Energy Drinks Case Study

Custom Student Mr. Teacher ENG 1001-04 3 January 2017

Energy Drinks Case Study

There are new coming items in beverage industry during the mid-2000s, which are energy drinks, sports drinks and Vitamin-Enhanced beverages. These items focus on different flavors, specified consumers, efficient distribution systems, and products innovation in the beverage market. They compete with water, soft drinks, juices, tea, and other common drinks, which are in low prices, good and long history of brand reputation, easy to accept the taste. From 2005 until now, alternative beverages grow fast and take more and more market share in the whole world beverage market.

The main alternative beverages companies are Coca Cola, PepsiCo, Red Bull and Hansen Natural Corporation. Energy drinks, spots drinks, and vitamin-enhanced beverages use many strategies to find a good position in the beverage industry in the Global market, which also give us some ideas about how to operate beverage companies. Firstly, alternative beverages take the action via wider product selection, better product quality, good delivery system to gain sales and market share.

For example, PepsiCo develops 12 flavors of Amp Energy drinks and 28 varieties of SoBe vitamin-enhanced drinks (Gamble, 2010, p. C-83). Again, PepsiCo, Coca-Cola through their own soft drinks distribution channels to deliver energy drinks at the same time, which reduce much time and cost. Secondly, energy drinks take big actions to enter emerging market opportunities, like most Asia countries and South America. For example, alternative beverages take 31. 5% market share in Asia-Pacific in 2009 (Gamble, 2010, p. C77).

Thirdly, Energy drinks, spots drinks, and vitamin-enhanced beverages try to acquire or merge with other small companies to strengthen market standing and competitiveness. For instance, PepsiCo has a multiyear distribution agreement with Rockstar to distribute Rockstar energy drinks in the United States and Canada (Gamble, 2010, p. C-83). Coca-Cola also has a multiyear distribution agreement with Hansen Natural Corporation to distribute Hansen’s Monster energy drink in some areas of the United States, Canada, and six European countries (Gamble, 2010, p. C-84).

To solve weaknesses and threats, alternative beverages industry companies set up business models to match the customer value and gain profit. Firstly, Energy drinks, sports drinks, and vitamin-enhanced beverages companies develop many different flavors to match different customers’ taste. Second, these companies also focus on different customers’ demands. Third, they sell products in many different locations, not only supermarkets, but also convenience stores and vending machines around every corner, which give convenient service to customers.

Fourth, alternative beverage companies always try to follow the state law and regulations. Try to avoid risk ingredients. Fifth, to pretend the health risk, some companies placed warnings on their products labels. Sixth, because many people and organizations are focus on environment issues, alternative beverages’ plastic bottles and cans are really concern by these people. To solve this problem, beverage companies recycle plastic bottles and cans to keep pollution away.

I also have some recommendations to alternative beverage companies to grow bigger and faster in the global market. First, try to make innovation on the local taste in different countries. Do research on people’s taste in various countries. McDonald’s is a good example in promoting global market. McDonald’s knows Indian people don’t eat beef and pork and love spicy food, so McDonald’s over there never have any product with beef or pork but with more spicy taste. Again, don’t put sensitive ingredients in the drinks. People are more curious about health and drink ingredients.

Many organizations are strict with it, too. Try to produce healthier and more nutritious drinks to the market. Moreover, drinks’ function attempts to everyone, but not only for a small group of people. Nowadays, teenage boys always buy energy drinks, people who do sports, fitness, or other strenuous activities bought sports drinks; adult consumers are interested in buying vitamin-enhanced beverages (Gamble, 2010, p. C-77). What I recommend is alternative beverage companies should develop beverages suitable for most people.

White collar can drink energy drinks; sports people also suitable to buy some kinds of vitamin-enhanced beverages. Additionally, don’t publicize the function too powerful. Some alternative drinks have some special effects, but not like what the advertisement said. If the company wants to operate for a long time running, it should be honest and act in good faith. Last but not least, incumbents of alternative drinks use strong brand preferences, high degrees of customer loyalty, significant cost advantages to keep new entrants out of the market.

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  • University/College: University of Chicago

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 3 January 2017

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