¶ … strategically relevant components of the global and U.S. beverage industry macro-environment? How do the economic characteristics of the alternative beverage segment of the industry differ from that of other beverage categories?
One of the most important components is whether or not the U.S. can afford to continue spending money on its beverages. To elaborate, whilst energy drinks were a fad in the early 2000s, the nation being now in a recession, finds them too costly and may likely opt for cheaper beverages. Secondly, the global and U.S. beverage industry depend not only on market spending capacity but also on trends. The trend for energy drinks, sports drinks, and vitamin-enhanced beverages may be shifting, particularly since critics contend that energy drinks, energy shots, and relaxation drinks present health risks for consumers and that some strategies of producers promoted reckless behavior. Possibly the most powerfully relevant component thoguh is the recession.
The alterative beverage segment differs from others in that, being based on additives; it depends on market trends for its popularity. Water, coffee, tea, and wine, for instance, are traditional substances and based on pure liquids (the liquor industry, at least in essence, and certainly pure juices). The alternative beverage segment, however, is created on additives and acceptance of these depends on trend and health...
What is competition like in the alternative beverage industry? Which of the five competitive forces is strongest? Which is weakest?
What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants?
Competition is strong and keen, with Pepsi, Coca-cola, and Red Bull Gmbh leading the way. Key competitors include Red Bull Gmbh, Rockstar, Hansen Natural Corp, Living essentials, and Energy Brands; as many as 138 new beverages drink introductions were launched in 2009. It seems easy for competitive forces to enter the market, since although Coca-Coal and Pepsi have a certain edge, there is room for differentiation and it does not take too much expense to produce a similar product. Suppliers may have strong bargaining power being that there are so many different firms and that these firms are growing. Also too, customers put the firms under pressure being that they have a diversity of firms to choose from. Of all of these elements, I would put the threat of new competition as the greatest threat. The penetration of many new entrants into the market may drive down prices eventually decreasing profitability for all firms in the industry. Unless they are blocked, the abnormal profit rate may fluctuate to zero. The least intimidating factor may be threat of substitute products or services…
