Energy drinks Essay Example for Free

Energy drinks Essay Since the mid-2000s, demands in the global beverage industry shift from carbonated soft drink to alternative beverages. Because of this market grows rapidly and gives high profit margins, it make changes in beverage manufacturing and encourage new entrant to focus solely on alternative beverages. Alternative beverages segment is comprised of energy drinks, sports drink, and flavored or enhanced water. Each segment has different consumer types and different distribution channel. In developed countries, such as USA, this carbonated soft drink market has reached a mature stage but energy drink and ready-to-drink tea is still inclined. However, beverage industry is steady growth in developing countries. Alternative beverages competed on the basis of differentiation from traditional drinks such as carbonated soft drinks or fruit juices. All energy drink brands attempted to develop brand loyalty based on taste, the energy-boosting properties of their ingredients, and image. The strongest competitive force is buyer because buyer costs to switch brands are low. Consumers will be more prices sensitive and will switch to other product or even other segment. The weakness competitive force is rivalry because of many sellers in this market and diversity in commodities. The high profit margins will make alternative beverage market attract entrants that are more new, also supported by rising demand for the alternative beverage. Energy drinks pricing is 400% higher than carbonated soft drinks. In addition, to create an alternative beverage business needs medium-high capital investment. The market of global beverage industry is projected to grow from $1. 58 trillion in 2009 and forecasted to grow to nearly $1. 78 trillion in 2014 as beverage producers entered new geographic markets, developed new types of beverages, and continued to create demand for popular drinks. It is expect to result from steady growth in the purchasing power of consumers in developing countries. In addition, alternative beverages tended to carry high price points, which made them attractive to both new entrants and established beverage companies. Sport drinks and vitamin-enhanced beverages tended to carry retail prices that were 50 to 75% higher than similar-size carbonated soft drinks and bottled water, while energy drink pricing by volume might be as much as 400% higher than carbonated soft drinks. While the alternative beverage segment of the industry offered opportunities for bottlers, the poor economy had decreased demand for higher-priced beverages, with sales of sports drinks declining by 12. 3%. The Alternative beverages consumer profile varied substantially across the three types of beverages. Then energy drink consumer was a teenage boy, sports drink consumer were purchased by those who engaged in sports, fitness or other strenuous activities. Vitamin-enhanced beverages could substitute for sports drinks but were frequently purchased by adult consumers in increasing their intakes of vitamins. The best position strategic group map is reasonable price and reasonable quality. The worst position is the low price and quality. Now people think about health more than in the past, and they still worry about economic crisis. The alternative beverage chose set strategic group map with answer key we are alternative. We found that key factors, which determine the success of alternative beverage producers,have many factors. First, is Productinnovation, Product Innovation can be done by customizing product ingredient, flavor, packaging, or the benefit that product offer to consumer. Second, Focus in one segment can be the best strategy like Red Bull. Their focus in energy drink segment make them became the market leader in energy drink. Third, there are many type of channel distributor, like supermarkets, natural foods store, wholesale clubs, convenience store, and restaurant. The company’schoose is depends on the company resource. Example PepsiCo and Coca Cola were dominating convenience store and special event channel. However, for company with limited resource use third parties channel distribution will has lowest cost in transportation and labor. Fourth, use the right supplier can reduce production cost. The last one is Brand image, the right promotions that really connect with the product image will make the brand and product can penetrate the market.