The Soda Industry

1. The Soda Industry Brought to You By: Heather Terry Bernie Melchor Gerard Yparraguirre Poyeh Hadjian Anthony Kimani Nicholas Mucks

2. Introduction • Natural Mineral Water and Carbonation • The first modern sodas • The ABA • Economic Effects

3. Dominant Economic Forces • Dominant Economic Forces • 1. Market Size • 2. Competition • 3. Stage in Life Cycle • 4. Number of Companies in the Industry • 5. Industry Profitability

4. Dominant Economic Forces • Market Size • The soft drink industry has been dominated 3 Companies • Coca Cola : 44% • Pepsi : 31% • Cadbury Schweppes: 15% • Cott: 3.1% • Hansen: 0.3%

5. Dominant Economic Forces • Competition • Competition is increasingly fierce among the big competitors. The leaders in the industry are Coca Cola, Pepsi and Cadbury Schweppes • Coca Cola, the market leader has over 350 different brands in over a hundred and eighty countries. Their most popular brands are Coke, Diet Coke, Fanta, Sprite, Coke Zero and many more • Pepsi, the second largest and Coca-Cola’s biggest competitor also has an array of soft drinks in its name. The most popular are Pepsi, Diet Pepsi, Mountain Dew, Mirinda, Pepsi One and many more

6. Dominant Economic Forces • Stage in Life Cycle • The life cycle of popular soft drinks like Pepsi, Coke, Sprite, etc. is in the maturity stage, the popularity of these products is still strong, however; there is an increasing trend towards healthier soft drinks.

7. Dominant Economic Forces Reasons For the Maturity Stage • Recently, there has been a growing demand for alternatives to sugar-heavy soft drinks. “Regular” soft drinks today contain high fructose corn syrup, and have been blamed for contributing to various diseases • A study from Harvard shows that soft drinks may be responsible for the doubling of obesity in children over the last 15 years • As the soda pop fight rages on companies are increasingly relying on new products like non carbonated beverages like Fruit punch, Lemonade, Iced tea, etc. to take them to the next level.

8. Dominant Economic Forces • Industry Profitability • The soft drink industry will remain profitable as long as companies like Coca-Cola and Pepsi continue to develop new products to remain competitive, improve technology (especially in production) to reduce cost per unit • According to People’s Daily Newsletter; Coca-Cola made a profit of $2.71Billion last year in the first six months, Pepsi did as well, taking into consideration of its size compared to Coca-Cola by bringing home an estimated $1.27 Billion just in the first six months.

9. Six Forces Analysis I • Threat of New Entrants • Economies of Scale • Product Differentiation • Capital Requirements • Access to Distribution Channels

10. Six Forces Analysis II • Rivalry Among Existing Firms • Number • Rate of Industry Growth • Product Characteristics • Threat of Substitute Products

11. Six Forces Analysis III • Bargaining Power of Buyers • Bargaining Power of Suppliers • Relative Power of Other Stakeholders

12. Competitive Position of Major Companies and Competitor Analysis • Competitive Position of Major • Brief overview of some major companies in the soda industry

13. Competitive Position of Major Companies • In terms of 2005 US Market Share

14. Competitive Position of Major Companies (cont’d) • Top 3 Companies: Coca-Cola Co., PepsiCo., and Cadbury Schweppes = 89.1% of U.S. Market Share • Redbull energy drink sales surging during 2004-2005 • Brand recognition • Exclusive Contracts

15. Competitor Analysis • Brief description of Coca-Cola Co., PepsiCo., Cadbury Schweppes., Cott Corp., and Hansen Natural • What sets a company apart from the top competitor, Coca-Cola.,

16. Industry Trends • Less Soda, more Alternatives • Increase in bottled Water Consumption • Energy and Sports Drinks • Portable Packaging

17. TRENDS: Less Soda, more Alternatives • Increased sales in alternative beverages caused drop in carbonated beverages.

18. TRENDS:Simply Water, Simply Delicious • 1990’s water sales: $5.7 billion 2004’s water sales: $9.2 billion • 16% annual growth rate • Projected to be top selling drink by 2010

19. TRENDS: Energy and Sports Drinks • Marketed to teenagers & young adults image and brand loyalty is everything • Over 10 billion liters sold in 2005 • Pepsi’s Gatorade dominates Sports Drinks • Red Bull holds 70% of Energy Drink • Energy Drinks estimated to grow 30% by end of 2006

20. TRENDS:Portable Packaging • PET bottles are small and easy to store • Companies fill end of registers with portable 8oz bottles to entice sales. • Companies increased sales with PET bottles by selling their portability and light weight qualities.

21. Key Success Factors • Marketing • Targeting younger generation • Market monopoly • Innovation • Able to adapt to trend changes and customer needs • Globalization • U.S. market is saturated with soft drinks. • Ability to be successful in global market.

22. Industry Prospects and Overall Attractiveness • Factors Making the Industry Attractive • Mature market; stable and good investment • Expanding product lines allow for growth • Factors Making the Industry Unattractive • Industry is oversaturated • Future Prospects of the Industry • Changing consumer tastes will change products

23. Conclusions • Past • Present • Future