Threats of New EntrantsĮxisting companies already acquired massive expenditures and possess economies of scale as they have a setup of direct supply. It all depends on the factors such as price and how efficiently they deliver a product. Any customer can easily enter in the industry as supplying beverages is not a tough task at all. The beverage industry possess a portion of their own supply companies. As it is easy to switch among the suppliers so the bargaining power of the suppliers are not very effective in this case. These usually includes bottling manufactures and packaging suppliers. Suppliers are not facing a competitive pressure. Every company has their own trade secret. In the race of creating the best product in the beverage industry, companies are trying to acquire best products from the suppliers. The provision of these incentives are done through contests including win tickets and many more. So in order to retain the customers, the companies provide enticements to the customers. As it is not a basic necessity so having high prices in beverages will cause loss of customers. When it comes to the price of beverages, the customers change brands depending upon how expensive it is. The buyers does not requires the additional information as a list containing all the nutrients are present at the back of bottles. The only difference that exists among the suppliers is the geographical locations and how much the travelling cost will be added to the delivery. Due to these factors, swapping among the suppliers are quite easy and the rates they put are slightly different from each other. Almost 56 gallon of soda is consumed every year (Puravankara, 2007). So looking at the scenario, there is enough room to start a business in beverage industry but on the other side to gain market share in it is very difficult task to accomplish. Talking about the beverage industry, there exists three companies in US which contribute to 89% sale of the beverages. The porter’s five forces analysis on the beverage industry is given below. Moreover it explains the strategy that is adopted by the companies to increase the productivity by taking in to consideration the five powers. The porter’s five forces analysis is established by Michael Porter with the purpose of understanding and evaluating the factors that influence the success of the industry in terms of five forces. Porter five forces Analysis of Beverage Industry But Coca-Cola comes on the top of the list in the industry as it has 7% of increase market share when compared with Pepsi-Co and other firms in Beverage industry (Esther Njambi, 2016). If we analyze the figures, we come to know that the earning through sales by both of them are tremendously close.
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Moreover in the same manner Pepsi Cola also had a huge sale of $1.9 billion and possess 30% in the market share. It can be understood by numbers as Coca-Cola had a total sale of $2.1 billion and possess 37% of the market share in 2012 (Nhuta, 2012). They are among the strongest competitors and successful brands in the industry. When we talk about the beverage industry, the most well-known brands that comes in one’s mind is Coca-Cola and Pepsi Co. The industry contains many companies that are well established in this field and posing a great competition to the other companies that are working under the same umbrella. Because of this fact, an enormous amount of the customers are targeted by the firms and companies. Approximately 48% of the people drink more than two glasses of beverages per day. The Beverage industry is a high profitable industry providing with $60 billion in United States.