Non Alcoholic Drinks

Name --Amit Bhardwaj

Roll no --104

Division –B
 INTRODUCTION OF THE SECTOR

A non-alcoholic beverage is a beverage that contains no alcohol. There are various types of

non- alcoholic drinks available in the market . Some of them are:--

Colas – One of the important clusters for non- alcoholic drink and emerging in
India with lot of competition among different multinationals competing for the
epitome slot in the market .Some of the biggest market-holders are Pepsi-Co, Coke
employing various marketing strategy to woo different sections of society.

Tea- One of the traditional drinks used in India with various companies like
Tata, HUL competing for the market share. Indian tea industry faces a lot of difficulty
because of government lifting import restrictions which allowed neighbouring
countries to compete with Indian firms and in export also India is threatened by
new-comers like Indonesia.

Coffee—Coffee is one of the drinks which is branded in a different way as compared

to other traditional drinks. Companies like Nescafe and others trying to get the share
of packaged coffee being used in the household. Difference in branding of coffee
with opening of different coffee-shop ventures like Cafe Coffee Day reaching out to
people with a different blend and opening their outlets in different cities starting
from Bangalore and different multinationals entering into this for the different blend
for coffee.

Other Drinks—Malt drinks like Horlicks , Bournvita entering to compete as an

alternative for tea and coffee. Drinks like cocktails are also being used as an
alternative for the alcoholic drinks where reasons can be numerous like religion not
permitting consumption of alcoholic
 Government Regulation for the Sector:--

Schools:--Soft drinks are having high calorie content which can be significant
contributor to childhood obesity. Considering this fact there was argument that it is
schools responsibility to take care of children health. Opponents note that children
are not always mature enough to understand the consequences of their own food
choices and hence government in US banned the sale of soft drinks within the school
premise.

Taxation:-- In the United States and elsewhere, legislators, health experts and
consumer advocates are considering levying higher taxes on the sale of soft-drinks
and other sweetened beverages to help curb the epidemic of obesity among
Americans, and its harmful impact on overall health. Higher taxes could help reduce
soda consumption.

Pesticides: -- In 2003, the Delhi non-profit Centre for Science and Environment
published a disputed report finding pesticide levels in Coke and Pepsi soft drinks sold
in India at levels 30 times that considered safe by the European Economic
Commission The Indian Health Minister said the CSE tests were inaccurate, and said
that the government's tests found pesticide levels within India's standards but above
EU standards

Government regulation also include that it should not include benzene and any other
chemical components which can be harmful for consumption. In one the surveys it
was found that soft-drinks contain traces of benzene and some contained some
levels of alcoholic drinks.

A group of scientist have sent an petition to FDA to urge for the regulation of
Caffeine content present in soft-drinks and other energy drinks as they is no upper
limit for caffeine content per can. It can lead to high heart beat, insomnia.

Different Players in Market :--

1) Pepsi-Co
2) Tata
3) HUL
4) Nescafe
5) Coke

PEPSI—CO
Introduction

PepsiCo, Incorporated is a Fortune 500 American multinational corporation headquartered

in Purchase, New York , with interests in manufacturing and marketing a wide variety of
carbonated and non-carbonated beverages, as well as salty, sweet and cereal-based snacks,
and other foods.

Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006. During her
time, healthier snacks have been marketed and the company is striving for a net-zero
impact on the environment

USP:--

Pepsi is the second largest soft-drinks in the World and it is growing its market-share in India
as compared to Coke mainly riding on YOUNGISTAAN philosophy targeting younger
generation.

Revenue and Sales:--

Revenue—44.3 Billion US dollars

Operating Income—7.3 Billions US dollars

Net Income :--6.24 Billion US dollars

Total Assets –39.8 Billion US dollar

Total Employees –2,03,000

Pepsi has changed from carbonated drinks to other healthier drinks such as diet pepsi and
others and have tried to create awareness regarding this. Pepsi is having different variations
of soft-drinks like Mirinda and they discontinued one of their soft-drinks like teem after
acquiring 7Up

India is one of the top five markets in terms of growth of the soft drinks market. The per
capita consumption of soft drinks in the country is estimated to be around 6 bottles per
annum in the year 2003. It is very low compared to the corresponding figures in US (600+
bottles per annum). But being one of the fastest growing markets and by the sheer volumes,
India is a promising market for soft drinks.
The major players in the soft drinks market in India are PepsiCo and Coca-Cola Co, like
elsewhere in the world. Coca-Cola acquired a number of local brands like Limca, Gold Spot
and Thums Up when it entered Indian market for the second time. Pepsi Co’s soft drink
portfolio also consists of Miranda and 7Up along with Pepsi. The market share of each of the
company is more or less the same, though there is a conflict in the estimates quoted by
different sources

The major ingredient in a soft drink is water. It constitutes close to 90% of the soft drink
content. Added to this, the drink also contains sweeteners, Carbon dioxide, Citric Acid/Malic
acid, Colors, Preservatives, Anti Oxidants and other emulsifying agents.

Marketing Initiatives:

Pepsi have been taking various marketing initiative in order to compete with Coke which is
the largest market share size holder.

In 1975, Pepsi introduced the Pepsi Challenge marketing campaign where PepsiCo set up a
blind tasting between Pepsi-Cola and rival Coca-Cola. During these blind taste tests the
majority of participants picked Pepsi as the better tasting of the two soft drinks. PepsiCo
took great advantage of the campaign with television commercials reporting the results to
the public

Pepsi has official sponsorship deals with three of the four major North American
professional sports leagues: the National Football League, National Hockey League and
Major League Baseball. Pepsi also sponsors Major League Soccer.

Pepsi also has sponsorship deals in international cricket teams. The Pakistan cricket team is
just one of the teams that the brand sponsors. The team wears the Pepsi logo on the front
of their test and ODI test match clothing.

Latest Marketing Campaign in India:--

Latest Campaign is to target young audience by endorsing youth icon and conducting
various surveys to find out how is the youth icon every-year. Since cricket is a religion is
India so pepsi is endorsing young team India slogan to cater to larger audience

They have redesigned their logo and their can different from the traditional look which they
were having earlier.

CSR Initiatives:--

Pepsi-Co is considering responsibility to ensure that our suppliers honour and respect the
people and environments in which we as partners operate. We use our Supplier Code of
Conduct to articulate these priorities, and our Supplier Corporate Social Responsibility (CSR)
Risk Evaluation and Management Program to educate, validate compliance, and facilitate
continuous improvements.
As part of our Responsible & Sustainable Sourcing (RSS) strategy PepsiCo, is committed to
working in partnership with our suppliers to follow a specific code of conduct in the areas of
employee labour conditions, health & safety, environmental management and business
integrity, all part of our corporate social responsibility (CSR) assurance program. We have
updated our policies to simplify communications about PepsiCo's values and how they
extend to our supply chain partners

In 2007 PepsiCo joined Sedex as the means for our supplier community to articulate and
verify their activity in the areas of employee labour conditions, health & safety,
environmental management and business integrity. Sedex is the standard tool we are using
to gain visibility into our supply chain regarding these issues in a consistent and reportable
manner

Product and Services Offered

Pepsi

Diet Pepsi

Mountain Dew

Slice

Aqua Fina

Tropicana Juices

Lipton

Gatorade

Pepsi is having different marketing strategy for their products even in case of soft-drinks
considering the example that their strategy for pepsi is different from their strategy from
Slice or Mountain Dew.

Pepsi-Co in India is beating their arch-rivals Coke by their marketing strategy and having
more followers by using their new campaigns every-year
 Pareto 5 Force principle

There is continuing interest in the study of the forces that impact on an organisation,
particularly those that can be harnessed to provide competitive advantage.

As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature
of competition within it, the forces inside the industry (microenvironment) that influence
the way in which firms compete, and so the industry’s likely profitability is conducted in
Porter’s five forces model. A business has to understand the dynamics of its industries and
markets in order to compete effectively in the marketplace

Porter (1980a) defined the forces which drive competition, contending that the competitive
environment is created by the interaction of five different forces acting on a business. In
addition to rivalry among existing firms and the threat of new entrants into the market,
there are also the forces of supplier power, the power of the buyers, and the threat of
substitute products or services

The rivalry between existing sellers in the market.

• The power exerted by the customers in the market.
• The impact of the suppliers on the sellers.
• The potential threat of new sellers entering the market.
• The threat of substitute products becoming available in the market.

Force 1: The Degree of Rivalry

The intensity of rivalry, which is the most obvious of the five forces in an industry, helps
determine the extent to which the value created by an industry will be dissipated through
head-to-head competition. The most valuable contribution of Porter's “five forces”
framework in this issue may be its suggestion that rivalry, while important, is only one of
several forces that determine industry attractiveness.

Considering in case of Pepsi their biggest rival is Coke as it is still holding the number one
slot in sales of cola drinks across the World but In countries like India,Pakistan Pepsi is
holding more market share as compared to Coke.
Force 2: The Threat of Entry

Both potential and existing competitors influence average industry profitability. The threat
of new entrants is usually based on the market entry barriers. They can take diverse forms
and are used to prevent an influx of firms into an industry whenever profits, adjusted for the
cost of capital, rise above zero
Other than pepsi and Coke there is always a scope for new entrants to enter the market
which are unexploited as there would be ample amount of opportunity for all the players to
enter in the market.

Force 3: The Threat of Substitutes

The threat that substitute products pose to an industry's profitability depends on the
relative price-to-performance ratios of the different types of products or services to which
customers can turn to satisfy the same basic need. The threat of substitution is also affected
by switching costs – that is, the costs in areas such as retraining, retooling and redesigning
that are incurred when a customer switches to a different type of product or service.
In case of Pepsi-Co also there is threat of substitute as there can be new colas entering into
the market and capturing the market share which is existing for pepsi-co

Force 4: Buyer Power

Buyer power is one of the two horizontal forces that influence the appropriation of the
value created by an industry (refer to the diagram). The most important determinants of
buyer power are the size and the concentration of customers

Considering the example of India in which the buyer power helped pepsi-co to pip out coke
in India and having good market share in India as compared to Coke so buyer force also
plays an important role in deciding the market share.

Force 5: Supplier Power

Supplier power is a mirror image of the buyer power. As a result, the analysis of supplier
power typically focuses first on the relative size and concentration of suppliers relative to
industry participants and second on the degree of differentiation in the inputs supplied. The
ability to charge customers different prices in line with differences in the value created for
each of those buyers usually indicates that the market is characterized by high supplier
power and at the same time by low buyer power (Porter, 1998). Bargaining power of
suppliers exists in the following situations:

• Where the switching costs are high (switching from one Internet provider to another);
• High power of brands (McDonalds, British Airways, Tesco);
Similarly pepsi started in India in collaboration with pepsi but with liberalisation of markets
in India it was able to establish its own entity in India

SWOT ANALYSIS OF PEPSI-CO:--

STRENGTH

1. Company Image:
It also is a reputable org. and is well known all over the world. Perception of producing a
high quality product.

2. Quality Conscious:
They maintain a high quality as Pepsi Cola International collect sample from its different
production facilities and send them for lab test in Tokyo

3. Production Capacity:
It has the highest production capacity in South Asia.

4. Market Share
Pepsi-Co is having the second largest market share in World when compared to Coke but
market share in India, Pakistan and other countries for Pepsi is more as compared to Coke.
5. Good Relation with Franchise:
Throughout its history it has a good relation with franchisers working in different areas of
the world where they have the production facilities
Considering example of India it started its production in association with Lehar and
maintained a good relationship with them and established itself as a different entity in
Indian market now.

6 High Tech Culture:

The whole culture and business operating environment at Pepsi-Cola-West Asia has quick
access to a centralized database an they use computers as business tools for analysis and
quick decision making.

WEAKNESS
1. Decline in taste:
During the last years, it was published in Financial post that there has been big complaints
from the customers with regard to the bad taste that they experienced during the span of
six months.

2. Weak Distribution:
They lack behind in catering the rural areas and just concentrating in the urban areas.

OPPORTUNITIES

1. Increase Population:
As almost in all over the world growth rate is increasing which in turn increases the demand
of products and necessities and especially in Asia the market is growing at a faster rate as
compare to other continents. So they have to attract new entrants.

2. Changing social trend:

As in all over the world people are rushing towards fast food and beverage because of life
which has become much faster, it provide the company a favor to capture this fast moving
market with its take away product.

3. Diversification:
They may enter in garments business in order to promote their brand mane, by making
sports cloths fro players which represent their name by wearing their clothes.
4. Distribution of snack foods:
Opportunity to distribute Pepsi snack foods in the future.

One weakness that Pepsi posses is that it has very strong taste it really feels that something
highly toxic going inside the body, where as the same product of the coke is not much
strong.

They also have a problem of imitators as receives complaints from customers that they find
take product in disguised of Pepsi’s product. During the last years, it was published in
financial post that there has been big complaints from the customers with regard to the bad
taste that they experienced during the span of six months. If they soon pay no attention
towards that this will create a big problem for them.

Large size may lead to conflicting interests.

New one calorie products have no existing customer base; generic brands can make
similar drinks – cheaper. It is also big threat for any company people may like or
dislike new launching product.

Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong political support
from a political party which is in opposition. In; their era in government less taxes are
imposed on them but relation increases as they come in opposition. So the selection is not
appropriate as this thing is harmful to their image as well as the strategies. So this may
become a big threat for the Pepsi.

They have a lack of emphasis on this in their advertising such as currently when they losses
the bid for official drink in the 96 cricket world cup. They started a campaign in which they
highlight the factor such as “nothing official about it”. If they don’t focus on sudden
changing’s in their advertising then they can convert this weakness into opportunity.

They lack behind in catering the rural areas and just concentrating in the urban areas. They
should try to increase their distributions and also focus on capturing rural areas; this will
become a big opportunity for them.

The other big weakness on Pepsi is that they don’t pay any attention towards garments.
They may enter in garments business in order to promote their brand name, by making
sports cloths fro players which represent their name by wearing their clothes. That must
increase the customer and income of the Pepsi.
High expenses may have trouble balancing cash-flows of such a large operation. The staff
may show dishonesty. They should try to pay much attention towards their cash flow, and
audit there statements on regular basis.