Johnson & Wales University
Providence, Rhode Island
Feinstein Graduate School
Competition in Energy Drinks, sports Drinks, and Vitamin-Enhanced Beverages Case Study
A Research Project Submitted in Partial Fulfillment
Of the Requirements for the MBA Degree
March 18th, 2012
Competition in Energy Drinks, sports Drinks, and Vitamin-Enhanced Beverages Case Study
There are new coming items in beverage industry during the mid-2000s, which are energy drinks, sports drinks and Vitamin-Enhanced beverages. These items focus on different flavors, specified consumers, efficient distribution systems, and products innovation in the beverage market. They compete with water, soft drinks, juices, tea, and other common drinks, which are in low prices, good and long history of brand reputation, easy to accept the taste. From 2005 until now, alternative beverages grow fast and take more and more market share in the whole world beverage market. The main alternative beverages companies are Coca Cola, PepsiCo, Red Bull and Hansen Natural Corporation. Energy drinks, spots drinks, and vitamin-enhanced beverages use many strategies to find a good position in the beverage industry in the Global market, which also give us some ideas about how to operate beverage companies. Firstly, alternative beverages take the action via wider product selection, better product quality, good delivery system to gain sales and market share. For example, PepsiCo develops 12 flavors of Amp Energy drinks and 28 varieties of SoBe vitamin-enhanced drinks (Gamble, 2010, p.C-83). Again, PepsiCo, Coca-Cola through their own soft drinks distribution channels to deliver energy drinks at the same time, which reduce much time and cost. Secondly, energy drinks take big actions to enter emerging market opportunities, like most Asia countries and South America. For example, alternative beverages take 31.5% market share in Asia-Pacific in 2009 (Gamble, 2010, p....
COMPETITION IN ENERGYDRINKS, SPORT DRINKS,
AND VITAMIN-ENHANCED BEVERAGES
(John E. Gamble, University of South Alabama)
MANAJEMEN STRATEJIK DAN KEPEMIMPINAN
Chitarani Kartikadewi – 1406524682
Desi Susanti – 1406524695
Karina Ayu Ditriani – 1406524713
Rahcoyoning Widianingrum – 1406590570
FEBRUARY 2015INTRODUCTIONEnergydrinks incorporate calorie, caffeine in addition to other ingredients that presumably enhance the energy capacities of humans by adding extracts from herbs, nutrients like vitamin B and taurine. Energydrinks first emerged on the scene during the 1960s as a response to an increase in the demand of the consumers for an energy rich supplementary drink mostly in the European and Asian markets. The very first energydrink was launched in Japan named Lipovitan D, which received huge reception from the general public. The energydrink market in the United States was truly brought into life with the advent of Red Bull after successfully doing business in Austria for 10 years. Alternative beverages especially energydrinks have established themselves firmly in the United States market and have become the favorite beverage for...
8 Related ResearchWikis
Energydrinks are non-alcoholic beverages which are intended to provide a quick burst of high energy to the consumer. These may be prepared with a composition of methylxanthines, caffeine, natural flavors, some herbal components or specific vitamins including Vitamins B. They may also contain taurine, guarana, maltodextrin, ginseng, carnitine, inositol, glucuronolactone, creatine and ginkgobiloba. Most products include artificial sugar. The primary active component is generally caffeine.
Japan and Thailand have a longer history of energydrinks and the use of caffeine has been a key ingredient in those countries. Energydrinks acting as an alternative to coffee were first introduced in Europe. The market received a significant boost when Red Bull entered the US market in 1997. After this successful market introduction, various beverage companies including Coca-Cola and Pepsi entered the market. Austria-based Red Bull remains the market leader though with an approximate market share of 65%. According to Beverage Marketing, the growth rate of this industry had been doubling every since the late 90s. The current U.S. domestic market may be approximately $4 billion, expected to grow to an estimated US $10 billion by 2010.
Recent years have witnessed the emergence of several new energy...
What is competition like in the alternative beverage industry? Which of the five competitive forces is strongest?
Innovation is vital for the beverage industry because they have to use different strategies to build brand differentiation among all the traditional drinks. The new drinks provides vitamins, energy boosting, etc, so they have to focus also on advertising, branding, nutritional properties and packaging.
The strongest force is the action of offering a variety of beverages, meaning that customers are the strongest forces.
What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants?
Companies like Pepsi and Coca Cola seem to have a greater effect on the new entrants because they already have a huge number of loyal customers. If they introduce a new product in contradiction to the new entrants, customers more willingly adopt their products more than the new company launches.
How is the market for energydrinks, sport drinks and vitamin-enhanced beverages changing?
The people or customers nowadays are more conscious about their health and how much they spend than in the past. The market behaves knowing what are the negative and positive effects provided by this kind of drinks, and the alternative beverage segment.
What are the...
...Competition in EnergyDrinksCase
Within the beverage industry companies like Pepsi and Coca Cola were using alternative beverages as a way to counter the effects of the decline of consumption of carbonated beverages. This in turn will help them sustain volume. These two large companies were working hard to expand their alternative market line by introducing sports drinks, energydrinks, and vitamindrinks. One of the largest issues at hand is the pressure to stop producing these harmful drinks, people felt that they had a negative impact on your body and believed their strategies promoted reckless behavior. Even though this was happening they had to keep pushing through to be very successful. Sales began to increase as well as market share which introduced several new brands to the alternative beverage industry.
In the alternative beverage industry competition is fierce. Some of the major factors that play a role are product innovation, differentiation; create brand loyalty based on taste, the drinks image, advertising, and sponsorships. Many of these companies like Hansen and Red bull sponsored events to promote their brand. The strongest of the 5 competitive forces within the industry is that of substitution. Pepsi and Coca Cola made their products available to customers with ease pushing other companies out of business. The weakest of the 5...
The use of energydrinks in the United States has increased more than the controversial consumption of regular sodas. According to Coca-Cola executives, profits from energy products since 2005 through 2008 will total $540 million, compared with $210 million for regular soft drinks, $130 million for bottled water and $290 million for sports drinks (Warner). So what is it about this drinks that make them more popular than our pure and vital water? The answer is very simple; our hectic lifestyles. Today’s society is filled with exhaustion and high stress levels; many people rely on energydrinks to give them that second wind, which helps them stay awake through a test, and even revive them for a party. According to Simmons Research, thirty-one percent of teenagers in the United States say they drinkenergydrinks on a regular basis. People use energydrinks to boost their energy so they can be able to perform better, but because energydrinks contain ingredients that harm the human body they should be banned all over the world.
There are some factors that increase the popularity of energydrinks. For example the easy to grab structure in which they are packed. The small container...
...said“what goes up must come down” .This rings true when talking about energydrinks. These products promise to provide heightened awareness, more energy, more endurance some even reference to the consumer you will have wings. So when consuming these products what are you really drinking? Do they provide the energy boost they promise? Are they harmful? Should the FDA do more investigating into the safety of these so-calledenergydrinks? These are questions I had going into this as a consumer of energydrinks myself, I was interested in how harmful they are too the consumer. In this paper I hope to provide a better insight to a product that is popular and in demand; but little is known about.
What Are You Drinking?
Energydrinks contain most of the same major ingredients caffeine, taurine, glucronolactone, niacin and panax ginseng just to list a few. Let’s start with caffeine it is a central nervous system stimulant that has the effect of temporarily warding off drowsiness and restoring alertness. As of studies done by (Lovett, Richard) 90% of adults consume caffeine daily in different ways. Most of the energy from these drinks comes from the sugar and caffeine not the unnecessary extras (Suzanne Farrell MS, RD). Taurine another main ingredient is actually an amino acid that is found in...
...Energydrinks have been increasing in popularity, especially among teens and children. Due to several articles in the media about negative health effects experienced by people who consumed too many energydrinks, some parents and school personnel have become concerned about their growing popularity specifically among teens and children.
However, if you are aware of how much caffeine you are consuming, people of all ages can safely consume energydrinks in moderation. Caffeine is the primary ingredient in most energydrinks, and is often blamed for causing the negative health effects some people have experienced after consuming too many energydrinks. However, the majority of the healthy population can safely enjoy moderate amounts of caffeine without experiencing undesirable symptoms.
Staying aware of how much caffeine you are consuming each day from energydrinks, as well as other sources such as coffee, tea, soda, dietary supplements, and medications, is important to stay within moderate, safe intake levels. Learning how to determine the caffeine content of each item, as well as the number of servings per container, will help you to know how to moderate your consumption. You can also help children and teens learn how to moderate their consumption so that they can safely enjoy an energy...
...Soft Drink Industry CaseStudy
Table of Contents
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
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
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...