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Florida International University **We aren't endorsed by this school
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ECO 4100
Subject
Economics
Date
Nov 11, 2023
Pages
3
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Collapse Subdiscussion Charles Escalante Charles Escalante Nov 3, 2023Nov 3 at 10:42pm Manage Discussion Entry Why has the soft drink concentrate business historically been so profitable? I believe the soft drink concentrate business has been profitable historically because of various reasons. In my opinion the following reasons are the main reasons why: Brand Power: Companies like Coca-Cola and PepsiCo have built strong and iconic brands over the years. These brands enjoy a high level of customer loyalty, which allows them to charge premium prices for their products. Low Production Costs: Concentrate production is a cost-effective process because it involves creating a concentrated syrup that can be mixed with carbonated water. Global Reach: These companies have a global presence and can reach a vast consumer base. This global reach allows them to tap into various markets and diversify their revenue streams. Using the "Five Forces" model as a framework, compare the concentrate business to the bottling business. Threat of New Entrants: Concentrate Business: High entry barriers due to the need for established brands and strong distribution networks. Bottling Business: Moderate entry barriers as it requires significant investment in bottling facilities and distribution networks. Bargaining Power of Suppliers: Concentrate Business: Low as they have strong bargaining power over suppliers of ingredients. Bottling Business: Moderate as they rely on concentrate companies for the core product. Bargaining Power of Buyers: Concentrate Business: Moderate to high due to the brand loyalty of consumers. Bottling Business: Low as they have limited influence over product pricing and innovation. Threat of Substitutes: Concentrate Business: Low as there are few direct substitutes for their branded products.
Bottling Business: Moderate as there are other beverage options in the market. Competitive Rivalry: Concentrate Business: High rivalry, with a few major players like Coca-Cola and PepsiCo dominating the market. Bottling Business: Moderate rivalry, with several bottlers, but they are often tied to the concentrate companies' brands. Who has been winning the Cola wars and why? "Cola Wars" refers to a long-standing rivalry between PepsiCo and Coke. Both Coke and PepsiCo have been competing fiercely for decades, with each taking turns as the market leader. Their strategies have included marketing, advertising, diversification into non-carbonated beverages, and expanding into international markets. Coke's success may be attributed to various reasons but Coke has long had the upper hand in the cola wars, outselling Pepsi in sales. However, they have always held the top two spots. Also, Coke has always advertised and marketed as a wholesome family centered company. Coke also has a very loyal consumer base. In my opinion, because of these reasons, Coke has been winning the Cola wars. Which firm is in the best position to capitalize on current trends in the industry? In terms of capitalizing on current industry trends, it depends on the specific trends at the time you're referring to. If health and wellness trends are prominent, companies that offer healthier or low-calorie beverage options might be in a good position. If sustainability is a focus, those with environmentally friendly packaging and practices could be the leaders. Companies that can adapt to changing consumer preferences and innovate in response to evolving trends are likely to thrive. With that said, I believe Coke is in the best position to capitalize on the current trends in the industry. This is because of the diversity of products it produces and offers its consumers. The company is coming up with healthier alternatives which is a huge trend for consumers. They will be able to attract more consumers looking for a healthier option. o Stan Richetti Stan Richetti
Nov 4, 2023Nov 4 at 4:43pm Manage Discussion Entry Hey Charles, Coke has been labeled the winner of the Cola Wars but I like how you mentioned Pespi was close behind. In my opinion, a winner does not matter at this point because both companies are now well established. Coke and Pepsi have been first and second respectively for years and it's their intense competition that provides their profits. I believe it was brilliant that Pepsi had the hindsight to buy a couple of fast-food chains where now they could sell only Pepsi related soft drinks. However, there's always a winner after a war and in terms of market leader that goes to Coke.
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