Dr. Pepper/Seven Up, Inc. The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten brands sold. Colas are the dominant flavor in the U.S carbonated soft drink industry; however, popularity for flavored soft drinks has grown in recent years. The changing demographics of the U.S population have been an important factor in the growing popularity of these flavored soft drinks. The possible impact of this factor will be addressed later in the case. ٱ Squirt Brand Squirt is a caffeine-free, low-sodium carbonated soft drink brand with a distinctive blend of grapefruit juices that gives it a tangy, fresh citrus taste. Squirt is the best selling carbonated grapefruit soft drink brand in the United States. The origin of Squirt can be traced back to 1938 when a man named Herb Bishop began experimenting with Citrus Club. Bishop created a new carbonated soft drink that required less fruit and sugar to produce compared to other sodas that were being made at the time. The new drink "seemed to squirt onto the tongue," so Bishop named the drink Squirt. Squirts sales grew during WWII because its low sugar content helped bottlers restricted by sugar rationing rules. By the mid 70's, Squirt was introduced internationally in Central and South America. In 1977 a company named Brooks Products purchased Squirt from Bishop. In 1983, Diet Squirt became the first soft drink in the United States to be sweetened with Nutra Sweet. Squirt joined A&W Brands in 1986, which was later purchased by Cadbury Schweppes PLC in 1993. Responsibility for manufacturing, marketing, and distribution of Squirt was assigned to Dr Pepper/Seven Up, Inc, which had been acquired by Cadbury Schweppes PLC in 1995. It still remains under the Dr Pepper/Seven Up, Inc.
From the review of U.S Census on the size of the market segment to which the marketing campaign of Dr. Thunder would target, it has been found that the marketing campaign would target around 3 million Americans. Over the past 10 years, it has been noticed that the target market segment has grown for about 7.7% (United States Census Bureau, 2013). Moreover, the target segment would expand by another 8.9% in the coming ten years. Upon understanding the dynamics of soft drink industry in USA, it is found that the following three factors have an impact on the consumer behavior of this industry:
It is clear from this research that the average rates of soda consumption from Americans are decreasing as time goes on, especially with the new generation of citizens rising up. Based off a national poll taken in 2014 by Gallup Inc., communications professional Justin McCarthy asserts, “Americans have become increasingly wary of drinking soda since Gallup began asking them about their dietary choices in 2002. At that time, only 41% said they actively tried to avoid soda, a percentage that has now jumped to 63%” (Gallup Inc.). It is evident that with the releasement of new knowledge regarding soda, each new generation will be more aware of the issues and as time goes on, the trend of decreasing rates in soda consumption will continue throughout the course of the nation’s
Soft drinks are popular worldwide taking up 25% of the beverage market. Nearly two hundred countries enjoy these drinks. These drinks consist of carbonated water, flavoring, and lots of sugar.
Both concentrate producers (CP) and bottlers are profitable. These two parts of the industry are extremely interdependent, sharing costs in procurement, production, marketing and distribution. Many of their functions overlap; for instance, CPs do some bottling, and bottlers conduct many promotional activities. The industry is already vertically integrated to some extent. They also deal with similar suppliers and buyers. Entry into the industry would involve developing operations in either or both disciplines. Beverage substitutes would threaten both CPs and their associated bottlers. Because of operational overlap and similarities in their market environment, we can include both CPs and bottlers in our definition of the soft drink industry. In 1993, CPs earned 29% pretax profits on their sales, while bottlers earned 9% profits on their sales, for a total industry profitability of 14% (Exhibit 1). This industry as a whole generates positive economic profits.
Coke continuously out-stands Pepsi, even though they share a very similar taste and colour, however Coke should not be the drink that receives all the love and attention for what it offers. Despite their similar soda colour, the drinks actually contain some different ingredients, which produce a different taste, and affect the body differently. Furthermore, the way the companies markets their drinks makes a huge contribution to how successful their products will become. The major element for success however stems from their impact on society and how the companies utilize their social power to evolve. The two major soda companies are constantly head to head with one another, yet it is what they do that sets them apart.
It was seen that, group of respondents (age group of 31-40 yrs mostly) said that they are becoming health conscious day by day and they prefer Minute Maid more now, whereas earlier they liked ThumsUp, which means that this group of customers prefer Non-Aerated health drinks. Since, Coca-Cola does not have many varieties in this category, so they should now target the health conscious audience and venture into “Healthy non-aerated beverages category”.
Cola Wars came into existence since 1980’s though marketing campaigns of soft drinks rivals such as coca cola. Different kinds of challenges were being posed by companies like Pepsico and coca cola for marketing their products by innovating products through line extensions and entirely positioning different products for customers at worldwide basis. The modifications were being done in pricing strategy, bottling of products like soft drinks and brand positioning.
The beverage industry is highly competitive and presents many alternative products to satisfy a need from within. The principal areas of competition are in pricing, packaging, product innovation, the development of new products and flavours as well as promotional and marketing strategies. Companies can be grouped into two categories: global operations such as PepsiCo, Coca-Cola Company, Monster Beverage Corp. and Red Bull and regional operations such as Ro...
Dr Pepper Company is the oldest major manufacturer of soft drink concentrates and syrups in the United States. Dr Pepper is the company's principal brand. Cadbury Schweppes PLC acquired Dr Pepper/Seven-Up Cos. Inc. in March 1995. The new business will be called the Dr Pepper Company, which will focus on the Dr Pepper brand by handling all beverage system sales, which account for 75 percent of its business, in addition to related independent bottlers. The second operating group will be Cadbury Beverages/Seven Up Co., which will service independent bottlers not carrying Dr Pepper. Dr Pepper/Seven Up soft drink brands now hold about 16 percent of the U.S. market. Dr Pepper and Seven-Up are among the top 10 carbonated soft drinks, with Dr Pepper being the top non-cola soft drink. Other soft drink include: A&W Root Beer, Canada Dry, Schweppes, Welch's, Sunkist, Squirt, Crush and Hires (Levy 1999). According to the soft drink industry report, there is large sales growth recently in non-colas. Dr Pepper was number three in the industry. The reason is because non-colas have above-average caffeine level, and will be aimed at the 12-to 21-year-old market. Obviously, management sees this product as an opportunity to more fully participate in the growing popularity of non-colas.
Generally speaking, the soft drink off-trade value worldwide is gradually rising ever year, from $231,401 in 2001 to $323,031 in 2006 (Global Market Information Database 2007). The biggest market for soft drinks is still North America and Western Europe, which together consumed 43% of gross soft drink volume worldwide in 2006 (Global Market Information Database ‘07). However, the general developing trend for the North America and Western European market is now shrinking in terms of the global market while the Asian market is expanding very rapidly in recent years to now account for 22% of the global market (Global Market Information Database ‘07). The market volumes of Africa, the Middle East, and Australia are comparatively smaller. However, the Middle East, Africa, Eastern Europe, and Asia-pacific markets are “emerging markets” and attract many companies, ranging from multinationals to niche specialists, who continue to see volume growth well in excess of the market average (Robinson ‘04).
Obesity is one of the most concerned health issues in the U.S. Statistics show that two thirds of adults and one third of children are either overweight or obese in this county. Although there are a variety of reasons leading to obesity, soft drink consumption is viewed as the leading cause among a number of various factors. Although the industry has been working actively to provide more low- and no-calorie options and increase consumer awareness of soft drink nutrition facts, simply offering low-calorie drinks is not enough. The company has to improve communication to ease consumers’ health concerns. In order to revitalize sales, Coca-Cola Company faces a public relations challenge very similar to one cigarette companies have faced for years. They have to find the balance between supporting anti-obesity efforts and keep selling its most popular products such as Coke and Diet Coke that many claim to contri...
Challenges in the last 10 years have been a direct result of the decline in sugary beverages. Thus, the sales of carbonated drinks has declined for the last 10 years and the industry has struggled as consumers began to make healthier choices (DeCarlo, 2016). Moreover, consumers reduced their soda consumption and leaned more towards juices, waters, and other options such as protein drinks (DeCarlo, 2016).
The always tasty and always refreshing soft drinks everyone loves to drink, whether it is Pepsi, Coca-Cola, Red Bull, etc., they are always welcomed. Soft drinks have to be distributed to multiple target markets in different parts of the world. From Pakistan, to Russia, to India, to the U.S., soft drinks are desired. Soft drinks are very popular in all developed areas of the world. From local beverages to international brands, to sport drinks and energy drinks, soft drinks are there to stay. Soft drinks are a multi billion dollar industry and the global demand for it, is only forecasted to grow (1). How can these products be delivered around the world to so many different people, catch the attention and satisfy the target market? Let’s see.
Pepsi Cola beverage business was founded at turn of the century by Caleb Bradham a New Bern N.C druggist who formulated Pepsi Cola. Pepsi Cola Company now produces and markets nearly 200 refreshment beverages to retail, restaurants and food service customers in more then 190 countries and territories around the world and generates revenue of over 18 billion dollars. Although Pepsi holdings over the years have become diverse in such fields as the snack industry and restaurants industry this portfolio will discuss its core business and its highly successful business of beverages. The soft drink industry customer base is probably the widest and deepest base in a world that is flooded with some many categories. According to Beverage Digest the customer base for soft drinks is a whopping 95% of regular users in the United States. This represents a large field of potential customers for Pepsi Cola. Yet although Pepsi could just use the majority fallacy to market there product, Pepsi prefers to segment itself as the beverage choice of the “ New Generation”, Generation Next, or just as the “Pepsi Generation”. These terms adopted in Pepsi’s advertising campaigns are referring to the markets that marketers refer to as Generation X. The Generation X consumer is profiled to be between the ages of 18 to 29. They have high expectations in life and are very mobile and active. They adopt a lifestyle of living for today and not worrying about long term goals. Those Pepsi’s main emphasis on this segment they also have a focus on the 12 to 18 year old market. Pepsi believes if they can get this market to adopt their product then they could establish a loyal customer for life. Pepsi Cola is situated in an industry that is dominated by two competitors, Coca-Cola and of course themselves. Although Pepsi and Coke basically go after all consumers who purchase soft drink beverages Coca-Cola targets its products at the head of household. This is evident in many of the ad campaigns such as “Always Coca - Cola” which refers to the traditional beverage heritige of its product. They also reinforce this in the name “Coca-Cola Classic” which is inferring to the older consumer. This name reflects an image of value, reliabilty, and old time values. Pepsi Cola throughout its 100 years of existence has developed many strengths. One of the strengths that has developed Pepsi into such a large corporation is a strong franchise system.
Experimentation with the new market for carbonated beverages on the decline coke has done experiments in new flavors and healthier alternatives to try to stay competitive. As well as investing in “Keurig Green Mountain is a K-Cup maker but has a new Keurig Cold that can deliver Coca-Cola through the new system.” (Cooper, 2014)