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  • Cola Wars:: An In-Depth Analysis of One of The World's Greatest Corporate Rivalries

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    The document analyzes the profitability of the concentrate industry using Porter's Five Forces model. It finds the industry has high barriers to entry due to established brands and marketing budgets. Buyer power is mixed as Coke and Pepsi own many bottlers but retailers are consolidating. Supplier power is weak due to inexpensive inputs. Substitutes pose a threat as demand shifts to healthier options. The bottling business faces stronger competition from many bottlers and supplier power over pricing. Challenges include competing brands, declining cola tastes, and retailer/private label growth. Overall the concentrate business is very profitable but future trends are uncertain.

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    The document analyzes the profitability of the concentrate industry using Porter's Five Forces model. It finds the industry has high barriers to entry due to established brands and marketing budgets. Buyer power is mixed as Coke and Pepsi own many bottlers but retailers are consolidating. Supplier power is weak due to inexpensive inputs. Substitutes pose a threat as demand shifts to healthier options. The bottling business faces stronger competition from many bottlers and supplier power over pricing. Challenges include competing brands, declining cola tastes, and retailer/private label growth. Overall the concentrate business is very profitable but future trends are uncertain.

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    5 views7 pages

    Cola Wars:: An In-Depth Analysis of One of The World's Greatest Corporate Rivalries

    Uploaded by

    Ismail KS
    The document analyzes the profitability of the concentrate industry using Porter's Five Forces model. It finds the industry has high barriers to entry due to established brands and marketing budgets. Buyer power is mixed as Coke and Pepsi own many bottlers but retailers are consolidating. Supplier power is weak due to inexpensive inputs. Substitutes pose a threat as demand shifts to healthier options. The bottling business faces stronger competition from many bottlers and supplier power over pricing. Challenges include competing brands, declining cola tastes, and retailer/private label growth. Overall the concentrate business is very profitable but future trends are uncertain.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    of 7

    Cola Wars: An In-Depth Analysis of one of the Worlds Greatest Corporate Rivalries

    Erik Bywall Niklas Gilmark Robert Borowiec Pat Hulsy

    Is the Concentrate Industry Profitable?


    2nd most profitable industry in US from 1992-2006* 5 Forces Analysis
    Barriers to Entry
    Long-established Mature market Huge marketing budgets Stranglehold on production/distribution

    Power of Buyers
    Mixed Weak as Coca-Cola and Pepsi own more Strong due to conglomeration
    *Standard & Poors Compustat

    Is the Concentrate Industry Profitable?


    5 Forces Analysis (cont.)
    Power of Suppliers
    Weak power Inexpensive inputs: caramel coloring, citric acid, caffeine, etc.

    Substitutes
    Poor position Decreasing demand: Trend away from colas to healthful alternatives and power drinks

    Competitors
    Mixed Growth in private label dangerous High brand awareness

    Why is profitability higher in the concentrate than bottling business?


    5 Forces Analysis
    Barriers to Entry
    Large number of bottlers reduces individual bottler power; easy entry

    Power of Buyers
    Bottlers depend entirely on concentrate suppliers Retailers not dependent on bottlers for profit

    Why is profitability higher in the concentrate than bottling business?


    5 Forces Analysis (cont.)
    Power of Suppliers
    Bottlers have to deal with powerful supplier Contentious history of concentrate price hikes Supplier owns big portion of bottlers

    Substitutes
    Every other bottler is a substitute

    Competitors
    High competition due to heavy numbers of bottlers

    What challenges face these companies today?


    Competition
    Keeps Coke and Pepsi from stagnating High marketing expenditures

    Other factors
    Declining taste for Cola in US vs. substitutes for health reasons Increasing retailer power and introduction of private label

    Conclusion
    Concentrate business is profitable Bottler business less so Future of industry undecided Room for growth outside of US

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