The Cola Industry Has On The Drinker

Soft drink producers have in the recent past faced stiff competition from upcoming substitute products: bottled mineral water, energy drinks, teas, juices and sport drinks. This trend has thrown companies such Pepsi Co. back to the drawing board to regain their grip on the market. Pepsi Co. recently introduced "Pepsi Next" a mid-calorie beverage in their line of products. Success in attracting demand for the product needs a promotional strategy that incorporates consumer needs embracing the global trends in technology and life style. An understanding of the consumer

For more than a century, Coca Cola and PepsiCo have been the major competitors within the soft drink market. By employing various advertising tactics, strategies such as blind taste tests, and reward initiatives for the consumer, they have grown to become oligopolistic rivals. In the soft-drink business, “The Coca-Cola Company” and “PepsiCo, Incorporated” hold most of the market shares in virtually every region of the world. They have brands that the consumers want, whether it be soft-drink brands or in PepsioCo’s case, snacks. With only one soft-drink market, the two competitors have no choice but to increase sales by stealing the other competitor’s clients. This led to the term, the “cola wars” which was first used

By consulting the above graphs and charts it can be concluded that Pepsi has been a strong competitor to Coke and that throughout history they have been performing at comparable rates. Each has a similar background and customer base, but there are some differences between the two companies and their individual performance overall. It is clear that Pepsi holds a major stake in the market and is somewhat ahead of Coca-Cola in market share and productivity. Although both companies appear to be competing neck-to-neck Pepsi appears to be performing at a slightly higher rate than Coke, despite the popularity of both. Coke is wildly popular and is considered an American institution, but many seek different tastes and this is where Pepsi has been taking some of the market share as some consumers opt for Pepsi as their choice of beverage.

They are always attempting to gain market share, by consuming many compact beverage companies to appeal to the people. This paper will discuss the history over time between these two industry giants and how they are economically at this point, and how supply and demand effects this industry. There are two extremely famous beverage companies, Coca-Cola and Pepsi, have competed fiercely for the beverage market profit for many decades. In the free market, it is complicated to perfectly tell which drink is the winner within the ideal competition, because both companies use unalike style of commercials and merchandise to expand their markets. Personally, I believe that Coca-Cola earns a

The market for energy drinks, sports drinks and vitamin-enhanced beverages has changed a lot over the years and will continue to see changes well into the future. The underlying drivers of change include changes in growth rate (decrease) and innovation. Worldwide dollar sales of alternative beverages grew by more that 13% annually between the year 2005 and 2007, however, it slowed down to about 6% between 2007 and 2009. One might argue that the reason for this decline is the impact the ongoing recession has on the beverage industry. Beverage producers continue to maintain their optimism for the industry regarding future prospects that will be brought to fruition by innovation in brands, flavors, and formulations. These are the facets that they believe will support their premium pricing and volume increases.

In an industry dominated by two heavyweight contenders, Coke and Pepsi, in fact, between 1996 and 2004 per capita consumption of carbonated soft drinks (CSD) remained between 52 to 54 gallons per year. Consumption grew by an average of 3% per year over the next three decades. Fueling this growth were the increasing availability of CSD, the introduction of diet and flavored varieties, and brand extensions. There is couple of reasons why the industry is so profitable such as market share, availability and diversity and brand name and world class marketing.

Another important weakness is that the company’s products are seen as a major cause of obesity. (Melser, 2013) The beverage sales are affected by various factors including change in trends and preferences. Recently, beverage sales have fallen because of people’s increased preference for the health drinks. Around the world, obesity is a major problem and the Coca Cola products are seen as a major cause of obesity. As people are getting health conscious they are moving towards low calorie healthy drinks. This affects coca cola’s profitability and popularity. However, the brand can overcome this situation by increasing the number of low calorie products in its brand portfolio. It will need to add more healthy choices for its customers in its product portfolio.

Carbonated drinks are so popular around the globe that people can hardly do without them. There are several companies that produce carbonated drinks, but the two most populous brands are Pepsi-Cola and Coca-Cola. About half of the population of people in America consume carbonated drinks like Pepsi, Coca-Cola, and Sprite (Chan T.H). According to beverageuniverse.com, an average American consumes 44 gallons of soda each year (beverageuniverse.com). Majority of the drinks are high in sugar content and the chances of them leading to health issues are very high. However, in the early 1990’s, Pepsi cola diversified from producing only carbonated drinks to marketing new products like water, tea, juice, and beverages like tea,

Nancy Dai, (2004) Cola Wars in China: Future is Here. The University of Western Ontario

Starbucks is a major reason why things have changed for Coca-Cola and Pepsi Co, they have emerged in the market with balancing their menu with gourmet, coffee beverages that offer sweet and sugary options for their customers. In 2016, the soft drink industry is in the middle of the growing policy debate in the United States regarding taxation of sugar-sweetened beverages. Therefore, it hasn’t been a great year for Coca-Cola, Pepsi Co, and Dr. Pepper Snapple due to the public’s concern on the health issues of sugary sodas. The health problems with the sugar content in soft drinks have increased political pressures, as well as slowed the growth of these giant beverage companies.

For many years, nutrition activists have attempted to reduce soda consumption by taxing sugary soft drinks, but have been continuously shot down by many U.S. states. Fortunately for these activists, soft drink sales have been declining since 1998 with sales down by nearly 30 percent from its peak. Decreased soda consumption can be attributed to the fact that Americans are simply consuming fewer calories. Many health researchers believe that this healthier lifestyle is due to increased knowledge of obesity and a possible trend that obesity rates are leveling off and declining instead of increasing. This change in consumer’s trends for soda has created a massive challenge for beverage makers as they scramble to invent new products, such as diet drinks, that make the healthier lifestyles of Americans.

PepsiCo is rated the second biggest player in the global food and beverage industry (Ferguson, 2017). This rating means that they face stiff competition from rival companies like Coca-Cola and others in the industry. The strategy that PepsiCo has used over the years to stay competitive in the food and beverage industry is constructed from of two generic strategies cost leadership and broad differentiation (Ferguson, 2017). Utilization of this strategy has enabled PepsiCo to maintain its reputation and continual growth in the industry despite the highly competitive market (Ferguson, 2017).

Innovation is much more than taking a current beverage and repackaging it with different flavors. It also means more than boosting Coca-Cola Classic sales (Cravens, 2009). “New formulations could potentially serve as the basis for future advertising efforts, while providing shelter from health critics and politicians who blame soda for the nation's obesity epidemic” (Schultz, 2013). New formulations and brand extensions will help consumers that are no longer purchasing the brand to try new flavors or brand products, have a positive experience, and then hopefully return to the purchasing of previous products also (Bloomberg Businessweek, 2005). The innovation strategy should strengthen the brand.

Pepsi Co is engaged in manufacturing, marketing and distribution of food and beverages which includes carbonated, non carbonated drinks, snacks and grains. Its main competencies are its marketing and distribution network, it does not believe in competing with its competitors but rather defines its own market by selecting their own target audience. It has formulated it strategy in reference to its external environment and internal capabilities. The company selects is own internal strengths and tries to capitalize on them, it also seeks for improving upon its opportunities and find ways to combat its threats. Pepsi being having the second major share in the F&B industry is constantly developing new products to improve its

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.