Fruit Juice Industry
November 24, 2009 The Juice industry in Mexico have been increasing, there are several factors that make this possible and companies like Jugos del Valle and Jumex are making different strategies to capture that market. Next there is an analysis of the industry and then it follow an internal and external analysis of Jugos del Valle, which is now part of Coca-Cola FEMSA. There are some aspects that are favorable for the company and some that are disadvantages for them. The purpose of this essay is to show the advantages and disadvantages, and analyze more the disadvantages to see where Jugos del Valle can improve in order to become the number one producer and distributor of fruit and vegetable juices.
Industry Strategic Analysis
Threat of New Entrants: In the fruit juices industry there are high entrance barriers because there are big companies that have economies of scale because of the great amount of products they sale, and this companies have machinery to make a lot of juices of different fruits and vegetables, making it easy for big companies to have economies of scale. Many of these companies not only make fruit juice, but have products like water, sodas, alcoholic beverages, vegetable juices, and other beverages. These make the entrance difficult for new companies, especially small ones that can’t compete with the low prices. The capital requirements for new entrants is high because companies already established are big companies, such as Jumex, Campbell’s, Herdez, Jugos del Valle, Gerber, Valle Redondo. These are big companies that have been in the industry for several years, and the brands are already known for consumers, this is what makes it difficult to compete against them.
Bargaining Power of Suppliers Suppliers have the option of changing their clients, but it is difficult to reject the big amount of product that the big companies ask for. This is why suppliers don’t have bargaining power, it is the other way; the juice companies have
Industry Strategic Analysis
Threat of New Entrants: In the fruit juices industry there are high entrance barriers because there are big companies that have economies of scale because of the great amount of products they sale, and this companies have machinery to make a lot of juices of different fruits and vegetables, making it easy for big companies to have economies of scale. Many of these companies not only make fruit juice, but have products like water, sodas, alcoholic beverages, vegetable juices, and other beverages. These make the entrance difficult for new companies, especially small ones that can’t compete with the low prices. The capital requirements for new entrants is high because companies already established are big companies, such as Jumex, Campbell’s, Herdez, Jugos del Valle, Gerber, Valle Redondo. These are big companies that have been in the industry for several years, and the brands are already known for consumers, this is what makes it difficult to compete against them.
Bargaining Power of Suppliers Suppliers have the option of changing their clients, but it is difficult to reject the big amount of product that the big companies ask for. This is why suppliers don’t have bargaining power, it is the other way; the juice companies have
Bibliography: CENAM, “La importancia de la industria de jugos y néctares en México” extracted on November 20, 2009 from the webpage: http://www.cofemermir.gob.mx/uploadtests/7596.66.59.5.Anexo%204.pdf Datamonitor, “Juices in Mexico” extracted on November 23, 2009, from the webpage: http://0-search.ebscohost.com.millenium.itesm.mx/login.aspx?direct=true&db=buh&AN=14383745&site=bsi-live FEMSA, “Estados Financieros de FEMSA” extracted on Noviembre 22, 2009 from the web page: ttp://files.shareholder.com/downloads/FEMSAS/780579993x0x326787/5C565B45-FE76-40CA-A741-E3145BF8C1B9/FEMSA_3Q09_Earnings_Release_-_Esp.pdf Google Finance, “Coca-Cola FEMSA SAB. De C.V. financials” extracted on November 22, 2009 from the web page: http://www.google.com/finance?q=NYSE:KOF&fstype=ii