Analyze and compare the business performance of two companies in the same industry
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Two companies were chosen in the Canadian Beverage industry, analyzed and compared their performances in the following context:
-Industry analysis,
-Socio-Economic analysis,
-Financial analysis.
Finally, recommended courses of action.
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Solution Summary
The solution presents a well-cited 1950 word research paper in analyzing and comparing two Canadian beverage companies.
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INTRODUCTION
The beverage industry has experienced significant change over recent decades. The "new age beverage craze" of the 1990s, coupled with the increase of socially and environmentally sensitive issues, has forced industry leaders to re-evaluate and diversify their products and processes. This report will examine two leading producers of non-alcoholic beverages, Cott Corporation and Clearly Canadian Beverage Corporation.
INDUSTRY ANALYSIS
The non-alcoholic beverage industry is currently undergoing a transformation. The sector is moving away from a franchise system towards fully integrated beverage companies. Firms are experiencing increased competition from other non-alcoholic beverages and pressure from social and environmental factions (Exhibit 1). , Cott Corporation and Clearly Canadian have responded to industry demands though purchases of capital assets and the formation of alliances. (Exhibit 2)., Exhibit 3 provides an indication of products/market focus of each company with a comparison to other major beverage producers.
Exhibit 4 illustrates a detailed analysis of the beverage industry through Porter's Five Forces. Due to high industry maturation, threats from new entrants are high along with buyer power. This is something management must be aware of when devising strategies on current products.
The National Packaging Protocol and recycling programs have mandates in the soft drink industry, while the federal, provincial and Canadian Bottle Water Association regulate the bottle water industry. , Regulations, directives, and awareness have forced beverage manufactures into a position of becoming environmentally and socially focused if continued growth in the industries is desired.
Currently the soft drink industry occupies 4.8% of the food and beverage shipments, while the bottle water industry makes up less than 1%. , Cott holds 60% of this market, which translates to approximately 6% of the total industry by volume or 1.8 billion in sales (Exhibit 5).
ECONOMIC OUTLOOK & OPPORTUNITIES
Opportunities exist for the Canadian beverage industry to expand globally and several companies have already developed export relations (Exhibit 6). The sales of bottled water has escalated in the last decade with exports increasing from $4.6 million in 1988 to $256.6 million in 1999, with the United States being the leading export market.
Canada has an advantage in exporting because of the positive consumer perception of the country, a favourable exchange rate, and the harmonization of standards for bottled water. However, certain Canadian regulations within the industry limit trade between Canada and the U.S.
FINANCIAL ANALYSIS
The ratio analysis for each company can be seen in Exhibits 7 and 8. For comparison purposes, the ratios of two relevant industries were calculated (Beverage Industry and Miscellaneous Foods and Beverage Preparation Industry). The ratios and financial statements were acquired from Dun and Bradstreet and can be found in Exhibits 9 and 10.
Exhibit 11 provides a detailed explanation and interpretation of the ratios for Clearly Canadian and Cott. All relevant ratios in comparison to the industry ...
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