ٱ Soft Drink Industry
The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten brands sold. Colas are the dominant flavor in the U.S carbonated soft drink industry; however, popularity for flavored soft drinks has grown in recent years. The changing demographics of the U.S population have been an important factor in the growing popularity of these flavored soft drinks. The possible impact of this factor will be addressed later in the case.
ٱ Squirt Brand
Squirt is a caffeine-free, low-sodium carbonated soft drink brand with a distinctive blend of grapefruit juices that gives it a tangy, fresh citrus taste. Squirt is the best selling carbonated grapefruit soft drink brand in the United States. The origin of Squirt can be traced back to 1938 when a man named Herb Bishop began experimenting with Citrus Club. Bishop created a new carbonated soft drink that required less fruit and sugar to produce compared to other sodas that were being made at the time. The new drink "seemed to squirt onto the tongue," so Bishop named the drink Squirt. Squirts sales grew during WWII because its low sugar content helped bottlers restricted by sugar rationing rules. By the mid 70's, Squirt was introduced internationally in Central and South America. In 1977 a company named Brooks Products purchased Squirt from Bishop. In 1983, Diet Squirt became the first soft drink in the United States to be sweetened with Nutra Sweet. Squirt joined A&W Brands in 1986, which was later purchased by Cadbury Schweppes PLC in 1993. Responsibility for manufacturing, marketing, and distribution of Squirt was assigned to Dr Pepper/Seven Up, Inc, which had been acquired by Cadbury Schweppes PLC in 1995. It still remains under the Dr Pepper/Seven Up, Inc. branch. The Squirt Brand remains highly competitive among the grapefruit and citrus-flavored brands in the United States. It has extreme competition from similar brands distributed by Coca-Cola and Pepsi-Cola.
The chart below shows the volume breakdown of citrus soft drinks by year compared to other competitors in the carbonated grapefruit and citrus-flavored market.
Case Volume Trend for Major Carbonated Grapefruit and Citrus-Flavored Brands in the United States: 1996-2000 Case Volume (millions) by Year
Dr Pepper/Seven Up
Total Case Volume768.4900.8964.4989.1981.8
*Note: 2000 Competitor case volume data represent estimated figures
Squirt's market share is calculated by dividing case volume by total case volume for the entire market. The market share for Squirt for the past years is as follows:
1996-55,800,000/768,400,000= .0726 or 7.26%
1997-55,700,000/900,800,000= .0618 or 6.18%
1998-54,800,000/964,400,000= .0568 or 5.68%
1999-56,000,000/989,100,000= .0566 or 5.66%
2000-54,600,000/981,800,000= .0556 or 5.56%
The numbers above show that the percent of market share for Squirt has slowly declined in recent years....