Since 2006, the soft drinks market has been "flourishing" thanks to two factors: rising disposable incomes and well-being. Consumer lifestyles are undergoing a major change due to a growing awareness of the link between diet and health. On the other side, enhanced living standards, especially in emerging markets, allow consumers more freedom in terms of product purchase, and consequently help in the market dynamics.
Many causes can be attributed to the profitability of the soft drink market. This market covers carbonates, fruit/vegetable juices, bottled water, functional drinks, concentrates, RTD tea, RTD coffee and Asian specialty drinks.
Bottled water overtook carbonates as the leading soft drinks sector by off-trade volume thanks to shifting attitudes to health in developed as well as emerging markets. Besides, consumers are now aware of the importance of hydration thanks to the rising temperatures caused by climate change. The mix of these two factors have prompted the manufacturers to double their efforts in positioning themselves profitably in an increasingly competitive marketplace.
Functional drinks represent the fastest growing sector of the soft drinks market, thanks to the strong trend towards healthier and busier lifestyles and convenience. Manufacturers are faced with the challenge of maintaining consumer interest in an increasingly competitive environment. Consequently, functional drinks have to focus on brand extensions for introducing new products which could target specific consumer demographics, and the development of "hybrid" drinks, which is a combination of functional drinks with other successful soft drink formats.
As for carbonates, even though they have a less than healthy image, they still represent a major force in the global soft drinks market. With the expanding focus on wellbeing, carbonates started "to witness the introduction of low-calorie and low-sugar products", as the manufacturers are trying to stimulate sales growth. Moreover, using fruit flavors and natural ingredients, or simply sparkling fruit juices are regarded as carbonate options.
Coca-Cola and PepsiCo were the world leaders of the "soft drinks" market for January 2000. John Pemberton created the Coca-Cola brand in 1886 in Atlanta whereas Caleb D. Bradham created Pepsi-Cola brand in 1898.
Owing to their strong reputation & the infatuation of their customers, their sales have increased dramatically and put them "under the spotlight". Ever since their creation, these two soda giants have been involved in a constant business war.
Both brands are synonymous with American culture worldwide and is present on a global scale thanks to company strategies which have been adapted to each different culture. Due to an increase in sponsorships and several horizontal acquisitions, they have acquired significant positions in their consumers' lifestyle.
[...] In 2008, BRIC contributed to 17% of Coca-Cola's global sales, and to 15% of PepsiCo's overall sales.The two cola giants have been working on geographic diversification to reduce their dependency on the North American market, and thus, boost their presence in international markets.Thereby, the role of emerging markets to the global soft drinks sector is significant as these markets are on their path to economic stability and have begun to spend money for non-essential goods in a discretionary way. This leads us to ponder over an essential question How did PepsiCo and Coca-Cola, two different companies, adopt different strategies and still succeed in winning over BRIC markets as well as developed markets? [...]
[...] Even if PepsiCo is larger than Coca-Cola in terms of revenue, latter has a more effective and secured strategy for the long run'. Moreover, thanks to a wide variety of products, the PepsiCo business units compensate for the other weaker ones. Coca-Cola diversified its products in the soft drinks market whereas PespiCo diversified its snacks in the market, which makes it a less risky investment for PepsiCo. PepsiCo tries to be the first to enter the emerging countries where Coca- Cola is not the indisputable leader yet; it is to become the leader when it failed in the developed countries. [...]
[...] PepsiCo Americas Beverages As for beverages, volume declined; growth in 2008 and 2009 In 2008, the non-carbonated beverage volume declined, by 6%. The decline of volumes in North America was offset by net pricing (increase of prices of concentrate and fountain products). In 2009, it declined unfavourable foreign currency contributed for of the decline. Operating profit declined 19% in 2008 due to impairment charges related to the Productivity for Growth program. High production cost, high selling and delivery costs with high fuel costs also contributed to the decline of the operating cost. [...]
[...] The company's partnership with the government and domestic businesses are key to a strong market presence PepsiCo In 2008, PepsiCo had of the soft drinks market in China ( for Coca-Cola). During the last 2 years, PepsiCo has focused on the Chinese market to get a bigger market share. Diversification Strategy They are many ways of diversification for the company's products and it has the capacity to invest huge amounts of money to do it. PepsiCo took the time to understand and analyze this market, learn about the taste of the consumers, their taste, needs, expectations and marketing opportunities. [...]
[...] Deputy Director General for Economy and Finance of the Nidan Juices Company, Dmitry Avdeev said, "The purchase of Nidan gives us confidence that Nidan will add on investments and raise share prices with its stable and growing future prospects for the benefit of our employees and consumers." The benefits that Coca-Cola brought about was when a smaller company is acquired by a bigger company, it brings about new technology and tangible working capital to the smaller company PepsiCo For a long time, PepsiCo stayed in its domestic market, and waited until the end of the World War II to take revenge and compete with competitor, Coca-Cola. [...]
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