‘Global’ Rivalry’ - Cola Wars Continue: Coke And Pepsi In 2006
‘Global’ Rivalry’ - Cola Wars Continue: Coke and Pepsi in 2006
PROFITABILITY OF THE SOFT DRINK BUSINESS
In order to analyse the profitability of Coke or PepsiCo, who are major players in the soft drink business, first it is important to understand the value chain of the industry. Therefore, a definition of the particular industry is required. Coca-Cola’s company website proclaims Coca-Cola to be “The Beverage Industry Leader” . The Coca-Cola Company engages in the manufacture, distribution, and marketing of non-alcoholic beverage concentrates and syrups worldwide. It also offers fountain syrups, syrups, and concentrates, such as flavouring ingredients and sweeteners. On the other hand PepsiCo Inc. manufactures, markets, and sells snacks and beverages worldwide. The company distributes its products through direct-store-delivery, broker-warehouse, and food service and vending distribution networks. Throughout their company history, both competitors tried to boost their revenues by different acquisitions. Herewith, they tried to implement the strategy of product differentiation / diversification opposed to cost leadership or segmentation strategy . After struggling with the consequences, PepsiCo sold PizzaHut and many of other involvements, to concentrate on the beverage market but still engaging in the snack business through Frito Lay and Quaker as separate units. Coca-Cola diversified within the coke business offering e.g. different flavours, calorie categories. To sum up, you can say that both companies currently compete in the beverage industry.
The supply with soda is made through different channels: finished beverage products primarily to distributors, and beverage concentrates and syrups to bottling and canning operators, distributors, fountain wholesalers, and fountain retailers. Profitability is the highest in the fountain and vending channel . This is due to the fact, that capital investments are low for...
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