholic beverages for the alcohol they currently consume[6]. Since 1994, consumption per capita has increased for the three major substitutes – premium beers, wine, and spirits.[7] Although beer holds a majority

The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten

Dr Pepper Snapple Group, Inc. decided in September of 2007 to explore the profitability of expanding into the energy beverage market. Dr Pepper Snapple Group, Inc. is a major competitor in the flavored carbonated soft drink (CSD) market, and also has a strong presence in the non-CSD market. The energy beverage market had an estimated $6.2 billion in retail dollar sales in 2006. The market grew at an average annual rate of 42.5 percent between 2001 and 2006, however, market industry experts estimated an average annual growth rate of 10.5 percent

Threat of substitutes: This represents one of the main threats for Brita. Both tap water and soft drinks are potential substitutes for the product that Brita offers.

The behavior of Hawaiian Punch differs between juice drink aisle and soft drink aisle in supermarkets and retail outlets. Supermarkets form the largest vendors of fruit and fruit juices. Supermarkets alone constitute of over 53.5% of the total sold. The rest is divided among trade sales as restaurant and schools constituting of 18.5%; Convenience stores 10.6%, Discounters 9.5%, Independent food retailers 5.8% and the rest is sold in vending machines consisting of 0.2%. 20 percent of Hawaiian punch juice aisle buyers and 34 percent of hawaiian punch soft drink aisle buyers shop both supermarket aisles, second both supermarket aisles attract Hawaiian punch buyers from households with children under 18 years old. The juice aisle was shopped more by households with children in the “under 6” to 12 year old age group. The soft drink aisle was more popular among the households with children in the 6 to 17 year old age range and skewed toward households with teens.

Both competition and market size are of major importance when one explores the positioning of a product. In the case of Crescent Pure, this is vital as Ryan must determine the level of competition that will be faced if the product is marketed as either an energy or sport drink. In the case of an energy product, it should be noticed that there is heavy market dominance by Together, Freight, Razor, Torque and Steller, as they account for roughly 85% of the market. Despite this, it should be seen that the average price point for a 5oz can is $2.99 which is notably higher than Crescent’s $2.75 pricing. Additionally, the market size for sport drinks is of particular interest as it is estimated to grow to $8.5 billion by the year 2013. This, coupled with the fact that the market had grown 40% between the period 2010 – 2012, makes this sector of particular interest to PDB.

Bargaining Power of Buyers: The Buyers and suppliers do not have an impact on the purchasing of the product. NutriBullet is widely distributed and

The interactions between the two major players allows for the creation of a level of competition, where both companies are consistently seeking to improve their businesses processes to remain competitive with the other. Each company also has a set of pricing and output decisions that not only effect their organization but the entire industry in general. One of the most pressing trends for both companies is that consumers are generally becoming more health conscious and beginning to shun carbonated beverages.

The change in the consumers' taste is another key trend in the industry. Many substitutes to carbonated soft drinks gained more popularity among consumers. Exhibit 5 shows an increase in the consumption of bottled water from 11.8 in 1998 to 13.2 gallons/capita in 2000, and that of juices from 10 to 10.4 gallons/capita at the expense of

The last two topics within Porter’s Five Force Analysis are the threats of substitutes and new entries. The threat of substitutes for PepsiCo and Pepsi products could be considered quite high. In recent years, Americans have been cutting back soda consumption, approximately 1.2% in 2015, and 0.9% in 2014 (Taylor, 2016). Customers have been replacing soft drinks, in particular, with water, coffees, and all natural juices. This also leads the way for the threat of new entries. As people are tending to lean away from traditional soft drinks, the threat of new entrants could be considered moderate. This is because the cost of entry is relatively low as it is not a technology driven industry. Most of the cost of entry would be related to branding and marketing of the new product (Thompson, 1996). In recent years many competitors have entered the market with desirable ingredients and non-soft-drink beverages.

Healthier substitutes will have an advantage due to health consciousness and religion. Bargaining power of buyers is strong since competition is high in this industry. The pickiness of these consumers lowers suppliers’ bargaining power.

PepsiCo has the potential to encourage consumers into drinking water and eating healthier snacks that they promote. Bottled water is rising and it is a healthy substitute to sugared drinks. Restaurants, clubs and venues are using their beverage to make special drinks. This is where alcohol industries gains more profit to their company. However, with the ability to adjust customer’s demands with new and appealing products it can dominate to success.