Industry Analysis Csd Essay

2355 Words Oct 29th, 2006 10 Pages
Mohan Shiv
Section #1
Boston College
Carroll School of Management

MM 720 Management Practice I

STRATEGIC ANALYSIS
Professor MCCLEELLAN

Case: Cola wars Continue: Coke and Pepsi in the 21st Century

September

INDUSTRY ANALYSIS OF THE CARBONATED SOFT DRINKS INDUSTRY
Description of the Industry
The industry of Carbonated Soft Drinks (CSD) is highly concentrated. The three major companies, Coca Cola, PepsiCo, and Cadbury Schweppes accounted in 1998 for more than 90% of market share by case volume –Exhibit 1-.
Generally, there are 4 participants in the market, involved in the process of production and distribution, namely, concentrate producers, bottlers, retail channels, and suppliers. Porter's 5 forces analysis reveals
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The rise of these non cola beverages induced an additional cost for bottlers, in terms of marketing, plant upgrading, packaging, etc. The inability to keep up with this major shift in the CSD industry lead to a change in the relationship between Concentrate Producers and bottlers from franchising to acquisition ( vertical integration). The main challenge of Pepsi and Coke is to build strong brands for non carbonated soft drinks.
3- Globalization is an important shift in the strategy of Pepsi and Coke, as the domestic market becomes more mature. So, Pepsi and Coke have to target international markets and run the risk of operating abroad (political risk, threat of national brand names, …).
Exhibit 1: Growth of Market share by Case Volume 1990 1995 1998 2000E

Coca Cola Company 41.1% 42.3% 44.5% 44.1%
PepsiCo, Inc 32.4% 30.9% 31.4% 31.4%
Cadbury Schweppes (*) 3.2% 15.1% 14.3% 14.7%
Others 23.3% 11.7% 9.8% 9.8%

(*)

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