...Case Discussion: Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages Assignment Questions: 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. Global beverages companies like Coca Cola had relied on those beverages to sustain volume growth in mature markets where consumers were reducing their consumption of soft drinks. These companies wanted to expand the market for alternative beverages by introducing new drinks into emerging markets. Beverage producers made numerous attempts to increase the size of the market for those types of beverages by growing product lines and increasing sales and market share. They were faced with criticism of alternative beverages as presenting health risks or not yielding the advertised results. Rapid growth in the market and premium prices/high margins made the alternative beverage market an important part of beverage company strategy. The economic characteristic of the alternative beverage segment if the industry is differ from that of other beverage categories. Alternative beverages competed on the basis of differentiation from traditional drinks such as carbonated soft drinks or fruit juices. The market started out with low competition, however that is rapidly changing as many new product lines enter and profit...
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...Porter’s five-forces model reveals that the overall alternative beverage industry attractiveness is high. Some beverage companies, such as PepsiCo and Coca-Cola, have mastered the art of brand building in the alternative beverage market and have been rewarded with rapid growth rates. The rising population of health conscious consumers is increasingly leaning towards alternative beverages that are believed to offer greater health benefits. The strongest competitive force, or most important to strategy formulation, is the threat of entry of new competitors. Competitive pressure from rival sellers is high in the alternative beverage industry. The number of brands competing in sports drinks, energy drinks, and vitamin-enhanced beverage segments of the alternative beverage industry continue to grow each year. Both large and small vendors are launching new products and fighting for minimal retail shelf space. More and more consumers are moving away from traditional soft drinks to healthier alternative drinks. Demand is expected to grow worldwide as consumer purchasing power increases. Another strong competitive force is buyer bargaining power. Convenience stores and grocery stores have substantial leverage in negotiating pricing and slotting fees with alternative beverage producers due to the large quantity of their purchase. Newer brands are very vulnerable to buyer power because of limited space on store shelves. Top brands like Red Bull are almost always guaranteed space...
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...Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages Executive Summary Beverage companies were intent on expanding the market for alternative beverages by introducing energy drinks, sports drinks, and vitamin drinks in more and more emerging international markets. Energy drinks, sports drinks, and vitamin-enhanced beverages were the stars of the beverage industry during the mid-2000s. Rapid growth in the category, coupled with premium prices and high profit margins made alternative beverages an important part of beverage companies' lineup of brands. On the other hand, Fifth consecutive year data show that U.S. consumers had purchased fewer carbonated soft drinks than the year before. Carbonated soft drinks sales would continue to decline as consumers developed preferences for bottled water, sports drinks, fruit juices, readyto-drink tea, vitamin-enhanced beverages, energy drinks, ready-to-drink coffee, and other types of beverages. Even though the global beverage industry was projected to grow from $1.58 trillion in 2009 to nearly $1.78 trillion in 2014 as beverage producers entered new geographic markets, developed new types of beverages, and continued to create demand for popular drinks., beverage producers also were forced to contend with criticism from some that energy drinks, energy shots, and relaxation drinks presented health risks for consumers and that some producers' strategies promoted reckless behavior. Although sports drinks and...
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...relevant components of the global and U.S. beverage industry macro-environment?The strategically relevant components of the global and U.S. beverage industry macro-environment: • Global beverage companies such as Coca Cola and PepsiCo had relied on such beverages to sustain in volume growth in mature markets where consumers were reducing their consumption of carbonated soft drinks. • Coca-Cola, PepsiCo, and other beverage companies were intent on expanding the market for alternative beverages by introducing energy drinks, sports drinks, and vitamin drinks in more and more emerging international markets. • Beverage producers had made various attempts at increasing the size of the market for alternative beverages by extending existing product lines and developing altogether new products. • Expanding the market for alternatives beverages and increasing sales and market share, beverage producers also were forced to content with criticism from some that energy drinks, energy shots, and relaxation drinks presented health risks for consumers and that some producers’ strategies promoted reckless behavior, the primary concern of most producers of energy drinks, sports drinks, and vitamin-enhanced beverages was how to best improve their competitive standing in the market place. • Rapid growth in the category, coupled with premium prices and high profit margins made alternative beverages an important part of beverage companies’ lineup of brands. (b) How do...
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...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 alternative beverages grew at a 9,8 % annually between 2005 and 2009, and has a forecasted growth rate of 6,7 % between 2010 and 2014. * Of the alternative beverages market, the USA has 42,3 % of the share, Asia- Pacific has 31,5 %, and Europe has 22,2 % of the share. * In the US, sports drinks accounted for almost 60 % of alternative beverages sales, while vitamin- enriched drinks and energy drinks accounted for about 23 % and 18 % of 2009 alternative beverage sales. * Saturation rate for all types of beverages was high in developed countries. * Market maturity and poor economic conditions caused the US beverage industry to decline by 2,3 % in 2008 and by 3,1 % in 2009. * The entering of new geographic areas, the steady growth of the purchasing power of consumers in developing...
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...Vitamin Water, Energy Drinks, other Beverages Case Study 2 The beverage industry has been rapidly growing for many years now. New products are being produced, as well as old products being refined. One of the largest markets thus far, beverages are continuously changing and being tinkered with. We look at a few different types such as, energy drinks, sports drinks, and vitamin-enhanced beverages. With different corporations comes different success factors. Some success factors for the beverage industry consist of rapid growth in category, premium prices, and high profit margins. Coca Cola and PepsiCo have been expanding on numerous different flavors, holding to the same products and production line. By expanding the “line up”, companies can expand their production, as well as profit and the business as a whole. “As consumer preferences shifted during the 2000s, sports drinks, energy drinks, and vitamin- enhanced drinks had grown to become important segments within the industry in 2010.” [Gamble C 76]. Noticing that most of the energy drinks are vitamin based, the growth of these products has been positive. Looking at Exhibit 1, we understand and can see the growth and volume sales over the years between 2005 and 2014. This chart pictures a constant growth based on the growth determined within prior years. The Five-Forces Model of Competition, is a key analytical tool in organizing a model based on buying and selling. The Five Forces are considered to be: firms...
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...Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages Case Discussion: Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages Assignment Questions: 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. Global beverages companies like Coca Cola had relied on those beverages to sustain volume growth in mature markets where consumers were reducing their consumption of soft drinks. These companies wanted to expand the market for alternative beverages by introducing new drinks into emerging markets. Beverage producers made numerous attempts to increase the size of the market for those types of beverages by growing product lines and increasing sales and market share. They were faced with criticism of alternative beverages as presenting health risks or not yielding the advertised results. Rapid growth in the market and premium prices/high margins made the alternative beverage market an important part of beverage company strategy. The economic characteristic of the alternative beverage segment if the industry is differ from that of other beverage categories. Alternative beverages competed on the basis of differentiation from traditional drinks such as carbonated soft drinks or fruit juices. The market started out with low competition...
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...growth and competition in the alternative beverage industry. Both large and small marketers are launching new products and fighting for limited retail shelf. More and more consumers are moving away from traditional soft drinks to healthier alternative drinks. Demand is expected to grow worldwide as consumer purchasing power increases. PepsiCo was the worldwide leader of alternative beverages with a global market share of 26.5% and a 47.8% share of the U.S. market in 2009. Coca-Cola held a global market share of 11.5%. Although Coca-Cola was the worldwide leader in carbonated soft drink sales, they trailed PepsiCo in alternative beverage sales. Fast on the heels of the larger marketers are Red Bull, Monster, and “other” mainly consisting of privately held bottlers. Red Bull was the world’s number one seller of energy drinks which made it the third-largest producer of alternative beverages worldwide and the number two seller of alternative beverages in the U.S. and Europe. In 2009, Monster was the second-best-selling energy drink brand in the U.S. with revenues growing to more than $1.3 billion. There are hundreds of regional and specialty brands of energy drinks, sports drinks, and enhanced beverages in the U.S. and internationally. Of these, Rockstar was the most noteworthy privately held alternative beverage company. Which of the five competitive forces is strongest? Competitive pressure from rival sellers is high in the alternative beverage industry...
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...Case Analysis of the Alternative Beverage Marketplace Companies around the world are fighting for position in their industries. The completive world of alternative beverages is no different. The companies involved in this epic battle for market share all are challenged with the three questions outlined by Arthur A. Thompson “What’s the company’s present situation? What should the company’s future direction be and what performance targets should we set?” (Thompson, 2012) The development of a strategy for the companies involve in the alternative beverage arena is a daunting one. There are pressing internal and external environmental factors that present significant challenges in the gaining and maintaining of market share with in the industry. The obstacles faced by these organizations include global economic slow downs, dynamic distribution channels, negative press and fickle customer tastes. These companies, however, must remain focused and vigilant to attract customers to their brands. The case study presented by John E. Gamble, Competition in Energy drinks, Sport Drinks, and Vitamin-Enhanced Beverages, outlines the boons and challenges faced by the four leading distributers of alternative beverages around the world. The industry leaders (PepsiCo, Coca-Cola, Red Bull and Hansen Natural Company) in the alternative beverage market are what is know as a strategic group. “A strategic group is a cluster of industry rivals that employ similar competitive...
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...relevant components for the global and U.S. beverage industry macro-environment are market growth rate, market size, segmentation and scope of rivalry. Economic characteristics of alternative beverage segment differ from other beverage categories in several ways. The market size for alternative beverage was $40.2 billion globally and $17 billion in the United States, while the market size for other beverages was $ 1,548.3 and $28.9 billion globally. Market growth rate for alternative beverages between 2005 and 2009 was 9.8 percent while for other beverages it was 2.6 percent. Question two The competition in the alternative beverage market was strong. Pepsi and Coca-Cola were competing for the top spot in the production and distribution of their beverages. The strongest competitive force was bargaining power and leverage of buyers. Most stores were negotiating for lower prices since they bought the beverages in large quantities. Since Pepsi and Coke had an established brand, their alternative beverages found automatic shelf space in most stores and wholesale clubs. The weakest of the five competitive forces was the bargaining power and leverage of suppliers. The reason is that the packaging from different suppliers was similar, thus it was easy to substitute the packaging from most suppliers, and thus they had weak bargaining power. The competitive force that seems to have the greatest effect on industry attractiveness is competition from substitutes. This is why there were many...
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...BUS 470 Case 5 – Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages Porter’s five-forces model reveals that the overall alternative beverage industry attractiveness is high. Some beverage companies, such as PepsiCo and Coca-Cola, have mastered the art of brand building in the alternative beverage market and have been rewarded with rapid growth rates. The rising population of health conscious consumers is increasingly leaning towards alternative beverages that are believed to offer greater health benefits. The strongest competitive force, or most important to strategy formulation, is the threat of entry of new competitors. Competitive pressure from rival sellers is high in the alternative beverage industry. The number of brands competing in sports drinks, energy drinks, and vitamin-enhanced beverage segments of the alternative beverage industry continue to grow each year. Both large and small vendors are launching new products and fighting for minimal retail shelf space. More and more consumers are moving away from traditional soft drinks to healthier alternative drinks. Demand is expected to grow worldwide as consumer purchasing power increases. Another strong competitive force is buyer bargaining power. Convenience stores and grocery stores have substantial leverage in negotiating pricing and slotting fees with alternative beverage producers due to the large quantity of their purchase. Newer brands are very vulnerable to buyer power because...
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...VITAMIN WATER VITAMIN WATER VITAMIN WATER VITAMIN WATER Executive Summary Executive Summary Group Members: Faizan Makhdoom Sarah Waheed Rutba Gabool Mehak Masood Group Members: Faizan Makhdoom Sarah Waheed Rutba Gabool Mehak Masood VITAMIN WATER Executive Summary This term report is a compilation of our research based on a lengthy interview taken from the Brand and Category Managers of Vitamin Water by Searle. In this report we explored factors that have led the brand to build its equity since its introduction in 2013. It was initially introduced as an Enhanced Water product with 6 essential vitamins and minerals and came in only 5 flavors. It is the only Enhanced Water category product that exists in Pakistan. This is where it has gotten an edge over its competitors. However, they believe that the target market is still unaware of what the product exactly is, despite of being aware of the Brand’s existence. Currently, Vitamin Water is at its introductory phase where it is looking to generate leads and educate its audience about the Enhanced Water Product category. They have started conducting researches for long-term plans and to evaluate their existing market performances. They believe that in the next 5 years, Vitamin Water is likely to have a larger share in the market, especially when people are more aware of it category rather than its existence. Table of Contents Introduction to vitamin water 3 Consumer Based Brand Equity 3 Brand...
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...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? Since the recession in 2008 in the U.S., the alternative beverage industry has been negatively influenced. Consumers then realized the high price of soft drinks, which made the sales dropped every year. Sociologically, consumers are concerned about health problems that they can get from soft drinks. In particular, energy drinks with mixed alcohol effects became physician's warnings and caused consumers to raise awareness and demand innovation. In addition, companies have to improve their technological advances in order to promote their brands. Many companies became more innovative and competitive by producing products with advanced chemicals to lower calories and health issues. To become the leading sellers in the alternative beverage industry, companies have to advance their competitive prestige.Substitutes are a strong competitive force. If buyer's bargaining power gets stronger, substitutes will be introduced. Substitutes can attract buyers with competitive price, They also join the market after so companies can adapt positive feedback from consumers to advance substitutes.Supplier bargaining power is the weakest. Unique improved supplements can only be found from a few sources. There are plenty of packaging suppliers...
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...1. Executive Summary 05 2. Current Situation - Market analysis 06 2.1. Market Definition 2.2. Market Size 2.3. Market Segmentation 2.4. Competition Direct Competitor Indirect Competitor Competition and market share Competitors’ strengths and weaknesses • Market trends 3. PESTEL Analysis 14 • Economy • Politico-legal • Demographic • Technology • Ecological (Natural) • Sociocultural 4. SWOT Analysis 17 • Strengths • Weaknesses • Threats • Opportunities 5. Consumer Analysis 20 Nature of the buying decision Participants Demographics Psychographics 6. Mission Statement and Vision Statement 22 7. Objectives 22 8. Marketing Strategy – Market Segmentation, Target Market, Market Positioning 23 8.1. Market Segmentation Bases 8.2. Target Market 8.3. Market Positioning Positioning Statement Positioning Strategy Slogan 9. Marketing Strategy – Product 30 9.1. Levels of Product Core Benefit Actual Product Augmented Product 9.2. Product Life Cycle Stage 9.3. Product Attributes 9.4. Brand Name, Brand Image, Brand Equity 9.5. Packaging and Labeling 9.6. Product Support Services 9.7. BCG Analysis 10. Marketing Strategy – Price 38 • 10.1. Pricing Objectives • 10.2. Pricing Method • 10.3. Pricing strategy 11. Marketing Strategy – Distribution (Place) 39 11.1. Geographical Coverage 11.2. Distribution channels 12...
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...Dr Pepper Snapple Group, Inc. Energy Beverages Author: Ravi Sockalingam, PhD Dr Pepper Snapple Group, Inc.’s brand manager Andrew Barker was tasked with recommending the company’s top management if it should decide to introduce a new branded product into the energy beverage market. A brief overview of the company’s position Dr Pepper Snapple Group, Inc. maintains a well-entrenched position in the flavored carbonated soft drink (CSD) market. In 2007 he held a market share of the US CSD market. And this share had been steadily growing year to year. The company is also a leader in the non-CSD drink category that comprises ready to drink tea, juice, juice drinks, enhanced water, drink concentrates and mixer categories. In addition to these beverages, the company also manufactures Mott’s apple sauce. Why Dr Pepper Snapple Group, Inc. is considering introducing a new energy drink? There are several strengths the company has. There is high brand awareness and a strong diverse portfolio of consumer preferred products. Their business model as far as ownership, bottling and distribution go, is very well integrated and robust. The top management is also very experienced with an average of 20 years in the food and beverage industry behind them. Plus, the company has a long standing relationship with major retailers and third party distributors. Through their extensive networks they have the capability to reach out to most geographical areas of the US. The company has been...
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