Pepsico: Competition in Energy Drinks, Sports Drinks and Vitamin-Enhanced Beverages

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Identification The alternative beverage industry has become more popular in the mid-2000s. There has been rapid growth in the demand for energy drinks, sports drinks, and vitamin-enhanced beverages. PepsiCo has become the world’s fourth largest food and beverage producing company in 2010. Though it had 26.5 percent of the global share of alternative beverages it trailed Coca-Cola Company. PepsiCo seeks to improve its standing in the soft drink market as well as alternative beverage market. Analysis and Evaluation What are the strategically relevant components of the global and U.S. beverage industry macro-environment? How do the economic characteristics of the alternative beverage segment of the industry differ from that of other beverage categories? Explain. Market size According to the exhibit provided by John Gamble, the sales of the global beverage industry in 2009 were $1,581.7 billion and projected to grow to nearly $1,775.3 billion in 2014. The volume of sales was 458.3 billions of liters in 2009 and projected to 542.5 billion liters in 2014. According to Exhibit 2, 48.2percent of the U.S. beverage industry volume sales by segment went to carbonated drinks, 1.2percent to energy drinks, 4percent to sports drinks and 1.6percent to flavored or enhanced water. The dollar value and volume sales of the global market for alternative beverages between 2005 to 2009 ranged from $27.7billion to $40.2 billion respectively. Likewise the volume of liters ranged from 9.4 billions of liters to 12.7 billions of liters respectively (Gamble, C-76-77). Market growth As indicated by John Gamble, “worldwide dollar sales of alternative beverages (sports drinks, energy drinks, and vitamin-enhanced beverages) grew by more than 13 percent annually between 2005 and 2007” (Gamble, C-76). “A great deal of industry growth was expected to result from steady growth in the

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