Beverage Competition

3078 WordsNov 26, 201113 Pages
Analysis of Case 5 1. What are the strategically relevant components of the global and U.S. beverage industry macro-environment? How do the economic characteristics of the alternative beverage segment of the industry differ from that of other beverage categories? Explain. About the market size, The worldwide total market for beverages in 2009 was $1,581.7 billion. The sales of beverages in the U.S. during 2009 totaled nearly 28,859 billion gallons, with carbonated soft drinks accounting for 48.2 percent of industry sales and bottle water making up 29.2 percent of industry sales. Sports drinks, flavored or enhanced water, and energy drinks made up 4.0 percent, 1.6 percent, and 1.2 percent of industry sales, respectively, in 2009. The…show more content…
Delis and restaurants had low switching costs from brand to brand, but had less ability to negotiate for deep pricing discounts because of volume limitations. The bargaining power and leverage of suppliers—a _______competitive force Students will easily conclude that suppliers to beverage producers have little leverage in negotiations and represent a weak competitive force. Packaging is readily available from many suppliers and is commodity like. It is possible that suppliers of ingredients available from only a few suppliers (such as taurine) would have a moderate amount of leverage in negotiations with energy drink producers. Additionally, the producers of alternative beverages are important customers of suppliers and buy in large quantities. Competition from substitutes—a _______________ competitive force There were many substitutes to alternative beverages, including any other type of beverage (e.g., tea, soft drinks, fruit juices, and bottled water) and tap water. Students are likely to suggest that other beverages represent a strong competitive force since there are many types of beverages that can satisfy one’s thirst. Consumers were familiar with substitute beverages and likely consumed substitute beverages on a regular basis. In addition, and most substitute beverages sell at price pointss much lower than alternative beverages, which leads to switching if consumer income is limited.
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