Coke And Pepsi Of The Carbonated Soft Drink Industry Essay

1679 Words Sep 29th, 2015 7 Pages
Coke and Pepsi are the largest manufacturers in the Carbonated Soft Drink industry, or Concentrate Manufacturing. Using Porter’s Forces, we will examine the competitiveness of the industry. The Five Forces Model includes: (1) the risk of entry by potential competitors, (2) the intensity of rivalry among established companies within an industry, (3) the bargaining power of buyers, (4) the bargaining power of suppliers, and (5) the closeness of substitutes to an industry’s products. In the case of Coke and Pepsi, the risk to entry by potential competitors is considered weak. This is due to their retail distribution, bottling network, advertising spending, brand loyalty, and fear of retaliation. In the United States, the distribution of Carbonated Soft Drinks took place through supermarkets (29.1%), fountain outlets (23.1%), vending machines (12.5%), mass merchandisers (16.7%), convenience stores and gas stations (10.8%), and other outlets (7.8%). A main attraction for consumers to supermarkets was CSDs, accounting for 4% of total stores sales in the United States, or $12 billion.
There is little investment in machinery, overhead, and labor. This is due to concentrate producers preparing of raw material ingredients for the bottler, who then add ingredients such as water and sugar to result in the final CSD product. Coke and Pepsi bottlers offered “direct store door” delivery, in which route delivery sales people positioned the brand’s trademarked label, secured shelf space,…

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