First, the market for energy drinks, sports drinks and vitamin-enhanced beverages is being more fragmented and growing much faster than the traditional market for energy drinks. This is due to both the healthy nature of these drinks, the caffeinated ingredients, and nearly immediate energy they give consumers,. The underlying drivers of change that are going to individually and collectively make this industry even more attractive over the long-term is the proliferation of individualized brands and the ability of drink producers to rapidly increase their speed to market. These two factors will lead to short, more profitable product lifecycles and a much greater level of innovation over the long-term.
4. What does your strategic group map of the energy drink, sports drink, and vitamin-enhanced beverage industry look like? Which strategic groups do you think are in the best positions? The worst positions?
Those brands that have the ability to continually support a very high perception fo value for the price and also have earned a reputation for having a very healthy, good-tasting drink are in the ideal position in this market. The brands that lack these attributes and have a low perception of value, like AMP for example, are going to increasingly have trouble breaking into new markets and holding onto market share. Full Throttle, which has a good reputation of value for the price, is not as good-tasting as Red Bull and Monster which further hurts the positioning of the product. The strategic group map is shown...
What key factors determine the success of alternative beverage producers?
The most critical key factor is building an sustaining a highly differentiated and valuable brand. As Buyer Power dominates this industry, creating and sustaining a highly defensible brand is essential to any company looking to stay profitable and grow in this industry. Additional key factors include creating a highly agile, effective supply chain that can anticipate and react to changes in ingredient forecasts and demands, in addition to creating a highly effective framework for planning and executing new products. Of the many factors necessary for success in this market, foremost among the secondary set is rapid time-to-market of new product ideas, and an excellent foundation of new product and introduction processes. All of these factors taken together will equip a company to compete in this very rapidly changing, mercurial, highly competitive industry that is the fastest growing of all beverage markets.
Reference
Porter, Michael E., Millar, Victor E..(1985). How Information Gives You Competitive Advantage. Harvard Business Review, July 1, 149.
Figure 1:
Porters' Five Forces Model
High
Red Bull
Perception of Value for the Price
Full Throttle
Rockstar
Monster
AMP
Healthy, Good Tasting High Energy Ingredients
High
Low
Low
