Soft Drink Industry EXECUTIVE SUMMARY In the firsthalf of the

 
 
 
 
In the firsthalf of the 1990s, domestic volume in the soft drink industry is projected to grow at the rate 4.5 percent per year. For the diet drinks, however, growth is projected in the 11.5 percent range, while growth of only 2.5 percent is projected for the regular, sugarflavored colas. Internationally, growth projections for the industry are even stronger, with a 9.0to11.0 percent annual growth rate projected for the firsthalf of the 1990s.

The increasing acceptance and popularity of diet soft drinks indicate that growth in per capita consumption of soft drinks will continue in the coming decade, in spite of significant demographic changes, because the diet soft drinks appeal to older consumers, as well as to teenagers.

The demographics of the American population are changing significantly. With respect to the soft drink industry, the most important changes are (1) the aging of the babyboom generation, which fueled the rapid growth of the industry in the 1960s and 1970s, and (2) the declining proportion of teenagers in the population, the age group the industry had hoped would fuel its growth in the 1980s and 1990s.

In 1990, six soft drink manufacturers account for more than fourfifths of the total market. These six manufacturers are CocaCola, Pepsico, SevenUp, Dr. Pepper, Crush and A&W Brands. Of these six companies, threeSevenUp, Dr. Pepper, and Crush

are owned by either conglomerates or investment organization


     
 
 
 
    

 

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ose sole business is bottling CocaCola products. The CocaCola Company retained a 49 percent interest in CocaCola Enterprises, with the remaining shares offered publicly. CocaCola Enterprises net revenues in 1989 were 8$4.0 billion. Thus, the comparable revenue total at CocaCola was $13.0 billion. Both firms are also soft drink companies, but bothpar ticularly PepsiCoare much more than soft drink companies. At PepsiCo, soft drink operations contribute only 36 percent of total revenues, and only 32 percent of profits (Standard & Poor's, 1988b, 1802b). Restaurant operations (PepsiCo is the world's largest operator of restaurants) contributed as much to revenue as did soft drink operations36 percent, and snack food operations contributed signficantly more to profits41 percentthan did soft drink operations (Standard & Poor's, 1988b, 1802b). At CocaCola, soft drink operations contributed 81 percent of revenues, and 96 percent of profits (Standard & Poor's, 1988a, 562b). It is evident that CocaCola is far more dependent on soft drink operations than is PepsiCo., but is equally as evident that CocaCola is by far the largest soft drink firm of the two. Both CocaCola and PepsiCo are perceived as Amer

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