3. Rivalry – Attractiveness of Market Relatively high bargaining power of suppliers Relatively high bargaining power buyers (Bottlers) High barriers to entry for new competitors Low switching costs for consumers, potentially high emotional costs for consumers to change drinking habits Two major players – Coca- Cola and Pepsi playing out each other but both are winning the war = Profitable and attractive for the concentrate industry 3
5. Rivalry – Attractiveness of Market Relatively high bargaining power of suppliers Relatively low bargaining power buyers (retailers) High barriers to entry for new competitors due to established long-term contracts Relatively high switching costs due to investments Competitive industry (many players) = Low profitability, not attractive for the bottling industry 5
6. Comparison of Concentrate and Bottles The difference between profitability levels The concentrate producers control prices for product in both industries. The concentrate market has a low level of comptetion while bottling industry has a high level of competition. 6
7. FutureChallanges for Pepsi and Coca-Cola Higher health awareness among consumers – drink less CSD than other non-CSD alternatives Competition from vitamin water alternatives as a health conscious alternative for the consumers – Acquisitions needed. Needs for expanding the portfolio of brands even further, and reduce the production of the core products - cola drinks 7
