Alternative Beverages Industry Case Study Example | Topics and Well Written Essays - 1250 words

Alternative Beverages Industry - Case Study Example People who associate with strenuous activities and sports are inclined to purchasing sports drinks, which are said to help them reenergize and enhance their capability to participate in their respective activities. The ‘mature’ or adult consumers have the vitamin-enhanced beverages, which are said to boost their health as they help them supply the body with vitamins. Energy drinks’ and readymade teas’ target the teenagers, as they seem to assist improve their concentration. In the alternative beverages industry, Pepsi faces stiff competition from its rival company, Coca Cola, and other players with a smaller market share. These include Monster Beverage and Red Bull, which are companies that developed unique brands and advertised them well to earn a fair share of the market (Esterl, 2013). Alternative Beverage Market in the U.S The economic recession back in 2008 dealt a heavy blow to the alternative beverages market. Though there were many opportunities for key players in the alternative beverages segment, demand for the highly priced commodities decreased due to the poor economy. In between 2008 and 2009, sports drinks’ sales declined by thirteen percent and the sale of vitamin-enhanced drinks declined by twelve percent. In 2009, sixty percent sales of alternative beverages were made from sports drinks, followed by sales of energy drinks at twenty-three percent and finally vitamin-enriched drinks, which accounted for eighteen percent. 2008 and 2009 were slow years for the alternative beverages industry in the United States as they did not experience growth but market forecast experts predicted a six percent growth by 2015 (Harder, 2013). Organizations lobbying for health diets attributed conditions such as obesity and diseases like diabetes to the overconsumption of carbonated soft drinks. This has influenced many Americans to consume healthy food thus shying from carbonated soft drinks and moving to alternative beverages. Thi s trend saw companies such as Pepsi create several brands of alternative beverages and this helped cushion the company from dropping sales of carbonated soft drinks (Datamonitor, 2007). Global Alternative Beverage Market In 2005, the alternative beverage market experienced growth that resulted to a value increase of twenty seven billion dollars. In 2009, the industry’s value increased to reach a global value of forty billion dollars and the experts projected a fifteen billion dollar increase by 2014. Consumer preferences had changed due to emphasis on healthy diets thus reducing the market share of carbonated soft drinks, which held forty-eight percent of the market. Data shows that consumers preferred alternative beverages to carbonated soft drinks, which translated to a two percent decline for the latter in 2009. From 2005 to 2009, the global market value of alternative beverages had grown by nine percent and forecasts targeted a nine percent growth by 2014. The United Stat es held a forty-two percent market-share of the alternative beverages, followed by Asia with a thirty one percent and finally Europe with twenty three percent (Harder, 2013). Five Forces Model Firms in other industries offering substitute products There are many companies offering alternative beverages besides PepsiCo. These are Coca Cola, Monster beverages, Red Bull and other smaller players. With all these competitors and their substitute alternative bever