Case analysis of the Soft Drink Industry

Essay by Steve PotusA, February 1997

download word file, 18 pages 3.2 3 reviews

Third highest grade in the class Needs work on the critical success factors for the industry

Table of Contents

Introduction 3

Description 3

Segments 3

Caveats 4

Socio-Economic 4

Relevant Governmental or Environmental Factors, etc. 4

Economic Indicators Relevant for this Industry 4

Threat of New Entrants 5

Economies of Scale 5

Capital Requirements 6

Proprietary Product Differences 7

Absolute Cost Advantage 8

Learning Curve 8

Access to Inputs 8

Proprietary Low Cost Production 8

Brand Identity 9

Access to Distribution 9

Expected Retaliation 9

Conclusion 10

Suppliers 10

Supplier concentration 10

Presence of Substitute Inputs 11

Differentiation of Inputs 12

Importance of Volume to Supplier 13

Impact of Input on Cost or Differentiation 13

Threat of Backward or Forward Integration 13

Access to Capital 14

Access to Labor 14

Summary of Suppliers 14

Buyers 15

Buyer Concentration versus Industry Concentration 15

Buyer Volume 15

Buyer Switching Cost 15

Buyer Information 16

Threat of Backward Integration 16

Pull Through 16

Brand Identity of Buyers 17

Price Sensitivity 17

Impact on Quality and Performance 17

Substitute Products 18

Relative price/performance relationship of Substitutes 18

Buyer Propensity to Substitute 18

Rivalry 18

Industry Growth Rate 20

Fixed Costs 21

Product Differentiation 21

Brand Identity 21

Informational Complexity 22

Corporate Stakes 22

Conclusion 23

Critical Success Factors 23

Prognosis 24

Bibliography 26

Appendix 27

Key Industry Ratios 27



The soft drink industry is concentrated with the three major players, Coca-Cola Co.,

PepsiCo Inc., and Cadbury Schweppes Plc., making up 90 percent of the $52 billion dollar a year domestic soft drink market (Santa, 1996). The soft drink market is a relatively mature market with annual growth of 4-5% causing intense rivalry among brands for market share and growth (Crouch, Steve). This paper will explore Porter's Five Forces to determine whether...