Competition in energy drinks, sports drinks and vitamin enhanced beverages
Competition in energy drinks, sports drinks and vitamin enhanced beverages
Kyle Holloway
Spring Hill College
INTRODUCTION
Alternative beverages such as sports drinks, energy drinks, and vitamin-enhanced beverages developed into an important competitor for the beverage industry and saw rapid growth in the mid-2000s. Alternative beverages compete on the basis of differentiation from each other in the market and traditional drinks, such as carbonated soft drinks and fruit juices. The largest sellers of alternative beverages are the global food and beverage giants, such as Coca-Cola and PepsiCo., that have already built respected brands in snack foods, carbonated soft drinks, and fruit juices prior to joining the alternative beverage industry. Along with these global giants, companies that utilized the blue ocean strategy, such as Red Bull GmbH and Hansen Natural (now known as Monster Beverage), were able to develop respected brand images and a decent share of the alternative beverage market. Success in this industry is based on companies that exploit innovation, capitalize on consumer trends, and have brand loyalty.
IDENTIFICATION
When the U.S. saw an economic recession starting in the year 2008, the premium-priced alternative beverage market was hit hard. While the alternative beverage segment of the beverage industry provided opportunities for bottlers, the poor economy decreased demand for higher-priced beverages, with sales of sports drinks declining by 12.3 percent and flavored and vitamin-enhanced water declining by 12.5 percent over 2008 and 2009 (Gamble, 2011, p. 264). A great deal of the industry’s growth was stunted in these years but the industry is projected to grow at a rate of 5.88% on average for the next five years (Appendix 1). Industry analysts believe that “carbonated soft drinks would remain the most consumed beverage but would continue to see a decrease in annual sales due to a consumer preference for bottled water, sports
Kyle Holloway
Spring Hill College
INTRODUCTION
Alternative beverages such as sports drinks, energy drinks, and vitamin-enhanced beverages developed into an important competitor for the beverage industry and saw rapid growth in the mid-2000s. Alternative beverages compete on the basis of differentiation from each other in the market and traditional drinks, such as carbonated soft drinks and fruit juices. The largest sellers of alternative beverages are the global food and beverage giants, such as Coca-Cola and PepsiCo., that have already built respected brands in snack foods, carbonated soft drinks, and fruit juices prior to joining the alternative beverage industry. Along with these global giants, companies that utilized the blue ocean strategy, such as Red Bull GmbH and Hansen Natural (now known as Monster Beverage), were able to develop respected brand images and a decent share of the alternative beverage market. Success in this industry is based on companies that exploit innovation, capitalize on consumer trends, and have brand loyalty.
IDENTIFICATION
When the U.S. saw an economic recession starting in the year 2008, the premium-priced alternative beverage market was hit hard. While the alternative beverage segment of the beverage industry provided opportunities for bottlers, the poor economy decreased demand for higher-priced beverages, with sales of sports drinks declining by 12.3 percent and flavored and vitamin-enhanced water declining by 12.5 percent over 2008 and 2009 (Gamble, 2011, p. 264). A great deal of the industry’s growth was stunted in these years but the industry is projected to grow at a rate of 5.88% on average for the next five years (Appendix 1). Industry analysts believe that “carbonated soft drinks would remain the most consumed beverage but would continue to see a decrease in annual sales due to a consumer preference for bottled water, sports
References: Barr , M., & Hajela, D. (2013). Judge strikes down NYC ban on supersized carbonated soft drinks. Wall Street Journal. Retrieved from http://online.wsj.com/article/AP2994ae4cfc42475d93e82c5e0b45319a.html Beverage industry. (2012, July 18). Retrieved from http://www.bevindustry.com/articles/85656-2012-state-of-the-industry--sports-drinks Esterl, M. (2013, January 18). Retrieved from http://online.wsj.com/article/SB10001424127887323783704578245973076636056.html Gamble, J., Thompson, A., & Peteraf, M. (2013). Essentials of strategic management. (3rd ed., p. 265). New York, NY: McGraw-Hill/Irwin. 2012 state of the industry: Energy drinks. (2012, July 15). Retrieved from http://www.bevindustry.com/articles/85655-consumers-seek-out-energy-boosts