Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages

2667 words 11 pages
Case Study: Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages
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pavangradapp@gmail.com 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.
Demographics:
The total sale for beverages in 2009 in the US was about 458.3 billion gallons and it is one of the largest markets with dollar value of 1,581.7 billion in 2009 and with a forecast of $1,775.3 billion for 2014. 48.2 percent of industry sales were from carbonated soft drinks and 29.2 percent of bottle water
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* New entrants with comparatively lower market shares are most affected with this like how it is mentioned in the case where the shelf space is limited to top brands like Coke, PepsiCo and Red bull for that particular market segment. The larger brands like coke and Pepsi also already have spaces worked out with them for their other products and this makes it easier for the bigger brands to get their newer products in the shelf’s too. * Delis and restaurants have low switching costs to other brands but they have less volumes compared to stores and less space, shelfs etc. and also will not have the same bargaining power that a store enjoys. * Demand is highly dynamic
Bargaining Power of Suppliers: Weak * Suppliers for alternative beverages do exist in huge numbers and the competition is high * The producers of alternative beverages are important customers of suppliers and buy in large quantities. * Packaging is readily available
Threat of Substitutes: Medium * Many substitutes like tea, bottled water, juices, nutrition water etc. have surfaced but the market is not as big as alternative beverages and this customer preference had weakened the competitive power of substitute beverages. * Many substitutes that can quench the thirst of the consumers * Price point of substitutes is less compared to alternative beverages
Threat of New entrants: Weak *

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