Introduction
The soft drink industry is among the most profitable industries in the market. This is based on the fact that the market demand for soft drink is very relatively high and the suppliers for the product are few. Soft drinks are complimented with a variety of other food products ranging from fast foods to other beverages. In addition, the soft drink operators have integrated their business with that of the bottlers, giving it a competitive advantage.
For instance, the soft drink companies do not produce bottles for their beverages. The bottles are produced by the bottlers, thus cutting down on the manufacturing costs of operating soft drink companies. Over the years, soft drink companies such as Coke and Pepsi have established their brands in the market.
Strengths
Their trade marks are reputable in the market and this gives them an added advantage. Coke and Pepsi have a vast experience in the market and enjoy the benefits of first entry in the market. These two companies have signed agreements with the major bottlers not to sell bottles to companies offering similar products.
These agreements have made it very difficult for new operators to penetrate into the market, thus putting Pepsi and Coke at an advantage. Research indicates that soft drink operators have been focusing on Rapid Continuous Improvements (RCI) which has enabled them improve their product significantly.
Operations of soft drink companies are integrated with the ideals of Corporate Social Responsibility (CSR), thus winning the confidence of their customers.
In terms of strengths, Coke and Pepsi are better placed than the other soft drink operators. For instance, these two companies have been leading in the provision of flavored carbonated soft drinks and have thus won the confidence of their consumers over the years.
Soft drink companies have variety the quality of their products to meet the specific health needs of their companies. The market for soft drinks has the potential of growing especially with the growth of fast foods.
Weakness
Despite the above strengths, the soft drink industry has also been faced with several weaknesses. To begin with, there is a move to liberalize the market. The interpretation of these is that many operators will have their way into the market, thus making it less profitable. Secondly, fast foods, which are a major booster ton the demand for soft drinks has been found to be unhealthy.
The diminishing demand for soft drinks will in turn lower the demand for soft drinks, thus reducing its profits. Political unrest in some parts of the world is limiting the international market for soft drinks. The economic go slow in the world causing fluctuations in the foreign exchange markets is among the factors limiting the future growth of the soft drink industry.
Opportunities and Threats
The opportunities left at the disposal of the soft drink industry includes venturing into more healthier drinks and venturing into developing countries where competition has not reached its maximum. The current world campaigns for health eating is among the threats facing the soft drink industry. This campaign is expected to lower the demand for soft drinks and consequently reduce the profitability of the industry.
With liberalization of the market, many operators are expected to venture into the market and increase the competition for customers. The entry of new operators is expected to increase the supply of soft drinks, which will already be faced with a diminishing demand. These factors are expected to reduce the profitability of this industry.