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Business Strategy
MM-6056
COMPETITION IN ENERGY DRINKS, SPORT DRINKS AND VITAMINENHANCED BEVERAGES

Lecturer : Dr. Mohammad Hamsal

Developed by : Deru R. Indika Nisham Fiksriyoso Erika Paraminda Josia Pranata T. 29110301 29110309 29110310 291103

Master of Business and Administration Bandung Institute of Technology Bandung 2012

1. Case Synopsis At this time, in the global beverages industry, carbonated soft drink market has reached a mature stage. This occurs because the demand shift from carbonated soft drink to alternative beverages. Since the mid 2000s alternative beverages product became product/brand line that important for beverages company because its market grow rapidly and give high profit margins due to the premium price. This is not only affect to existing beverages manufacturers, but also encourage the emergence of new sellers that focus solely on alternative beverages.

Alternative beverages segment is divided over several segments of the energy drinks, sports drinks, vitamin-enhanced beverages, two-once concentrated energy shots and relaxation drinks. Each segmen has different consumer types and different distribution channel. In term of market, global beverages company also began to shift to consumers in developing countries than develop country where the market began to decline, exacerbated by worse economic condition in US which is the largest market of beverages industry.

2. Issues and Problem There are several Issues and problem that appear on alternative beverage Industry such as: a. Several alternative beverage Industry begin to mature that could be seen from this graph below that show the growth of global alternative beverage become slower every years.

Global Alternative Beverage
19.00% 14.00% 9.00% 4.00% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Value growth

b. There are several research that show the negative effect from the alternative beverage products. c. Global economical crisis that make customer became more price sensitive.

3. Analysis General Environtment dari Alternative Beverages (PEST Analysis) 1. Politic Factor US government policy about suprime mortgage Citigroup relieve act that allow bank to merger (bank merger) The Commodity Futures Modernization Act desember 2000 Economic Stimulus Act of 2008 Housing and Economy Recovery Act of 2008 Emergency Economic Stabilization Act of 2008 ($700 Bailout) Regulation about content of alternative beverage from US Food and Drug Administration (FDA) and similar body in other country

2. Economic Factor The global beverage industry projected to grow from $1.58 trillion in 2009 to early $1.78 trillion Steady growth in purchasing power of consumer in developing countries Market maturity in the carbonated soft drink Poor economic condition in US because there is a global economic crisis that makes the consumer becomes more price sensitive. Increasing demand in alternative beverage, with US contributed demand for 42.3 percent in 2009 worldwide

3. Social Factor Consumer preference shifted from carbonated soft drink to alternative beverages Health concern from physician, health proffesional, and member of law enforcement about content and effect of consumed alternative beverages Demografic of consumer is different in every alternative beverages segment (age, job, life style)

4. Technology factor Internet and social media era Fast technologi development will effect production and distribution system Medical research

According to PEST analysis over industry alternative beverages concluded: Factors Politic Impact Low Reason There are few Government regulation that really control about alternative beverage. Economy Moderate The premium price of alternative beverage make it sensitif toward economic condition because it will affect consumer’s purchasing power where their disposible income will decrease or increase depends on their economic condition. Social High The reason of consumer consumed alternative...
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