Strategic Analysis of Pepsi :: Business Case Studies

The growing demand for more healthy goods has naturally delayed several sectors of the beverages industry. While consumers have turned to bottled water and juices rather than carbonated drinks in the soft drinks market, consumers concern over alcohol consumption has affected demand in the alcoholic drinks sector. This trend has affected the alcohol sector much more than the soft drinks sector with the exception of wine consumption because it is being proved by scientists that it may reduce the risk of heart disease with a moderate consumption. While there are only few new markets to expand into, the market for soft drinks is globally well exploited. There are few factors that suggest trivial forecast for growth. However, demand continues to grow. Before the end of the current decade, the soft drinks market is expected to surpass the alcoholic beverages market, which constantly has shown lower growth than the beverage industry market in general. While product innovation has stimulated some growth within the industry during the 1990s by introducing new plastic bottles, innovation is slowing within the soft drinks industry recently. Since1997, in terms of market value, the global beverages market grew by 1.7% in 2002 to reach a value of $1,060 billion, and an increase of 16.6% in the global beverages market is predicted by the year 2007 to reach a value of $1,236 billion. In terms of market volume, the global beverages market grew by 3.4% in 2002 to reach a volume of 551 billion liters, and an increase of 20.5% is forecasted by 2007 to reach a volume of 664 billion liters. Even though all sectors of the beverage market are generally dominated by big companies, the soft drinks market is quite different in terms of its competitive position. The soft drinks market is dominated by two global giants: Coca-Cola and PepsiCo. Even though innovation and brand extension strategies have played big role in the recent years within the soft drinks sector between major competitors, market leader Coca-Cola is still concentrating its efforts on the traditional carbonated drinks market with respectable success. It is absolutely difficult for new start-up companies to enter the soft drinks market because it requires a huge financial resources as well as logistical infrastructure that need to rely on. The most important asset for all of the top current players continues to be the brand, and this is where Coca Cola really have the edge.