Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages Essay
The strength of these companies had been growing strong but had a slight decline in recent years. SWOT for the IndustryStrength:Product Expansion – many new products have been developedDistribution Channels – Can use convenience stores, grocery stores Able to deliver with carbonated soft drinksWeakness:Price is high compared to soft drinksUnhealthy ingredientsCaffeine is not regulated – like in soft drink industryOpportunity:Consumer demandSupplier Channels – ingredients, cans, labelsProduct Innovation – provides differentiationBrand Loyalty – taste, image, energy boostingBrand building skills needed2 oz. energy shotsThreat:EconomyScientific evidence that some products are not healthyEffect people with heart arrhythmias and insomniaMix with alcoholRelaxed Drink Niche – abuse with prescription cough syrupAs we look at this SWOT analysis of the alternative beverage industry we notice that there are some opportunities that they have created and are able to use in the future. Consumers’ choices are changing from the standard soft drink to alternative beverages. The key is to be sustainable by building up these products. The main opportunity to help with sustainability is to build brand loyalty. Try building up the knowledge and uses of your brands will help you gain the skills needed to continue building the brand.
Porter’s five-forces model reveals that the overall alternative beverage industry attractiveness is high. Some beverage companies, such as PepsiCo and Coca-Cola, have mastered the art of brand building in the alternative beverage market and have been rewarded with rapid growth rates. The rising population of health conscious consumers is increasingly leaning towards alternative beverages that are believed to offer greater health benefits.
The strongest competitive force, or most important to strategy formulation, is the threat of entry of new competitors. Competitive pressure from rival sellers is high in the alternative beverage industry. The number of brands competing in sports drinks, energy drinks, and vitamin-enhanced beverage segments of the alternative beverage industry continue to grow each year. Both large and small vendors are launching new products and fighting for minimal retail shelf space.More and more consumers are moving away from traditional soft drinks to healthier alternative drinks. Demand is expected to grow worldwide as consumer purchasing power increases. Another strong competitive force is buyer bargaining power. Convenience stores and grocery stores have substantial leverage in negotiating pricing and slotting fees with alternative beverage producers due to the large quantity of their purchase.
Newer brands are very vulnerable to buyer power because of limited space on store shelves. Top brands like Red Bull are almost always guaranteed space. This competitive force does not affect Coca-Cola or PepsiCo as much due to the variety of beverages the stores want to offer to the customer. As a result of this certain appeal, the two companies’ alternative beverage brands can almost always be found shelf space in grocery/convenience stores.
Distributors, like restaurants, have less ability to negotiate for deep pricing discounts because of quantity limitations.