Porter’s five forces of competition SUPPLIERS POTENTIAL ENTRANTS SUBSTITUTES BUYERS INDUSTRY COMPETITORS Rivalry among existing firms Bargaining power of suppliers Bargaining power of buyers Threat of new entrants Threat of substitutes
A substitute is always a threat within the beverage industry since it’s easy to take an other product. After al, it has the same function. It should taste could, and make you less thirsty. Competitors are fighting with better prices and products. Red Bull is an example of a new innovation that “came out of nowhere”.
All this leads to high rivalry between the firms which affects the companies strategies negative for example more marketing costs less profit low profit potential for other competitors.
A big problem for huge companies is that there is few line to hide behind, which you can defend you market share from. A new company’s brand can become cool and interesting just because the brand is new and unknown.
Example: Red Bull
Why is profitability so different between the concentrate business and the bottling business?