Cola War

Topics: Coca-Cola, Soft drink, Pepsi Pages: 30 (9264 words) Published: March 18, 2012
Table of Contents
Works Cited2
Executive Summary3
21st Century Major Trends4
Value Chain and their relationships5
Industry Analyses6
CSD Industry Analysis6
Porter’s Five Forces for Bottler & Distribution9
Profitability Analysis11
Financial Analyses12
SWOT and Ansoff Matrix Analyses12
Where Should Pepsi and Coca-Cola head?14
Keep status quo price competition and marketing mix?14
Initiate Price War to enhance profitability while holding the rest of marketing mix?14
Bottling drinking water, should the strategy be the same as CSD?15
Should Coca-Cola and PepsiCo going in different strategies?16
Industry Marketing Mix16
Figure A1: U.S. Liquid Consumption 1970 - 200420
Exhibit 1: U.S. Bevearage Industry Consumption Statistics21
Exhibit 2: U.S. Soft Drink Market Share by ase Volume (percent)22
Exhibit 4: Comparative Costs of a Typical U.S. Concentrate Producer and Bottler, 200424
Financial Analysis25
Exhibit 3: Financial Data for Coca-Cola, Pepsi-Cola, and their Largest Bottler ($millions)25
Figure A2: Selected health conditions and risk factors: United States, 1988–1994 through 2005–200627
Industry Analysis, full report28
CSD Industry Analysis28
The impact of Globalization on an industry30
Pepsi: Ansoff Referrence35
Contribution part:37

Executive Summary
For over a century, carbonated drink was introduced to mankind. Two major contenders in the industry stand Coca-Cola and PepsiCo. The two soar in the industry as they compete with each other. There were amazing monopolistic behaviors found in their doings. Have you ever wondered why such drink without any redeeming health benefits, but rather sublimely known as one of the causes to sugar and fat related diseases, can be so profitable? By setting the health benefits aside, have you ever wondered why such drinks are so popular yet a lot of competitors are unable to imitate and stand up to beat them? The secret lies in the fact that they could control their value chain so well in order to sustain their business in a long run.

By entering the 21st century, consumer trends are shifting. Now this is where new challenges surface. How can a sweetened and carbonated drink survive in an era where health becomes a major concern in consumer’s minds? What strategies should they work on as they thrive to survive in beverages industry?

21st Century Major Trends
Shifting in Beverage Consumption
The trend in consumption of carbonated soft drinks (CSD) is shifting to other types of beverages. The CSDs share beverage of consumption starts to fall. Throughout 1998 - 2004, CSDs consumption drops by a total of 1.1%. Unlike the time during 1970 to 1998, the share of consumption grew from 12.4 percent to 29.6 percent in 1998. Other types of beverages have shown their shift in beverage consumption share. Beer, Wine, Distilled spirits, and Tea shares are stabled since 1985 while powdered drinks, and Coffee and Milk had shown a small decline. The most noticeable changes, however, found in coffee, sport drinks, tap water and bottled water. Coffee shows a sign of huge consumption drop. Bottled water and Power drink, however, shows an increasing consumption at noticeably growth rates (see Appendix S - Figure A1: US Liquid Consumption Trend, 1970 - 2004) Increasing in sugar-related diseases and deaths

According to the Center of Disease Control and prevention (CDC), there is evidence indicating an increasing trend for the percentage of the population which is being exposed to high-sugar related health risks; diabetes, overweight, obesity, etcetera. (see Appendix - Figure A2: Selected Health Conditions and Risk factors, 1988 - 1994 through 2005 - 2006)

With an increasing trend in fat-related diseases, the sweetened beverages are well aware that they give no health redeeming benefits. Thus, people tend to consume less sugary beverages. Value Chain and their relationships

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