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Beverage Industry
Economic growth in countries like China, India, Brazil and Vietnam will have a positive impact on the global beverage industry. Most packaged beverages are discretionary purchases, which makes them luxury products unattainable to the very poor. Yet, they are relatively low cost, and provide a fairly high level of utility for many people. As national income rises in a country, that wealth will usually be distributed, maybe not evenly but certainly there will be economic beneficiaries. In the past couple of decades, many people in the above-mentioned countries have been lifted out of abject poverty by the developments in those economies. China, for example, claims through its official media to have lifted 700 million people out of poverty since Deng Xiaoping's economic reforms were first put into place in 1978 (Xinhua, 2015). Many of these people have transitioned from a position where they were unable to purchase small discretionary consumer items such as packaged beverages to a position where now they can. In many cases, such purchases are now routine.
For beverage companies, the implications are clear. Western markets are mature. For example, in North America the share of carbonated soft drinks in the beverage market has...
Sales were down 1% for these products last year in North America and volumes are also down (Trefis, 2014). For this industry, there is no growth to be found in their largest markets. As such, growth prospects for the industry are dependent on emerging markets. In these markets, rising levels of personal wealth create new potential consumers every day. With their saturation marketing strategy and ability to distribute even to remote areas, beverage companies are in a strong position to be among the first to capture the benefits of this growth -- people can afford the occasional soda long before they can afford their first car, for example.
The result is a long-run trend of beverage companies investing in emerging markets. They are investing in production and distribution capabilities in particular, but also in product development. Major beverage companies like PepsiCo and Coca Cola have massive portfolios, over 1000 products globally, and this is because of the high number of local products that they develop for their different markets. From the product perspective, more resources need to be deployed to these emerging markets in order to help build out market share with local flavors that can support the core…
References
Trefis (2014). PepsiCo rides on growth in Frito-Lay and developing markets in the first quarter. Forbes. Retrieved October 18, 2015 from http://www.forbes.com/sites/greatspeculations/2014/04/21/pepsico-rides-on-growth-in-frito-lay-and-developing-markets-in-the-first-quarter/
Xinhua (2015). 700 mln rural residents lifted out of poverty since 1978 in China. Xinhua News Agency. Retrieved October 18, 2015 from http://news.xinhuanet.com/english/2015-10/16/c_134721370.htm
Beverage Industry New Companies Entering the Market The beverage industry is witnessing rapid evolution with constant flow of new market entrants. These entrants attempt to avail product or marketing tactics that set them apart from the existing firms. Firstly, the beverage market is able to support a certain number of successful companies. With the crowding of the market, there is reduction of room for new entrants thereby giving the customers as many options
other intangible assets such as patents and management strength. Finally, those future earnings are discounted to arrive at a net present value. Interbrand discounts against current interest rates and also against the brand's overall risk profile to factor in brand strength. Considerations include market leadership, stability, and global reach -- or the ability to cross both geographic and cultural borders. The final result values the brand as a financial
Multinational Global Operations Company Overview McDonald Corporation is a multinational company that operates in the fast food sector in 119 countries. The company has 32,737 restaurants and operates 19,276 franchises. McDonald runs its business in the six geographical regions such as the United States, Europe and Pacific, Middle East and Africa (APMEA). In the U.S. segment, McDonald could boast of 34% from its total revenue. The company also records 40% of the
" (Guelph Food Technology Centre, 2008) This report additionally relates four "meta trends" in the packing industry which are those of: 1) Convenience; 2) Health and wellness; 3) Upscale experiences; and 4) Sustainability. (Guelph Food Technology Centre, 2008) The work entitled: "Generational Change and Marketing Indicators" states that five decades ago "when supermarkets were 'stores of the future' retailers and manufacturers pretty much knew where to find their customers. Food came from food stores;
Kraft Foods is an example of a complex and innovative company. It is the largest branded food and beverage company in North America and the second largest globally. It operates in over 150 countries worldwide with a number of the world's preferred food brands. Kraft holds more than 35 major brands with over a century of successful sales: Oscar Mayer, Maxwell House, Jell-O, and Velveeta. In 2011 the company posted
The rules and regulations are designed to level the competition and to disrupt advantages of a country based on price and favored tax status. All of the countries in the union must abide by these tax and trade regulations. In January of 2004, Denmark and Sweden were forced to remove import restrictions on alcohol purchased for personal consumption (EPHA, 2007). A recent decision by the European Court of Justice (ECJ)