AGENDA IntroductionBart Economic ForcesTorrey Social, Cultural, and Demographic ForcesChad Demographic ForcesChad Technological ForcesBart Global SegmentsEdward.

AGENDAAGENDA

IntroductionIntroduction BartBart

Economic ForcesEconomic Forces TorreyTorrey

Social, Cultural, andSocial, Cultural, and

Demographic ForcesDemographic Forces ChadChad

Technological ForcesTechnological Forces BartBart

Global SegmentsGlobal Segments EdwardEdward

Competitive ForcesCompetitive Forces Leslie Leslie

ConclusionConclusion EdwardEdward

IntroductionIntroduction

+ $154 Billion + $154 Billion IndustryIndustry

Segments of the Segments of the IndustryIndustry

Soft Drinks-$53.4 billSoft Drinks-$53.4 bill

Beer-$53.28 billBeer-$53.28 bill

Sports Drinks-$1.4 bill Sports Drinks-$1.4 bill

Bottled Water-$4 billBottled Water-$4 bill

Fruit Drinks-$1.4 billFruit Drinks-$1.4 bill

Water46%

Coffe & Tea33%

Other3%

Alcohol6%

Juice8%

Soft Drinks4%

Worldwide Worldwide Beverage Beverage

ConsumptionConsumption

Growth RatesGrowth Rates::

Fastest GrowingFastest Growing

– Water - 9.5%Water - 9.5%– Sports Drinks - Sports Drinks -

8.3%8.3%

OthersOthers

– Soft Drinks-3.4%Soft Drinks-3.4%– Fruit Drinks-1.7%Fruit Drinks-1.7%– Beer - 1.4%Beer - 1.4%

Driving ForcesDriving Forces

Expanding Market PowerExpanding Market Power Desire to fill Consumer NeedDesire to fill Consumer Need Personalization of the Personalization of the

Market SegmentsMarket Segments Building Brand RecognitionBuilding Brand Recognition Maximization of Growth Maximization of Growth

PotentialPotential

Economic Forces

Growth rateGrowth rate GDPGDP GDP per capitaGDP per capita InflationInflation UnemploymentUnemployment

Economics Around Economics Around the Globethe Globe

GDP $8.511trillion

$2.9trillion

$815billion

$4.42trillion

$1.8trillion

Growth 3.9% -2.6% 4.8% 7.8% 2.7%

GDP percapita

$31,500 $23,100 $8,300 $3,600 $22,100

Inflation 1.6% .9% 18.6% -.8% .9%

Unem-ployment

4.5% 4.4% 2.6% 10% 10.6%

U.S. Japan Mexico China Germany

Discretionary Discretionary Income in the U.S.Income in the U.S. Income is increasing in American Income is increasing in American

householdshouseholds Consumers are spending moreConsumers are spending more Consumers are saving lessConsumers are saving less

Impact of Impact of Economic FactorsEconomic Factors

Demand on beverages should Demand on beverages should remain stableremain stable

Brand label beverages should do Brand label beverages should do wellwell

Low interest rates and low inflation Low interest rates and low inflation provide new business opportunitiesprovide new business opportunities

Other Economic Other Economic Factors to ConsiderFactors to Consider

Lower restrictions on trade and Lower restrictions on trade and investment in foreign countriesinvestment in foreign countries

Foreign currencies are weak Foreign currencies are weak against the U.S. dollaragainst the U.S. dollar

YenYen German MarkGerman Mark Mexican PesoMexican Peso various Asian currenciesvarious Asian currencies

Markets for the Markets for the IndustryIndustry

Markets are becoming internationalMarkets are becoming international Latin American, Eastern European, and Latin American, Eastern European, and

Asia-Pacific region countries are favorableAsia-Pacific region countries are favorable JapanJapan ChinaChina BrazilBrazil MexicoMexico LithuaniaLithuania ThailandThailand United KingdomUnited Kingdom

Social, Cultural, Social, Cultural, and and

Demographic Demographic ForcesForces

Ethnic/Age Ethnic/Age DemographicsDemographics

Hispanics-33%Hispanics-33% African-Americans- African-Americans-

14%14% Asian-American-49%Asian-American-49% Baby BoomersBaby Boomers

– healthhealth– convenienceconvenience

Younger generationYounger generation

Target MarketTarget Market Focus on Focus on

traditiontradition Stress Stress

convenienceconvenience

Marketing Marketing Strategies/ Strategies/

ExpendituresExpenditures

Pepsi31%

Coca-Cola44%

DP/SU21%

Triarc4% •Sports

•Tradition

Beverage Beverage TechnologyTechnology

Product LabelerProduct Labeler

C C

HH

I C Pressure SensorI C Pressure Sensor

L AL A

L N L N

Life Top PackageLife Top Package

Injects Probiotic Bacteria ( Reuteri )Injects Probiotic Bacteria ( Reuteri )

Bacteria lives 5 to 6 DaysBacteria lives 5 to 6 Days

Extended Shelf LifeExtended Shelf Life

““Good Bacteria”Good Bacteria”

Superior PlasticsSuperior Plastics

Keep beverages from going flatKeep beverages from going flat

Increased Shelf LifeIncreased Shelf Life

Gas-Tight BarriersGas-Tight Barriers

Liquid Crystal PolymersLiquid Crystal Polymers

““Chill Can”Chill Can” Bad Bad Idea?Idea?

Heat the Whole WorldHeat the Whole World with with Greenhouse EffectGreenhouse Effect

Same Effect on Global Warming as Same Effect on Global Warming as Driving Car Driving Car 200 200 MilesMiles

Not EPA ApprovedNot EPA Approved

Synthetic CorkSynthetic CorkGuards against Cork ContaminationGuards against Cork Contamination

Affinity PolyoleifinAffinity Polyoleifin

PlastomerPlastomer

Natural Cork Natural Cork 8%8% Failure Failure

Research/SurveyResearch/SurveyTaste is one of top Determining FactorsTaste is one of top Determining Factors

Desire for “Adult Sophisticated and Desire for “Adult Sophisticated and

Complex Taste”Complex Taste”

Strategy Implemented by Strategy Implemented by

Ocean SprayOcean Spray

World SegmentWorld Segment

Coverage AreaCoverage Area

Important FactorsImportant Factors MergersMergers

Currency ratesCurrency rates

Health and Health and Stability of Stability of economieseconomies

World Cup SoccerWorld Cup Soccer

North AmericaNorth America

Highest per capita Highest per capita consumption in consumption in the worldthe world

Largest market Largest market salessales

Growth potential Growth potential relatively smallrelatively small

Latin AmericaLatin America

Population 481 Population 481 millionmillion

Young populationYoung population

Many individual Many individual cultures and cultures and tastestastes

EuropeEurope Population of 866 Population of 866

millionmillion

Strong increase with Strong increase with new governments in new governments in Eastern EuropeEastern Europe

Potential growth Potential growth very highvery high

Middle and Far Middle and Far EastEast

Population of 3.6 Population of 3.6 billionbillion

Largest potential Largest potential for growthfor growth

Largest population Largest population concentration on concentration on EarthEarth

+29 billion 8 ounce +29 billion 8 ounce servings per dayservings per day

AfricaAfrica Population of 594 Population of 594

millionmillion

Introduction of Introduction of bottled drinks into bottled drinks into everyday lifeeveryday life

increase amount increase amount of exposure on of exposure on individual individual communitiescommunities

Competitive Competitive ForcesForces

Porter’s Five Forces ModelPorter’s Five Forces Model

Rivalry Among Rivalry Among Competing Competing

FirmsFirms

Level of Level of intensityintensity

ImplicationsImplications

Implications of Implications of IntensityIntensity

New Product IntroductionsNew Product Introductions

Sales Promotion OffersSales Promotion Offers

Price WarsPrice Wars

Media SpendingMedia Spending

Media Media ExpendituresExpenditures

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

1994 1995 1996 1997 1998

Coca-colaPepsiDr.PepperRC

Media Spending Media Spending FactFact

Soft drink companies spent Soft drink companies spent more than $530 million to more than $530 million to promote their brands in 1998.promote their brands in 1998.

Potential Entry of Potential Entry of New CompetitorsNew Competitors

N eed forLarge

F inancia lR esources

H igh B randEquity

for ExistingBrands

ExperienceC urves

Barriersto

Entry

Substitute Substitute ProductsProducts

Wine/SpiritsWine/Spirits MilkMilk JuicesJuices Fruit DrinksFruit Drinks Coffee/TeaCoffee/Tea Gourmet DrinksGourmet Drinks WaterWater

Bargaining Bargaining Power of Power of SuppliersSuppliers

Competitive PricesCompetitive Prices Dependable ServiceDependable Service Product QualityProduct Quality Supplier ReliabilitySupplier Reliability Turnaround TimeTurnaround Time

Bargaining Power of Bargaining Power of ConsumersConsumers

Buying Private Buying Private Label BrandsLabel Brands

Product LoyaltyProduct Loyalty

Changing Changing DemandsDemands

FactFact

One of every four beverages One of every four beverages consumed in America is a soft consumed in America is a soft drinkdrink

Average over 56 gallons of soft Average over 56 gallons of soft drinks per year per individual.drinks per year per individual.

MergersMergers The Coca-Cola Company The Coca-Cola Company

merges with Cadbury merges with Cadbury SchweppesSchweppes

ComplementsComplements

Snack Food IndustrySnack Food Industry– potato chipspotato chips– chocolatechocolate– peanutspeanuts

ConclusionConclusion $154 Billion Dollar Industry$154 Billion Dollar Industry Thriving World Market with High Thriving World Market with High

Growth PotentialGrowth Potential More “Health Conscious” WorldMore “Health Conscious” World Intense Competition with Barriers Intense Competition with Barriers

toto

EntryEntry

Thank YouThank You