Energy Drink and Alternative Beverages Essay

1. What are the strategically germane(predicate) components of the orbicular and U. S. drink manufacturing macro-environment? How do the economic characteristics of the substitute(a) crapulence segment of the persistence differ from that of other swallow categories? Explain. SEGMENTATION The global market for preference potables was divided by increase type (sports drinks, zip drinks, and vitamin-enhanced boozings) with different requires for each group.Sports drinks accounted for nearly 60% of pick beverage gross revenue in 2009, plot of ground vitamin-enhanced drinks and cypher drinks got about 23% and 18% of 2009 substitute(a) beverage gross gross sales, respectively, in the US. RIVALRY The worldwide competition in the midst of ternary major producers (PepsiCo, Coca-Cola and loss forge) made the industry rivalry become global. In U. S. , Pepsico has engulfed almost half or 47. 8% of the market administers last 2009. The save region where Coca-Cola beats 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 dollar lever for beverages in 2009 was $1,581. 7 one thousand thousand (458. 4 million liters) with 48. 2% of industry sales was from carbonated tardily drinks, 29. 2% from bottle water, 4. 0% from sports drinks, 1. 6% flavored or enhanced water, and 1. 2% from nothing drinks. The dollar value of global market for substitute(a) beverages in the same year was $40. 2 billion (12. 7 billion liters), while the dollar value of the U.S. market for utility(a) beverages stood at $17 billion (4. 2 billion liters). Meanwhile, in Asia-Pacific region, the dollar value for choice beverages in 2009 was $12. 7 billion (6. 2 billion liters) and it was $9. 1 billion (1. 6 billion liters) in the European market. MARKET GROWTH The dollar value of the global beverage industry had grown 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.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 remit down to 5. 7% annually from 2010 to 2014. Based on the geographic share of the alternative beverages market, U. S. largely adopts 42. 3% of it while Asia-Pacific, Europe and Americas (excluding U. S. ) only cover 31. 5%, 22. 2% and 4% respectively. US is the country that has strongest development 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% decline in sports drink sales and a 12. 5% decline in flavored and vitamin-enhanced waters sales. It was in any case the reason why energy drinks sales increased just a little of 0. 2% between those years. 2. What is competition like in the alternative beverage industry? Which of the tail fin warring forces is strongest? Which is weakest? What combative forces seem to have the greatest effect on industry lovableness and the potential profitability of new entrants?In the beverage industry, competition can be extensive (large scale). There are some(prenominal) substitute beverages from tea,soft drinks,fruit juices, and bottled water. Provided that there is a wide range of substitute beverages, this weakens the competitive forcefulness of substitute beverages when there comes a change to consumer preference. Because there is a large purchase for wholesale clubs, grocery stores, and public toilet stores consumers have material influence in negotiations for pricing and slotting fees with the producers.Wholesale clubs an d the likes find it difficult to map new defacements due to limited shelf space.when fruits become a phratry get wind such as coca cola, red bull, etc already suggest the demands of consumers. Coca Cola and PepsiCo are the least vulnerable when it comes to substitute crossroads since they purport 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 tick off image is blusher to becoming a household name in the industry, Attractive case should be developed, New research and product development, Increase of distribution capabilities, Better taste and more variety.The Bargaining function and leverage of suppliers is the weakest competitive force, Consumers tend to buy more alternative products. The threat of new brands varies by market maturity of each alternative beverage category. Competition is strong and will continue on growing all(prenominal) year in the product line. Competition among all brands center largely on brand image, attractive packaging, new product and research development, sales promotion, better access to shelf space, and strengthening distribution capabilities.Rivals expands their numbers and types of alternative beverages in their product line, the opportunity for low switch cost 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 central drivers of change and how might those forces individually or collectively make the industry more or less attractive? The market for energy drinks, sports drinks and vitamin-enhanced beverages is at a time 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 power of the consu mers increased. The volume of the alternative beverages offered higher profit margin than those of other beverages. ingathering innovation, in terms of flavors and formulation, was the most important competitive feature of the alternative beverages. They competed on the basis of differentiation from traditional drinks. This made the industry attractive because of the enhanced view and flavors that the company made.The modernization in selling 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 far-famed artists that the companies hire for advertisements. There was overly 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 apply made the industry less attractive due to the products faults being undefended to the public.The growing concern of people about health associated with their consumption also made the industry less attractive. For example, caffeine in energy drinks, motley of alcohol and energy drinks, melatonine hormone in relaxation drinks, and use of kava and unapproved valerian roots as food additives. The drivers of change, however, will unlikely alter the magnet 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 attractor of the industry. 4. What does your strategic group map of the energy drinks, sports drink, and vitamin-enhanced beverage industry look like? Which strategic groups do you think are in the surmount positions? The worst positions? PepsiCo, Coca-Cola, 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 parts 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 small 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 gibe the success of alternative beverage producers? The four key factors that determine the success of alternative beverage producers (1) access to distribution, (2) innovating product skills, (3) image, and (4) sufficient sales volume. The kickoff 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 get good sales volumes and market shares unless they are widely easy in stores, and there are also far too more brands for all to be included 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 additional volume gains from line extensions and the entry into new categories like energy shots.The third one is image, which was also a circumstantial factor in choosing a brand of customers. The image presented by the products name and emphasized in ad vertisements, endorsements, and promotions created demand 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 grammatical construction 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 fight 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 groundwork in Africa.* Continue to budget and implement their 2020 visio n corporate scheme * Enhance product line and innovation PepsiCo * Focus on menses energy drink line * Continue to promote their tea and juice-energy lines * declare oneself different sized cans for current energy drink lines of No vexation and Amp * Proceed to distribute Rockstar energy drinks and strengthen their alliance with them RedBull * prolong product line while focusing on market sixth sense in South America * Branch out with additional lines of alternative beverages * Continue to promote brand.