Pepsi VS Coca-Cola Keela Murphree Eng 121 Brain Davis 07/18/2011 Pepsi VS Coca-Cola Pepsi and Coca-cola are the most widely recognized beverage brands in the United States formulated by pharmacists. Pepsi and Coca-cola are different in many ways. Pepsi is not as frizzy as Coca-cola. It is sweeter than Coke. After Pepsi sits out a while the taste is stronger.
Coca-Cola vs. PepsiCo. Coca-Cola and Pepsi are two of the top manufacturers of carbonated soft drinks in the world. Both companies are highly profitable in the soft drink/beverage industry. However, there is a marked distinction between the two companies to start with. While Coca-Cola completely operates in a beverages (for example Coke, Sprite, Minute Maid, Dasani), Pepsi is more diversified in its products they sale.
What would you recommend to Coke to insure its success? To Pepsi? 1. Why is the soft drink industry so profitable? Low supplier bargaining power: * Commodities easily available in the market * Choose suppliers based on need and costs * Low switching cost of suppliers * Raw materials required: Caramel coloring, citric acid, natural flavor, caffeine Low/Moderate buyer bargaining power (bottlers and fast food restaurants): Bottlers – Franchise agreements: * Coke’s Master Bottler contract – coke determines concentrate price and other terms of sales * Pepsi’s master bottler contract – Pepsi can force bottlers to purchase raw materials from Pepsi at prices and conditions determined by Pepsi Fast-food restaurant – Acquisitions * Coke retained exclusievely deal with Burger King and McDonald * Pepsi acquired Pizza Hut, Taco Bell and KFC Threat of Substitutes: * Ease of substitute is high * Many alternative to CSDs * Different diet brands (school banned the sale of soft drinks on their premises) * Customer switching costs are low As we can see demands of CSD has increased significantly between 1970 and 2000 but it has decrease and maintain stable until now.
3. Market development growth strategy by expanding to different global markets. Coca-Cola is sold in vending machines. Expand by acquiring products that appeal to different customers sold in vending machines. Bottled iced coffees as an alternative to a carbonated drink.
Many of the brands that the two companies have are intended to be direct competition of each other. The chart below gives a better view: Pepsi | Coke | Pepsi | Coca-Cola | Diet Pepsi / Pepsi Light Pepsi ONE Pepsi Max | Diet Coke / Coca-Cola Light Coca-Cola Zero | Sierra Mist | Sprite | Mountain Dew Kas Izze | Mello Yello Vault Fresca | Tropicana Dole | Minute Maid Fruitopia Simply Orange | Gatorade Propel | Powerade Aquarius Vitamin Water | AMP | Full Throttle NOS, Monster | The chart gives an illustration of how when one company introduces a new sports drink, or a new tea line the other competitor does the same thing as well but with a different name for the product. The way that Pepsi making their stamp in the market is to continue coming out with brands those customers may like and that’s in line with Coke. Pepsi wants to stay ahead and also wants to continue to make and gain revenue from their product. Pepsi wants to expand their growth and to take advantage of potential opportunities, they will be able to do this my expanding their
The above mentioned data regarding the soft drink market & industry in the US could explain why this industry is so profitable. 2. Compare the economics of concentrate business to that of the bottling business: Why is the profit so different? By comparing the function: Concentrate Producers ■ Blend raw material ingredients ■ Packaged Mixture in plastic canisters ■ Shipped to bottlers Bottlers ■ Purchased Concentrate ■ Added carbonated water and high fructose corn syrup ■ Bottled CSD product ■ Delivered to customers accounts By comparing the industrial features: Concentrate
THE BEVERAGE BATTLEFIELD In 2007, the President and CEO of Coca-Cola asserted that Cokehas had a rather rough run in India; but now it seems to be gettingits positioning right. Similarly, PepsiCo’s Asia chief asserted thatIndia is the beverage battlefield for this decade and beyond.Even though the government had opened its doors wide to for-eign companies, the experience of the world’s two giant soft drinkscompanies in India during the 1990s and the beginning of the newmillennium was not a happy one. Both companies experienced arange of unexpected problems and difficult situations that led themto recognize that competing in India requires special knowledge,skills, and local expertise. In many ways, Coke and Pepsi manag-ers had to learn the hard way that “what works here” does notalways “work there.” “The environment in India is challenging, butwe’re learning how to crack it,” says an industry leader. THE INDIAN SOFT DRINKSINDUSTRY In India, over 45 percent of the soft drinks industry in 1993 con-sisted of small manufacturers.
HBS Case 9-702-442 MSB30 June 2008 COLA WARS CONTINUE: COKE & PEPSI IN THE TWENTY-FIRST CENTURY. Houssem Ghorbel Page 1 of 4 HBS Case 9-702-442 MSB30 June 2008 1- Why is the soft drink industry so profitable? Both concentrate producers (CP) and bottlers are profitable. These two parts of the industry are extremely interdependent, sharing costs in procurement, production, marketing and distribution. Many of their functions overlap; for instance, CPs do some bottling, and bottlers conduct many promotional activities.
Business Definition Cadbury Beverages, Inc. is the beverage division of Cadbury Schweppes PLC, a major global soft drink and confectionery marketer, whereas, Crush is a fruit-flavored carbonated beverages brand owned by Cadbury Schweppes. Business Mission “Cadbury Schweppes’ governing objective is growth of shareowner value. We will deliver this by competing in growth markets, with strong brands, focused innovation and value enhancing acquisitions. Our organization is increasingly energized to manage for value.” (Annual Report, 1997) Business Objectives Production objectives: • To improve product quality, while reducing the time and resources required to manufacture, warehouse and ship products. • To improve the process responsiveness, such as product cycle time, process time and process efficiency.
The marketing of energy drinks, sport drinks, and vitamin-enhanced beverages targets many segments, so much so that Coke and Pepsi now own or distribute many of the labels vying against their mainstay brands. This case deals with the competition within the alternative beverage segment by exploring the strategic components, competitive forces, changes in the market, group map, and success factors. In addition this case focuses on key recommendations that will be needed to navigate the complex arena of the alternative beverage segment. Strategic Components of Alternative beverage segment The US beverage market grew by 0.9 percent in 2011 and although this marked the second year of growth for the beverage industry, after two consecutive declines in 2008 and 2009, the pace of growth slowed from 2010 (Berk, CNBC, 2012). This study emphasizes a point of a societal shift of Americans being more health conscious and not consuming as much carbonated beverages as in years past.