Coke and Pepsi in the Twenty-First Century
The average American consumes around 53 gallons of carbonated soft drinks (CSD) per year, there is around 292.8 million people in the United States, that’s 15.5184 trillion gallons of carbonated soft drink consumed in 2004. With so much CSD consumed every year in the US, it makes sense why Coke and Pepsi are fighting for market share in this $60-billion industry. In 1970’s the average American only consumed 23 gallons of CSD, but consumer consumption grow by 3% per year for the next 30 years. Because of the growth for 30 years, from 1975-1995 both Coke and Pepsi enjoyed a average annual growth rate of 10% because of how fast both the US and world’s consumption of CSD rose. CSD only consist of a flavor …show more content…
There are many options such as juices, water, coffee, beer, etc.
Consumers trends are shifting away from soft drinks. Although CSD’s were the most consumed beverage, U.S. sales volume saw a 0.2% increase in 2000 in contrast to 5-7% annual growth in the 1980s.
Rivalry among Existing Competitors (High)
There are many distribution channels such as food stores, fountain outlets, and vending machines.
Concentrate producers fighting for space. Some offered bottlers rebates to encourage them to purchase and install vending machines
Bottlers 5-Forces analysis:
Threat of New Entrants (Low)
Big chance that the bottling plant is acquired by Coca-Cola Enterprises or by Pepsi Bottling Group.
High initial start-up costs. The minimum cost to build a small bottling plant costs $25-$35 million. A large plant with a capacity of 40 million cases, costs can be up to $75 million.
Bargaining Power of Suppliers (High)
Most CSDs are packaged in three different type of bottles; plastic bottles(60%), glass bottles (2%) and tin cans (60%).
Concentrate producers have long-term contracts with bottlers, most bottlers are now subsidiaries.
Bargaining Power of Buyers (Medium)
The master bottlers agreement lets Coke control of prices.
Threat of Substitutes
The average American consumes around 53 gallons of carbonated soft drinks (CSD) per year, there is around 292.8 million people in the United States, that’s 15.5184 trillion gallons of carbonated soft drink consumed in 2004. With so much CSD consumed every year in the US, it makes sense why Coke and Pepsi are fighting for market share in this $60-billion industry. In 1970’s the average American only consumed 23 gallons of CSD, but consumer consumption grow by 3% per year for the next 30 years. Because of the growth for 30 years, from 1975-1995 both Coke and Pepsi enjoyed a average annual growth rate of 10% because of how fast both the US and world’s consumption of CSD rose. CSD only consist of a flavor …show more content…
There are many options such as juices, water, coffee, beer, etc.
Consumers trends are shifting away from soft drinks. Although CSD’s were the most consumed beverage, U.S. sales volume saw a 0.2% increase in 2000 in contrast to 5-7% annual growth in the 1980s.
Rivalry among Existing Competitors (High)
There are many distribution channels such as food stores, fountain outlets, and vending machines.
Concentrate producers fighting for space. Some offered bottlers rebates to encourage them to purchase and install vending machines
Bottlers 5-Forces analysis:
Threat of New Entrants (Low)
Big chance that the bottling plant is acquired by Coca-Cola Enterprises or by Pepsi Bottling Group.
High initial start-up costs. The minimum cost to build a small bottling plant costs $25-$35 million. A large plant with a capacity of 40 million cases, costs can be up to $75 million.
Bargaining Power of Suppliers (High)
Most CSDs are packaged in three different type of bottles; plastic bottles(60%), glass bottles (2%) and tin cans (60%).
Concentrate producers have long-term contracts with bottlers, most bottlers are now subsidiaries.
Bargaining Power of Buyers (Medium)
The master bottlers agreement lets Coke control of prices.
Threat of Substitutes