Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages
1. What are the strategically relevant components of the global and U.S. beverage industry macro-environment? How do the economic characteristics of the alternative beverage segment of the industry differ from that of other beverage categories? Explain. The strategically relevant components of the global and U.S. beverage industry macro-environment are essentially the expansion of the market for alternative beverages by introducing energy drinks, sports drinks, and vitamin drinks in international markets, and increasing the market size of alternative beverages by extending current product lines and developing new products. Numerous factors affect the achievement of this strategy and they include: Size of the Market:
It is without question that the global beverage industry is a large one, with the dollar value of the market being $1581.7 billion in 2009 and volume sales (in billions of liters) being $458.30. Regarding the distribution of sales in regards to beverage type, carbonated soft drinks came on top with 12,919.3 (millions of gallons) being sold and leading to a market share of 48.2%. Next in volume of sales was bottled water with a sales volume of 8,435.3 and 29.2% market share. Fruit beverage sales were 3,579.2 and a market share of 12.4%. In the alternative beverage category, sports drinks sales were 1,157.8 and a market share of 4%, ready-to-drink tea sales were 901.4 with a market share of 3.1%, flavored or enhanced water sales were 460 with a market share of 1.6%, energy drink sales volumes were 354.5 with a market share of 1.2%, and ready-to-drink coffee sales volume was 51.5 with a market share of 0.2%. In 2009, the industry worldwide sales of alternative beverages were 40.2 billion, with sales in the US accounting for 42.3% of the sales. Asia-Pacific accounted for 31.5%, Europe 22.2%, and the Americas (excluding the US) 4%. Growth Rate:
There has been a steady growth in the value of the global beverage industry over the years. Between the years 2005 and 2009, there has been a constant increase in the dollar value of sales, and this increase has also been forecasted between the years 2010 and 2014. Regarding the alternate beverages, we see an increase in sales over the years that even surpasses that of the global beverage industry. Market Segmentation:
The market for global alternative drinks has been in existence for a while, and beverages have been chosen and selected into groups based on the type of products. The different groups include sports drinks, energy drinks, vitamin-enhanced beverages, and relaxation drinks, with comfort and relaxation been of utmost importance to the consumer. In 2009, the alternative beverage drink with the most sales was sports drinks with sales of nearly 60%. Vitamin enhanced followed in sales by 23% and energy drinks came closely behind with sales of18% during that same year. Scope of Competition:
The major worldwide producers of beverages are Coca-Cola, PepsiCo, and Red Bull. There are also smaller companies in the same industry, by their production do not compare to the three major companies. Among the most important competitive features of the alternative beverage industry include product innovation, efficient distribution systems, and distinct differentiation. 2. What is competition like in the alternative beverage industry? Which of the five competitive forces is strongest? Which is weakest? What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants? Competition in the alternative beverage industry is in favor of the three major producers, especially Coca-Cola and PepsiCo. Since their alternative beverage product offerings are numerous, and they supply to grocery stores, convenience stores etc. who have a high demand for their products, they avoid vulnerability to buyer leverage and always have shelve space in these...
References: Gamble, J. (2008). Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages. Boston: Harvard Business Publishing.
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