You are on page 1of 3

Dwitya Aribawa/MM 61 Int/343554

COMPETITION IN ENERGY DRINKS, SPORTS DRINKS AND VITAMIN-ENCHANCED BEVERAGES Case Insight The beverages industry is the growing industry globally, many brands with unique taste, the benefits and high technology processing are compete in this industry. Growth of sales (in Dollars) and growth of volume (in Liters) in average growing stable from 2005 to 2009 in 2.58% and 4% annually, furthermore analyst forecasted about the growth of industry for 2014, it would be growing in sales about 11.7% ($ 1,775.3 Billion) and volume about 17.15% (542.5 Billion Liters). From that statistic we already know about the positive demand about the beverages industry in globally today and the bright prospect of this industry to growing in the future. Beverages industry growth pushed by the tendency of changes of consumers around the world that have more preferences to consume more healthy drinks but still tasty (Alternative Beverages), such as Energy Drinks, Sport Drinks and Vitamin-Enhanced Drinks. Alternative beverages segment are divide to several types based on consumers segmentation, there are the energy drinks (Teenage boy), sports drinks (Sport or Fitness person), vitamin-enhanced drinks (Adult Consumers-Aware to vitamins benefit), concentrated energy shots (busy workers adult) and relaxation drinks (Niche Market). Every segment has different consumer types and their tendency of purchasing and different distribution channel (Convenience store, deli or restaurant, food retailers, events or vending machine) strategy. The interesting fact that occurs in alternative beverages market is come from not common brands (such as Pepsico, Coca-Cola or Red Bull). In global, the market share of others brands of alternative beverages is 55% compare to PepsiCo 26.5% and Coca-Cola 11.5%. Asia Pacific and Europe have more local brands of alternative beverages, which issue increasing numbers of others producers become more than 70%. Global Beverages Company started to shift the focus to consumers in developing countries (Increasing consumer purchasing power) rather than develop country where market began to decline, because of the recession economic condition in US and Europe, especially for US market which is the largest market of beverages industry. In this case four brands has analyzed deeply as company that can influence Alternative Beverages market.

Strategic Analysis of Alternative Beverages Industry To gain a deep understanding of a company industry and competitive environment, managers do not need to gather all the information they can find and spend lots of time digesting it. From Crafting and Executing Strategy by Thompson et al (2012), there are some concept and analysis in order to provide systematical analysis of industry. There are seven analysis based questions and answers to provide managers with understanding needs to crafting a strategy to company: 1) Does the industry offer attractiveness opportunities for growth? In overall, beverages market look steadily growing stable in 3%-4% p/a in term of sales or volume that sold. Alternative Beverages look more attractive market to growing, from 2005 2009 there is increasing most likely 20% p/a of value and near to 25% p/a of volume of sales and forecast to improve most likely 40% in total from 2009 to 2014 in US market. The same pattern arise in Asia Pacific and European market, it will be range of 25% - 30% growing market in the future (2014). Market size of this industry is slightly being discoverable to gain more new market (niche). The attractiveness of industry showed by growth rate of dollars and volumes all over the world of alternative beverages industry. That was support the fact about shifting consumers tendency to move from carbonated soft drinks to more healthy drinks. 2) What kind of competitive forces are industry members facing, how strong is each force? Based on Five Forces Model by Porter, there are some considerations of competition analysis in industry that will be discover from the stakeholders situation, there are: High rivalry among competing sellers Medium competitive pressures coming from the threat of entry of new rivals. Low competitive pressures from the sellers of substitutes products. Low competitive pressures stemming from supplier bargaining power. Medium competitive pressures come from buyer bargaining power & price sensitivity.

3) What factors are driving changes in industry, and what impact will these changes have on competitive intensity and industry profitability? The major driving changes in alternative beverages industry are changes in who buys the product and how they use it and changing in societal concerns, attitudes and lifestyle.

4) What market position do industry rivals occupy? Who is strongly positioned, who is not? Strategic Group Maps using in order to arrange the competitive positions that three of the firms in this case (Pepsi Co, Coca-cola, Red Bull and Hansen Natural) occupy the industry. Hansen Natural Corporation has a most growing business in industry but have a low in market penetration. Coca cola and Pepsi Co have a stable growth and high market penetration, Red Bull actually in the best position based on the map above, Red Bull growing well in profitability and have a good market penetration over the world. Coca cola and Pepsi Co is the close competitor, Hansen Natural have a far away position to fight with the other brands. Conclusion 5) What strategic moves are rivals likely to make next? Innovation of more (real) healthy Product. Open a new segment (Niche) of consumers. Expand a unique channel distribution of products.

6) What are the key factors for competitive success in the industry? Brand Image (brand capability) and pricing strategy. Product differentiation and diversification. Taste and healthy ingredients. Amount of volume in one package.

7) Does the industry offer good prospect for attractive profits?

Alternative Beverage industry is already growing industry; the competition on this industry is very tight with so many major players that compete in several segments. Every company (brands) has their own strategy to compete in this industry but the common strategies to compete in this industry are brand image, price, taste, healthy ingredients, product differentiation and diversification and amount of volume.