Coke And Pepsi 's Effect On The Industry Competition

1774 WordsJan 25, 20158 Pages
Over the last century, Coke and Pepsi have been waging war over the $74 billion carbonated soft drink industry in the United States. The degree of this competition has changed over the last decade as carbonated soft drink (CSD) consumption in America decreased to 46 gallons per year per person. To investigate these changes and evaluate the reasons why the industry has been so successful over the years, it is important to do an industry analysis looking at the different forces that affect both Coke and Pepsi as well as the changes in these forces and their effects on the industry competition. FORCE: Threat of Substitute Products Carbonated soft drinks have an abundance of substitute products that can be consumed by their customers. These include other drinks such as water, tea, beer, milk, coffee, juice, and sports drinks. With all these substitute drink options, most of which are much cheaper than CSDs, it would be seem as though the soft-drink industry would have a lot of heavy competition. Yet Americans continue to consume “more soda than any other beverage” (Harvard 2). This is due to a couple of reasons, one of which is the very strong brand name loyalty present in the soda industry. Consumers continue to come back to their favorite brands. Another reason is that Coke and Pepsi have both made a strong push into the marketing of their own alternative/substitute beverages which they use to protect themselves from competition. They each own one of the two largest bottled

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