Energy Drink and Alternative Beverages Essay

1. What be the strategically relevant components of the global and U. S. potable pains macro-environment? How do the economic characteristics of the choice beverage segment of the labor protest from that of other beverage categories? Explain. SEGMENTATION The global securities application place for secondary beverages was separate by convergence type (sports drinks, cypher drinks, and vitamin-enhanced beverages) with different demands for each group.Sports drinks accounted for to the highest degree 60% of alternate beverage gross gross revenue in 2009, duration vitamin-enhanced drinks and energy drinks got about 23% and 18% of 2009 alternative beverage sales, respectively, in the US. disceptation The worldwide aspiration between tierce major producers (PepsiCo, Coca-Cola and Red squat) do the industry rivalry become global. In U. S. , Pepsico has engulfed al close to half or 47. 8% of the commercialize place sh bes last 2009. The only region where Coca-Cola be ats Pepsico is in Asia-Pacific. Coca-cola has 13. 7% of the market shares while Pepsico has 12. 4%.Worldwide, Pepsico is still leading among the three with 26. 5% of market shares while Coca-Cola and Red Bull had 11. 5% and 7%, respectively. MARKET SIZE The global beverage industrys sawhorse look upon for beverages in 2009 was $1,581. 7 billion (458. 4 billion liters) with 48. 2% of industry sales was from carbonated soft drinks, 29. 2% from bottle water, 4. 0% from sports drinks, 1. 6% flavored or enhanced water, and 1. 2% from energy drinks. The long horse value of global market for alternative beverages in the same year was $40. 2 billion (12. 7 billion liters), while the dollar value of the U.S. market for alternative beverages stood at $17 billion (4. 2 billion liters). Meanwhile, in Asia-Pacific region, the dollar value for alternative beverages in 2009 was $12. 7 billion (6. 2 billion liters) and it was $9. 1 billion (1. 6 billion liters) in the atomic number 63an market. MARKET GROWTH The dollar value of the global beverage industry had deformn approximately 2. 6% p.a. from 2005 to 2009 and was forecasted to grow approximately 2. 3% annually from 2010 to 2014. However, this indicator for the alternative beverage industry was much higher(prenominal).For example, the dollar value of the global market for alternative beverages grew at a 9. 8% annually from 2005 to 2009, but was expected to slow down to 5. 7% annually from 2010 to 2014. Based on the geographic share of the alternative beverages market, U. S. largely covers 42. 3% of it while Asia-Pacific, Europe and the Statess (excluding U. S. ) only cover 31. 5%, 22. 2% and 4% respectively. US is the country that has strongest growth internationally in terms of alternative beverage sales with a 84. 78% growth between 2005 and 2009 while Europe and Asia-Pacific are 22.97% and 24. 51%, respectively. However, poor economic conditions in the US in 2008 and 2009 led to a 12. 3% dec product draw in sport s drink sales and a 12. 5% decline in flavored and vitamin-enhanced wet sales. It was withal the reason why energy drinks sales increased full a little of 0. 2% between those old age. 2. What is competition like in the alternative beverage industry? Which of the five competitive forces is strongest? Which is weakest? What competitive forces seem to give up the greatest effect on industry benignantness and the probable profitability of new entrants?In the beverage industry, competition can be extensive (large scale). There are many substitute beverages from tea,soft drinks,fruit juices, and bottled water. Provided that thither is a wide shake off of substitute beverages, this weakens the competitive power of substitute beverages when there comes a stir to consumer preference. Because there is a large purchase for sell clubs, grocery stores, and convenience stores consumers have significant influence in negotiations for determine and slotting fees with the producers.Whole sale clubs and the likes find it difficult to represent new brands delinquent to throttle ledge space.when products become a house chasten name such as coca cola, red bull, etc already offer the demands of consumers. Coca Cola and PepsiCo are the least vulnerable when it comes to substitute products since they offer a wide range of variety beverages. The strongest competitive force is competitive rivalry within the industry, competition grows stronger by the year. The primary focus on brand cast is find out to becoming a household name in the industry, Attractive promotional material should be developed, New research and product development, append of distribution capabilities, bust taste and more variety.The Bargaining power and leverage of suppliers is the weakest competitive force, Consumers fly the coop to buy more alternative products. The threat of new brands varies by market maturity of each alternative beverage category. Competition is strong and exit continue on gr owing every year in the product line. Competition among all brands center mostly on brand image, attractive packaging, new product and research development, sales promotion, better glide path to shelf space, and strengthening distribution capabilities.Rivals expands their numbers and types of alternative beverages in their product line, the luck for low switch comprise for consumers gets introduced and sales efforts to establish consumers brand loyalty. 3. How is the market for energy drinks, sports drinks and vitamin-enhanced beverages changing? What are the underlying drivers of transfer and how might those forces singly or collectively make the industry more or slight attractive? The market for energy drinks, sports drinks and vitamin-enhanced beverages is now changing due to the change in the long-term industry growth rate.Because of the US recession on the entire beverage industry the demand for the alternative beverages was expected to grow worldwide as the purchasing pow er of the consumers increased. The volume of the alternative beverages offered higher profit margin than those of other beverages. Product innovation, in terms of flavors and formulation, was the most important competitive feature of the alternative beverages. They make dod on the basis of note from traditionalistic drinks. This made the industry attractive because of the enhanced look and flavors that the conjunction made.The modernization in market and distribution system changed the industry in the way that the beverages may be bought from convenience stores, restaurants, sporting events, delis, concerts, festivals, carnivals and vending machines. The industry was made more attractive because of the famous artists that the companies hire for advertisements. There was as well an expansion of target markets, and an increase in new entrants, which made the industry seem appealing to others. The regulations and policies that the government implemented made the industry slight attractive due to the products faults being exposed to the public.The growing concern of commonwealth about health associated with their consumption also made the industry slight attractive. For example, caffeine in energy drinks, mixture of alcohol and energy drinks, melatonine internal secretion in relaxation drinks, and use of Kava and unapproved valerian roots as viands additives. The drivers of change, however, will unlikely alter the attractiveness of the alternative beverages for the next years because large producers of this industry would rely on product innovations and acquisitions to increase sales and market shares.But individual and collective effect of industry drivers of change will likely affect the attractiveness of the industry. 4. What does your strategic group correspond of the energy drinks, sports drink, and vitamin-enhanced beverage industry look like? Which strategic groups do you think are in the beaver positions? The worst positions? PepsiCo, Coca-Col a, Red Bull GmbH, and Hansen Natural Corporation are strategic groups that are in the best positions because they have already established a market position and they hold most of the market share in the alternative beverage industry.They also account for most of the sales in the industry and they have conquered not just US but also Europe and some separate of Asia and America. Living Essentials, Vacation in a Bottle, Dream Water or Drank are strategic groups that are in the worst positions. This is due to the short number of consumers that they have and policies implemented by the government hinder their expansion. though Living Essentials lead the development of energy drinks, they did not expanded their market thus other companies took advantage of the opportunity. 5.What key factors determine the success of alternative beverage producers? The four key factors that determine the success of alternative beverage producers (1) portal to distribution, (2) innovating product skills, ( 3) image, and (4) sufficient sales volume. The first one is access to distribution, which is regarded as the most important 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 far too many brands for all to be include on store shelves.Popular brands that enjoyed first mover advantages such as Red Bull and 5-Hour Energy and brands offered by Coca-Cola and PepsiCo were assured of consistent access to distribution. The second factor is innovating product skills. By definition, alternative beverages were different from traditional beverages based upon product innovation. Moreover, continuing product innovations were essential to developing additive volume gains from line extensions and the entry into new categories like energy shots.The terce one is image, which was also a critical factor in choosing a brand of customers. The im age presented by the products name and forceful in advertisements, endorsements, and promotions created demand for one brand over another. Brand image was also a result of labels and packaging that alternative beverage consumer raise appealing. Small producers with poor image building capabilities found it difficult to compete in the industry unless the product enjoyed a first-mover advantage similar to that achieved by 5-Hour Energy.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 to keep marketing expenses at an acceptable cost per unit basis. 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 * Increase alternative beverage drink brand awareness in Europe and capture its market * Grow infrastructure in Africa.* Continue to calculate and implement their 2020 vision corporate strategy * Enhance product line and innovation PepsiCo * Focus on trustworthy energy drink line * Continue to promote their tea and juice-energy lines * Offer different sized cans for current energy drink lines of No fear and Amp * Proceed to circularise Rockstar energy drinks and strengthen their alliance with them RedBull * Expand product line while focusing on market penetration in South America * Branch out with additional lines of alternative beverages * Continue to promote brand.