Alternative Beverage Industry †Paper Essay

1. What be the st pass judgmentgically relevant components of the global and U.S. boozing attention macro-environment? How do the economic characteristics of the alternate drink segment of the attention dissent from that of some other drunkenness categories? Explain. The strategically relevant components of the global and U.S. crapulence manufacture macro-environment ar Market Size, Market gatewayion, Markets Segmentation, and Intensity of Rivalry.Market SizeThe beverage fabrication serves an incredible large food market. In 2009 alone, the beverage market consumed to a greater extent(prenominal) than 458 million liters of beverage, resulting in everyplace $1.58 trillion in gross revenue for the industry. Although in that location is a declining trend in the consumption of carbonated soft drinks in the United States, as of 2009, carbonated soft drinks still accounts for the lion theatrical role of the U.S. beverage market with 48.2% of the market while bottle w ater and ingathering juice account for 29.2% and 12.4%, respectively. The remaining market space was occupied by the preference beverages segment, which includes sports drinks, flavored or enhanced water, and muscle drinks with 4.0%, 1.6%, and 1.2%, respectivelyMarket Growth succession U.S. beverage market saw a decline of 2.1% and 3.1% for the historic period 2008 and 2009, respectively, due(p) in large part to the economic recession, the global market dollar grade as well as volume gross revenue saw an increase year-after-year, from 2005 to 2009. The industry is expected to maintain a proceeds trend, with gross revenue forecasted to r separately approximately $1.78 trillion in 2014, as beverage producer enter innovative market and develop parvenue types of beverages to adjust the shifting consumer preferencesand capitalize on the growing and profitable pick beverage segment.Market SegmentationThe global beverage market is categorized as carbonated soft drinks (soda), bo ttle water and option beverages, which includes sports drinks, energy drinks, vitamin-enhanced water, energy shots, and relaxation drinks. Sports drinks accounted for nearly 60 percent of preference beverage gross revenue in 2009, while vitamin-enhanced drinks and energy drinks were approximately 23% and 18% of gross sales in the U.S., respectively.Scope of rivalry There has been a long un modificationable rivalry in the carbonated beverage market segment amongst the two largest producersPepsiCo and Coco-Cola. However, in the alternative beverage segment, other than red ink red cent and Hansen Natural Corporation which alike puzzle international presence, most of the other sellers are durability or regional shits, with distribution limited to a elfin geographic region.2. What is rivalry like in the alternative beverage industry? Which of the five warlike forces is strongest? Which is weakest? What combative forces seem to have the superlative effect on industry att ractiveness and the potential profitability of sunrise(prenominal) entrants? Competition in the alternative beverage industry is low to moderate. Although in that respect are umteen sellers, the high profit margin in the alternative beverage segment allows for everyone to earn respectable profit. In addition, the loss leaders, PepsiCo, Coca-Cola and Red fake appear to understand the importance of maintaining the stability of the industry as a whole, as opposed to aggressively jockeying for item-by-item strategic return at the expense of the industry. Although the five matched forces in the beverage industry are quite favorable, threat of substitute crop is the strongest force. This is evidence by the point that flawing and taste are the primary strategic differentiations in the segment.Additionally, the comprise of switching is undiscernibly low and there were many substitute alternative beverages much(prenominal) as tea, soft drinks, fruit juices, bottled water and ta p water, which made it easier for consumers to tardily switch from one brand to another. The bar touching power and leverage of suppliers was the weakest competitive force because, with the exception of few rare ingredients, there are many suppliers available for producers to purchase ingredients from. Suppliers for packaging are also abundant. Even though substitute products had a bigger market share in the US, consumers bought more alternative beverages. This change in guest preference weakened the competitive power of substitute beverages. The threat of sweet brands varies by the development of each alternative beverage category. There is a low threat for bestride categories and moderate to strong in young categories.During the early stages of develop a category, when famous brand leaders had yet to be established, the threat of accession in alternative beverage categories was strong. This enabled consumers who did not have a brand preference to be attracted to new beverage s and allow a quick gain in market share. Once brand preference is established, the threat of insertion would is lower for all types of alternative beverages except energy shots and relaxation drinks. The increase among sellers of alternative beverages could be considered the strongest competitive force. Among the sellers of energy drinks and other alternative beverages competition among major brands is focused on brand image, taste, packaging, R&D, sales promotions, endorsements, and wagerer access to shelf space.3. How is the market for energy drinks, sports drinks and vitamin-enhanced beverages changed? What are the underlying drivers of change and how might those forces individually or collectively make the industry more or less attractive? As the industry experiences a fertilization rate for all types of beverages in the mature markets (i.e. the U.S. and Europe), it is exercising great run to enter new international markets . In fact, the industry is expected to gain a goo d portion of its future harvest-tide from consumers in developing countries. As a result, maturity of change in the long-term growth rate, industry consolidation and product innovation are all crusade forces of the alternative beverage industry.The annual rate of growth for the dollar value of the global market for alternative beverages was forecasted to decline from the 9.8 percent annual rate occurring between 2005 and 2009 to an anticipated annual rate of 5.7 percent 2010 through 2014. While dollar value growth rates were expected to decline all slightly in Europe and Asia-Pacific, the annual rate of growth in the U.S. was projected to decline from 16.6 percent during 2005 2009 to 6.7% between 2010 and 2014. Product innovation is a constant force as the alternative beverage industry is act to create new ideas that give rise to new beverage industry categories and niches.Drivers of change are unlikely to dramatically alter the attractiveness of the alternative beverage indus try in the next 3-5 years. Even with a slow up economy, there is no indication that the larger producers such as Red Bull GmbH, Coca-Cola, or PepsiCo are prepared to compete aggressively on price for volume and market share gains. They will likely cuss on product innovation and acquisitions to increase sales and market shares. However, the individual and collective effect of industry drivers of change can make the industry less attractive for unknown self-reliant brands unless such companies gain an advantage in the industry.4. What does your strategic group map of the energy drink, sports drink, and vitamin-enhanced beverage industry look like? What strategy groups do you think are in the best positions? The worst positions? The strategic group maps show the industry participants competing in scope of geographic distribution and brand portfolio breadth. It shows that beverage producers competing internationally with resistant brand portfolios are positioned most favorably in th e industry, because as the fledged market saturate, and volume sale declines, the producers with international presence and capabilities will have the edge to enter into other international markets. Companies with a single brand and regional or national distribution only (i.e., Living Essentials, pass in a Bottle (ViB), Dream Water, or Drank) seem to be positioned most poorly in the industry because they are positioned as specialty or regional brand, which exposes them to the ebb and flows of market conditions of the economic condition or consumer preference of a narrow market.The current level of competition makes it obscure that small regional producers will survive over the long-term unless acquired by a large international bottler. 5. What key factors determine the success of alternative beverage producers? There are four factors that are necessary for competitive success in the alternative beverage industry. The first one is access to distribution, which is seen as the most fundamental industry success factor due to the fact that most brands of energy drinks/alternative beverages cannot achieve good sales volumes and market shares unless they are widely available in stores, and there are also too many brands for all to be included on store shelves, especially in convenient stores who require placement fees. The spot factor is innovating product skills. By definition, alternative beverages were different from traditional beverage line extensions permitted entry to new categories.The third one is name brand, which was also a critical factor in choosing a target customer demographic. The image which the brand represents and exemplified and emphasized in advertisements, endorsements, and promotions created a following and submit for one brand over another. Brand image was also a result of labels and packaging that alternative beverage consumer found appealing small producers with poor image building capabilities had difficulty competing in the industry. Finally, sufficient sales volume to achieve scale economies in marketing expenditures is also an important driver. Successful alternative beverage producers were required to have sufficient sales volumes in order maintain marketing expenses at an acceptable cost per unit ratio.6. What recommendations would you make to Coca-Cola to improve its competitiveness in the global alternative beverage industry? To PepsiCo? To Red Bull GmbH? Coca-Cola should go beyond a distribution deal with Living Essentials 5-Hour Energy drink, and instead, make a pretend to acquire it. Secondly, with only 10.2% of market share in the United States, as compared to PepsiCos 47.7%, Coca-Cola should focus on building strength in alternative beverage sales in Asia where it has a slight edge over its competitors. As globally established brand, and the market leader in the alternative beverage segment, PepsiCo is well positioned to maintain its market strength in the foreseeable future.And with its global dist ribution capacity, PepsiCo should leverage its strength and aggressively enter new markets in Asia, South America, Africa and the Middle East before its competitors and or new entrants gets ahead of it. For its U.S market, PepsiCo should continue to maintain its market position by drop in R&D in order to develop new expand its product lines. As the energy drink market leader in the U.S. and the third-largest producer of alternative beverages worldwide and the number two seller of alternative beverages in the U.S. and Europe, Red Bull had notable performance for an independent producer. To maintain their competitive advantage, Red Bull GmbH should also create product line extensions to aid in the appeal of its brand.