Industry Analysis and Possible Adaptations: Soft Drink Sub-sector

This report provides a comprehensive industry analysis of the soft drink sub-sector, with a specific focus on the Coca-Cola Company. It begins with an overview of the industry, its classification, and the growing demand for soft drinks in the UK. The report then delves into the external environment using the PESTEL model, examining political and environmental factors like sugar taxes and waste management. Porter's Five Forces model is applied to analyze the competitive landscape, including competitor rivalry, new market entrants, suppliers, buyer power, and the threat of substitutes. The analysis continues with the application of Michael Porter's Value Chain model to assess the internal workings of Coca-Cola. The report concludes by explaining potential adaptations Coca-Cola could undertake to address external environmental forces, and reflects on the usefulness and limitations of Porter's Five Forces model in understanding the business environment. The report provides a detailed analysis of the soft drink industry, highlighting key challenges and opportunities for Coca-Cola.

Running Head: INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS
0
COCA cOLA COMPANY
SOFT DRINK AND ITS SUB-SECTOR
Student
5/6/2019
[Type the abstract of the document here. The abstract is typically a short summary of the contents of
the document. Type the abstract of the document here. The abstract is typically a short summary of
the contents of the document.]

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 1
In the Industry Classification Benchmark, which are ground rules are prepared by the FTSE,
there are about 3000 consumers good, which include multiple companies which carters the
needs of the customer. The industry is further split into the sector of 3350 beverages. Soft drink
is one of the sub-sectors of the beverage industry, which are the producers and the supplier of
non- alcoholic drink, soda, juice and bottled water (Anon., 2019).
In the 19th century, the first soft drink was introduced in the market. It became popular among the
all the ages by the 20th century. Soft drink was started serving and still serve as it is more
preferred than the alcoholic beverages (Anon., 2019).
As per my research, the demand of soft drinks is increasing in the UK as they contain
carbonated water, which keeps the drink more fizzy and carbohydrate in the form of sugar syrup.
It keeps the mood refreshing and the boost to the energy level in the body. Soft Drink is one of
the most demanded non-alcoholic drinks in the UK (Anon., 2019). As per the statistics provided
by the pure gym, UK with the population of 6.6 core people is a seventh largest consumer of
non-alcoholic drink. The weekly consumption level of the soft drink among all the sections is
about two liters (Riddler, 2018). Moreover, the consumer is demanding different range of soft
drinks according to their taste. The objective of the soft drink is to satisfy the wants and needs of
the customer by introducing various innovative ranges of product in the market, which are.
Fruit juice, Carbonated drinks, Energy drink, Bottled water, Sports drink and Dilutables.
However, with the commercialization and globalization, the competition for soft drink industry
has risen. Now the consumers are becoming health conscious and they are adopting healthy life
style. There is a need to bring the change in the Soft drink Industry. The focus of the report is to

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 2
examine and identify the influence of macro and micro environmental factors on the soft drink
industry and on its sub sectors along with the necessary steps taken by the industry to deal with
them.
A. P.E.S.T.E.L. Model (Political, Economic, Social, Technological, Environmental and Legal)
Pestel analyses are the structure that examine and check the influence of various macro
environmental factors that affects the working of an organization. It helps an organization to
identify various threats and opportunities, so that the organization can become more productive
and attain its goals efficiently ( Bruin , 2018).
As per the analysis I conducted, there are some factors, which affect the performance of the Soft
drink industry, which are Political Factor and Environmental factor.
a) Political factors:

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 3
They are those factors, in which government has great influence over the activities of an
organization. Government policy, tax policies are the various policies, which are regulate by the
government. These policies affect the working of the businesses.
As per my study, as soft drinks are becoming popular in the culture, the consumption of
carbonated water, sugar syrup and caffeine is also increasing due to which, the health problems
like obesity and type two diabetes diseases has become common (Anon., 2018).
To deal with the health problems and to minimize the sugar in take in the country, the
government officials announced the Soft drink industrial levy from 11 April 2018. This sugar tax
has been regulated on the soft drink production houses, which have added sugar in their
products.
Source: ( Triggle, 2018)
 Impact: The soft drink companies
are compelled to pay between 18p
and 24p for every litre of soft
drinks manufactured as per the
sugar content contained in it. Fruit
juices, which are manufacture from pure fruit juices and the drinks, which include milk content,
are not liable to pay tax as it contains calcium that is very good for the bones. Fanta, which is
fruit flavored carbonated drink of UK has reduced the sugar content in the drinks by 30%. In the
previous year, Coca cola announced that it would reduce the size of its bottle to 1.5 l and

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 4
increase the prices by 20p. The market of soft drinks likes coca cola sugar and a light drinks like
diet coke remain unchanged.
Source: ( Triggle, 2018)
b) Environmental factor:
They are those factors, which include the detailed information about the different ecological and
environmental characteristics like climatic changes, pollution.
Environment Sustainability is one of the major objectives of the soft drink industry. About 48%
consumers know that the environment sustainability is an important task. To attain 100%
environmental sustainability the year of 2025, Soft drink industry addressed various important
issues like (Gray, 2018)
 Waste Management and Packaging: The worldwide production level of plastic packaging is
about 78 million tons. The plastic pollution has damaged not only the aquatic life but also the
deepest ocean trenches. This has created the alarming situation in the all the consumer good
industry (Gray, 2018).

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 5
To deal with such situation soft drink industry has taken an action to eradicate the use of plastic
in the process of manufacturing drinks. Soft drink companies Nestle, Danone and Suntory has
sighted the overall view of eco –friendly packaging, which can be reuse and recycle.
For reducing the impact on the environment, PET plastic bottles packaging is use in the soft
drink industry (Anon., 2019). Many food and beverages outlets are substituting the usage of non-
biodegradable straws with the paper, metal and bamboo sticks (Arthur, 2018).
Source: (Selwood, 2018)
B. Porter s Five Forces

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 6
Source: (Anon., 2019)
Poter’s five forces are of the important devices for analyzing the competitive behavior in the
industry and to know how they are affecting the business atmosphere .It is a way of identifying
the various marketing strategy tools, which the industry must take up.
In the beverage industry of UK, Beer, soft drink and whisky are the top 3 sectors which are
highly manufactured (Anon., 2018).

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 7
Porter’s five forces Analysis on Soft Drink Industry and its subs sector:
I. Competitor Rivalry among the existing Sub-sectors:
As per my opinion, Soft drink industry has various sub sectors like carbonated drink, fruit
juices, dilutables, still and juice drinks, bottled waters and sports and energy drinks.
a) Carbonated Drink: Carbonated drinks are the top selling category in the UK with the market
share of 38%. The main ingredient of carbonated drinks is carbon dioxide, which makes the
drink fizzier.

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 8
b) Energy drinks: Energy drinks are known for its formula of energizing the body level and
refreshing the mind and body.
c) Fruit Juices: In the market of soft drink, the share of fruit juices is about 8%.It is made up real
juice with no artificial flavors and sugar contains in with the power of vitamin B.
d) Sports Drink: The sports person or the customers who are very sporty and play different games
mostly prefer Sports drink. It keeps the body mode hydrated.
e) Bottled water: They are the natural underground water. It is pollution- free water and keeps the
body healthy.
f) Dilutables: They are thick juices with less calorie content. As it is liked by the all the ages it is a
second most preferred drink in the UK.
As per my opinion, the statics provided in the march 2019 highlight the top 10 brands of soft
drinks in the United Kingdom in which Coca Cola is most popular carbonated drink with more
than 2.5 million fans on the Facebook. Dr Peeper UK, which also a carbonated drinks, is a
second most famous the fans .The foundation of both the companies was happened in the UK.
II. New Entry in the market of Soft Drink Industry:
a) As per my knowledge to meet the energy and to make the coca cola brand more popular among
the young individuals, the coca cola company introduced Coca cola energy under the name of the
same brand in the end of the April. Coca Cola energy is being provide in two variations which is
with and without sugar. The aim of Coca Cola Company is to bring diversity in their drink so
that it can fulfill the want of the public of the UK (Fleming, 2019).
b) Britvic which is a soft drink company has introduce refreshing flavors like Cucumber, Mint and
the lemon fruit in the sparkling water flavored brand called Aqua Libra brand. The company has

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 9
brought this innovation in the so that it can carter the needs of the consumers who are health
conscious (Cronin, 2019)
III. Suppliers in the Soft Drink Industry :
Source: (Anon., 2019)
As per the business point view of 2018, I understood that for the retail outlets carbonated drinks
are the means of business. With the amazing sale of about, 176 million euros the demand popular

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 10
drink like Coca-Cola has remain unchanged. The Sales of carbonated drink and Energy drink
Source: (Wells, 2018)
Volvic and Evian, which is famous brand of water category, suffered the loss in the sales of their
products. Britvic Soft Drink Company presented the file on the soft drink review in which there
has been change in the channel performance (Wells, 2018). As compared to other food and
beverage sectors, Soft has shown the growth of about 7.7% in its value (Anon., 2018).
IV. Buying Power:
As per my research, the soft drink has shown a tremendous growth since last years. However,
with the sugar tax and increment in the price of soft drink, the consumers are looking for
alternative due to which there has been reduction their visit. The carbonate soft drink Coca-Cola
has outshined other soft drink (Anon., 2018).

INDUSTRY ANAYLSIS AND POSSIBLE ADAPTATIONS 11
Source: (Wells, 2018)
V. Threat of substitute:
What I concluded by the above study, that the Coca- Cola is the powerful company that is not
only well known in the UK, but also a famous drink in the world. However, all the soft drink has
seen slight changes in their sales due to the sugar tax but coca cola is the only company who did
not make changes in their recipe, which has made him unique and powerful.
C. Value Chain Model by Michael Porter: