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Business Analysis: PepsiCo and alternative beverage brands

Prepare an analysis of the global and U.S. alternative beverages industry. A 5-6 page analysis should list strategic issues confronting PepsiCo and its alternative beverage brands and make recommendations to address such issues. The analysis MUST include: (1) A Michael Porter Five Forces model, (2) macro-environmental characteristics, (3) key success factors, (4) drivers of change and industry dynamics, and (5) a strategic group map.

This case is about the alternative beverage industry & the role of Pepsi in that industry and should not focus on the cola wars Pepsi vs. Coke. Please limit graphs/charts usage.

"Competition In Energy Drinks Sports Drinks And Vitamin Enhanced Beverages" By John e Gamble

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In analyzing PepsiCo's role in the global and U.S. alternative beverage industry, an analysis, as stated by Porter (2008) should focus on the foundations of profitability while understanding the applicable time horizons. In other words, determine any cycles where profitability is less than average, and quantifying the forces to shape its strategic plans. Additionally, the analysis must be concerned with the income statements as well as the balance sheets of competitors, which affects the investment strength of the organization. Moreover, identification of underlying constraints is essential in analyzing where the organization currently is in the operative industry.

Alternative beverages in the form of energy drinks have been around since 1901, and were first introduced to the United States by Pepsi in 1995, aptly called Josta. Vitamin-enhanced beverages were introduced to the United States by Coca Cola under the brand of Glacéau, which also had energy drinks, in 1998. By the mid-2000, these alternative beverages were becoming more popular, with smaller companies introducing new beverages.

SoBe was purchased in late 2000 by PepsiCo and represented its first line of Synergy drinks aimed at providing healthy beverage. But because Synergy drinks, on average, contained a considerable amount of sugar, they were deemed not a healthy alternative beverage. This was a risk most prevalent for PepsiCo in the U.S. and globally in Europe, which was attributed to developing a more healthy drink. A trend toward the more healthy beverages could draw negative attention to PepsiCo and affect its status in the industry. To become more aligned with this trend toward health consciousness PepsiCo has taken the initiative to make 30% of their product portfolio healthy alternatives by 2020. According to Esterl & Bauerline (2011) "products that PepsiCo calls "good for you'' still make up only about 20% of revenue [and is] pushing to emphasize PepsiCo's health initiatives".

In recent years, these alternative beverages have accounted for a large part of the growth of the soft drink industry. Distribution channels presented a problem to smaller makers of alternative beverages because of costs involved in getting their products to retailers. However, PepsiCo has acquired distributors which provide effective marketing results, which:
• Manage pricing promotion and brand investment decisions;
• Get closer to the consumer to understand trends;
• Ability to react to consumer trends more quickly;
• Changing out shelves/investing and adjusting pricing accordingly;
• Reduce number of people ...

Solution Summary

The following post helps prepare an analysis for global and U.S. alternative beverages industries.