Social, Cultural, and Demographic Forces

1
The Beverage Industry
2
AGENDA

• Introduction Bart
• Economic Forces Torrey
• Social, Cultural, and
• Demographic Forces Chad
• Technological Forces Bart
• Global Segments Edward
• Competitive Forces Leslie
• Conclusion Edward

3
Introduction

• 154 Billion Industry

4
Segments of the Industry

• Soft Drinks-53.4 bill
• Beer-53.28 bill
• Sports Drinks-1.4 bill
• Bottled Water-4 bill
• Fruit Drinks-1.4 bill

5
Worldwide Beverage Consumption
6
Growth Rates

• Fastest Growing
• Water - 9.5
• Sports Drinks - 8.3

• Others
• Soft Drinks-3.4
• Fruit Drinks-1.7
• Beer - 1.4

7
Driving Forces

• Expanding Market Power
• Desire to fill Consumer Need
• Personalization of the Market Segments
• Building Brand Recognition
• Maximization of Growth Potential

8
Economic Forces

• Growth rate
• GDP
• GDP per capita
• Inflation
• Unemployment

9
Economics Around the Globe
10
Discretionary Income in the U.S.

• Income is increasing in American households
• Consumers are spending more
• Consumers are saving less

11
Impact of Economic Factors

• Demand on beverages should remain stable
• Brand label beverages should do well
• Low interest rates and low inflation provide new
  business opportunities

12
Other Economic Factors to Consider

• Lower restrictions on trade and investment in
  foreign countries
• Foreign currencies are weak against the U.S.
  dollar
• Yen
• German Mark
• Mexican Peso
• various Asian currencies

13
Markets for the Industry

• Markets are becoming international
• Latin American, Eastern European, and
  Asia-Pacific region countries are favorable
• Japan
• China
• Brazil
• Mexico
• Lithuania
• Thailand
• United Kingdom

14
Social, Cultural, and Demographic Forces
15
Ethnic/Age Demographics

• Hispanics-33
• African-Americans- 14
• Asian-American-49
• Baby Boomers
• health
• convenience
• Younger generation

16
Target Market

• Focus on tradition
• Stress convenience

17
Marketing Strategies/ Expenditures

• Sports
• Tradition

18
Beverage Technology

• Product Labeler
• C
• H
• I C Pressure Sensor
• L A
• L N

19
Life Top Package

• Injects Probiotic Bacteria ( Reuteri )
• Bacteria lives 5 to 6 Days
• Extended Shelf Life
• Good Bacteria

20
Superior Plastics

• Keep beverages from going flat
• Increased Shelf Life
• Gas-Tight Barriers
• Liquid Crystal Polymers

21
Chill Can Bad Idea?

• Heat the Whole World with Greenhouse Effect
• Same Effect on Global Warming as Driving Car 200
  Miles
• Not EPA Approved

22
Synthetic Cork

• Guards against Cork Contamination
• Affinity Polyoleifin
• Plastomer
• Natural Cork 8 Failure

23
Research/Survey

• Taste is one of top Determining Factors
• Desire for Adult Sophisticated and
• Complex Taste
• Strategy Implemented by
• Ocean Spray

24
World Segment
25
Coverage Area
26
Important Factors

• Mergers
• Currency rates
• Health and Stability of economies
• World Cup Soccer

27
North America

• Highest per capita consumption in the world
• Largest market sales
• Growth potential relatively small

28
Latin America

• Population 481 million
• Young population
• Many individual cultures and tastes

29
Europe

• Population of 866 million
• Strong increase with new governments in Eastern
  Europe
• Potential growth very high

30
Middle and Far East

• Population of 3.6 billion
• Largest potential for growth
• Largest population concentration on Earth
• 29 billion 8 ounce servings per day

31
Africa

• Population of 594 million
• Introduction of bottled drinks into everyday
  life
• increase amount of exposure on individual
  communities

32
Competitive Forces

• Porters Five Forces Model

Competitive Forces
33
Rivalry Among Competing Firms

• Level of intensity
• Implications

34
Implications of Intensity

• New Product Introductions
• Sales Promotion Offers
• Price Wars
• Media Spending

35
Media Expenditures
36
Media Spending Fact

• Soft drink companies spent more than 530 million
  to promote their brands in 1998.

37
Potential Entry of New Competitors
38
Substitute Products

• Wine/Spirits
• Milk
• Juices
• Fruit Drinks
• Coffee/Tea
• Gourmet Drinks
• Water

39
Bargaining Power of Suppliers

• Competitive Prices
• Dependable Service
• Product Quality
• Supplier Reliability
• Turnaround Time

40
Bargaining Power of Consumers

• Buying Private Label Brands
• Product Loyalty
• Changing Demands

41
Fact

• One of every four beverages consumed in America
  is a soft drink
• Average over 56 gallons of soft drinks per year
  per individual.

42
Mergers

• The Coca-Cola Company merges with Cadbury
  Schweppes

43
Complements

• Snack Food Industry
• potato chips
• chocolate
• peanuts

44
Conclusion

• 154 Billion Dollar Industry
• Thriving World Market with High Growth Potential
• More Health Conscious World
• Intense Competition with Barriers to
• Entry

45
Thank You