Essay on Cola Wars

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1. The concentrate producers, Coke and Pepsi, purchase and blend raw material ingredients such as caramel coloring, phosphoric or citric acid, natural flavors and caffeine, then package the mixture and ship it to bottlers. Bottlers major purchases and inputs in the process are packaging (cans and bottles), and sweeteners (carbonated water, sugar and high fructose corn syrup). They add their contribution to the concentrate, package up the final concoction, and deliver it to the final customers, mainly supermarkets, fountain outlets, vending machines, mass merchandisers, convenience stores and gas stations. Because bottling plants are capital-intensive and include major variable costs, such as labor and overhead, concentrate producers began to franchise the bottling business.

2. The bargaining power of the supplier in the concentrate business is low. The raw materials that are needed for the concentrate are basic commodities. Therefore the producers of these materials have no pricing power. Because the concentrate industry has shifted to a highly intense, profitable business, especially for Coke and Pepsi, the threat of new entrants is low. Brand loyalty and expenditures such as advertising make it nearly impossible for a new entrant to survive in the marketplace. Overall the bargaining power of the buyers for in the concentrate industry is weak. Though there is threat of substitutes out there (coffee, tea, juice, etc.), concentrate firms (Coke, Pepsi, Cadbury) diversified their businesses to offer some of the similar substitutes to combat the threat. Along with diversifying, Coke and Pepsi’s brand equity makes it difficult for any substitute, not under their brand

Cola Wars

Courtney Bohen Esheet Modi MGMT E-5000 Section 2 Spring 2015 Cola Wars Over time, the US carbonated soft drink industry has developed from a fragmented industry of many small players into one dominated by two key players: Pepsi and Coca-Cola. By 2009, these two giants generated 72% of the sales of the entire industry. (Yoffie & Kim, 2011, p. 2) However, the recent decline in US per capita CSD consumption (Yoffie & Kim, 2011, p. 1), now poses a threat to Pepsi and Coca-Cola’s most important…

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Essay on Cola Wars

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Cola Wars Essay

market. “The most intense battles in the so-called cola wars were fought over the $74 billion carbonated soft drink (CSD) industry in the United States.” Although still in the lead, recent sales of CSD have declined. For years, the rivalry between Cola and Pepsi has provided a competitive advantage for both parties, motivating each to do whatever is necessary to stay on top. John Pemberton, a pharmacist in Atlanta, Georgia formulated Coca-Cola in 1886. In 1891, Asa Candler gained knowledge of the…

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Cola Wars Essay

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Cola Wars paper

Coke and Pepsi – Cola Wars A1) Porter’s five forces analysis of why this industry has been profitable: Threat of new entry – Extremely low There are many different barriers to new entry in the CSD industry. Some of them mentioned in the case are: Bottlers – Pepsi and Coke have exclusive franchisee agreements with a lot of bottlers since they are a crucial step in the chain. The exclusivity of these restricts the bottlers from working with anyone else so newcomers would be at an extreme disadvantage…

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Cola Wars Case Essays

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The Cola Wars Continue Essay

information regarding the other company’s intended course of action. As a result of the cola wars, bottlers were pressured to increase spending on marketing and promotion, new packaging and product, and allow for widespread retail discounting. There are different “battlefields” on which Coke and Pepsi compete, such as marketing, bottling decisions, formula, and alternative products. On the marketing field, Coca-Cola claimed to be “American’s Preferred Taste” in 1955. Pepsi launched the “Pepsi Challenge”…

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Essay on Cola Wars

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Cola Wars Essay

Samantha Napier Business Strategy Dr. Randall January 22, 2015 Using the five forces do an analysis of the industry structure of the concentrate producers. Suppliers: In this industry, the raw materials needed to produce concentrate diet and regular are your basic supplies such as sugar, artificial sweetener, color, water, flavor, and high-fructose corn syrup. These are basic supplies you can find anywhere; therefore producers have no power over the pricing. Coke and Pepsi also have the freedom…

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Cola Wars Case Essay

Cola Wars Continue: Coke and Pepsi in the 21st Century Concentrate Producers and Bottlers were two of the four major participants that were involved in the production and distribution of Carbonated Soft Drinks (CSDs) in the United States. The Concentrate Producers (CPs) were responsible for blending raw material ingredients, packaging the blend in plastic canisters, and shipping it to the Bottler. Using Porter’s Five Forces analysis for the CPs industry, we determined that…

Words 1179 - Pages 5