Competitors Analysis - Soft Drink Industry

Topics: Coca-Cola, Soft drink, PepsiCo Pages: 17 (5014 words) Published: February 18, 2007
Executive Summary – Competition
In 2005, the global carbonated soft drink (CSD) market generated revenues of over $147 billion, all of which comes from three global powerhouse companies occupying 90% of the market. Coca-Cola, Pepsi, and Cadbury Schweppes, are one, two and three, respectively, in the very competitive CSD industry. Over past decades, the CSD market has been honored with record growth, showing consumption rates that have more than doubled over the last 25 years. Americans are consuming twice as many beverages as they were 25 years ago; however, while carbonated soft drinks continue to remain the most popular beverage, consumer preferences are changing to include other types of beverages, such as waters, juices, and other drinks perceived to be a healthier alternative. The changes in preferences and overall increases in new alternatives are beginning to bring the total consumptions rates for CSDs down from their 25 year high. In 2004, 10.24 billion cases were sold, while 2005 showed a 0.6% decrease translating to 10.18 billion cases. This 2005 decline came after a small growth in both 2003 and 2004. Coca-Cola lost some market share, Pepsi gained some, and diet drinks seems to be what is fueling the overall category growth. Dr. Pepper, Cadbury Schweppes' only US sold CSD, was the only beverage to have growth in the US in 2005. This was due in part to the launch of Diet Cherry Vanilla Dr. Pepper. As mentioned above, the top-three players in the CSD market are Coca-Cola, Pepsi, and Cadbury Schweppes (Dr. Pepper). Coca-Cola continues to hold the lead position with a market share of 45%, but Pepsi and Cadbury Schweppes are not far behind with 32% and 15%, respectively. At this stage in this very mature market, the only way market share will change significantly is through takeovers. However, the takeover targets that exist are so small, that the market share increase would be approximately 1%. Despite the 2005 decrease in consumption, three-year sales numbers for these companies show increases in both Coca-Cola and Pepsi from 2003 to 2005. While Coke remains the leader, Pepsi believes that they will continue to grow through product innovation. Their diet carbonated beverages continue to grow, so as long as consumer interests stays relatively high on the diet beverages, Pepsi feels that it is positioned to remain in a tight competition with Coke. Product Quality

Product quality is an extremely important issue for all companies. But when it comes to products that will be consumed, customers will turn their back on a product if they face a product issue. Coca-Cola ensures the safety and product quality of their beverages through a system they have designed call The Coca-Cola Quality System. This in an integrated approach to managing all aspect relating to the product – quality, the environment and health and safety. This worldwide system involves every aspect of their business. All employees are empowered to follow and expected to maintain the high quality standards. While PepsiCo is operating the beverage and food industry, the company is extremely committed to providing safe, wholesome products and protecting equity in their brands and trademarks. In all divisions throughout the globe, they have implemented strict policies related to food safety, labeling product integrity and quality. Their policies cover food safety, sanitation, recalls and allergens and require that our products are coded, labeled, identifiable and traceable. Cadbury Schweppes, playing in both the beverage and confectionary industries, also has high quality standards. They use innovation, responsible marketing and ethical sourcing to deliver the best quality products to their consumers. They also have strict levels of control on their manufacturing processes and are committed to minimizing any environmental impacts these processes may cause.

Each of the top three CSD companies has been in business for over 100 years. As the...
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