Five Forces of Competition on Energy Drinks Industry

Topics: Caffeine, Coca-Cola, Coffee Pages: 2 (563 words) Published: February 11, 2013
Five Forces of Competition on Energy Drinks Industry

Rivalry Among Competing Sellers
Increasing Market Size
There are already many brands in the energy drinks industry. Simultaneously, existing beverage producers are coming up different products to capture increasing the size of the market for alternative beverages by extending existing product lines and developing altogether new products. Increasing marketing strategies

The competition among producers becomes more and more fierce. Because many Sellers put active and aggressive efforts on establishing consumer brand loyalty and strong emphasis on advertising, sales promotions and endorsements. Therefore, we conclude that rivalry in this industry is strong. Potential New Entrants

Powerful big company existing
There are many global brands (such as Coca Cola, PepsiCo, Red Bull, Hansens Natural) with stronger product differentiation, greater distribution channel and brand loyalty. For new entrants, it is difficult to seize market share from these big companies. High initial cost

Another barrier to entry is high fixed costs for warehouses, trucks, equipment and labor. New comers cannot compete in price without economies of scale. High saturation rate
According to this case, saturation rate for all types of beverages was high in developed countries. Indeed, sales of sports drinks and vitamin-enhanced water had declined between 2008 and 2009. Restrictive government policies (FDA Regulatory)

As we known, high caffeine content of energy drinks is not good for heart. U.S. Food and Drug Administration regulate strictly the caffeine content of energy drinks. Some company have been removed the caffeine product from drinks in government’s force. Therefore, we conclude all above make it extremely difficult for companies to enter energy drinks industry. New entrants are weak competitive force. Competition from substitutes

There are many substitutes in the market. All soft drink, fruit juices, sodas and various...
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