Written Case Assignment

Laura Haines

Written Case Assignment #1: Case 3

Major economic features of the industry – (Market size and growth rate, scope of competitive rivalry, demand-supply conditions, market segmentation, pace of technological change)

Major economic features of the industry: The accelerated growth of the alternative beverage industry, along with the steep prices and huge profit margins, led to multiple companies vying for a part of the market. Two of those companies were the already dominating Coca-Cola and PepsiCo. Among these two were other large corporations including Red bull, Rock star Inc., Hansen Natural Corporation, Living Essentials, and Energy Brand all establishing their place in the beverage industry. All were aiming to capture the growing market trying to reduce their carbonated soft drink intake. Business was booming and profits were rising for enterprises taking advantage of the alternative beverage industry. However, the U.S. economic downturn eventually made an impact and resulted in a slow decline. Between 2008 and 2009, alternative beverage sales declined by 12.3%, and flavored and vitamin-enhanced water sales declined by 12.5%. On the up side, 2009 energy drinks sales exceeded 2008 by 0.2%. With these negative results in 2009, came hope in the future projections. The global beverage industry is expected to increase from $1.58 trillion in 2009 to almost $1.78 trillion in 2014.

The industry’s competitive (five forces): Rivalry in the alternative beverage industry is moderate because of the huge profits up for grabs to anyone able to dominate this market. However, the market is so big that more than one company can easily succeed in this industry. Suppliers to the industry provide the manufacturers with nutritive and non-nutritive ingredients as well as supplements like taurine, for the alternative beverages. They also are able to provide secondary packaging materials to all of the companies. Supplier power is very weak in this situation...