Strategic Alliance With Pepsi Company

1322 WordsJul 31, 20166 Pages
Strategic Alliance with Pepsi Similar to the Kraft alliance, Starbucks would look into a partner in Pepsi that had already and already established supermarket retail channel to market its mass produced cold bottled coffee beverage, the Frappuccino (Doorneweert, 2013). In exchange for Pepsi’s carbonated beverage R&D expertise, bottling plants network, soft drink sales distribution network, and advertising channels, Pepsi would receive Starbucks’ coffee expertise and unmatched brand experience (Table 2). The Frappuccino and the partnership with Pepsi would prove to be a huge success. As of 52 weeks ending June 14, 2015, the partnership had a 97% market share in ready-to-drink coffee with an outstanding $1.5 billion retail business (PepsiCo and Starbucks, n.d.). The alliance and its products have been so successful in fact, that a recent article has dubbed this the “Frappuccino Generation” (Mieszkowski, 2006). While coin operated arcades were the popular hangouts for kids during my youth with memorable title such as Street Fighter II and Bubble Bobble, kids these days prefer to spend their time in their Neighborhood Starbucks locations, outfitted with oversized lounge chairs, and tables equipped with wireless charging stations for all their portable electronic devices, strung out on the sugary, caffeine laden beverage. External Environment For years, while Starbucks strived for growth, competitors slowly gained traction in the coffee beverage market. While Dunkin

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