Cola Wars Continue: Coke and Pepsi in the 21st Century Concentrate Producers and Bottlers were two of the four major participants that were involved in the production and distribution of Carbonated Soft Drinks (CSDs) in the United States. The Concentrate Producers (CPs) were responsible for blending raw material ingredients‚ packaging the blend in plastic canisters‚ and shipping it to the Bottler. Using Porter’s Five Forces analysis for the CPs industry‚ we determined that
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companies experienced their own distinct ups and downs‚ as Coke suffered several operational setbacks and as Pepsi charted a new‚ aggressive course in alternative beverages. Although their paths diverged‚ however‚ both companies began to modify their bottling‚ pricing‚ and brand strategies. As the cola wars continued into the 21st century‚ Coke and Pepsi faced new challenges: Could they boost flagging domestic CSD sales? Would newly popular beverages provide them with new (and profitable) revenue streams
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bottlers to concentrate on take home sales through supermarkets and Pepsi introduced new 26 ounce bottle at the same time for family consumption. Later in 1963‚ new CEO Donald Kendall launched a new campaign for the young generation and the people who think themselves as ‘young at heart’‚ named “Pepsi generation”. Intense promotion were held to reach to the customers mind and thus Pepsi were able to narrow coke’s lead to 2-to-1 margin at that time. In this period‚ Pepsi sold concentrate to its bottlers
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gallons of CSD per year‚ loest since 1989. Coke suffered from operational setbacks Pepsi charterd new‚ aggressive course in altnerative beverage and snack Challenges Boost domestic CSD sales? Compete how in growing non CSD category that demanded bottling‚ pricing‚ and brad strategies What has to be doen to ensure sustainable growth and profitability? Economies of the US CSD Industry Consumed 23 gallons of CSD annually in 1970‚ consumption grew by 3% per year over next 3 decades. Availability
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also both had a very high market share. Coke and Pepsi had an average of 10% net profit in sales. The profitability of the concentrate business is so different to that of the bottling business because the concentrate producers are not responsible for distribution. Coke and Pepsi are to distribute their products. It also takes little capital investment for the concentrate producers. They need only one factory to serve all of the U.S. Bottlers deal with merchandising and have high fixed operation costs
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value chain of the soft drink industry. By focusing on the war between Coca-Cola and PepsiCo as market leaders in this industry – with a 90% market share in carbonated beverages – the study analyses the different stages of the value chain (concentrate producers‚ bottlers‚ retail channels‚ suppliers) and the impact of the modern times and globalisation on competition and interaction in the industry. Throughout this analysis‚ I will assess how the strategic interaction between the two players allowed
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analyses Concentrate producers: Bargaining power of buyers: Refer to the case‚ direct buyer is the bottler and indirect buyers are the end consumer and suppliers such as supermarkets and other outlets. Bargaining power of buyers for concentrate producers refers to the bargaining power of the bottlers. From the industry perspective‚ it is true that bottler could choose to switch their concentrate producers. Bargaining power of suppliers: The direct suppliers for concentrate producers are the suppliers
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worldwide sales and produced 47 percent of operating income. Strategic Focus and Plan The Mission Crush brand of fruit flavored carbonated beverages. Three issues were prominent. First‚ immediate efforts were needed to rejuvenate the bottling network for the Crush soft drink bard. Second‚ accounting to one executive‚” to sort through and figure out what the Crush brand equity is‚ how the brand was built… and develop a base positioning.” Third‚ a new advertising and promotion program for
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COCACOLA STRENGTHS Brand Image Brand image is very high throughout the world. It’s so famous that almost everyone knows about it. It develops so strong image that also has a great effect on the corporate image as well. It is rated as the world’s number one cold drink and is famed for its internationally well-known brand name “Coca-Cola”. Coke is well supported by Coca-Cola Ltd. in the local market and enjoys distinct position. Brand Positioning The brand positioning of the Coca Cola is very strong
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Coke strayed from its Coca-Cola Classic formula‚ its customers demanded a return to the original recipe. Pepsi and Coke also share an absolute cost advantage over others in the industry. They developed superior production operations by buying up bottling companies and performing the service in-house. These companies also have large economies of scale‚ as they both operate internationally and together control 84% of the market worldwide. Additionally‚ government regulations have prevented competitors
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