Energy Drinks

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Question one
The strategically relevant components for the global and U.S. beverage industry macro-environment are market growth rate, market size, segmentation and scope of rivalry. Economic characteristics of alternative beverage segment differ from other beverage categories in several ways. The market size for alternative beverage was $40.2 billion globally and $17 billion in the United States, while the market size for other beverages was $ 1,548.3 and $28.9 billion globally. Market growth rate for alternative beverages between 2005 and 2009 was 9.8 percent while for other beverages it was 2.6 percent. Question two

The competition in the alternative beverage market was strong. Pepsi and Coca-Cola were competing for the top spot in the production and distribution of their beverages. The strongest competitive force was bargaining power and leverage of buyers. Most stores were negotiating for lower prices since they bought the beverages in large quantities. Since Pepsi and Coke had an established brand, their alternative beverages found automatic shelf space in most stores and wholesale clubs. The weakest of the five competitive forces was the bargaining power and leverage of suppliers. The reason is that the packaging from different suppliers was similar, thus it was easy to substitute the packaging from most suppliers, and thus they had weak bargaining power. The competitive force that seems to have the greatest effect on industry attractiveness is competition from substitutes. This is why there were many substitutes to alternative beverages that were sold at lower prices. The competitive force with the greatest effect on profitability of new entrants is a threat of entry. Question three

The market for energy drinks, sports drinks and vitamin-enhanced drinks is changing in several ways. There is innovation of products with the rise of drinks containing additional nutrients and introduction of energy shots. Furthermore, the industry is also considering...
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