Cola Wars Continue

The main environmental trends currently affecting the beverage industry include the decrease in the consumption of CSDs. According to Exhibit 1, U.S. CSD consumption started decreasing from 2000 with 53 gallons per capita to 46 gallons per capita in 2009. With that, the CSD consumption as a share of total beverage consumption decreased from 29% to 25.2%. Market share of the cola segment dropped drastically. In addition, the U.S. liquid consumption trends changed, with milk, juices, tea, powdered drinks, wine, and tap water/hybrids/all others gaining or maintaining a certain level of popularity among the population. Furthermore, growing non-CSD category demanded different bottling, pricing, and brand strategies. Coke and Pepsi were dominant in the U.S. CSD market’s sales volume. CSDs accounted for “4% of total store sales in the U.S., and were also a big traffic draw for supermarkets” (Yoffie & Kim, 2011, p. 4). Expanding array of products and packages created intense competition for shelf space. In addition, the industry was experiencing fierce competition for fountain “pouring rights” in fast food restaurant chains. There was an increase in popularity of single-serve 20-oz PET bottles in convenience stores. Also, there was a trend of bottler consolidation, which made smaller concentrate producers increasingly dependent on the large bottling networks for distribution of their products. The shift in consumption patterns evolved around the growing linkage between CSDs and health issues such as obesity and nutrition. This resulted in taxes on sodas. Obesity and health concerns become important risk factors to the CSD segment of the beverage industry. Firms focused on attracting consumers with innovation and marketing, such as free-style soda machines, and greater emphasis on promoting brands. There was also more spending on sponsorships and global marketing. Other trends included focus on brand loyalty, search for healthier alternatives for sweeteners, expansion of...