Coca Cola is the largest company of the non-alcoholic beverages industry, controlling about 40% of the industry, followed by Pepsi with 20% control (Maverick 2015). Both companies are fully international, with a presence in over 200 countries, and are composed of numerous brands. Coca Cola, for example, owns about 500 brands, although the largest part of its profits stems from 21 of these brands. Overall, in 2016, the global non-alcoholic beverages industry was valued at $967.3 billion (Grand View Research 2017). Other key players in the industry include Nestle, Kraft Heinz Company, and the Pepper Snapple Group. In order to better analyze the industry and to understand the macro-environment in which Coca Cola is evolving, we have used …show more content…
Competitive rivalry The global beverages industry is currently a low-growth market, with an expected compound annual growth rate of 5.7% between 2017 and 2025 (Grand View Research 2017). Additionally, the industry is quite saturated with firms that offer increasingly differentiated products. However, due to this low growth rate, companies have been engaging in price competition to gain competitive advantage and increase their market share. Nevertheless, Coca Cola is a dominant force in this market, controlling 40% of the industry, and is therefore at a low risk of losing its position. Threat of entry The non-alcoholic beverages industry requires significant levels of infrastructure and technology, as well as large capital investments, in order to successfully compete in the market. As a result, it is considered as an industry with high barriers to entry that are difficult to overcome for new entrants. Additionally, the dominant position of the industry’s key players - Coca Cola and Pepsi - lower the threat of entry on the market as new entrants do not have the resources or capabilities to compete with these
The existing concentrate business is largely controlled by Coca-Cola Company (Coca-Cola) and PepsiCo (Pepsi), together claiming a combined 72% of the U.S. carbonated soft drink (CSD) market sales volume in 2009. Refer to Exhibit 1 for an illustration of the CSD industry value chain. For more than a century, Coca-Cola and Pepsi have maintained growth and large market shares through mastering five competitive forces, shown in Exhibit 2, that drive profitability and shape the industry structure.
Another factor that creates a barrier to entry is the unequal access to distribution channels. Coke and Pepsi created agreements with their franchised bottlers that prevent them from handling competing brands of other concentrate producers. This prevents companies from entering an industry and using a Coca Cola bottler to get their product on the market. Also as Coca Cola and Pepsi grow in size so does the shelf space they require. As stated previously Coca Cola and Pepsi
In 1886, the Coca Cola Company was developed but it wasn't until 1898 that the fierce competitor Pepsi-Cola entered into the market. These 2 companies are the two major players that dominate the consumer beverage (soft-drink) industry. Coke and Pepsi have since been competing to rein the global market in consumer beverages. The market of drinks in the United States alone is valued at more than thirty million dollars annually. With the growth of these two companies, PepsiCo has developed and acquired additional products outside the scope of just the consumer beverage industry, these products have helped the company to increase their exposure and position in the global market. This has not been the case for the Coca Cola Company; they
In 1886, the Coca Cola Company was developed but it wasn 't until 1898 that the fierce competitor Pepsi-Cola entered into the market. These 2 companies are the two major players that dominate the consumer beverage (soft-drink) industry. Coke and Pepsi have since been competing to rein the global market in consumer beverages. The market of drinks in the United States alone is valued at more than thirty million dollars annually. With the growth of these two companies, PepsiCo has developed and acquired additional products outside the scope of just the consumer beverage industry, these products have helped the company to increase their exposure and position in the global market. This has not been the case for the Coca Cola Company; they
The aim of this report is to analyse the main forces driving the market for any specific product of our choice. In details, we will research about the product’s background information, the special characteristics and the market it belongs to. We will also explain the market structure, the supply conditions and barriers of entry, giving an insight of competition and government policies, too. Furthermore, we are going to point out the price elasticities, determinants of demand and sizes of income. Lastly, we will be assessing how this market will develop and the future opportunities for both existing and new firms. For the purpose of this report, we have decided to use Coca-Cola from the Coca-Cola Company, the world leading beverage company. We have discovered that although Coca-Cola is not performing very well in terms of income, it is still the market leader in the soft drink industry. Thus, new rivals’ entrants may be discouraged to compete because of the uncertainty and the competition present in the market.
Are you a Coca-Cola fan or do you enjoy drinking Pepsi? Chances are you’ve tried both and have noticed the difference between the two. These two soft drinks have been legendary rivals for over a decade. Coca-Cola has always came out on top winning the cola war however. The company controls 42% of the soft drink market in comparison with Pepsi who owns 30% (“Coke Vs. Pepsi: By The Numbers.”). With market power, Coke and Pepsi have accomplished manipulating prices and controlling profits for ages leading towards their success. Coke and Pepsi are two economic giants that sell similar products in the cola industry and market power keeps them both competitive.
The case explains the economics of the soft drink industry. There activities that add value to consumer at nearly every stage of the value chain of the soft drink industry. The war is primarily fought between Coca-Cola and PepsiCo as market leaders in this industry; who combined have roughly a ninety percent market share in their industry. The impact of globalization on competition has allowed both of these major players to find new markets to tap which has allowed each continued growth potential.
This Power Point presentation discusses the various factors that present challenges for new competition entrance in the airline industry. In terms of the Porter's Five Forces evaluation, this document is a good starting point for determining the types of factors that would effect new competition. It is not a credible source of information on Southwest Airlines, but it gives an overview of the types of factors that would affect new competition.
The last couple of years has seen Coca-Cola making many changes. The company is currently in the middle of a major refranchising initiative to increase its productivity and streamline operations. Over the course of the last two years, the company has been in the process of refranchising all of their North American company owned bottling operations (Bailey, 2015). According to their website, they have also signed a letter of intent to sell all of their China bottling locations to one of their existing partners within their Chinese market (The Coca-Cola Company, 2016a). The company is also looking to create consolidated Europe, Middle East, and Africa groups in an effort to boost its revenues and profits in light of a decrease in soda sales (Esterl, 2016). In an effort to bring a new “freshness” to the
This essay presents the carbonated soft drinks in the worldwide soft drink market, and Coca-Cola and Pepsi Co, the two companies that have been competing and fighting to control profits and market share in this segment. First, this essay explains the reasons that the carbonated soft drink industry is so profitable and lucrative. Second, this essay compares the economics of the concentrate business to the bottling business, and explains the reasons that the profitability metrics are different. Third, this essay explains how the competition between Coke and Pepsi have affected the world beverage markets profits with carbonated soft drinks. Fourth, this essay forecasts the feasibility of Coke and Pepsi being able to sustain their profits as a result of demand decreasing and
Coca-Cola started its business in 1886 bringing, in the concept of carbonated soft drinks. Coca-Cola Company’s primary business consists of manufacturing and selling beverage concentrates and syrups, as well as some finished beverages, to bottling and canning operations and other distributors. (“Structure and culture - creating an effective organizational structure - Coca-Cola great Britain,” 1995). Coca-Cola was first to move into the marketplace and by being first to move into this marketplace Coca-Cola was able to lock in a tremendous market share which improved on their strategy. They were able to build strong relationships with other companies; therefore, forming a stronger bond entitling them to stay at the top of the marketplace.
Recently, the Coca-Cola Company laid out its growth plan in its 2020 vision, and it plans to double its system revenue, increase its total servings to three billion per day, and raise its operation margins (Banks, 2016). The company has several reasons relating to its economies of scale and cost reductions that would make it realize its strategy. The Coca-Cola Company owns one of the world 's strongest nonalcoholic beverage brands, and its brand qualifies as a billion-dollar brand in nineteen countries across the world (Foster, 2014). Each of the Coca-Cola’s brands generated about fivehundred million to one billion dollars annually in revenue (Collier, 2014). Currently, the company holds the leadership position in the world 's soda industry with a market share of 41 percent (Banks, 2016). Besides, Coca-Cola enjoys a stable global distribution system in two-hundred countries and owns more vehicles than both FedEx and UPS combined (Elmore, 2016). The company, therefore, has a huge moat with significant economies of scale that none of its competitors can beat or copy.
The threat of new entry in today’s beverage market is low because of several factors. However we are only going to discuss the main points of why the threat is low in today’s market which include; High cost barriers due to the role of bottlers, saturated American market due to brand loyalty created by Pepsi and Coke, emerging markets laws and regulations, and costly risks to match consumer taste trends and preferences.
Cola has been around for ages. In technical terms, there is not a need of cola yet so many people find themselves drinking it every day. Globally, but especially in the U.S., there is a very big want of Coca-Cola and its affiliate products. They are a huge company with a lot of financial benefits backing up their name. Any place you go to whether it is out to eat or an amusement park, you find yourself asking if they have Coke or Pepsi products. And a majority of the time, you tend to hear that they have Coke products because they have more control of the market.
It faces a vital question: does it have to keep the same positioning or to adapt according to the 200 countries where the brand sells its products.