Soft drink industry refers to the market that sells bottled, canned, and fountain beverages. These include traditional soda drinks like Coca-Cola and Pepsi, as well as less traditional ones like lemonade and fruit juices.
There are few firms that dominate the soft drink industry which is characterized as having a high level of competition. Only a small number of companies produce bottled water, for example.
Unlike other industries, such as the mobile phone industry where there is only one dominant company (Apple), in the soft drink industry, there are several dominant companies. This creates an environment of competition that influences the buying habits of consumers.
Consumers have specific brands they prefer and will continue to buy those over the competitors. For example, someone who likes Coke will probably not start drinking Pepsi just because it is cheaper. These factors influence the competitiveness of the soft drink industry.
How the big three soft drink companies dominate the industry
Overall, only a few firms dominate the soft drink industry. According to a
study by Beverage-Forum, the top three soda brands Coca-Cola, PepsiCo, and Sprite
dominate approximately 75% of the market share. This is characterized as monopoly
because there is only a few companies that produce and sell soft drinks.
Besides these top three companies, no other company has more than 5% market share. This is
demonstrated by the fact that all other brands have less sales combined than Coca-Cola does on its own.
The reason why there are only a few companies that produce and sell soft drinks is because it is a very competitive industry. Only the best firms survive because of all the competition.
The biggest player in the soft drink industry
Coca-Cola is one of the biggest soft drink companies in the world. It is estimated that it holds a 65% market share in the beverage industry.
Other big players include PepsiCo, Nestle, and Dr. Pepper Snapple Group. These firms all have large shares of the market, making it difficult for smaller companies to break into the industry.
The main reason for this is that it requires a large amount of money to advertise and promote your product. Companies must invest in advertisements, marketing materials, and promotions to get any sort of recognition.
These investments can be hard to make when you are a small company. Coupled with the fact that consumers tend to stick with brands they know and trust, getting any sort of foothold in the industry is difficult.
The history of Coca-Cola
The soft drink industry is characterized by a few dominant firms that dominate the market. The same can be said for the history of Coca-Cola.
The original Coca-Cola was created by pharmacist John Pemberton in 1885. It was a mixed drink that included cocaine and other substances. Over time, the other substances were removed and cane sugar was added.
Over a century later, in 2005, The Coca-Cola Company acquired Fuze Beverage Group, makers of Fuze Tea and Vitaminwater. In 2007, they acquired China Huiyuan Juice Group for $2.5 billion USD. Both of these companies were large juice manufacturers.
In 2008, they acquired Columbia Water & Ice Corporation which made them the largest bottled water manufacturer in South America. That same year they also acquired Cott Corporation making them a leading manufacturer of bottled water as well (“The World’s Top 10 Beverage Companies”).
Ingredients in Coca-Cola
Now let’s look at the soft drink industry as a whole. Coca-Cola, Pepsi, and other popular soft drinks are owned and produced by a limited number of firms.
What sets these drinks apart is the unique ingredients they use to produce their sodas. For example, only Coca-Cola uses kola nuts and coca leaves in its formula.
Only Pepsi uses pepsin enzyme in its production process, and 7-Up does not have a vanilla flavor as an ingredient. All of these differences set these soft drinks apart from one another.
Having different ingredients sets the production costs for each beverage type apart as well. Because of this, suppliers can be competitive on price while still maintaining their quality product.
How it tastes so good
The soft drink industry is characterized by the dominance of a few firms that produce so many flavors and varieties. Only a few firms dominate the market, which is characterized as how it tastes so good.
Consumers are very picky about the flavors of soft drinks they like, and therefore, companies have to invest a lot of money in research and development to find the perfect mix.
People are also very picky about what kind of soda they like: whether it is Coke or Pepsi, lemon-lime or berry, or if they like them fizzy or flat.
There are many ways to distinguish your soft drink from your competitors’, but only some work well. Companies must test their products thoroughly to ensure they are getting the best return on their investment.
Overall, the soft drink industry is dominated by a few firms that produce lots of different flavors, making it hard for new companies to break in.
Who are the players in the soft drink industry?
There are a few major players in the soft drink industry. These include Coca-Cola, PepsiCo, and Dr. Pepper Snapple Group. These companies dominate the market due to their marketing strategies and investments in advertising.
Coca-Cola is one of the world’s most famous brands. It is an American beverage company that manufactures, markets, and sells nonalcoholic beverages. It owns or licenses over 500 brands, including Diet Coke, Fanta, and Odwalla juice drinks.
PepsiCo is an American multinational beverage and snack company headquartered in New York City. The company owns brands such as Pepsi, Gatorade, Tropicana, Naked Juice, and Quaker Oats.
Dr. Pepper Snapple Group is an American beverage corporation that manufactures and markets nonalcoholic beverages such as juices; soft drinks such as soda water; teas such as iced tea; purees; enriched waters; and bottled waters.
Why is this market so tough?
In the soft drink industry, only a few firms dominate. Coca-Cola and PepsiCo are the two biggest players in the world. In fact, these two companies own more than half of the market share.
Unfortunately for new entries, this isn’t going to change any time soon. The soft drink industry is very consolidated, which is characterized as a situation where only a few firms dominate an industry and barriers to entry are high.
Consolidation occurs for many reasons, but the most common ones are quality assurance, cost reduction, and brand recognition.
All three of these contribute to creating a dominant firm, and all of them are achieved through good marketing and advertising. Coca-Cola and PepsiCo both excel in marketing their products, which contributes heavily to their success.
What are some popular drinks?
Some of the most popular soft drinks are Coca-Cola, Pepsi, Dr. Pepper, Sprite, and Mountain Dew. Although there are many brands of soft drinks, only a few firms dominate the industry.
The two largest firms are Coca-Cola and PepsiCo. These two corporations account for around 70% of the market share. The rest of the industry is highly competitive with many small companies trying to make a splash.
In order to stand out in this competitive industry, companies have to sell more than just soda. They have to sell an experience or emotion. Some do this through their branding or marketing, others offer products other than sodas, or they may have special flavors or ingredients.
You have probably heard of some of these non-soda drinks: lemonade, iced tea, fruit juices, milk products such as lattes or milkshots®, and vitamin waters.