Profitable growth and value creation in the soft drink industry
A view from Deloitte and SAP
Table of Contents
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Introduction and objectives .......................................................................................... 1
Industry background and overview ............................................................................ 1
The business environment for the soft drink industry ............................................ 1
Business performance improvement priorities – the path to value ....................... 2
Market trends and industry challenges ...................................................................... 2
Consumers turn to wellness and healthy drink ........................................................ 2
Beverage companies and bottlers are conflicting ..................................................... 3
Retailers’ power continuously increases .................................................................... 4
Competition is becoming more and more difficult ................................................. 4
Distribution system and sales channels are very complex ......................................... 5
Statutory regulation is increasing ............................................................................... 6
Soft drink industry process improvement opportunities ....................................... 6
Improve customer relationship with direct store delivery ..................................... 6
Enhance relationship with indirect partners ............................................................ 7
Increase sales force effectiveness through incentives management ...................... 8
Manage safety requirements through tracking and traceability ............................ 8
Optimize the extended supply chain.......................................................................... 9
Reduce time to market for new products ................................................................ 10
Increase customer retention through effective trade promotions ........................ 11
Improve margins by optimizing telesales channel .................................................. 12
Solutions for the soft drink industry.......................................................................... 13
Conclusion ..................................................................................................................... 14
1. Introduction
Soft drinks are gradually overtaking hot drinks as the biggest beverage sector in the world, with consumption rising by around 5 percent a year according to a recent report from Zenith International. But while the US remains the biggest market for now, Asia is likely to be the main driver of sales growth in the future.
This paper provides insights on the market trends facing the soft drink industry. It outlines the specific challenges confronting the companies operating in this arena, such as ever-changing consumer tastes, a growing emphasis on product safety, and the increasing power of global retailers. This paper explores opportunities for process improvement and cites specific solutions that can empower soft drink companies to meet industry challenges, both today and tomorrow, and drive profitability and growth.
2. Industry background and overview
The business environment for the soft drink industry To understand the soft drink industry, one must first look at the beverage industry as a whole. In recent years, the beverage industry has been faced with new opportunities and challenges. Changing consumer demands and preferences require new ways of maintaining current customers and attracting new ones.
Amid ever-increasing competition, beverage companies must intensely court customers, offer high-quality products, efficiently distribute them, ensure safety, and keep prices low – all while staying nimble enough to exploit new