Pepsico: Alternative Beverage Market Case Essay Example

attention. However, when it comes to supplements like taurine, suppliers have more control over pricing and sales agreements.

Compared to its competitors, PepsiCo faces less pressure from buyer bargaining power. While other companies must pay high shelving fees and lower their profit margins to meet convenience stores' demands, Pepsi benefits from distribution agreements across the U.S., which keep their distribution costs low and expand the reach of their new products.

A critical factor for success in the specialty beverage market is distribution. PepsiCo already possesses a significant advantage over its competitors with an established extensive distribution network throughout the United States that accounts for a large portion of the alternative beverage market. This enables Pepsi to ensure that its specialty beverages are available wherever its other Pepsi products are sold.

Product innovation plays a crucial role in achieving success in this market. It is vital for companies in this industry to differentiate their products from regular carbonated beverages; otherwise they will be competing with cheaper soft drinks and negatively impacting sales. Additionally, a company's image holds substantial importance in this industry.

Various factors, such as packaging, advertisements, celebrity and athlete endorsements, and event sponsorships, influence a consumer's perception of your product. Hence, it is crucial for us to shape the desired image among our consumers. Branding plays a significant role in achieving success in this industry. Pepsi has an advantage over its lesser-known competitors in this area and has successfully developed numerous successful brands.

In this industry, there are strategic groups of companies including PepsiCo and Coca-Cola.

Both companies have similar product ranges and distribution strategies, resulting in direct competition due to their comparable capabilities. Furthermore, there is another strategic group

composed of Five Hour Energy, Rockstar, Red Bull, and Monster Energy that concentrates exclusively on catering to the niche market of energy drinks. This group abstains from competing in other beverage categories such as sodas, vitamin waters, teas, or juices. After conducting extensive research, I have come to the following conclusion regarding the long-term attractiveness of this industry.

PepsiCo has greatly profited from its established distribution network, making the industry highly lucrative. Analysts anticipate that the specialty beverage market in the United States will grow to $23.6 billion in 2014, compared to $19 billion in 2009. This projection suggests that despite an initial decline due to economic factors, there will be a positive trend in the upcoming years as consumers regain their purchasing power. Given the growing number of health-conscious Americans, it is clear that Pepsi cannot rely solely on carbonated drink sales indefinitely.

In order to capitalize on the emerging specialty health markets, Pepsi needs to adapt and act swiftly. Additionally, it should strategically eliminate its distribution agreement with Monster and other competitors in the energy drink market to gain a competitive edge through its superior distribution network. Given the current trends, the specialty beverage market appears to hold great potential for the future of bottled beverages. Therefore, Pepsi should closely monitor market movements going forward to maintain a competitive advantage over its rivals.