Soft Drinks

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The Soft Drink Industry in 1996: A Case Study for External Environment Analysis

Raman Muralidharan

Indiana University-South Bend

he average U.S. consumer drinks more soft drinks per capita (2.3 eight ounce servings a day) than any other beverage, including milk. Table 1 shows the per capita consumption of various beverages in the U.S. for 1991-1995. In terms of 1995 retail sales, soft drinks in the U.S. are a $52 billion dollar industry (Standard & Poor's Corp., 96:11). The U.S. market growth for soft drinks, however, has slowed to single digits since the end of 1980s (Sawinski, 95:550). Fifty-four percent of the world's soft drink volume is sold outside North America, and in 1995, the per capita consumption of soft drinks in continental markets outside North America ranged from a low of 2.02 gallons in Africa to a high of 13.86 gallons in South America.

INDUSTRY PRODUCTS AND VALUE CHAIN

The industry, once synonymous with the Cola, has now grown into one with a wide range of products.

Soft drinks on shelves in a Woolworths supermarket...

English: Macro photograph of coca-cola bubbles. De...

Coca-Cola

Additional flavors such as orange, cherry, lime, lemon, pepper, and ginger ales have appeared in the market, and caffeine-free and diet versions of almost all of the industry's products have been introduced. In 1996, Cola brands occupied the top two marketshare positions in the U.S., while non-cola brands such as Mountain Dew, Sprite, and 7UP were also among the top ten best-selling soft drinks. Also, in 1996, sales volume for the top two Colas, Coca-Cola Classic and Pepsi-Cola, grew 3.2% and 3% respectively, while sales volume for Mountain Dew and Sprite grew 5.7% and 17.6% respectively. Table 2 shows the list of 10 best selling soft drinks in the U.S. market.

Table 1 Per Capital Beverage Consumption in the U.S. 1991-1995

(Gallons Per Person)

Beverage19911992199319941995

Soft drinks47.148.048.849.651.2

Coffee26.626.628.429.529.9

Milk25.525.225.125.024.8

Beer23.222.922.822.722.4

Bottled water8.89.09.510.311.0...