Five Forces: 1. Threats of new entrances 2. Rivalry among competition 3. Threat of substitute products 4. Bargaining of power suppliers 5. Bargaining of power buyers Five foresees Analysis is necessary for any business to operate efficiently and effectively.
Threats of New Entrances: One threat faced by the company is the threat of new entrants into the market. With "new age" food such as Chinese, Thailand (Asian), Italian foods enter the market, Wholefoods has no choice but to develop its own versions of these drinks. Not doing so could have proved very damaging.
The threat of new entrants into the soft drink market was real, especially new concentrate producers. The process of producing concentrate (essentially what both Coke and Pepsi did) required very little capital investment. One operating plant could serve a market the size of the United States. This made it fairly easy for a competitor to enter the market.
Take for example, Cott a private concentrate producer based in Canada. Although nowhere near the size of Coke or Pepsi, Cott proved to be a real challenge to both of the market leaders, especially in Canada.
Although it was fairly easy to enter the market as a concentrate producer, entering as a bottler wasn't as attractive. The bottling process was very capital intensive and involved specialized machinery to mix the concentrate with sugar and carbonated water. Furthermore, the production lines were not easily interchangeable. Unlike a concentrate plant, it would require many bottling plants to serve a large geographic region. Even though it may be attractive to enter the soft drink market from a concentrate producer's perspective, if you don't have any bottlers there is no way the consumer will ever get a taste of your drink