Exam Case Study Cola Wars Continue: Coke and Pepsi in 2010 1 Overview (Power Point Page (PPP) 2) For more than a century, Coke and Pepsi compete for market share within the world’s beverage market. The most intense battles were fought over the $74 billion carbonated soft drink (CSD) industry in the United States that lasted until the mid-1990s. Coke’s and Pepsi’s revenues grow annually, as the worldwide CSD consumption rose steadily by an average of 3% per year. In the early 2000s, however, domestic CSD consumption started to decline in consequence of the evolving linkage between CSDs and health issues such as obesity. Coke and Pepsi faced new challenges regarding the growth of non-CSD beverages accompanied by the demand of different bottling, pricing and brand strategies to ensure sustainable growth and profitability. 2 General environmental analysis (PPP 3) Sociocultural trends: Starting in the late 1990s, the soft drink industry encountered new challenges. A great number of consumers started to perceive high-fructose corn syrup as unnatural and unhealthy. As a result the U.S. share of carbonated soft drink consumption of the total beverage consumption fell down from 29% in 2000 to 25.2% in 2009. In 2010, 53% of Americans were concerned that the ingredient posed a health hazard. In addition to the health issues, environmentalists became more vocal in their criticism against the use of plastic bottles (PET). Political/Legal trends – Tax policy changes: New federal nutrition guidelines, issued in 2005, identified CSDs as the largest source of obesity-causing sugars. As of April 2010, 29 states already taxed sodas and around 12 more states were considering the measure in order to reduce the consumption.
Case Analysis - Cola Wars Continue: Coke and Pepsi in 2010
582 WordsJun 3rd, 20143 Pages
Case Analysis – Cola Wars Continue: Coke and Pepsi in 2010
Coke and Pepsi are two leading companies in the soft drink industry. They contend with each other during decades. The Cola Wars are a campaign of mutually-targeted television advertisements and marketing campaigns since the 1980s between soft drink manufacturers The Coca-Cola Company and PepsiCo.
Historically, the soft drink industry has been so profitable. Porter’s Five- Forces Model of industry competition can define and analyze an industry in terms of five main factors. In this industry, competition is quite cruel between rivalries since Coca-Cola and Pepsi are already powerful leaders in the industry. It is basically a duopoly situation in soft drink field. The two…show more content…
Bottling does more of the end product jobs such as producing and distributing, making the bottling business deal with more direct materials, machinery and tangible business. While the concentrate business is basically dealing with advertising and marketing and intangible business, thus, concentrate business is less risky and more profitable.
The soft drink industry’s profit is mostly the profit of Coke and Pepsi. The two companies are so influential not only in the soft drink industry, but the whole beverage industry. The competition between two leaders should be good for the industry. Since there is already a duopoly situation, Coke and Pepsi compete for the market for years while neither of them appears to be weaker in the industry. They are relatively tied in the competition, and the competition did not affect the industry very much.
Coke and Pepsi to sustain their profits in the wake of flattening demand and the growing popularity of non-CSDs by developing their association with the customer to gain their loyalty and brand equity. People are more likely to pursue a healthy diet thus the sales of soda decrease harshly. Both coke and Pepsi have introduced non-CSDs to balance out the market sales, and change their concept as more than refreshing drink to avoid the negative thoughts about CSDs. And also expand their production line and make it more global would also help maintain the profit. The two leading companies of the soft