Has soda lost its fizz

1. What stage in the industry life-cycle model is the soft drink industry in? Explain
and justify your answer.

Ans- On the basis of case study, soft drink industry seems to be in decline phase in
the industry life-cycle. Because sales of the soft drinks are declining continuously all
over the world that leads to the decrease in revenues of the companies.

An increase in the health awareness in the youth is also another factors that affects
soft drink industry. Today customer prefer to buy healthier products like juices,
coconut water and low calories drink that do not affect their health.

Furthermore, different substitutes are available in market. Consumers always want

something new that satisfied their needs.

Demographic changes also affect demand. Like baby boomers are the target market
of soft drink. Now they become older and youngsters shift to the other energy drinks
and healthier drinks.

 2. What strategies are available to the soft drink industry for dealing with declining
sales? What would you recommend?

Ans- Different strategies can be used by the soft drink industry for dealing with the
decline phase:

 Consolidate: Different firms can consolidate with each other in order to

achieve economies of scale and synergies to reduce cost of manufacturing
and cope up with declining demand. Like tea and coffee sold through joint
ventures with Lipton and Starbucks are posting healthy growth.

 Harvest profits: Squeezing profits as much as possible from the industry by

reducing costs can also help the industry.

 Niche strategy: firms can focus on specific segment to attain the competitive
advantage. Like soft drink companies can focus on manufacturing of low
calories and sugar free drinks that reduce problem of obesity and diabetes
etc. With this demand of products can also rise in market.
 3. Do you think the soft drink industry will die? Why or why not?

Ans- Although the demand of the soft drink decreases but in many countries soda
market is dominated by Coke, Pepsi and Dr. Pepper. Despite lower sales,
carbonated soft drinks still make up the largest segment of non-alcoholic drinks in
the beverage industry. In North America coke is more than just a soda- It becomes
the part of their culture and history. So, it is difficult to say that soft drink industry will
disappear in near future. For maintaining their share in market companies are
required to continuously innovate their products.

I agree with your recommendations for the soft drink industries to cope up with the decline
stage. Another way that can help the industry is consolidation with the rival firms to reduce
costs of products and competition in the market. This will ultimately increase the profits of
the industry. Like tea and coffee sold through joint ventures with Lipton and Starbucks are
posting healthy growth