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Global Beverage Industry Essay

1778 words - 8 pages

Global and US beverage industry – macro environment
* In 2009 the global sales of beverages industry was $ 1 581,7 billion, with a forecasted sales value of $ 1 775,3 in 2014.
* In 2009 48,2% of the market share belonged to carbonated soft drinks, 29,2% to bottled water, 12,4% to fruit beverages, and the rest to alternative beverages.
* Consumers were reducing their consumption of carbonated soft drinks, with a growth of – 2,3% in 2009. Consumer preferences have shifted.
* The global growth of alternative beverages grew from 2005 to 2009 from $ 27,7 billion to $ 40,2 billion, with a projected value of $ 53,3 in 2014.
* The $ value global market growth for ...view middle of the document...

* An expected annual growth is projected for alternative beverages till 2014 (annual sales will continue to decline for saturated soft drinks).
* Because of high price tags of alternative beverages, the market is very attractive to new entrants.
* Innovation in brands, flavors and formulations necessary for alternative beverages to support premium pricing.
* Some of the alternative beverages have health concerns from physicians, health professionals and members of health enforcement about the content and effect of consumed alternative beverages. Government control is low.
Competition - Porter’s competitive environment
Supplier power
* Consist of makers of nutritive- and non-nutritive ingredients, as well as manufactures of packaging material and bottlers.
* Most of it is readily available, number of suppliers is large.
* Suppliers compete aggressively for business – lower prices, better services
* Unique supplements available from few sources.
Buyer power
* Consumers developed affinity for alternative beverages; therefore preferences have shifted away from carbonated soft drinks.
* Poor worldwide economy had decreased demand for higher-priced beverages, with sales of sports drinks declining by 12,3 % between 2008 and 2009. The sales of flavored and vitamin-enhanced water declined by 12,5 % over the same period. Energy drinks’ growth slowed to 0,2 % between 2008 and 2009. Financially squeezed consumers became more price conscious.
* Price sensitive consumers can easily switch to other products or – segments.
Threat of new entrants
* The high profit margin of alternative beverages, as well as new demand created for alternative beverages will attract new entrants to the market.
Threat of substitution
* Nearly all of the alternative beverages can substitute each other, as benefits offered by each, are almost the same.
Competition among rivals
* The industry’s leading sellers are: Coka-Cola, PepsiCo, Red Bull and HNC. They operate globally. In contrast to these big players are companies that operate regionally or use a specialty brand of alternative beverages, such as GlaxcoSmithKline, Rockstar, etc.
* Each segment targets different consumers, and use different distribution channels:
Segments | Target market | Distribution |
Energy drinks | Teenage boys | Convenience stores, supermarkets |
Sports drinks | Sportsmen, outdoor manual laborers | Convenience stores, deli’s, restaurants, vending machines |
Vitamin-enhanced | Health conscious adults | |
2 ounce cons. shots | Office workers, parents | Convenience stores |
Relaxation drinks | Insomnia sufferers | |
* All have to make use of efficient distribution channels to be successful in the industry.
* Energy drinks are the leaders of the alternative beverages in brand loyalty(taste) and energy boosting(ingredients), while vitamin-enhanced beverages (VEB) use unique flavors and nutrition as competitive advantage.

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