Porters Five Forces Analysis

Threat of entrants
• High entry cost because of great capital is need for start up the business
• Difficult for the small sized companies to enter the market, i.e. the top brands are well established company linked to multi-production.
• Operating the business is challeging because of costly machiery repairing and professionally quality control is weariness.
• Market maturity and saturation which exiting nearly 100 brands and numourous little brands in the market
• Entrants are still willing to access to the market which enticed by the gravitation towards the great revenue. e.g. Hung Fook Tong began to sold its first batch of packaged ready-to-drink soft drinks for only 10 years.

Suppliers bargaining power
• Vitasoy is solely a manufacturer which has no farm to plant raw materials such as sugar, soya bean, tea leaf, etc., i.e. the supply is dominated by the suppliers
• Vitasoy would have limited choice of suppliers for their ingredients and therefore the suppliers would have large bargaining power.
• Sometimes, cost can be steped up suddenly by the influence of climates which the manufacturer has no right to complaint about
• The ingredients used for Vitasoy are commonly used in many other similar businesses and so the suppliers can sell large proportion of their goods that would not be reliant on sales to Vitasoy

Buyers bargaining power
• Very large market (Euromonitor International 2010).
• Selling to the distributors not to the end customer.
• Distribution channel is large. The end customer can buy the products in the supermarkets, convenience stores, old-fashion stores, tuck stores,etc.
• Customers can also buy the drinks at the vending machines.
• The loyalty of customers is low.

Threat of substitutes
• Different companies may have similar products.
• The price of competitive products is lower.
• Fresh made drinks in restaurant can be an alternative such as lemon water, lemon tea, milk tea, chocolate milk, etc
• Filtered tap-water, boiling water, traditional tea, home-make soup can be substitutes too
• Carbonates like Coca-Cola still staying at the top position of soft drinks

Competitive rivalry
• Competitors - Tao Ti, Hung Fook Tong and Swire (Euromonitor International 2010)
• Vitasoy and Swire are the two leading companies in Hong Kong beverage market.
• The top 10 companies are well established and acquired over 70% market share in total.
Vitasoy ranked 2nd in the soft drink market during 2009 with an off-trade value share of 22%.