History of the Soft Drinks Industry Essay

Introduction easy inebriations, more popularly known as sodas, are non exactly referred to as items of necessity. People tail live without sodas. In fact, people might be safer if they dont inebriation velvety drinks so much. And yet, soft drinks somehow make it to the top of the list of items bought by the fair(a) consumer. Why is this, exactly? Well, for wholeness thing, sodas are delicious. They stand between liquor and succus. Those who are too young to drink beer just now think that fruit juice is too juvenile can order sodas. Those too old and are putting their wellness at risk by drinking hard drinks can enjoy soft drinks and no one would think any less of them.In short, sodas have a mass appeal. They carry an im term with them an image of a person with a comfort fitting flavorstyle. This report entrust take a look at the soft drink patience as a hearty and particular diligences leading, brief history and description of the industry will show industry character istics, tr lay offs, changes, and competitive factors will give recommendations for the companies within the industry. My experience of the consumer and the seller of the soft drinks, allowed me to say, that the soft drinks industry deserves attention.It is one of the biggest, fast growing, perspective, and profitable industries in the conception. It takes a big place in our life as consumers. muted drinks, and such big companies as coca plant green goddess or PepsiCo, are widely spread e reallywhere and available in any country in the world. I decided to choose the soft drinks industry, because it illustrates the great product and distri entirelyion and heavy business innovations, such as product development, franchising, and mass addressing, as sound as the evolution of consumer tastes and cultural trends.History of the soft drinks industry. The soft drink industry began in the mid-1880s with the creation of syrup that was mixed with carbonate water and served at drug store lunch counters. During the early years, soft drinks were sold only in stores that could provide fountain service. Increasing distribution was tied to building superfluous syrup manufacturing plants. With the advent of bottling machinery, soft drinks began to be distributed beyond the town drug store. The first bottled soda water or soft drink in the linked States was produced in 1835.These drinks were called soft drinks, only to separate them from hard alcoholic drinks. This drinks do non contain alcohol and broadly specifying this potables, includes a variety of regular carbonated soft drinks, diet and caffeine free drinks, bottled water juices, juice drinks, sport drink and even ready to drink tea or coffee packs. So we can say that soft drinks mean carbonated drinks. Charles Aderton invented Dr Pepper in Waco, Taxes in 1885. Dr. John S. Pemberton invented Coca green goddess in Atlanta, Georgia in 1886. Caleb Bradham invented Pepsi gage in 1892, and so on.Bigger and smaller companies appear on a soft drink grocery since the greatest profitability (advantage) and cheap manufacturing of this industry was disc everyplaceed. Today, soft drink is more favorite refreshment drink in the United States then tea, coffee, juice and etc. Soft drinks industry everyplaceview in the United States and creation Wide. The soft drinks industry is very big, very visible, bluely concentrated, and appears to have been very profitable. The leaders of the Soft Drink Industry are the Coca- dope Company, PepsiCo, Cadbury Schweppes/Dr. Pepper Snapple, Cott potbelly., and guinea pig crapulence Corp. There is also noticeable Asian and European influence on a world merchandise of the soft drinks. Leading companies have vainglorious armorial bearing in the soft drink industry. This industry is well established already, and it would be difficult for any political party to take down or exit successfully. According to the Coca- Cola yearly report (2009), it has the or so soft drink sales with 24. 4 billion dollars. The Coca-Cola product line has several popular soft drinks including Coca-Cola, Diet Coke, Fanta, Barqs, and Sprite, merchandising over 400 drink chumps in about 200 countries.PepsiCo is the next top competitor with soft drink sales grossing 21 billion dollars for the cardinal drink subsidiaries, PepsiCo crapulences North the States and PepsiCo International (yearly report PepsiCo Inc. , 2009). PepsiCos soft drink product line includes Pepsi, Mountain Dew, and Slice which make up more than one quarter of its sales. Cadbury Schweppes/Dr. Pepper Snapple had soft drink sales of 6 billion dollars with a product line consisting of soft drinks such as A&W Root Beer, Canada Dry, and Dr. Pepper (annual report Cadbury Schweppes/Dr. Pepper Snapple, 2009).Cott Corporation is one of the worlds biggest soft drinks manufacturers, but has a low profile among consumers because it specializes in producing private label products for sellers. In fact the company is cosmicly credited with revitalizing the super securities industry place own-label boozing trade during the early 1990s, scoring a good turn of Copernican goals including the introduction of Sams American Choice cola by Wal-Mart and Sainsburys Classic Cola in the UK. Currently, its small portfolio of consumer brands includes RC Cola, Stars & Stripes and Red Rain. bailiwick Beverage Corp.(National Beverage) develops, manufactures, marts and distributes a portfolio of beverage products throughout the United States. The Company develops and sells flavored beverage products, including a selection of flavored soft drinks, juices, waters and energy drinks. Its brands include Shasta and Faygo, each of which has over 50 flavor varieties. The Company also maintains a line of flavored beverage products for the wellness-conscious consumer, including Everfresh, Home Juice and Mr. Pure deoxycytidine monophosphate% juice and juice-based products The Coca-Cola Company accounted for 26.5% of the worlds soft drinks sales and 43 % of the US market, almost double the amount of rival PepsiCo, which holds a 13. 4 % role of the world market and 32 % of the US market. both companies appear to be keen to extend their focus by expanding into growing segments for soft drink production. In the last month Coca-Cola has revealed it is extending began researching benefits of Chinese herbal remedies to target growing demand for nutritional benefits and functionality in their products. PepsiCo at the comparable time has increased its focus in production of non-carbonated beverages with juice in particular becoming important to its operations.Both companies remain significantly ahead of their rivals, reflecting the increasingly competitive nature of the soft drinks market. Cadbury Schweppes/Dr. Pepper Snapple takes 15 % of the US market and 3 % of the world market. Cott Corp takes 5 % of the US market. National Beverage Corp. takes 2% of the US market. (Table 1. The top 10 Soft Drinks Companies in 2008 by world-wide market share, Page 21 and Table 1. a. The Top 10 Soft Drinks Manufacturers in the US in 2008 by volume, Page 21 ). At the core of the beverage industry is the carbonated soft-drink category.The dominant players in this area (Coca Cola, Pepsi, and Cadbury Schweppes/Dr. Pepper Snapple) own virtually all of the North American markets most widely distributed and best-known brands. (Table 4 Top Ten Soft Drinks in the US, 2009. Page 24) They are dominant in world markets as well. These companies products occupy large portions of any supermarkets shelf space, often covering more territory than real food categories like dairy products, meat, or produce. Coca-Cola and PepsiCo keep to dominate the soft drinks market in 2010 accounting for more than a third of global sales in the sector, according to market analytic.Soft drinks industry description. The market size of this industry has been changing. Soft drink consumption has a market share of 46. 8% within the non-alcoholic drink industry. (Table 2, 2. a. Global Soft Drinks trade Segmentation % Share, by Value, 2008, Page 21). Total market value of soft drinks reached $367. 2 billion in 2008 with a market value forecast of $377. 1 billion by the end of 2010. In 2013, the global soft drink market is forecast to have a value of $456. 3 billion. The 2008 soft drink volume was 325,367. 2 million liters (Table 3 Global Soft Drinks market Volume liters million, Page 22).In 2013, the global soft drink market is forecast to have a volume of 474 million liters, an increase of 22. 3% since 2008. Soft drink industry is lucrative with a potential for high profits, but on that point are several obstacles to overcome in order to capture the market share. Carbonates sales proved the most lucrative for the global soft drink market, generating 46. 8% of the total value. However, the volume of the U. S. carbonated soft drinks declined -3% in 2009. That compares to 2. 3% decl ine in 2008 a 0. 6 % decline in 2007 and a -0. 2% decline in 2006. Top companies, Coke and Pepsi, generated similar results last year.Coke carbonated soft drinks volume was down -3. 1% and PepsiCos was down -4%. Both lost share. Dr. Pepper Snapples carbonated soft drink volume was down -1. 3%. (See below, Table 5 Carbonated soft drink Companies in the U. S. for 2009). In the U. S. , with the carbonated soft drinks decline accelerating, early(a) categories are slowly growing. (For example, bottled water and energy drinks market. ) The Coca-Cola Company accounts for 22. 6% of the global soft drink markets volume. Supermarkets and hypermarkets distribute 48. 4% of the global soft drink markets volume. Table 5. Carbonated soft drink Companies for 2009.Top -10 CSD Companies in the US for 2009 2009 2009 2008 2009 2008 Rank Companies Market Share Market Share Share Change Cases (millions) Cases (millions) Volume% Change 1 Coca-Cola Co 42. 7 42. 8 -0. 1 4107. 6 4241. 1 -3. 10% 2 Pepsi C o 30. 8 31. 1 -0. 3 2960. 4 3082. 8 -4. 00% 3 Dr Pepper Snapple 15. 3 15 0. 3 1471. 2 1491. 3 -1. 30% 4 Cott Corp 4. 7 4. 8 -0. 1 448 476. 6 -6. 00% 5 National Beverage 2. 6 2. 5 0. 1 247. 5 243. 9 1. 50% 6 Hansen Natural 0. 8 0. 8 flat 79 76. 5 3. 30% 7 Red Bull 0. 7 0. 6 0. 1 67. 2 63. 9 5. 20%.8 Big Red 0. 4 0. 4 flat 43. 6 42. 4 2. 70% 9 Rockstar 0. 4 0. 4 flat 40. 2 41 -2. 00% 10 Other 1. 6 1. 6 flat 156. 3 160. 3 -2. 50% Total Industry 100 100 9621 9919. 8 -3. 00% Statements of leading companies within soft drink industry of the US Coca Cola Company PepsiCo Dr Pepper Snapple Group, Inc. National Beverage Corp Cott Corp (2008) Net direct tax millions $ 30. 990 43. 232 5. 531 thousands $ 575. 177 millions $ 1. 648 Cost of goods sold 11. 088 20. 099 2. 234 405. 322 1. 467 GROSS PROFIT 19. 902 23. 133 3. 297 169. 855 181.Selling Expenses 11. 358 15. 026 2. 135 131. 918 179. 8 OPERATING INCOME 8. 231 8. 044 1. 085 24. 742 leaving 113. 0 amount of gold ASSETS 48. 671 39 . 848 8. 776 265. 682 873. 1 LIABILITIES AND EQUITY 48. 671 39. 848 8. 776 265. 682 873. 1 OPERATING ACTIVITIES 8. 186 6. 796 865 35. 829 66. 9 INVESTING ACTIVITIES employ in 4. 149 used in 2. 401 used in 251 used in 3. 491 used in 54. 8 FINANSIAL ACTIVITIES used in 2. 293 used in 2. 497 used in 554 305 used in 19. 4 v Forces of the Soft Drinks Industry. ( Figure 3. Five Forces of the Soft Drinks Industry. Page 24).Threat of in the buff Entrants. Significant barriers exist to entering the soft drink industry. Bottling operations have a fairly high minimum efficient scale and require fixed assets which are specific not only to the process of bottling but also to a specific reference of packaging. Entering bottling, meanwhile, would require substantial capital investment, which would deter entry. Exit costs are thus also high. Bottling operations do exist which in system could be contracted out, but they are tied up in long-term contracts with the major players and thus can onl y contract with other producers in a limited way.Perhaps the most significant barrier to entry, however, is the grueling brand identity associated with the best-selling soft drinks. Placing another cola on the market is not an attractive value proposition. Bargaining Power of Suppliers. Suppliers to the soft drink industry are, for the most part, providing commodity products and thus have little indicant over the industry. Sugar, bottles and cans are homogeneous goods which can be obtained from umpteen sources, and the aluminum can industry has been plagued by excess supply.The one necessary ingredient which is unique is the faux sweetener aspartame is clearly preferred by consumers of diet beverages and for a time was under bare protection and therefore only available from one supplier. However, the patent expired and another producer entered, reducing the market power of NutraSweet. For example, the inputs for Coke and Pepsis products were to begin with sugar and packaging. Sugar could be purchased from many sources on the feed market, and if sugar became too expensive, the firms could easily switch to corn syrup, as they did in the early 1980s.Bargaining Power of Customers. Buyers can be considered at the consumer or the retail level. The soft drink industry sold to consumers through five principal channels food stores, convenience and gas, fountain, vending, and mass merchandisers, fast food restaurants. For consumers, taste will be an important part of the preference for a particular soft drink thus although there is no mo exonerateary switching cost, there may be a loss of enjoyment associated with a less-preferred brand. Because of this, consumers have historically been brand-loyal and not based purchase decisions on price.Retail outlets have not been able to exhibit much buyer power over the industry, although they can do so more easily than consumers. Traditionally these outlets have been fragmented and have been dependent on the major soft drink brands to increase store traffic. However, at the time of the case there has already been evidence of some buyer power on the part of grocery stores, as they successfully resisted an attempt to price the varieties with more costly inputs higher. As grocery chains increasingly merge and as discount outlets continue to grow, buyer power on the part of retailers is likely to increase.Threat of Substitute Products. While the U. S. soft drink market was growing, substitutes did little to interfere. Soft drinks are sufficiently unique that when a consumer wants a soft drink another product is not likely to satisfy. Other cold drinks such as water, juices and iced tea offer similar refreshing qualities, yet they do not have the same taste or properties. Hot beverages and alcoholic beverages are not desirable or appropriate for many of the occasions when one would want a soft drink.The one category which threatens soft drink producers is the new age product which offers (or implies) more natural ingredients and/or health benefits. The soft drink industrys initial answers to these beverages, in the form of Tab Clear and crystallization Pepsi, are not going to compete effectively with the new age products. Competitive Rivalry within an Industry. The absorption in the industry (mainly between its leaders Coke, Pepsi and Cadbury/Schweppes) would suggest that internal rivalry is somewhat less than if there were many players of equal size.Although the competition between Coke and Pepsi has become fiercer over time, they traditionally competed chiefly on advertising, promotion and new products rather than price (although the explosion of new brands did eventually lead to some price competition). The products are similar but not homogeneous and buyers are fairly brand loyal. Retail buyers have significant costs for switching from the major brands since those are responsible for bringing people into the store.Flattening and potentially declining U. S.demand may be a factor which increases internal rivalry and encourages more price competition and thus erosion of profits. Revenues are extremely concentrated in this industry, with Coke and Pepsi, together with their associated bottlers, commanding 73% of the case market. In fact, the soft drink market can be characterized as an oligopoly, or even a duopoly between Coke and Pepsi, resulting in positive economic profits. As analysis using Porters five forces shows that the soft drink industry is very profitable. Suppliers and buyers have not had more power over the industry than it has had over them.Internal rivalry, while seeming intense, has not eroded the profitability of the industry because of its concentration and the fact that the two major players have primarily competed on the basis of advertising and promotion and not price. Entry is difficult both for reasons of scale and the strong brand identity of the current major players. Substitutes have not been neighboring enough to take away si gnificant market share, although the emergence of new substitutes may pose the largest threat to the industrys profitability. Soft drink industry has an oligopolistic character.SWOT analysis of the main producers in the soft drink industry. Coca Cola Company. The Coca-Cola Company is the worlds leading manufacturer, distributor and marketer of Non- alcoholic beverage concentrates and syrups, in the world. Coca Cola has a strong brand appoint and brand portfolio. Business Week and Interbred, branding consultancy, recognize Coca cola as one of the leading brands in their top 100 global brands be in 2009. The Business Week Interbred valued Cocoa Cola at 67,000 million dollars in 2008.Coca Cola ranks well ahead of its close competitor PepsiCo which has a ranking of 22 having a brand value of 12,690 million dollars. The Companys strong brand value facilitates customer take away and allows Coca Cola to penetrate market. However, the company is threatened by intense competition which could have an adverse impact on the companys market share. Strengths Weaknesses Worlds leading brand Negative publicity large scale of operations Sluggish performance in North America gamey revenue growth in three segment Decline in cash from operating activities Opportunities ThreatsAcquisitions extreme competition Intense competition Growing bottles water market Dependence on bottling partners Growing Hispanic population in US Sluggish growth of carbonated beverages Strengths. Worlds leading brand The Company owns four of the top five soft drink in the world Coca Cola, Diet Coke, Sprite and Fanta. Strong brands allow the company to exhibit brand extensions such as Vanilla Coke, Cherry Coke and Coke with Lemon. Over the years, the company has made large investments in brands promotions. Consequently, Coca Cola is one of the best recognized global brands.The companys strong brand value facilitates customer recall and allows Coca Cola to penetrate new markets and consolid ate existing ones. Large scale of operations With revenues is excess of 24 billion dollars Coca Cola has a large scale of operation. Of the approximately 52 billon beverage servings of all types consumed worldwide every day, beverages bearing trademarks owned by or licensed to Coca Cola account for more than 1. 4 billion. The companys operations are supported by a strong infrastructure across the world.Coca Cola owns and operates 32 principal beverage concentrates and/or syrups manufacturing plants set(p) throughout the world. In addition, it owns or has reside in 37 operations with 95 principal beverage bottling and canning plants in the US. The company also owns bottled water production and still beverage facilities as well as a facility that manufactures juice concentrates. The companys large scale of operation allows it to feed coming(prenominal) markets with coitus ease and enhances its revenue generation capacity.Robust revenue growth in three segments Coca Cola revenue s recorded a double public figure growth, in tree operating segments. These tree segments are Latin America, East/South Asia, and Pacific Rim and Bottling investments. Revenues from Latin America grew by 20,4% during 2007, over 2006. During the same period, revenues from East/South Asia and Pacific Rim grew by 10. 6 % while revenues from the bottling investments segment by 19. 9%. Together, the three segments of Latin America, East/South Asia and Pacific Rim and Bottling investments, accounted for 34. 8% of total revenues during 2007.Robust revenues growth rates in these segments contributed to top-line growth for Coca Cola during 2007. Weaknesses. Negative publicity The company received prohibit publicity in India during September 2006. The company was accused by the Center of Science and Environment (CSE) of selling products containing pesticide resi overdue. These pesticides included chemicals witch could cause cancer, damage to the nauseated and reproductive systems and red uce bone menial density. Such negative publicity could adversely impact the companys brand image and the demand for Coca- Cola products.Sluggish performance in North America Coca Colas performance in North America was far from robust. North America is Coca Colas core market generating about 30 % of total revenues during 2007. Therefore, a strong performance in North America is important for the company. Sluggish performance in North America could impact the companys future growth prospects and prevent Coca Cola from recording a more robust top-line growth. Decline in cash from operating activities Cash flows from operating activities decreased 7% in 2008 compared to 2007.Decline in cash from operating activities reduces availability of funds for the companys investing and financing activities, which, in turn, increases the companys exposure to debt markets and fluctuating interest rates. Opportunities. Acquisitions Strong international operations increase the companys capacity to penetrate international markets and also gives it an opportunity to diversity its revenue stream. Coca Cola made acquisitions in Australia, New Zealand, Germany, and China for the last 3 years. These acquisitions strengthened Coca Cola international operations.It gives Coca Cola an opportunity for growth, through new product launch or greater penetration of existing markets. Growing bottled water market Bottled water is one of the fastest growing segments in the worlds food and beverage market owing to increasing health concerns. The market for bottled water in the US is forecast to reach revenues of about 19. 3 billion dollars by the end of 2010. The companys Dasani brand water is the 3rd best-selling bottled water in US. Coca Cola could leverage its strong position in the bottled water segment to take advantage of growing demand for flavored water.Growing Hispanic population in US Hispanics are growing rapidly in number and economic power. As a result, they have become more important to markets than ever before. The company can benefit from an expanding Hispanic population in the US, which would learn into higher consumption of Coca Cola products and higher revenues for the company. Threats. Intense competition Intense competition Coca Cola competes in the nonalcoholic beverages of the commercial industry. The company faces intense competition in various markets from regional as well as global players.Also, the company faces competition from various juice drinks and nectars. In many of the countries in which Coca Cola operates, including the US, PepsiCo in one of the companys primary competitor. (Other significant competitors include Nestle, Cadbury/Schweppes, Group DANONE and Kraft Foods. ) Competitive factors impacting the companys business include pricing, advertising, sales promotion programs, product innovation. And brand and trademark development and protection. Intense competition could impact Coca Cola market share and revenue growth rates .Dependence on bottling partners Coca Cola generates most of its revenues by selling concentrates and syrups to bottlers in whom it doesnt have any ownership interest or in which it has no controlling ownership. Loss one or more of customers by any one of its major bottling partners could indirectly affect Coca Cola business results. Such dependence on third parties is a weak link in Coca Colas operations and increases the companys business risks. Sluggish growth of carbonated beverages US consumers have started to look for greater variety in their drinks and are becoming increasingly health conscious.This led to a decrease in the consumption of carbonated and other sweetened beverages in the US. The performance of the market is forecast to decelerate, with an anticipation compound annual rate of change of -0. 3% for the five-year period 2005-2010 expected to drive the market to a value of 62. 9 billion dollars by the end of 2010. Coca Colas revenue could be adversely affected b y a slowdown in the US carbonated beverage market. PepsiCo. In 2009 PepsiCo estimated that its annual retail sales had reached $92 billion, offering over 100 brands around the globe.The main cash cow of PepsiCo of course being the Pepsi carbonated drink that owned 10% of the US beverage market in 2008. PepsiCo offers the worlds largest portfolio of billion-dollar food and beverage brands, including 19 different product lines that each generates more than $1 billion in annual retail sales. PepsiCo mains businesses Frito-Lay, Quaker, Pepsi-Cola, Tropicana and Gatorade also make hundreds of other nourishing, foods and drinks. Strengths Weaknesses Strong core brand Concentrated in North America .Strong market position wellness Craze will hurt soft drink Solid brand portfolio Negative publicity Strong revenue growth Economies of scale Opportunities Threats Food segmentation expansion Sluggish growth of carbonated drinks Hispanic growth in the US Competition with Coca-Cola & others Bottled water growth Declining economy/recession Growing consumer health consciousness Cadbury Schweppes/Dr. Pepper Snapple. Dr Pepper Snapple Group Inc. (formerly Cadbury Schweppes Americas Beverages) is an American soft beverages drink company, which was spun off from Britains Cadbury Schweppes.Company manufactures, markets and distributes more than 50 brands of carbonated soft drinks, juices, ready-to-drink teas, mixers and other premium beverages across the United States, Canada, Mexico and the Caribbean. Our diverse portfolio includes Dr Pepper, Snapple, 7UP, Motts, A&W, Sunkist Soda, Canada Dry, Hawaiian Punch, Schweppes, Penafiel, Squirt, Clamato, Mr & Mrs T Mixers, Roses, Yoo-hoo and other consumer favorites. Most of the brands in this segment are CSD brands. In 2009, our Beverage Concentrates segment had net sales of approximately $1. 1 billion.Strengths Weaknesses Strong portfolio, consumer-preferred brands Weak performance in Asian Market Integrated business m odel A substantial amount of outstanding debt Strong customer relationships Strong operating brims and stable cash flows Opportunities Threats New distribution channels in a market Changing consumer tastes Growing consumer health consciousness Operating in highly competitive markets Focus on opportunities in high growth and high margin categories Depend on the 3rd party bottling and distribution companies Cott Corporation.Cott Corp is one of the leading non-alcoholic beverage companies and retailer brand soft drink providers. The company primarily operates in the US, Canada, the UK and Mexico. It is headquartered in Toronto, Canada and employs 2,803 people. The company recorded revenues of $1,648. 1 million during the financial year ended December 2009, a decrease of 7. 2% compared to 2008. The operating loss of the company was $113 million during 2009, compared to the operating loss of $54. 5 million in 2008. The net loss was $122. 8 million in 2009, compared to the net loss o f $71. 4 million in 2008.Strengths Weaknesses Leading Producer of Retailer Brand Beverages with Diverse Product Portfolio Unable to compete successfully in the highly competitive beverage category. Extensive, Flexible Manufacturing Capabilities May not be able to respond successfully to consumer trends significant amount of outstanding debt Opportunities Threats New distribution channels in a market Changing consumer tastes Growing consumer health consciousness Intense competition Focus on opportunities in high growth and high margin categories National Beverage Corp.National Beverage develops, manufactures, markets and distributes a portfolio of beverage products throughout the US. The company develops and sells a selection of flavored soft drinks, juices, sparkling waters and energy drinks. It is headquartered in strengthen Lauderdale, Florida and employed about 1,300 people. The company recorded revenues of $566 million during fiscal year ending April 2008, an increase of 5% over 2007. The increase in revenue was due to 9% growth in case volume of energy drinks, juices, and waters. The operating profit of the company was $172. 6 million during 2008, a decrease of 0. 4% compared with 2007.The net profit was $22. 5 million in 2008, decrease of 8. 9% compared with 2007. Strengths Weaknesses Extensive Brand Portfolio Geographic concentration Declining Profits Opportunities Threats Focus on Asia Pacific Market Limitations on Commercialization of Alcoholic Products Rise in Demand for bottled Water in the US Riding Input Costs Change in Consumer Preferences Intense Competitive Pressures Companys key success factors within the soft drink industry. Key factors for competitive success within the soft drink industry branch from the trends of the microenvironment. Primarily, constant product innovation is imperative.A company must be able to recognize consumer wants and needs, while maintaining the ability to adjust with the changing market. They must keep up with the changing trends. Another key factor is the size of the organization, especially in terms of market share. Large distributors have the ability to talk terms with stadiums, universities and school systems, making them the exclusive supplier for a specified period of time. Additionally, they have the ability to commit to mass purchases that significantly lower their costs. They must apply effective distribution channels to remain competitive.Taste of the product is also a key factor for success. Moreover, established brand loyalty is a large aspect of the soft drink industry. Many consumers of carbonated beverages are extremely dedicated to a particular product, and rarely purchase other varieties. This stresses the importance of exploitation and maintaining a superior brand image. Price, however, is also a key factor because consumers without a strong brand preference will select the product with the most competitive price. Finally, global expansion is a vital factor in th e success of a company within the soft drink industry.The United States has reached relative market saturation, requiring movement into the global industry to maintain growth. Soft drink industry main characteristics, trends and changes. Soft drinks are an integral part of American life and culture and soft drinks have been produced or consumed in nearly every corner of the world. The industry is lucrative with a potential for high profits, but there are several obstacles to overcome in order to capture the market share. Growing consumption trends can be attributed to rising disposable incomes, falling trade barriers, universal product acceptance, and a rising demand for American consumer goods.It would be very difficult for a new company to enter this industry because they would not be able to compete with the established brand names, distribution channels, and high capital investment. Likewise, leaving this industry would be difficult with the significant loss of money from the fi xed costs, binding contracts with distribution channels, and advertisements used to create the strong brand images. This industry is well established already, and it would be difficult for any company to enter or exit successfully.The carbonated beverage industry is a highly competitive global industry, and has some characteristics of an oligopoly in the US. Three leading companies have prominent presence in the soft drink industry. The leaders include the Coca-Cola Company, PepsiCo, and Cadbury Schweppes. Leader companies have to hold the highest percentage of the global market share therefore, companies need to be able to compete globally in order to be successful. Profitability in the soft drink industry will remain rather solid, but market saturation especially.