Transcript Social, Cultural, and Demographic Forces

AGENDA
Introduction
Economic Forces
Social, Cultural, and
Demographic Forces
Technological Forces
Global Segments
Competitive Forces
Conclusion
Bart
Torrey
Chad
Bart
Edward
Leslie
Edward
Introduction
+ $154 Billion Industry
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
Worldwide Beverage
Consumption
Coffe & Tea
33%
Water
46%
Alcohol
6%
Other
3%
Soft Drinks
4%
Juice
8%
Growth Rates:
 Fastest
Growing
– Water - 9.5%
– Sports Drinks - 8.3%
 Others
– Soft Drinks-3.4%
– Fruit Drinks-1.7%
– Beer - 1.4%
Driving Forces
Expanding Market Power
 Desire to fill Consumer Need
 Personalization of the Market
Segments
 Building Brand Recognition
 Maximization of Growth
Potential

Economic Forces
Growth rate
 GDP
 GDP per capita
 Inflation
 Unemployment

Economics Around
the Globe
GDP
Growth
GDP per
capita
Inflation
$8.511
trillion
3.9%
$4.42
trillion
7.8%
$1.8
trillion
2.7%
$31,500 $23,100 $8,300
$3,600
$22,100
1.6%
Unem4.5%
ployment
U.S.
$2.9
trillion
-2.6%
$815
billion
4.8%
.9%
18.6%
-.8%
.9%
4.4%
2.6%
10%
10.6%
Japan
Mexico
China
Germany
Discretionary Income
in the U.S.
Income is increasing in American
households
 Consumers are spending more
 Consumers are saving less

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

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

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

Social, Cultural,
and Demographic
Forces
Ethnic/Age
Demographics





Hispanics-33%
African-Americans14%
Asian-American-49%
Baby Boomers
– health
– convenience
Younger generation
Target Market
 Focus
on
tradition
 Stress
convenience
Marketing Strategies/
Expenditures
DP/SU
21%
Triarc
4%
Coca-Cola
44%
Pepsi
31%
•Sports
•Tradition
Beverage Technology
Product Labeler
C
H
I C
L A
L N
Pressure Sensor
Life Top Package
Injects Probiotic Bacteria ( Reuteri )
Bacteria lives 5 to 6 Days
Extended Shelf Life
“Good Bacteria”
Superior Plastics
Keep beverages from going flat
Increased Shelf Life
Gas-Tight Barriers
Liquid Crystal Polymers
“Chill Can”
Bad Idea?
Heat the Whole World with Greenhouse
Effect
Same Effect on Global Warming as
Driving Car 200 Miles
Not EPA Approved
Synthetic Cork
Guards against Cork Contamination
Affinity Polyoleifin
Plastomer
Natural Cork 8% Failure
Research/Survey
Taste is one of top Determining Factors
Desire for “Adult Sophisticated and
Complex Taste”
Strategy Implemented by
Ocean Spray
World Segment
Coverage Area
Important Factors

Mergers

Currency rates

Health and Stability
of economies

World Cup Soccer
North America



Highest per capita
consumption in the
world
Largest market sales
Growth potential
relatively small
Latin America

Population 481
million

Young population

Many individual
cultures and tastes
Europe



Population of 866
million
Strong increase with
new governments in
Eastern Europe
Potential growth
very high
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
Africa



Population of 594
million
Introduction of
bottled drinks into
everyday life
increase amount of
exposure on
individual
communities
Competitive
Forces
Porter’s Five Forces Model
Rivalry Among
Competing Firms
 Level
of intensity
 Implications
Implications of
Intensity
 New
Product Introductions
 Sales
Promotion Offers
 Price
Wars
 Media
Spending
Media Expenditures
60.00%
50.00%
40.00%
Coca-cola
Pepsi
Dr.Pepper
RC
30.00%
20.00%
10.00%
0.00%
1994 1995 1996 1997 1998
Media Spending Fact
 Soft
drink companies spent more
than $530 million to promote their
brands in 1998.
Potential Entry of
New Competitors
Barriers
to
Entry
Need for High Brand Experience
Large
Equity
Curves
Financial for Existing
Resources
Brands
Substitute Products
Wine/Spirits
 Milk
 Juices
 Fruit Drinks
 Coffee/Tea
 Gourmet Drinks
 Water

Bargaining Power
of Suppliers
 Competitive
Prices
 Dependable Service
 Product Quality
 Supplier Reliability
 Turnaround Time
Bargaining Power of
Consumers

Buying Private
Label Brands

Product Loyalty

Changing
Demands
Fact
 One
of every four beverages
consumed in America is a soft drink
 Average
over 56 gallons of soft
drinks per year per individual.
Mergers
 The
Coca-Cola Company merges
with Cadbury Schweppes
Complements

Snack Food Industry
– potato chips
– chocolate
– peanuts
Conclusion
$154 Billion Dollar Industry
 Thriving World Market with High Growth
Potential
 More “Health Conscious” World
 Intense Competition with Barriers to
Entry

Thank You