economics of the concentrate business to the bottling business: Why is the profitability so different? How has the competition between Coke and Pepsi affected the industry’s profits? Can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-carbonated drinks? The soft drink industry is a highly profitable industry and its success is due to the large consumption of non-alcoholic beverages through which both concentrate producers and bottlers are
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through the use of acquisitions and re-franchising of their bottlers‚ both C&P have made it essentially impossible for new entrants to find bottlers for the distribution of their drinks. In the event that the new entrants decide to build their own bottling plants (which is quoted to potentially cost
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which consist of four major participants: concentrate producers‚ bottlers‚ retail channels‚ and suppliers. Coke and Pepsi achieved average annual revenue growth around 10% from 1975 through the mid- 1990’s. The combination of a consistently growing market‚ fierce head to head competition‚ brand recognition‚ and efficient production and distribution networks made the CSD industry extremely profitable. Economics of Concentrate Business versus the Bottling Business The segments will be compared
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purchasing Crush‚ Cadbury executives needed to restructure the Crush brand to gain a higher market share while neither contradicting its current brand image nor cannibalizing Sunkist soda sales. Restructuring is to occur through revitalizing the bottling network‚ developing a brand position‚ and developing a new advertising and promotion program. Analysis and Evaluation When Cadbury acquired Crush in 1989 they discovered that Crush was available in markets that represented only 62% of orange category
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Case Part 1: Why was concentrate manufacturing profitable until the late ‘90s? Porter’s Five Forces provides an in-depth understanding as to how the interconnected relationship between Entrants‚ Buyers‚ Suppliers‚ Substitutes‚ and Rivals allowed concentrate producers to increase profitability. Entrants: Existing Concentrate Producers create high barriers to entry Despite low capital requirements to enter the market‚ dominant concentrate producers successfully restricted new entrants
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1. Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? The reason why their profitability is so different can be known by the fact that the costs they have to meet differ greatly. The concentrate producers need lower cost for building a manufacturing plant about $25 million to $50 million‚ and just one plant is needed. Concentrate producers pay the costs for advertising‚ promotion‚ market research‚ and bottler support. They
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profitable‚ more so for the concentrate producers than the bottler’s. This is surprising considering the fact that product sold is a commodity which can even be produced easily. There are several reasons for this‚ using the five forces analysis we can clearly demonstrate how each force contributes the profitability of the industry. Barriers to Entry: There are several major barriers to enter CSD industry. The value chain of the company consists of concentrate producer‚ bottlers and retailers. Assuming
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9-711-462 REV: MAY 26‚ 2011 DAVID B. YOFFIE RENEE KIM Cola Wars Conti inue: Coke an Peps in 201 C nd si 10 Fo more than a century‚ Co and Pepsi vied for “th or oke hroat share” o the world’s beverage m of s market. The most intense battles in the so-called col wars were fought over the $74 billio carbonated soft m b la e on drink (CSD) indus stry in the Un nited States.1 In a “carefu ully waged co ompetitive str ruggle” that l lasted from 1975 through the mid-199
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9-711-462 REV: MAY 26‚ 2011 DAVID B YOFFIE RENEE KIM Cola Wars Contiinue: Coke C an nd Pepsi in 20110 oke and Pepsi vied for “t hroat share” o of the world’ss beverage m market. For more than a century‚ Co The most intense battles in the so-called colla wars weree fought over the $74 billio on carbonated soft drink (CSD) industry in the Un nited States.1 In a “carefu ully waged co ompetitive strruggle” that llasted from 1975 through the mid-199 90s‚ both Cok ke and Pepsi achieved average annual
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BUAD497 Strategic Management Fall 2011 Session 3: Cola Wars Continue: Coke and Pepsi in 2010 Sun Hyun Park‚ Ph.D. Assistant Professor Marshall School of Business University of Southern California “Cola Wars” Blind Test “Can you tell the difference?” Student A 1: Coca Cola Student B 1: Big K Cola (Kroger) 2: Pepsi 3: Coca Cola Student C 1: Pepsi 2: Pepsi 3: Big K Cola (Kroger) 2: Coca Cola 3: Big K Cola (Kroger) Agenda for Today • Recap - Value chain analysis - Five Forces
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