Industry Analysis: Soft Drinks

Industry Analysis Soft DrinksSubmitted by-Prof. K G SahadevanRishi SinghTuhin Kanti MondalSunita Seetharam contentsDisclaimerContentsTable of general anatomysExecutive SummaryIntroduction grocery storeplace AnalysisMarket characteristics and major playersMarket characteristics and major playersMarket analysisConsumer BehaviourPorters Five ForcesConclusionReferenceTable of FiguresFigure 1..2Figure 2..2Figure 3..4Figure 4..4Figure 5..5Figure 6..5Figure 7..6Figure 8..6Figure 9..7Figure 10.....8Figure 11..10Figure 12..10Executive SummaryThe balmy confounds labor includes carbonated as well as the non-carbonated take ups. The attention leaders argon Coca-Cola and Pepsi. This industry is unique in the sense that the product is bought primarily for the firebrand image of the company rather that the utility of the product. The purpose of a carbonated crapulence can well be served by a glass of urine or lemonade. The companies strive to capture mart share through extensive advertisi ng and branding. The carbonated drinks were perceived as a health concern so the companies introduced non carbonated drinks like juices.The firms in this industry reckon tight control over the suppliers and compete on price to get customers. The industry is very belligerent and makes it very difficult for a bittie player to exist. The bigger firms stimulate an advantage collectible to economies of scale.IntroductionSoft drink industry has been a flourishing harvest- clipping for a long period. In recent years, the sales of basic squeezable drinks have been depreciated highly due to increase of health awareness, change in consumer behaviour towards other varieties of easy drinks etc. But all over the changes have been directed net positive increment in sales due affinity of consumers towards juice and bottled drinking and mineral irrigate. The big players of original soft drinks like setback, Pepsico etc. are acquiring or diversifying their products toward juice and mine ral water supply industry. They are doing product extension as well (ex. Diet Pepsi, Coke Zero etc.) to remain competitive in the market.The definition of classic soft drink can be expressed as followsSometimes soft drink may contain alcohol but the within the limit of 0.5%.The carbonated water is made in two ways. It is either using soda siphon or by home carbonation system. The latter one is made by place dry ice on water. In modern industry, carbondioxide is used instead of dry ice. The carbondioxide is public pressd and mixed with water with high pressure.The type of soft drinks decide the summation of colour and customised flavours which distinggishes one from another.The soft drinks can be categories in the following wayFigure 3 Classification of Soft DrinksMarket AnalysisThe market volume of soft drink industry in India in 2013 was 11,755 liters, exhibit a growth of 170% compared to 4369 liters in cc8. As far as predicted growth rate is concerned, market is showing around 19% growth annually. For product wise analysis, it shows that 20% annual growth rate for next year pentad in bottled water while the carbonated drink shows. The same figure for juice is 21%. Interestingly, the annual growth rate of carbonated drink is nevertheless 10%. This increment will come from mostly due to penetration in rural market while there is cut intoable decrement in sales in urban area.But if we put the percentage growth, then juice shows more than 100% growth.Market characteristics and major playersThe soft drink industry market can be analysed using three economic factors. These are market size, growth rate and overall profitability. As compared to hard drink, soft drink contains a share of around 48% in no-alcoholic industry. But the as discussed earlier, the market of carbonated soft drink is shrinking due to the awareness of sight for their health.Figure 6 Change in consumer behaviour toward non-alcoholic drinksThe above graph is an example that how the consu mers mindset has been changed from taste to health. It is to observe that sport drinks and bottled water have seen around 40% of growth whereas packet juice along with carbonated soft drink have faced a sharp decline sluice upto 20%. For example, if the sales of the largest leader is considered then a tentative area-wise sales trend is as followsFigure 7 year-wise change in sales of Coke in different areasFrom the chart it is evident the increment in sales in year 2010 and 2011 were a homo-wide event. But in a growing world like Europe and North America, the sales of Coke is decreasing for last two years. In other side, Pacific and Latin America are showing positive % change of sales over previous year. This discrepancy between growing world and grown world is mostly due to difference in level of education, crave of foreign money by growing world, socio-political difference. Evidently, the soft drink companies are depending mostly on third world market for increment of sales of th eir original products.Market characteristics and major playersThe driver for most downstream operations in the soft drink industry is the syrup production. Thus, the CSD industry is by and large dependent on the syrup producer. The product life cycle for soft drinks moves as followsFigure 8 Soft Drinks Industry Supply ChainMarket analysisThe top three brands in the soft drink industry had a 35 percent share of the market in 2011, According to the la interrogatory report from IBIS World. This industry is fiercely competitive. Small companies must conduct soft drink market research competitor analysis to know their current positions in the marketplace. These types of data help small organizations know which strategies are best for their products. Soft drink producers or distributors are not just competing with other soft drink manufacturers. They also must consider competitors in the functional soft drink sector, which includes sports drinks and health-oriented drinks.Figure 9 Soft D rinks industry market shareDespite organism the worlds two weakest acting regions in 2008, Western Europe and North America continue to hold the maximum revenue for soft drinks industry in the world. Together, they account for over half the total sales of the industry. This shows one of the major strategic problems faced by soft drinks companies globally while flash and third tier markets are showing a steeper growth curve in terms of revenue, their total market share remains small relative to developed markets.Figure 10 Soft Drinks by regionCritically, the industry needs to continue investments in high-yield regions of the developed nations and at the same time strengthen their foothold in the emerging market economies. This poses a huge challenge at the time of adverse macroeconomic conditions.Consumer BehaviourGlobal uptake of soft drinks is said to be rising by around 7% a year, much faster than the growth rate of many other industries. Consumer behaviour for soft drinks is largely volatile and there is very little brand loyalty to be found among consumers.But despite the choices given, a section of consumers black market to stick to one particular choice of CSD. The reason for this has less to do with taste, and more to do with subtle and careful marketing on the part of soft drink makers. The choice of a soda is as much about who you are as what you urgency to drink. Soda makers calibrate every aspect of their marketing- from their packaging, to their slogans, to the music that plays over their commercials- to create an identity around their products.Porters Five ForcesFigure 11 Performance of Coke and PepsiUSD $ in millionsThe above chart shows the quarterly performance of the two biggest companies in this industry. It is evident from this chart that the revenue of Coca-Cola is much lesser than Pepsi, however the former has higher net income. The scale of the revenue generated by these companies gives a glimpse of the huge market. However a new entrant would find it very difficult to enter the market due to the high market share captured by these two companies.The large difference between the revenues and the net income shows the magnitude of the greets involved.Figure 12 Financial AnalysisThe increasing debt to blondness ratio indicates that the biggest players are changing their funding profiles. This would be very difficult for a new firm to replicate.ConclusionFrom the above analysis, we found that the there was a huge change in the trend of sales of product in Soft Drink industry. We have seen that there were huge sales of traditional soft drinks earlier. But eventually the sales decreased due to rise in consciousness of plurality about health and increment in number of people suffering from different diseases and obesity which was partially caused by those drink. Big manufacturing companies are doing product extension in energy drink, juice etc or doing product diversification like Chips, snacks etc.The industry has strong entry barriers and the suppliers do not hold much control. The buyers however are very price sensitive and are brand loyal till other factors like taste, content etc. remain constant.ReferencesSeth, P. (02.10.2008.). slideshare. In Soft Drink Industry. Retrieved Feb 10, 2015, from http//www.slideshare.net/sethaphat/soft-drink-industry-presentation.Anonymous. (n.d.). sbtdc. In How to conduct an Industry Analysis. Retrieved Feb 10, 2015, from http//www.sbtdc.org/pdf/industry_analysis.pdf.Anonymous. (n.d.). changeabsolutions. In A Guide To Soft Drink Industry. Retrieved Feb 10, 2015, from http//changelabsolutions.org/sites/default/files/ChangeLab-Beverage_Industry_Report-FINAL_%28CLS-20120530%29_201109.pdf.Karimi, S. (n.d.). ehow. In How To Write An Industry Analysis. Retrieved Feb 10, 2015, from http//www.ehow.com/how_4811458_write-industry-analysis.html.Abraham, S. (n.d.). writing.uscb. In How To Do An Industry And Competitive Analysis. Retrieved Feb 10, 2015, from http//w ww.writing.ucsb.edu/faculty/holms/109EC__industry.pdf.1 foliateMaximal versus Submaximal Oxygen Consumption ResultsMaximal versus Submaximal Oxygen Consumption ResultsBree Dela RosaResults Table 1. Estimated VO2 max versus the measured VO2 max of a 28-year-old male college student performing a YMCA Cycle Test.WattsHeart Rate (HR)Estimated VO2 MaxMeasured VO2 Max story 15082Stage 2100103Stage 3125115Stage 4Stage 5Stage 6Stage 7Stage8Stage 915020025030035040013114215616717318035.7 ml/kg/min52.1 ml/kg/min*HR = Heart Rate VO2 = Oxygen Consumption young-begetting(prenominal) participants predicted VO2 max is 35.7 ml/kg/min and the observed value is 52.1 ml/kg/min. The predicted value was statistically not monumental from the observed value, 16 ml/kg/min.QuestionsWas the estimated VO2max from the submaximal coiffure significantly (more than 5 ml/kg/min) different from the measured at the end of the max test? What are some possible reasons for the difference?The estimated VO2 max f rom the submaximal test was 35.7 ml/kg/min, and the measured VO2 max was 52.1 ml/kg/min on the gold standard, and it is statistically not significant from the estimated VO2 value of 16.4 ml/kg/min. One possible reason can mean that the predicted nucleus rate during the test, 180 beats per minute, was not near the real max heart rate of 192 beats per minute.Are there any assumptions that you are familiar of that you entail that they have been or have not been met during the submaximal exercise test?One assumption that was not met during the submaximal is that the male college students steady state heart rate was not measured during the test at each exercise work rate after three-minute increments. Also, the difference between the actual heart rate of 192 beats per minute and 180 beats per minute is not minimal. Lastly, I was not aware if the participant took any medication, consumed high caffeine such as coffee or soda, was ill, and possibly stressed within the last workweek whic h may have altered his heart rate.Some assumptions that were met during the submaximal test were that there was a linear relationship between heart rate and work rate. The robotic efficiency is the same for everyone because the participant was biking normally with his arms.What are the reasons that you might choose a submaximal exercise test over a maximal exercise test and vice versa? Provide at least three advantages and disadvantages.A submaximal and maximal test can be performed on either a treadmill or a cycle ergometer. A treadmill test is used to the exam for either running or walking, which requires no experience for participants. Be sure to consider your limitations as well. For example, if you recently suffered a heart attack and are obese, this may not be an option for you, and you must get cleared by your main(a) care fork overr. A cycle ergometer is one of the more common tests that individuals use that requires no specialized training at all, and the activity is not encumbrance bearing. However, you need someone to administer the test for you.Submaximal tests will help indicate the level of oxygen consumption, the measure of aerobic fitness, and the record of your heart rate rejoinder during bouts of an exercise. As intensity increases, your heart rate will increase as well. According to ACE (American Council of Exercise), one single session of exercise can provide an excellent representation to indicate your current state of fitness without the use of expensive equipment or technology. Also, the submaximal test can track your progress over time through a consistent workout program. This inexpensive test is prescribed most commonly by clinicians to help diagnose cardiovascular disease (CAD). If you want to calculate, your maximal heart rate, use the formula 220 Age. Some disadvantages are that the small measurement can allow discrepancies in the results.A maximal test would be used to measure the direct oxygen consumption and maximum heart rate and the amount of carbon dioxide you expend during the test. Also, your heart rate and blood pressure are being monitored by a technician or by an exercise physiologist, and sometimes a physician to supervise. One disadvantage to this test that it is the high cost of each test, time-consuming, and is used correctly to measure aerobic power in athletes.Which one do you think is more applicable to a clinical existence and why?I would recommend using a submaximal test if an individual or client of mine wants to focus on endurance training. I think the submaximal test would be more applicable to people who suffer from cardiovascular disease and those who are not exposed to exercise that often. It would be more suspend for the individual to know where he or she stands on the fitness spectrum before going straight into a vigorous activity. I can use a treadmill test to increase the elevation and or a bike test to increase resistance. The speed, on the other hand, remains constant t hroughout the while of the test and heart rate is continually monitored after every incremental increase. The submaximal test stops when your heart rate reaches 85 percent of your max heart rate and or you feel like you cannot continue anymore.