Cola Wars Continue: Coke and Pepsi in 2010

2362 Words Aug 10th, 2014 10 Pages
Strategy
‘Cola Wars Continue: Coke and Pepsi in 2010’

Analysis of the US carbonated soft drinks (CSD) industry
(a) Strategic issues
The CSD market in the US (approx. $74 billion) is dominated by two concentrate manufacturers
– namely Coke and Pepsi –. Both companies have been competing intensely since the 1970s, yet have thrived from this competition and have grown the business very profitably, as both have benefitted from the CSD market growth rates of around 10% p.a. until the early 2000s, when domestic consumption started to decline and in 2009 fell back to levels of 19901:

U.S. Liquid consumption Trends (gallons/capita):
1970
Carbonated soft drinks

1990

2000

2009

22.7

46.9

53.0

46.0

U.S. Soft
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The 3
A’s (Advertising, Addiction, Availability) continue to be the main purchasing criteria for consumers. Still these players will have to adapt their strategies to maintain market levels for
CSDs. Possible strategic moves to act / react on the trends stated above should be based on the findings of the Five Forces Analysis and the PESTLE Analysis and could include:
(1) Development of (approved by the US F&D Admin.) alternative sweeteners to reduce obesitycausing sugars
(2) Compete on availability (through their impressive geographical reach)
(3) Create a fragmented bottling network but give territorial exclusivity to bottlers as incentive to
‘grow the pie’ and use the bottling network as a competitive firewall (especially against massmerchandisers)
(4) Escalate advertising spending to keep out entry

Further market analysis can be carried out by using proven
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