Meghan Deichert, Meghan Ellenbecker, Emily Klehr,

Leslie Pesarchick, & Kelly Ziegler

Strategic Management in a Global Context

February 22, 2006

1

Industry Examination: Soft Drinks

Barbara Murray (2006c) discussed the soft drink industry simply by stating, " For years the storyline in the nonalcoholic sector dedicated to the power struggle between…Coke and Pepsi. But as the put fight has topped out, the industry's leaders have commenced relying on new product flavors…and looking to noncarbonated drinks for growth. ” To be able to fully understand the soft drink industry, the following should be considered: the dominant economic factors, five competitive sources, industry trends, plus the industry's essential factors. Based upon the analyses of the sector, specific recommendations for competitors can then be created. Prominent Economic Factors

Market size, growth price and overall profitability will be three economical indicators which can be used to evaluate the soft drink market. The market size of this industry has been changing. Soft drink consumption has a market share of 46. 8% in the non-alcoholic beverage industry, illustrated in Desk 1 . Datamonitor (2005) also available that the total market value of soft drinks come to $307. 2 billion in 2004 using a market value outlook of $367. 1 billion dollars in 2009. Even more, the 2005 soft drink quantity was 325, 367. two million lt (see Table 2). Plainly, the soft drink industry is usually lucrative with a potential for substantial profits, but there are several obstructions to get over in order to record the market discuss.

The growth level has been just lately criticized because of the U. H. market vividness of soft drinks. Datamonitor (2005) stated, " Looking ahead, despite stable growth in consumption, the global soft drinks marketplace is expected to slightly decelerate, reflecting stagnation of market prices. ” The change is definitely attributed to the other growing sectors of the non-alcoholic market including tea and coffee (11. 8%) and water in bottles (9. 3%). Sports beverages and strength drinks can also be expected to embrace growth while competitors start off adopting new products. 2

Earnings in the soft drink industry will remain rather sound, but market saturation especially in the U. H. has induced analysts to suspect a slight deceleration of growth in the marketplace (2005). For this reason, soft drink market leaders are creating themselves in alternative marketplaces such as the treat, confections, bottled water, and sports activities drinks industries (Barbara Murray, 2006c). In order for soft drink firms to continue to grow and increase income they will ought to diversify all their product offerings.

The geographic scope in the competitive rivalry explains a few of the economic features found in the soft drink market. According to Barbara Murray (2006c), " The sector is completely outclassed by three major players…Coca-Cola is king from the soft drink-empire and boasts a global business of around 50%, accompanied by PepsiCo at about 21%, and Cadbury Schweppes at seven percent. ” Moreover major players, smaller businesses such as Cott Corporation and National Drink Company make up the remaining business. All five of these firms make some of their earnings outside of the us. Table several shows that the united states does not hold the highest percentage of the global market share, as a result companies have to be able to contend globally in order to be successful.

Table 5 indicates that Coca-Cola contains a similar syndication of sales in Europe, North America, and Asia. However, the majority of PepsiCo's profits come from the United States (see Table 5). Compared to PepsiCo, Cadbury Schweppes has a better global existence with their global mix (see Table 7). Smaller businesses are also looking to establish a global presence. Cott Corporation is a good example because indicated in Table eight. The saturation of the ALL OF US markets has grown the global enlargement by soda leaders to enhance their...

Mentioned: American Beverage Association (2005). Soft Drink Information. Retrieved February 21, 2006 from

http://www.ameribev.org/variety/facts.asp

Cadbury Schweppes. (2004). 2004 Annual Record. Retrieved Feb 17, 2006 from

http://www.cadburyschweppes.com

Datamonitor. (2005, May). Global Soft Drinks: Market Profile. New york city. Reference Code:

0199-0802

Hein, Kenneth. (2004). Brand Loyalty 2005. Retrieved March 12, 2006 from

http://www.brandkeys.com/news/press/102504Brandweek.Loyalty.pdf

Murray, Barbara. (2006a). The Coca-Cola Company. Hoovers. Gathered February 13, 2006,

from http://premium.hoovers.com/subscribe/co/factsheet.xhtml?ID=10359

Murray, Barbara. (2006b). Pepsi Co. Hoovers. Recovered February 13, 2006, by

http://premium.hoovers.com/subscribe/co/profile.xhtml?ID=11166

Murray, Barbara. (2006c). Carbonated Refreshments. Hoovers. Retrieved February 13, 2006, coming from

http://premium.hoovers.com/subscribe/ind/overview.xhtml?HICID=1049

Murray, Barbara. (2006d). Cadbury Schweppes Inc. Hoovers. Retrieved February 13, 06\,

by http://premium.hoovers.com/subscribe/co/profile.x html? ID=41767

Murray, Barbara. (2006e). Evaluation Data. Hoovers. Retrieved Feb . 13, 06\, from

http://premium.hoovers.com/subscribe/co/fin/comparison.xhtml?ID=10359

PepsiCo Incorporation. (2004). 2005 Annual Report. Retrieved Feb . 17, 2006 from

http://www.pepsico.com

Sicher, L. D. (2005). Beverage Digest/Maxwell ranks U. S. soda industry pertaining to 2004. Gathered

February 10, 2006 from http://www.beverage-digest.com/pdf/top-10_2005.pdf

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