Macroeconomic Factors Impacting Diet Pepsi in the US Market

This report provides an analysis of the macroeconomic factors impacting the US economy, with a specific focus on the soft drink industry and Diet Pepsi. It begins by outlining the overall state of the US economy, highlighting its strengths and challenges. The report then delves into the soft drink manufacturing industry, examining its structure, market size, and competitive landscape. Key forces influencing Diet Pepsi's business, such as market share, buyer power, and competition, are thoroughly assessed. Furthermore, the report addresses labor issues faced by the company and the impact of compliance with labor laws. Finally, it identifies and evaluates the factors that affect the demand for Diet Pepsi products, including inflation, tariffs, and stock prices, providing a comprehensive overview of the economic environment in which Diet Pepsi operates.

Running ead Macro conomic actors of S conomyH : E F U E
Macroeconomic Factors Analysis

Macro conomic actors of S conomy-E F U E 1
Question 1
 The economy of United States is strongly developed. Despite of the fact, that US
economy has faced enormous challenges at both domestic as well as global level, it
has contributed to the world’s economy in the largest proportion.
 It represents almost 20% of the world’s output. As per the data collected from IMF,
US economy has been ranked at 6th position among the economies with highest per
capita GDP (Purchasing Power Parity) (Focus Economics, 2018).
 United States is the 2nd largest manufacturer across the world.
 The rate of unemployment is also just 4% and the economy is still coming up with
numerous new employment opportunities (DePillis, 2018).
 Even the consumer spending percentage of the economy is quite healthy.
Question 2
The industry to which the business of Diet Pepsi belongs is the Soft Drink Manufacturing
Industry. The United States’ soft drink manufacturing industry covers almost 500
establishments as both the single location corporations and the units of multi-location
corporations. The annual revenue of the company is about $42 billion. The US soft drink
manufacturing industry is a part of non-alcoholic beverages industry. US industry is a highly
concentrated industry and the top 50 soft drink manufacturers of the economy generate
almost 95% of the total revenue of the industry. Hence, there is an intense competition.
Question 3
 As there is large number of top soft drink manufacturers in the US economy such as
Coca Cola, Pepsi Co, Dr Pepper Snapple, Redbull, it is difficult for Diet Pepsi to gain
its own market share (Jacobsen, 2018).
 The Pepsi Co.’s market share is continuously declining since 2004 till 2015 and it has
reported 4.9% of the market share in 2015 (Statista, 2017).
 The bargaining power of the buyers in the industry is quite high and they have the
opportunities to switch to different suppliers of soft drinks. So, the company cannot
do more with the prices of its products. The available substitutes of Diet Pepsi’s
product do not have any limitations in terms of performance.
 The company has to have intense competitive pressure and even the slow growth rate
of the industry makes it difficult for the company to achieve higher growth.
Question 4
 Currently, Pepsi had faced several fines for its failure to protect its workers. The
business of the company is affected by the availability of labour force (Beverage
Daily, 2014).
 For the company compliance with labour law is quite important and it has to maintain
the policies to safeguard the health of the employees.
 If the company violates any of the labour law applicable to the industry it will damage
the brand name in the market.
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Macro conomic actors of S conomy-E F U E 2
Question 5
Following factors will affect the demand of the products of Diet Pepsi in US market:
 Inflation: The US economy had to face inflation in the recent times and due to this the
prices of all its products increased and hence the demand for soft drinks got affected
(Forbes, 2011).
 Tariffs: The impact of soft drink taxes and tariffs crucially affect the consumer prices
of the products and hence it affects the demand of company’s product.
 Stock prices: The undervaluation of the stock prices of Pepsi Co. affects the
reputation of the company’s brand which ultimately affects the demand of its products
market (Forbes, 2018).
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Macro conomic actors of S conomy-E F U E 3
References:
Beverage Daily. (2014). Consistent Failure to protect Workers: Pepsi faces fine. Available at:
https://www.beveragedaily.com/Article/2014/02/17/Consistent-failure-to-protect-
staff-Pepsi-bottler-faces-heavy-fine Accessed on: 03.9.2018.
DePillis. (2018). How the US economy is doing now in four charts. Available at
https://money.cnn.com/2018/07/25/news/economy/state-of-the-economy-gdp/
index.html Accessed on: 0309.2018.
Focus Economics. (2018). U.S. Economic Outlook. Available at:
https://www.focuseconomics.com/countries/united-states Accessed on: 0309.2018.
Forbes (2011). Pepsi Gets A Taste Of Inflation. Available at:
https://www.forbes.com/sites/greatspeculations/2011/04/29/pepsi-gets-a-taste-of-
inflation/#70bde9455576 Accessed on: 03.9.2018.
Forbes (2018). Why We Feel PepsiCo Is Currently Undervalued. Available at:
https://www.forbes.com/sites/greatspeculations/2018/06/19/why-we-feel-pepsico-is-
currently-undervalued/#8c5089f222ca Accessed on: 03.9.2018.
Jacobsen (2018). 2018 Soft Drink Report: Carbonated soft drink manufacturers adapt to
formulation, engagement trends. Available at:
https://www.bevindustry.com/articles/91043-2018-soft-drink-report-carbonated-soft-
drink-manufacturers-adapt-to-formulation-engagement-trends?v=preview Accessed
on: 0309.2018
Statista (2017). Market share of the Diet Pepsi brand in the United States from 2004 to 2015.
Available at: https://www.statista.com/statistics/225491/us-market-share-of-the-diet-
pepsi-brand-since-2004/ Accessed on: 0309.2018.
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