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This is marketing research on the soft drink market and can include information on the

background, market structure, definitions, competitors, trends and developments of soft drinks
and is related to other topics such as beverages, colas, energy drinks and sports drinks.

Table of Contents

Contents
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• 1 Background
• 2 Market Structure
• 3 Industry Definitions
• 4 Market Metrics
• 5 Industry Players
• 6 Trends and Recent Developments
• 7 Sources
• 8 Next Steps

• 9 Related Research

Background
Carbonated drinks made without any alcohol are called Soft Drinks. They are also known as
Coke/Soda/Pop etc. Hot chocolate, teas, coffee etc are usually excluded from this classification.
They are sold in a variety of sizes and manner. In the U.S., they are often sold in two-liter
bottles, one liter plastic bottles, 24 and 20 US fluid ounce bottles and in 12 US fluid ounce cans.
Packaging is also available in many different quantities including six packs, 12 packs and cases
of 24 and cases of 36.

In Japan, 1.5 liter bottles, 500 mL and 350 mL bottles and cans are sold. At times, the fizzy soft
drinks are served as fountain drinks in which carbonation is added to a concentrate immediately
prior to serving. In Europe, plastic and glass bottles of sizes 2, 1.5, 1, 0.5, 0.35, 0.33 liters,
aluminum cans of 0.33, 0.35, and 0.25 liters are popular. Almost all soft drinks are made of
refined sugars. Hence, they are often criticized for causing obesity and other health related
problems. A link to problems of sleep, bones, and teeth has been proven by many studies.

Market Structure
The soft drink industry is a global marketing phenomenon. In essence, it is simply a blended
water drink with sweeteners, flavors and additives. The success in advertising and marketing this
product lies in convincing billions of consumers to drink these instead of straight water or other
less expensing alternatives. The brand recognition of this industry is extraordinarily high. In
2002, world sales exceeded US $193 billion. In contrast, fruit sales were just US $69 billion.
Global consumption is currently in excess of 327 billion liters.

Pepsi and Coca-Cola, between them, hold the dominant share of the world market. Cadbury
Schweppes follows a close third. Coca-Cola has approximately half of the world market share
and sells 4 out of the top 5 soft drink brands in the world. Coca Cola sales for 2006 reached US
$24.1 billion. It has profit margins of 20% and a market capitalization of US $130 billion. Pepsi
sales stood at US $36 billion but this also includes snacks and other foods.

Some analysts view the definition of soft drinks incomplete and wish to add ready to drinks also,
to this industry. If they are added as well, these would add another 1.3 billion servings to 50
billion servings for these drinks.

Industry Definitions
• Fizzy drinks: drinks injected with carbon dioxide at high pressure are
called Fizzy drinks.
• Floats: soft drink with scoops of ice-cream
• Soda: another term for soft drink
• Pop: another U.S. term for soft drinks
• Coke: a derivative and brand name of Coca-Cola, often used as a label for
soft drinks in general.

Market Metrics
U.S. Market

The U.S. is closely linked with soft drinks with Coca Cola being an American in much of the
world. About 500 soft drinks companies operate in the U.S. Annual sales of refreshments total
approximately US $88 billion, of which three quarters are soft drink sales. There are about 500
soft drink bottlers in the United States.

Soft drink companies manufacture and sell beverage syrups which are essentially bases to
bottling operators that then add sweeteners and/or carbonated water to produce the final product.
Independent bottlers work under license with various soft drink manufacturers and are generally
allotted specific territories to serve. Manufacturers not only provide the bottlers with syrups and
bases, but also often provide other business services such as product quality control, marketing,
advertising, and engineering as well as financial and personnel training.

In return, the bottlers furnish the required capital investment for land, buildings, machinery,
equipment, trucks, bottles and cases. As noted previously, the soft drink industry distributes and
sells its product in two primary forms: packaged and fountain service. In fountain service, the
soft drink product is dispensed and served in cups in restaurant or other retail oriented location
with a food service station.

Coke, Pepsi and Cadbury Schweppes control over 91% of the U.S. market share. They employ
about 63,000 people in the U.S.

World Market

Global sales of soft drinks exceed 327 billion liters and are valued at more then US $393 billion
annually. North America, Europe and Japan are the most mature markets for global soft drinks.
Coco Cola and PepsiCo Inc have significant control over the global soft drinks market and both
have similar business organizations and processes worldwide. The industry includes, other than
the soft drink manufactures themselves, the bottlers and various raw material suppliers. Suppliers
of cans, plastic and glass bottles are included in this category.

Globally, the soft drinks majors continue to face challenges. One key global trend is a move
away to healthier drinks, which may put some pressure on yearly growth in sales of soft drinks.
The push to diet beverages have been well covered by the major producers – with sales of diet
Coke and diet Pepsi still strong. A recent trend is the rise in popularity of sports drinks. Bottled
water has also experienced very strong growth. Finally the quality of water used in the
manufacture of soft drinks poses serious issues for the industry. Major players are working on
the issue as water scarcity becomes a global issue.

Industry Players
• The Coca-Cola Company

Coca Cola is the number one brand globally and has been for over 40 years It is sold in virtually
every country of the world. The successful expansion that began in World War II has continued
unabated up to this date. Now, the company has more then 400 brands in its portfolio. Tab,
produced in 1963 was one of the company’s landmark marketing successes.

• PepsiCo Inc.

Pepsi-Cola was created in 1898 in New Bern, North Carolina, by druggist Caleb D. Bradham.
PepsiCo Inc. holds about one-third of the U.S. market and is the second largest soft drink major
in the world. It owns Frito-Lay snacks and other businesses. Pepsi soft drinks include brands
such as Pepsi, Diet Pepsi, Slice, Mountain Dew and Mug Root Beer.

• Cadbury Schweppes

Cadbury Schweppes PLC is the number three global soft drink producer. The portfolio includes
Squirt, La Casera, TriNa, Spring Valley, and Wave. It has cornered more then 17% of the world
market. Total sales exceed US $12.9 billion.

Trends and Recent Developments


Private labels are becoming more prominent. Private Labels are brands owned by stores and
retailed through them. These private label manufacturers are retailing their brands very
aggressively these days. Although, lowering of prices is an open option for the soft drink majors,
it reduces their profits. Private labelers offer heavier discounts and sales are increasing.

In 2007, a new issue is the lack of recycling of plastic bottled water containers. Although the
trend to bottled water is high, environmentalists point out many of these are simply filtered tap
water and that the discarded bottles are causing environmental damage. The fallout among
consumers is unclear at mid-point 2007.

After nearly a year of deliberation, Cadbury has finally announced a date for the de-merger of its
US soft drinks arm, American Beverages. Although it appears to make sense to separate this
group from the company's confectionery operations, the separation could leave Cadbury
vulnerable to a takeover, which its turnaround plan may be unable to prevent.

The de-merger, which was first announced as a possibility back in March 2007, will now take
place in May and will see the creation of Dr Pepper Snapple Group as a separate entity with a
listing on the New York Stock Exchange and its own management team. The confectionery arm
is to be renamed Cadbury plc and will be listed in London.

Sources
• YahooFinance
• Coca-Cola
• Pepsi
• Datamonitor

Next Steps
If you would like a more detailed report on soft drinks, we offer an affordable in-depth report.
You can review the Table of Contents on Global Soft Drinks and Bottled Water Manufacturing.
This report is approximately 40 pages with data, charts and graphs fully updated for the industry
in 2007.

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