This document provides an overview of the alcoholic beverage industry in India. It discusses the industry's role in economic development through direct sales, supplier impacts, induced impacts, and tax contributions. The document also examines trends in the industry such as the growing popularity of whisky, craft beer, and online alcohol sales. Finally, it outlines some roadblocks for the industry including developing an online presence, competing with other beverages, and working within regulations.
Alcohol & Beverage Industry Study on Kingfisher and PepsiCo
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A Study on Alcohol & Beverage Industry with specific
reference to Kingfisher and PepsiCo
Project Submitted to
H & G H Mansukhani Institute of Management
In partial fulfilment of the requirements for
Master in Management Studies
By
AKSHAT MAHENDRA
Roll No. – 2
Finance
Batch: 2018 – 2020
Under the guidance of
Internal Guide: Dr. ANJU VASWANI
2. 2
A Study on Alcohol & Beverage Industry with specific
reference to Kingfisher and PepsiCo
Project Submitted to
H & G H Mansukhani Institute of Management
In partial fulfilment of the requirements for
Master in Management Studies
By
AKSHAT MAHENDRA
Roll No. – 2
Finance
Batch: 2018 – 2020
Under the guidance of
Internal Guide: Dr. ANJU VASWANI
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H & G H Mansukhani Institute of Management
Ulhasnagar
March 2020
Student’s Declaration
I hereby declare that this reportis submitted in partial fulfilment of the requirement of MMS
Degree of University of Mumbai to H.& G. H. Mansukhani Institute of Management.
This is my original work and is not submitted for award of any degree or diploma or for
similar titles or prizes. I further declare that my project in no way promotes liquor
consumption and is purely study related.
Name : AKSHAT MAHENDRA
Class : SYMMS
Roll No. : 2
Place : Ulhasnagar
Date :
Student’s Signature:
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Certificate
This is to certify that the project submitted in partial fulfilment for the award of MMS
Degree of University of Mumbai to H. & G. H. Mansukhani Institute of Management
is a result of the bonafide research work carried out by Mr. AKSHAT MAHENDRA
under my supervision and guidance, no part of this report has been submitted for award of
any other degree, diploma or other similar titles or prizes. The work has also not been
published in any journals/Magazines.
Date:
Place:Ulhasnagar
External Guide Director
(Signature & Name of the Guide) (Signature & Name of Director)
Faculty Guide
(Signature & Name of Faculty)
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Acknowledgement
First of all, I want to thank my college for giving me a platform to commence and
gain knowledge about my chosen course for my career ahead.
Its justification will never sound good if I do not express my gratitude to the ones who
helped me gain knowledge. I would like to mention one of few such persons, my Project
Guide, Dr. Anju Vaswani without whose help my project would have neither begun
nicely nor would have reached this destination of successful completion.
I would like to raise my immense gratitude towards all those people who made my
internship experience as well as projecting it all in this report possible.
And lastly, I would like to thank my parents, friends for being pillars of supportthroughout
and gratitude in abundance to the Almighty.
AKSHAT MAHENDRA
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Table of Contents
Chapter - 1: Industry Analysis ....................................................................................................................... 9
1.1 Introduction to Sector.............................................................................................................................. 9
1.2 Role of Sector in Economic Development............................................................................................... 10
1.2.1 What’s the direct economic impact?................................................................................................. 11
1.2.2 The indirect impact on the economy:................................................................................................ 12
1.3 Trends and Developments in the Sector .................................................................................................. 14
1.3.1 The alcoholic beverage industry is not slowing down just yet........................................................... 14
1.3.2 Selling alcohol online is becoming more popular............................................................................. 15
1.3.3 Whisky is becoming an increasingly popular alcoholic beverage...................................................... 15
1.3.4 The best-selling cocktail of 2019 so far is the Old Fashioned ........................................................... 16
1.3.5 Sake is no longer just a popular drink in Japan................................................................................ 17
1.3.6 High-end spirits remain highly coveted........................................................................................... 17
1.3.7 Craft beer is no longer just a niche offering..................................................................................... 17
1.3.8 Ready-to-drink alcoholic beverages are not going away anytime soon .............................................. 18
1.3.9 Wine is going beyond the bottle ..................................................................................................... 19
1.4 Market size of the sector....................................................................................................................... 21
1.5 Porter Analysis ..................................................................................................................................... 31
Bargaining Power of Buyers .................................................................................................................... 31
Bargaining Power of Suppliers................................................................................................................. 32
Threat of New Entrants............................................................................................................................ 33
Threat of Substitutes................................................................................................................................ 35
Rivalry Among Existing Players .............................................................................................................. 35
1.6 Industry Roadblocks.............................................................................................................................. 36
1. DEVELOPING AN ONLINE PRESENCE........................................................................................... 36
2. CONSUMERS WANT ETHICAL BRANDS........................................................................................ 36
3. ALCOHOLIC DRINKS HAVE MORE COMPETITION ...................................................................... 37
4. WORKING WITHIN REGULATIONS................................................................................................ 37
5. MODERATION AND SMALLER PORTIONS.................................................................................... 37
1.7 Future outlook and projections for the sector:.......................................................................................... 44
Chapter - 2: Reviewof Literature: ............................................................................................................... 46
Chapter - 3: Research Methodology............................................................................................................. 51
3.1 Statement of the problem:.................................................................................................................... 51
3.2 Objectives of the research:................................................................................................................... 51
3.3 Methodology and Data collection:......................................................................................................... 52
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3.4 Hypothesis:..........................................................................................Error! Bookmark not defined.
3.5 Scope of the study:.............................................................................................................................. 52
3.6 Limitations of the study:...................................................................................................................... 52
Chapter - 4: Company 1 Information - PepsiCo ........................................................................................... 53
4.1 Company Overview .............................................................................................................................. 53
4.1.1 BRIEF HISTORY........................................................................................................................... 54
4.2 Product Portfolio................................................................................................................................... 55
4.3 Key Financials ...................................................................................................................................... 56
4.3.1 Market Share of PepsiCo................................................................................................................. 56
4.3.2 Profit margin of PepsiCo................................................................................................................. 57
4.3.3 Other Financials of PepsiCo ............................................................................................................ 57
4.4 Business Strategies................................................................................................................................ 61
4.4.1 Marketing Strategies ....................................................................................................................... 65
4.4.2 Growth Strategies ........................................................................................................................... 68
4.4.3 Employee retention strategies .......................................................................................................... 74
4.4.4 Company Analysis .......................................................................................................................... 81
Chapter - 5: Company 2 Information - Kingfisher....................................................................................... 86
5.1: Company Overview............................................................................................................................. 86
5.2: Product Portfolio. ................................................................................................................................ 88
5.3: Key Financials. ................................................................................................................................... 89
5.3.1 Market Share of Kingfisher ............................................................................................................. 89
5.3.2 Profit Margin. ................................................................................................................................. 91
5.3.3 Other Financials of Kingfisher ......................................................................................................... 92
5.4 Business Strategies............................................................................................................................... 94
5.4.1 Marketing Strategies ....................................................................................................................... 94
5.4.2 Growth Strategies ........................................................................................................................... 95
5.4.3 Other Strategies .............................................................................................................................. 96
5.5 Company Analysis ............................................................................................................................... 98
5.5.1 STP for Kingfishers Beer.............................................................................................................. 100
5.5.2 PESTEL Analysis ......................................................................................................................... 101
5.5.3 SWOT Analysis............................................................................................................................ 102
Chapter - 6: Conclusion.............................................................................................................................. 104
Chapter - 7:Bibliography........................................................................................................................... 106
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List of Tables:
Table 5.5.2. 1 PESTEL Analysis ...........................................................................................................101
Table 5.5.2. 2 SWOT Analysis ..............................................................................................................102
List of Charts:
Figure 1.2. 1 Economic impact of the alcoholic beverage industry ........................................................11
Figure 1.4. 1 Market size of the food and beverages industry across India from 2015 to 2020 (in billion
U.S. dollars)..............................................................................................................................................22
Figure 1.4. 2 Global Alcoholic Market Overview .....................................................................................23
Figure 1.4. 3 Global Alcoholic Beverages Market (BY TYPE)................................................................24
Figure 1.4. 4 Global Alcoholic Beverages Market(BY DISTRIBUTION CHANNEL) ..............................25
Figure 1.4. 5 Global Alcoholic Beverages Market (BY REGION) ...........................................................26
Figure 1.4. 6 Global Beverage Alcohol Packaging Market Share, 2018 ................................................29
Figure 1.5. 1 Porter’s 5 Force Model......................................................................................................31
Figure 4.3. 1 Market Share of Soft Drink Companies in India ................................................................56
Figure 4.3.2. 1 PepsiCo Profit Margin 2006-2019 ..................................................................................57
Figure 4.4.3. 1 Employee Retention Strategies ......................................................................................74
Figure 4.4.4. 1 Porter’s 5 Force Analysis................................................................................................82
Figure 4.4.4.3. 1 GE Matrix .....................................................................................................................85
Figure 4.4.4.4. 1 ANSOFF Matrix............................................................................................................85
Figure 5.2. 1 Product Portfolio of Kingfisher. ..........................................................................................88
Figure 5.3. 1 Share of Kingfisher with it’s competitors............................................................................89
Figure 5.3. 2 Kingfisher brand Market Share (Beer)...............................................................................90
Figure 5.3. 3 Beer Market Share in INDIA ..............................................................................................90
Figure 5.3.2. 1 Profit Margin of Kingfisher ..............................................................................................91
Figure 5.3.2. 2 Key Data of Kingfisher ....................................................................................................91
Figure 5.3.3. 1 Overall Summary of Kingfisher Stock.............................................................................92
Figure 5.3.3. 2 Financial highlights &Trding Info. of Kingfisher ..............................................................93
Figure 5.5. 1 Porters 5 Force Model .......................................................................................................98
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Executive Summary
Food & Beverage has become a basic commodity consumed by almost every mankind. It
cherishes both the persons who consumes as well as the Govt. Persons feel pleasure by it’s
taste and flavor & government feels pleasure bythe taxes and duties it earns on consumption
by the public. I have selected this topic to study the various strategies adopted by Pepsi &
Kingfisher, while analyzing the values and importance of various important components,
like Marketing Strategies, Growth Strategies, Retention of Employees, etc.
During the course of study, it was found that Pepsi holds 19.6% (due to stiff competition
from Coca Cola and various local players), and Kingfisher holds 88% (mainly due to
Monopolistic Command and very less local competitors.
The study and findings will help to analyze and interpret of various key issues pertains to
Beverage and Alcohol, which has explained mainly through secondary data source and
various Journals and Periodicals. It also helps to make a comparative study as far as Govt.
ex-cheque is concerned, generation of employment, Profit Margin, etc.
Chapter - 1: Industry Analysis
1.1 Introduction to Sector
The first chapter deals with the Introduction of the Alcoholic Beverage Industry in India. It
shows “The Structure of the Beverage Alcohol Industry” and provides a summary of the
beverage alcohol industry its nature and scope. This chapter briefly highlights on the
consumption patter of beer, wine and Indian made foreign liquor in India and different part
of the world.
The other aspects discussed are the growth of industry over the times, recent challenges
(import-export duties and taxes, increasing market forwine, self-regulation norm) and future
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prospects. The objective of this chapter is to throw light on the challenges faced by the
alcohol industry worldwide.
Alcohol has been widely consumed since prehistoric times by people around the world, as a
component of the standard diet, for hygienic or medical reasons, for its relaxtant and
euphoric effects, for recreational purposes, for artistic inspiration, as aphordisiacs, and for
other reasons.
Some drinks have been invested with symbolic or religious significance suggesting the
mystic use of alcohol, e.g. by Greeo-Roman religion in the ecstatic rituals of dionysus (also
called Bacchus), god of wine and revelry; in the christian eucharist, and on the Jewish
Shabbat and Festivals.
In India, ' drinking ' has remained a bad word, clubbed with the other vices. While the beer
and liquor market continuous to grow at an impressive rate even against an impressive rate
even against an economic reassion, the social stigma remains in place which manifests itself
in anti-growth state policies. United Breweries (UB), shaw Wallacs and McDowell Cpartof
UB group) presently dominate the liquor and beer market.
The market on its past is set to undergo a sea change with the arrivals of MNCS. The
structure of the industry is clearly influenced by the regulatory environment and the
consequentfragmentation of markets. The regulatory framework covers all these categories.
Besides these, there is a significant presence of illicitly brewed alcoholic beverages, which
escapes the tax and regulatory net.
1.2 Role of Sector in Economic Development
The alcoholic beverage industry is part of the consumer staples sector and has a significant
impact on the overall US economy. The Consumer Staples Select SectorSPDR Fund (XLP)
has 19.6% exposure to beverages.
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The American Beverage Licensees (or ABL) is the national association for bars, taverns,
and package stores. In an economic study, ABL estimated that the economic impact of the
alcoholic beverage industry in 2014 was more than $245 billion.
Figure 1.2. 1 Economic impact of the alcoholic beverage industry
1.2.1 What’s the direct economic impact?
Alcoholic beverages can be sold on premises and off premises. On-premise sales include
bars and restaurants. Off-premise sales include liquor orpackage stores. Thedirecteconomic
impact of on-premise and off-premise alcoholic beverage retailers in 2014 was an estimated
$108.8 billion. Direct retail alcohol sales generated more than 1.77 million jobs. These are
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jobs related only to the sale of alcohol and not nonalcoholic beverages like coffee (SBUX).
Key alcoholic beverage producers include Anheuser-Busch InBev (BUD) (ABI.BR),
SABMiller (SBMRY) (SAB.L), Diageo (DEO) (DGE.L), Brown-Forman (BF.B), and
Bacardi, and Constellation Brands (STZ). The iShares Core S&P 500 ETF (IVV) invests
about 0.18% in Brown-Forman and Constellation Brands together.
1.2.2 The indirect impact on the economy:
The alcoholic beverage industry indirectly impacts the economy through its effect on
suppliers. ABL’s estimated supplier impact of the alcoholic beverage industry was $65.6
billion. The induced impact, defined as respending in the economy by employees in the
industry and its suppliers’ employees, was estimated at $70.6 billion.
The tax contribution
According to data provided by ABL, the alcohol beverage retail industry paid $19.3 billion
in federal taxes and $16.9 billion in state and local taxes. The alcoholic beverage industry
is a highly taxed industry.
Overview
The beverage industry can be classified into nonalcoholic and alcoholic beverage
categories. According to Beverage Marketing Corporation, the carbonated soft drink is the
key nonalcoholic beverage category with a market share of 33.1% of the total US beverage
market volume. Alcoholic beverages, primarily beer, also form a dominant part of the US
beverage market.
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Figure 1.2.2. 1 Market Share of Alcoholic Beverages (US)
Alcoholic beverages, market share
According to the preliminary figures provided byBeverage Marketing Corporationfor2014,
alcoholic beverages, including beer, wine, and distilled spirits, accountfor about 20% of the
US beverage market. This compares to 80% market share for nonalcoholic beverages, which
includes ready-to-drink tea and coffee, carbonated soft drinks, bottled water, and other
categories.
Beverages constitute about19.6% of the ConsumerStaples Select SectorSPDR Fund (XLP).
Alcoholic beverages contain ethanol or ethyl alcohol, which is an intoxicating agent.
Alcoholic beverages are classified into the following three categories:
Beer, which is brewed primarily from malted barley, hops, yeast, and water
Distilled spirits or liquor, which are alcohol products that are first fermented and then
distilled
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Wine, which is an alcoholic beverage made from fermented grape juice or other fruits
The major companies in the alcoholic beverage industry include Anheuser-Busch InBev
(BUD) (ABI.BR), Molson Coors Brewing (TAP), SABMiller (SBMRY) (SAB.L), Diageo
(DEO) (DGE.L), Boston Beer (SAM), Brown-Forman Corporation (BF.B), Bacardi,
Constellation Brands (STZ), Castle Brands (ROX), Heineken (HEINY) (HEIA.AS), and
Pernod Ricard (PDRDY) (RI.PA). The iShares Russell 1000 Growth ETF (IWF) has about
~0.28% of its fund allocation invested in Constellation Brands and Brown Forman together.
1.3 Trends and Developments in the Sector
Trends That Will Transform The Alcoholic Beverage Industry Outlook
in 2020
The alcoholic beverage industry is not particularly known for being stagnant. Significant
changes and surprising trends emerge every year and 2020 is no exception. The alcohol
industry is not without its challenges.
In order to get a better understanding of where things currently stand with regards to the
alcoholic beverage industry for this year, we’ve highlighted someof the stats and trends that
you need to take note of.
Without further ado, let’s take a closerat someofthe more interesting developments, starting
with the more general trends that are impacting sales.
1.3.1 The alcoholic beverage industry is not slowing down just yet
With more and more people becoming health-conscious, alcoholic drinks are increasingly
being dropped. Youprobablyhave at least a few friends or family members who have pulled
back on their alcohol consumption lately or perhaps have even tried to stop it altogether.
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It’s obviously up to the individuals to decide what they want to do with regards to their
alcohol consumption moving forward, but it is worth noting that the industry is not being
impacted just yet by folks who are opting for drinking less.
Via FoodBev Media, the alcoholic beverage market is expected to continue growing at a
CAGR (compound annual growth rate) of over 4 percent over the next 6 years. Things can
obviously change and the expected growth rate could shrink, but for now, the outlook for
the industry continues to be positive.
1.3.2 Selling alcohol online is becoming more popular
The idea that alcoholic drinks can be purchased online and even be delivered to your
doorstep may seem like a foreign conceptto many, but industry insiders already know that
those things are becoming common.
More recent numbers pertaining to the popularity of online sales of alcoholic beverages have
yet to be made available.
Still, it wasn’t too long ago when online alcohol sales reached $1.7 billion. To be more
specific, the online sales numbers got there back in 2017, per Grocery Dive. It’s not hard to
imagine the numbers growing even larger since then.
Companies suchas Drizly and Thirstie are already starting to reap huge rewards from selling
alcohol online. The market being flooded with even more options in the near future would
hardly be a surprise.
1.3.3 Whisky is becoming an increasingly popular alcoholic beverage
Whisky is already the drink of choice for many fans of alcoholic beverages all over the
country. Prized for its distinct flavour that manages to bring together some remarkably sweet
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notes, earthy tastes, and even hints of spice, whisky is a staple of many household liquor
cabinets. And it figures to stay that way for the foreseeable future.
According to Statista, revenues in the United States’ whisky sector are at $18.126 million
for this year. As impressive as that already is, the numbers could grow even larger in the
coming years. By 2023, whisky-related revenues could spill over $20 million.
This is also where it becomes important to point out that whisky is popular not just in the
United States. Sales of the spirit are also remarkably high in other corners of the globe, with
India standing out as one of the more voracious consumers of the a-fore-mentioned liquor.
1.3.4 The best-selling cocktail of 2019 so far is the Old Fashioned
Considering the popularity of whisky, it should probably come as no surprise that the top-
selling cocktail ofthe year at this point is one that prominently features the a-fore-mentioned
spirit.
According to Drinks International, the cocktail known as the Old Fashioned is the best-seller
and it’s being sold in 30 percent of bars. This is also nothing new.
The Old Fashioned has remained as the cocktail of choice for many lovers of alcohol for
quite some time now. Drinks International even points out that this is the fifth year in a row
in which the a-fore-mentioned cocktail has emerged as the top seller.
Putting together the conventional kind of the Old-Fashioned cocktail involves mixing
together sugars along with some bitters. Whisky is then often poured into the mixture,
although there are some instances wherein brandy may be used as a substitute.
As a finishing flourish, bartenders may add some citrus rind to the cocktail to give it a hint
of freshness and acidity.
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1.3.5 Sake is no longer just a popular drink in Japan
Whisky is not the only alcoholic beverage that is making waves in terms of sales. In recent
years, a popular alcoholic drink from Asia is also showing that it has fans all over the world.
The drink in question is none other than Japanese sake. According to Nippon.com, overseas
sales of the rice wine went over ¥22.2 billion for 2018. That translates to just a little under
$205 million. The site also noted that 2018 was the first year in which international sales of
Japanese sake surpassed the ¥20 billion mark.
So, who are the biggest fans of sake outside of Japan? As it turns out, the folks in the United
States can’t get enough of it. Americans accounted for just about 30 percent of sake’s
international sales last year. Residents of Asian nations have long known about the merits
of sake and it seems like people from other parts of the globe are wising up to them too.
1.3.6 High-end spirits remain highly coveted
Due in large part to the pervasive nature of the internet, you can learn just about anything
regarding almost every possiblefield ofinterest. If you’re into alcoholic drinks in particular,
and you want to know the best options available, you can quickly look them up online.
Perhaps becauseof that easy access to information, more people are now aware of high-end
spirits and they have also displayed a willingness to spend on those sought-after products.
Per the Brindiamo Group, sales of the “super-premium” and “high-end premium” spirits rose
by 6 and 7 percent respectively in 2018. It’s a good thing that more peopleknow about those
premium products, although their fans may want to stockup just in casethe demand gets too
high.
1.3.7 Craft beer is no longer just a niche offering
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Getting that first taste of craft beer can be a transformative experience. After settling down
with the mass-produced beers that flood the marketplace, suddenly being able to try out
something different can awaken the alcohol connoisseurin you. Craft beer has done that for
many people, which is why it should not come as a surprise that the beverage has become
immensely popular.
Per Austria Juice, sales of craft beer in 2018 rose by 5 percent. On top of that, around 8,000
craft breweries are expected to be operating inside the United States by the end of this year.
Back in 2007, the number of craft breweries stood at just over 1,511.
The popularity of craft beer has reached the point where even the larger players in the
alcoholic beverage industry are expected to get in on the action at some point. Whether or
not they will succeed in their forays into producing craft beer is another matter altogether.
1.3.8 Ready-to-drink alcoholic beverages are not going away anytime
soon
You can’t read up on the latest goings-on inside the alcoholic beverage industry without
hearing something about the increasing popularity of ready-to-drink (RTD) options.
Notably, these RTD alcoholic beverages have actually been around for a long time, but it
seems as though they are peaking in popularity right at this moment.
To give youa better idea ofjust howpopular alcoholic RTDbeverages have become, Nielsen
notes that the sales of malt-based cocktail variants have grown by 597 percent compared to
last year. Not to be outdone, hard seltzer RTDs are at 193 percent while the canned wine
options are 77.5 percent.
If you’ve noticed that these RTD alcoholic beverages have become more prevalent, there’s
a good reason for that. As it turns out, plenty of people really like them.
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1.3.9 Wine is going beyond the bottle
When you think of wine, you probably conjure up this image of red or white wine flowing
forth from an elegant-looking bottle as the luscious drink is poured into a glass. That’s a
classic image, but there’s a decent chance that you may be drinking wine from a can
sometime soon.
Going back to Nielsen, the data firm points out that there are now 22 wine brands that offer
their products in cans. As many as 386 different wine options can now be sipped from a can.
Wine lovers have also not shied away from the canned variants as sales figures have
skyrocketed to $81 million after finishing at $46 million for last year.
Increased focus on health and wellness- Consumers, particularly millennials, are
more health conscious, and they’re willing to try new, healthier alternatives to
traditional soft drinks. As soda consumption declines, we’ve seen more brands
develop sparkling water products.
Healthy drinks like plant-based waters, kombucha and functional beverages are also
gaining popularity. One statistic that I find to be particularly reflective of this shift is
that in 2016, bottled water dethroned soft drinks as the leader in beverage sales.
The lower calorie, sugar and alcohol content ofhard seltzer has also been popular with
consumers. New hard seltzer products are being offered by brands ranging from
bottled water to beer, and these brands are acquiring hard seltzer companies. Sales of
non- orlow-alcoholic versions of spirits, wine and beer are likewise increasing. From
2018-2013, it’s expected that no-alcohol wine, spirits and beer will see the most
growth within the alcohol category.
Premiumization. As the economy remains strong across theglobe, consumer interest
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in more expensive drinks remains high. With access to many different roasts from
various regions around the world, consumers are eagerly becoming coffee
connoisseurs.
They visit their local coffee shop for a cup of pour-over coffee, even though it might
be double the costof a regular drip coffee. Forhome brewing, they buy single
origin, whole-bean coffees that often retail for more than twice as much as the
traditional mainstream brands.
The growth of premium mixers is also particularly compelling to watch. These zero-
alcohol, zero-calorie beverages are made with exotic herbal ingredients. They come
with a price tag reflective of these high quality ingredients, and consumers are
willing to pay for them.
Convenience. Beer and soda are no longer the only beverages that come in cans.
Canned wine, hard seltzer and cocktails have all become mainstream. They give
consumers the ease of drinking their favorite products at the location of their choice
and with the instant satisfaction they’ve come to expect.
Drinks like ready-to-drink (RTD) cold brew coffee and cold-pressed juices are also
growing in popularity as they offer the grab-and-go convenience that fits into busy,
yet healthy lifestyles.
Direct to consumer offerings. Just as cans offer convenience, so too do companies
that deliver alcohol in sixty minutes or less. Dirty Lemon, a direct to consumer line of
functional beverages, takes orders only via text messages. And with the emergence of
subscription boxes for coffee, beer, wine and spirits, as well as online liquor stores,
consumers are increasingly turning to the internet for their beverage needs. These
businesses are disrupting the traditional retail model while giving brands access to
consumers in a new way.
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Sustainability. Environmental concerns around excess packaging and single-use
plastic are influencing consumers’ decision making. Beverage companies are
responding to these concerns and becoming more eco-friendly.
Single-use plastic water bottles are an ongoing concern, especially given the increased
popularity of bottled water. Companies are starting to change their packaging to more
eco-friendly options, including aluminum cans and paper boxes.
Alcohol producers are also using alternative sources ofenergy to run their distilleries,
reducing waste from their plants and eliminating plastic packaging. By reducing their
environmental impact they can leverage their sustainability efforts as a brand
differentiator in advertising campaigns.
1.4 Market size of the sector
Global Beverage Market Industry 2019 research report signifies the detail overview of
existing market State and forecast 2019-2024. The Beverage report further covers the
comprehensive analysis of the upcoming progress of the Beverage Market.
Additionally, this report gives Beverage Market size, trends, share, growth, and cost
structure and drivers analysis.
Beverage Market Report offers detailed research about the entire Market position and
growths. This report offers an executive summary containing Market figures, Tables and
favorable factors that are estimated to drive the growth rate of the market with SWOT
Analysis. Further, it also comprises raw material suppliers, manufacturers, end-users,
traders, distributors, production, price, capacity, future strategies and industrial
developments.
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Figure 1.4. 1 Market size of the food and beverages industry across India from
2015 to 2020 (in billion U.S. dollars)
Alcoholic Beverages Market Overview:
The global alcoholic beverages market was valued at $1,439 billion in 2017, and is expected
to reach $1,684 billion by 2025, registering a CAGR of 2.0% from 2018 to 2025. Most
cultures across the globe have traditionally consumed various types of alcoholic beverages;
however, local specialty alcoholic beverages account for the majority share.
Only a small number have evolved into commodities that are produced commercially on a
large scale. On a global level, beer from barley, wine from grapes, and other distilled
beverages are sold as commodities. The pricing ofthese beverages is determined bythe costs
of production and the duties levied on those costs.
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The effects of prices as measured with price elasticities dier across countries and in different
time periods. The growth of the global alcoholic beverages market is driven by increase in
global young‐ adult demographic, surge in disposableincome, and rise in consumer demand
for premium/super premium products.
However, high cost of premium/super premium products and escalation of nonalcoholic
beverages market, owing to increase in health concerns are expected to restrict the market
growth in the near future.
Furthermore, recent developments in honey-derived products appear to be a viable
alternative to produceinnovative alcoholic drinks for the consumers and to drive the future
growth of this market.
Figure 1.4. 2 Global Alcoholic Market Overview
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The report segments the global alcoholic beverages market based on type, distribution
channel, and region. On the basis of type, the market is classified into beer, distilled spirits,
wine, and others. Various types of beer include ale, lager, and hybrid, whereas distilled
spirits include rum, whiskey, vodka, and others.
Similarly, wine is bifurcated into sparkling or fortified. Depending on distribution channel,
the market is divided into convenience stores, on premises, liquor stores, grocery shops,
internet retailing, and supermarkets. Region wise, it is analyzed across North America,
Europe, Asia-Pacific, and LAMEA.
Figure 1.4. 3 Global Alcoholic Beverages Market (BY TYPE)
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In 2017, the distilled spirits segment accounted for more than one-third of the global market
share. In terms of volume, this segment held approximately 28% share in the overall market,
attributed to increase in premium/super premium whiskey consumptionand the demand shift
from beer to distilled spirits such as rum, whiskey, vodka, and others.
Thus, this segment is anticipated to provide high stability in terms of demand along with
significant return on investment for the stakeholders, owing to its high growth rate and
significant revenue contribution.
Figure 1.4. 4 Global Alcoholic Beverages Market(BY DISTRIBUTION
CHANNEL)
The number of supermarkets is on an increase in almost all major cities, with rapid
urbanization in various emerging economies. Moreover, availability of products at low cost
26. 26
and accessibility to a wide variety of alcoholic beverages available in supermarkets fuel the
growth of this segment.
Furthermore, high visibility and attractive assortment of alcoholic beverages, increase in
disposable income of consumers along with changes in preferences toward premium
products boost the growth of this distribution segment.
Figure 1.4. 5 Global Alcoholic Beverages Market (BY REGION)
Consumption ofalcoholic beverages in North America is expected to increase due to growth
in young‐ adult population and elevated consumption of high-quality alcoholic beverages.
On the other hand, emerging markets such as China and India are expected to witness
significant increase in demand for alcoholic beverages during the forecast period in Asia-
Pacific.
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This is attributed to substantial growth in disposableincome in this region. However, Europe
is expected to grow at the highest rate, closely followed by LAMEA, owing to increase in
alcohol drinking demographics. Major companies have adopted agreement, productlaunch,
expansion, and merger strategies to sustain the intense market competition.
The key players profiled in the report include Anheuser-Busch InBev SA/NV, Bacardi
Limited, Beam Suntory Inc., Constellation Brands Inc., Diageo Plc, Heineken Holding NV,
Molson Coors Brewing Co., Pernod Ricard SA, SABMiller Ltd., and United Spirits Ltd.
Other market players (not profiled in report) in the value chain include AccoladeWines Ltd.,
Asahi Breweries Ltd., Brown-Forman Corp., Carlsberg A/S, China Resources Beer
Company Limited, Rémy Cointreau SA, Tsingtao Brewery Co. Ltd., Treasury Wine Estates,
Thai Beverage Public Co., Ltd., and The Wine Group.
Key Benefits for the Alcoholic Beverages Market
This report provides an extensive analysis of the current trends and emerging
estimations & dynamics in the alcoholic beverages market.
In-depth analysis of alcoholic beverages market size is conducted, and estimations for
key segments between 2017 and 2025 are provided.
Factors that drive and restrain the growth of the market are provided.
Market share for all segments with respectto each geography is detailed in the report.
Key market players are profiled, and their strategies are analyzed thoroughly, which
provide a competitive outlook of the alcoholic beverages industry trends.
Product Insights
Glass material segment led the global alcoholic beverage packaging market in 2018 and is
expected to retain its leading position over the forecastperiod. Glass is 100% biodegradable
and thus is widely preferred in alcoholic beverage packaging.
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In 2016, there were 4.74 billion number ofwine bottles produced in United States, according
to the Wine Institute of America. Moreover, rising demand for beer in European and Latin
American countries is projected to boost the demand for glass packaging.
In addition, these materials are highly durable, water-resistant, and have flexible structure,
which also boosttheir demand. However, plastic segment is expected to witness the fastest
CAGR of 6.2% from 2019 to 2025 as this helps form lighter, thinner, and compact
packaging.
Currently, there are more than 30 different types of plastics being used for packaging.
Furthermore, manufacturers are investing in flexible plastic packaging, which will also have
a positive impact on the segment growth.
Application Insights
Beer was the largest application segment in 2018 and the segment will expand further due
to increasing consumption of beer.
Furthermore, improving brewing technologies coupled with the usage of best-quality raw
materials have boosted the products demand.
Major breweries are launching their products in developing countries, such as India, which
is also likely to contribute to the segment growth.
For instance, in June 2018, Victory Brewing Company introduced its standard lager beer in
the Indian market.
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Figure 1.4. 6 Global Beverage Alcohol Packaging Market Share, 2018
Wine application segment is projected to witness the fastest CAGR of 5.2% from 2019 to
2025. Product innovation, in terms of package designing, is the key factor for segment
growth. Forinstance, in February 2019, Bride Valley Vineyard, a sparkling wine producer,
introduced a Cremant in a stripped-back packaging.
Regional Insights
North America and Europe jointly held a share of more than 50% of global market in 2018.
These regions are expected to witness growth in future as well owing to increased
consumption of premium alcoholic beverages including spirits and wines.
For instance, U.S. has been witnessing a growing demand for vodka. Europe has been
witnessing high demand for flavored beer as one of the premium drinks.
Asia Pacific is projected to be the fastest-growing regional market owing to the increasing
consumption of alcoholic beverages.
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Moreover, rising population and disposable income levels along with rapid urbanization in
countries, such as China, India, and Thailand, are further anticipated to boost the market
growth. Introduction of new products, interms offlavors, will also fuel market development.
For instance, in November 2018, De Brabandere Brewery launched a premium beer,
‘hopper’, in collaboration with Brindco, one of the prominent importers of alcoholic
beverages. The product is offered in two variants, Blonde and a Witbier.
Alcoholic Beverage Packaging Market Share Insights
Key companies in the global market include :
1) Crown Holdings Inc.,
2) United Bottles & Packaging;
Vetreria Etrusca S.P.A.,
3) Owens-Illinois (O-I), Inc.,
4) OroraPackaging Australia Pty. Ltd.,
5) Encore Glass; Creative Glass; Ball
Corp.,
6) Tetra Pak International S.A., &
7) Brick Packaging, LLC.
Technological and product development is the key strategy undertaken by most of these
companies to gain maximum market share. For instance, in January 2019, Saxon Packaging
Ltd. claimed a 61% increase for paper-based packaging solutions for low-alcohol drinks.
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1.5 Porter Analysis
Figure 1.5. 1 Porter’s 5 Force Model
Bargaining Powerof Buyers
o The soft drink market is the largest group in the larger beverage industry. The soft
drink industry is worth $60 billion dollars. Three firms control 89% of the United
States soft drink sales.
o To say the least there is plenty of the pie to go around but it is hard to gain market
share. There are a large number of customers with the average American consuming
over 56 gallons of soda a year.
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o The average soft drink costs under $2 which makes each individual purchase
relatively insignificant.
o Because the soft drink industry is very competitive, switching suppliers is relatively
easy and the price difference is rather small.
o Difference can occur based on geographic location and how far the products need to
travel.
o There is no need for information on how to use the product it is a simple task.
o The buyer is not aware of the need for additional information because all the
information that is needed is provided.
o There are no steps to using the productand all nutrition facts and ingredients are listed
on the label.
o Because a softdrink is a hard thing to duplicate in your houseand takes a considerable
amount of time, manufacturing your own soft drink is inconvenient especially when
you take into consideration how low of a cost the product is.
o Customers are highly sensitive to the price of soft drinks and are willing to change
brands if one becomes much more expensive than the other. Softdrinks are not a need
and people won’t pay any price for it.
o Products are very unique in the soft drink industry and people are very brand loyal to
the drink of their choose.
o Though many of the sodas are rather similar in type they have distinct tastes. Firms
often provide incentives to customers on the buyer side.
o These incentivizes are often done in the form of contests such as win tickets to the
super bowl or deals such as get 20% off admission to a local theme park.
o These deals can often sway customers to choose a particular brand.
Bargaining Powerof Suppliers
o The inputs specifically the materials are extremely differentiated as every firm is
trying to create the bestproduct. Eachfirm has a different formula, colour, and flavour
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for their beverage. No two products are typically exactly alike. Productinnovation is
necessary to fill the buyers need for a variety of tastes.
o Firms can switch between suppliers very quickly and easily. Suppliers for the soft
drink industry do not hold much competitive pressure. Suppliers to the industry are
bottling equipment manufacturers and secondary packaging suppliers.
o In terms of equipment manufacturers, the suppliers are generally providing the same
products. Thenumber ofequipment suppliers is notin shortsupply, so it is fairly easy
for a company to switch suppliers.
o This takes away much of suppliers’ bargaining power. It is fairly easy to become a
supplier within the industry and thus they would not find it difficult if they wanted to
enter.
o The companies will choosethe suppliers that do the best job and have the best price.
If another supplier does the same job but is cheaper, the firm can switch without much
issue.
o There are many current and potential suppliers in this industry. Soft drink companies
own a portion of their own supply companies. For current and potential suppliers it is
fairly easy to enter or succeed in the industry as supplying the soft drinks is not a
difficult task.
o All about price and how efficient of a delivery job they do. Companies are willing to
switch suppliers whenever is necessary.
o Business is extremely important to the suppliers as the soft drink industry is an
enormously profitable market. The main revenue for these supply companies comes
from delivering the soft drink beverages and equipment for the firms to the
customers.
Threat of New Entrants
o Existing firms have costand performance advantage in this industry. This is because
existing firms have already purchased large capital expenditures and have economies
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of scale. They also have direct supply and distribution channels setup
o Soft drinks are not proprietary products because anyone can make soft drinks. The
only proprietorship is on patented flavours and brands.
o The majority of soft drinks have well-known brand identities, with the exception of
generic brands. Brand identities define soft drink flavours (i.e. Sprite means lemon-
lime, or Coke means cola)
o There are no significant costs in switching suppliers. The soft drink industry is very
competitive, so prices only fluctuate slightly depending on geographical location
(transportation) or short-run sale discounts.
o A lot of capital is needed to enter this industry because there are large capital costs
needed for manufacturing. Bottling, distribution, and storage could be contracted out,
but it would likely increase costs in the long run and weaken the supply chain.
o A newcomer to the industry would face difficulty in assessing distribution channels.
The major brands already control the main distribution channels, such as big
supermarkets, gas stations, and restaurants. They have low costs, competitive pricing,
and strong business relationships.
o Experience in this industry does help firms to lower costs and improve performance.
The major brands run on economies of scale and have experienced the highs and low
of the industry and overcome them. New entrants can learn from the first entrant’s
history but do not have first-hand experience.
o There are licenses, insurances, and other difficult qualifications required in this
industry. Companies must get FDA approval to sell their product, have licenses to
produce and distribute internationally, and insurance to cover potential lawsuits,
accidents, or faulty product.
o A newcomer in this industry can expect retaliation from current companies. The soft
drink industry is an oligopoly with existing firms having strong distribution channels,
relationships with suppliers, retailers, and brand value to customers.
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o The industry leaders have the tools necessary to force out new competitors.
Threat of Substitutes
o Available substitutes do not have performance limitations or high prices that would
justify their use over the products in the softdrink industry becausesubstitutes are not
priced at a high enough cost where it would affect their use as a mainland product.
o Customers would not incur costs in switching to substitutes.
o The choice of switching to a substitute for a customer would in most cases be the
difference of cents. There are substitutes for carbonated beverages, like water, tea,
sports drinks, etc.
o Customers are not likely to go for substitutes because brand name loyalty is a very
strong competitive pressure in this industry.
Rivalry Among Existing Players
o The industry is not growing rapidly. The growth rate for the industry is not rapid; it is
in fact relatively small. This makes it very difficult for new entrants to compete with
the already thriving firms in the industry.
o The industry does not necessarily have overcapacity at the moment. However, if a
newcomer were to try and enter the industry, its current players would make it very
challenging because of brand loyalty and recognition amongst customers.
o The fixed costs are a high proportionoftotal costs forafirm in the softdrink industry.
Fixed costs actas a firm barrier to entry and can include costs forwarehouses, trucks,
labour, etc.
o There are significant brand identities among the firms in the industry, which is why
brand names are an important competitive edge amongst new businesses.
o It actually would be difficult to get out of business because of money lost from fixed
costs and advertisements, as well as binding contracts with set distribution channels.
o Customers would not incur high costs from switching from one player to another.
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o The most they may incur would be a few cents because the prices in the industry do
not fluctuate much among the firms.
o Since the products in this industry are simple carbonated beverages, there is no need
for significant customer-producer interaction because customers purchase the
products mainly based on taste.
o Market shares in the industry are not more-or-less equally distributed among
competitors. This is evident because there are three main firms that own
approximately 90% of the industry, yet there are over 100 companies in the industry.
1.6 Industry Roadblocks
Whether you are a wine, beer, or spirits business, there are a few key trends that are posing
as challenges in today's market. These shifts are not just affecting us State-side but are
present on a global scale. There is a lot of influence from our European neighbours and their
attitude toward drinking that will impact how U.S. consumers purchase their beverage
products. Additionally, legislation is developing every day that stillers and distributors must
comply with in order to reach their customer. We've broken down some of the biggest
challenges that the alcoholic beverage industry is facing in 2018.
1. DEVELOPING AN ONLINE PRESENCE
The distribution of wines, beers, and spirits is steadfast in tradition. While most markets are
heading online to reach a broaderrange of consumers, the alcoholic beverage industry is still
trying to carve out their unique stance.
Many brands can forge ahead alone, or they can partner with online distributors to get their
name out there. While the U.S. online wine and spirits presence pales in comparison to our
foreign neighbours, it looks like we will have to adopta luxurious feel to the online offerings
in addition to convenience if we want to be competitive.
2. CONSUMERS WANT ETHICAL BRANDS
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Alcoholic beverages transcend both genders and all ages—as long as they are 21 and up.
Consumers are more conscientious and are looking for their products to be gender neutral.
We've already seen this trend come to fruition with Johnny Walker introducing a new logo
that depicts a woman. Drinking and its story is no longer a man's game. If companies want
to stay relevant, they will need to tailor their campaigns to be all-inclusive and broaden their
demographic range.
3. ALCOHOLIC DRINKS HAVE MORE COMPETITION
New legislation is developing every day across the United States making it legal to
sell cannabis. This rising tide is growing in popularity and hampering the growth of the
beverage industry. Fortunately, females, who represent a substantial portion of consumers
in the US beverage industry aren't leading the way downthis new green path. They still favor
a wine orspirit. If beverage companies want to stay competitive and relevant, then they need
to heed the gender-neutral advice and focus their campaigns on attracting more female
consumers.
4. WORKING WITHIN REGULATIONS
Regulations are single-handedly the biggest challenge for any wine, beer, or spirits company
who chooses to trade within the United States. There aren't just federal laws, but there are
also state laws you must comply with to produce and sell your product.
In addition to meeting with bothstate and federal legislation, there is also the concern about
taxation. This again differs from state-to-state further adding to the complexities of trying to
distribute your product.
5. MODERATION AND SMALLER PORTIONS
With cannabis consumption on the rise and becoming a significant competitor, the beverage
industry will need to considerhow it packages and mindfully presents its products. Cannabis
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is touted as a healthier alternative. If beverage companies want to be taken seriously, they
will need to take measures that incorporate smaller pack sizes or serving options. There is
also movement in the way of moderation. Offering smaller product sizes will help balance
the product desire for both the newer and more mature consumer.
1. The ‘Plastic ban’
The enforcement of the ‘plastic ban’ is rooted in an ideology that has lasted several years
amid discussions on international platforms and has now come to fruition. The consistent
growth pace of industrialization, of which the F&B sector is a major arm, has had a
disastrous impact on the environment, and has led to eco-friendliness becoming the next big
mantra out there.
Knowingly or unknowingly, the excess consumption and improper disposal of plastic has
come up as one of the major challenges faced by food and beverage managers today. In this
scenario, a productthat is tagged as ‘eco-friendly’, quite naturally, has more of a consumer
connection and is likely to accrue lucrative sales than a productthat is popularized to harm
the environment.
Food and beverage manufacturers and retailers are now striving toward making the food
manufacturing process highly conducive to the environment through the adoption of
numerous recycling practices.
The deployment of green business practices – right from the production to the packaging
and supply chain management is a crucial solution to tackling the current issues in the food
industry.
Another environment-related constituent that forms a part of the present challenges of food
and beverage industry is the issue of waste management. Undeniably, the food industry
39. 39
generates a considerable amount of waste, right from sourcing the raw material to food
retailing and distribution.
The negative impact ofthe same has been identified as one ofthe mostcrucial environmental
issues in food and beverage industry that needs to be dealt with as soon as possible. In
response, manufacturers have been striving to bring about eco-friendly manufacturing
practices, waste management programs, recycling techniques, and more.
A major example of how F&B industry contenders have been complying to the plastic ban
is that of Nestle. Last year, Nestle declared its decision to use 100% recyclable/reusable
packaging by 2025. Additionally, retailers such as Asda, Café Coffee Day, and McDonald’s
have also announced their commitment to go plastic-free and bring about sustainable
practices in production and packaging.
2. The rise of health-consciousness among consumers
The increasing incidences offood-related disorders have prompted consumers to bring about
vital changes in their diet and lifestyle, making them more health-conscious than ever.
Automatically, the train of thought is diverted towards purchasing foods without added
preservatives that might hamper one’s health.
The demand for products that do not carry the ‘healthy’ label is then bound to reduce, and
to stay at the top, the need to eliminate artificial constituents from products has come to the
fore as one of the major challenges faced by food and beverage managers.
One of the major factors that has led to increased diabetes prevalence is obesity, linked to a
major intake of sugar via processed foods and cereals.
This realization has, since the last half a decade, led to consumers shying away from products
containing artificial sweeteners and other added preservatives.
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Thus, one of the biggest challenges of food and beverage industry is for manufacturers to
come up with healthy products that provide ample nutrients; yet, at the same time, do not
take away from the aesthetics of the brand.
This has led to a variety of nutrient-rich foods making it to supermarket aisles, labelled
‘gluten-free’, ‘dairy-free’, ‘sugar-free’, and the like. The widespread expansion of food
supplement ingredients market is an apt example justifying the aforesaid.
As consumers tend to purchase products with value addition, food products reinforced with
proteins, vitamins, and other nutrients have better chances of a massive sale, fueling food
additives market, which is slated to register revenues over USD 115 billion by 2024.
Adding value to food products without diminishing their quality or compromising on taste,
and yet maintaining the cost-effectiveness, adds to the long list of current issues in the food
industry. Yet another trend that forms the crux ofthe challenges faced by food and beverage
managers is the rising demand for organic food.
The drastic reduction in the demand for processed foods has fueled the organic food market,
increasing awareness levels regarding natural foods and their positive health impact. This
has favored the demand for natural, healthy, food products, pushing organic rice protein
market trends.
The dramatic no-show of consumers from the ‘center of store’ aisle products also
demonstrates that consumers prefer to stay away from packaged goods, which is why
brainstorming strategies to combatthe increasing demand for organic products is one of the
major challenges faced by food and beverage managers today.
A recent example of how beverage manufacturers have been tackling this challenge is that
ofCocaCola, which has recently launched the first sugar-free flavored water in Japan, under
the brand “I LOHAS”.
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3. The rising concerns about product traceability
Traceability is one ofthe pivotal challenges in food and beverage industry, notjust forrecord
management but also to fulfil the bottomline – generating revenue for every sector. Of late,
consumers have been taking increasing interest to know what goes into their food, that has
led ‘ingredient labelling’ forming a major part of the packaging process.
With public trust in food supply chains reducing drastically and awareness pertaining to
glitches in the F&B supply chain since the last decade or so, end-to-end traceability has
emerged as one of the latest trends in food and beverage industry.
Having recognized the significance of maintaining precise data records, food processing
companies are now on their way to deploy advanced technology, such as IoT, AI, and the
blockchain, for tasks such as supply chain analysis, weight measurement, temperature
monitoring, etc. Say for example, Global retail giant Auchan, toward the end of 2018,
planned to expand TE-FOOD’s blockchain solution in a bid to improve food transparency.
4. The ascent of meat-free & veganism trend
The growing concern toward animals is ushering in a change in the food patterns of the
masses. With more and more consumers vying for vegetarian and vegan products, the
demand for meat and other products has observed a significant decline, posing as one of the
major challenges in food and beverage industry.
Social platforms and online information portals have paved the way for animal abuse
awareness, and people prefer purchasing products with labels such as “humane-certified”
and “cage-free”. Last year, in August, nine Japanese companies vowed to end testing on
animals, post discussions with the PETA U.S.
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Manufacturing products thatvouchforanimal safety has becomeone ofthe prime challenges
for food and beverage industry, as food manufacturers must maintain their reputation with
regards to ethical treatment of animal concern.
On this note, companies have come up with meat-free alternatives to keep the retail chains
running. Say for example, Sainsbury, Aldi, and Nestle have recently come up with the idea
of launching meat-free products at retail outlets.
5. The optimum level of stringency in the regulatory landscape
While it may be construed as stating the obvious – the fact is, that the F&B space is very
stringently governed by regulations. Organizations suchas the FDA, EPA, OSHA, and FTC
have been rather diligent in enforcing norms pertaining to the launch of healthy products,
regulating food labels, maintaining a clean, hygienic environment, and the like.
While mostcompanies are known to perfunctorily adhere to the norms, the periodic changes
subject to waste disposal, food quality, raw material, surplus production, documentation,
etc., have cropped up to be one of the major challenges faced by food and beverage
managers. Often, the continuously changing reforms have led to companies recalling food
products from their stores.
Say forinstance, TysonFoods recently recalled over 190,000 pounds of ready-to-eat chicken
fritters post order from the U.S. Department of Agriculture’s Food Safety and Inspection
Service (FSIS), while grocery store chain Kroger recalled three frozen berry varieties after
the FDA discovered that some of them tested positive for hepatitis A.
In order to deal with the same, companies are required to bring about utmost accuracy and
precision in their business operations – right from the manufacturing to the distribution
processes.
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6. The increasing complications of inventory management
Given the limited shelf life of food products, inventory management has come up to be one
of the current issues in the food industry. The perishability factor is responsible for fact that
F&B inventory is highly susceptible to foodborne pathogens and more, if not stored
hygienically.
This has prompted manufacturers to adoptnew software to alleviate these issues, given that
the presence of foodborne bacteria may have a disastrous impact on the company’s
reputation. Amid this backdrop, food pathogen testing market will stand tall as one of the
most profitable arms of the global F&B industry.
The F&B spaceis also highly machine-controlled, given its expanding growth pace, and is
likely to continue adopting advanced technology to keep up with consumer trends and latest
innovations. The demand for enhanced inventory management software in food processing,
canning goods, and packaging products forms a vital part of the challenges of food and
beverage market, and numerous companies are making efforts to help the F&B sector deal
with the crisis.
Say for example, toward the end of 2018, United Overseas Bank declared that it has upsized
UOB BizSmart – its cloud-based, integrated digital solution to help small business in the
F&B industry.
7. The pervasive presence of eCommerce
An online presenceis oneof the major challenges offood and beverage industry, considering
that consumers are more tech-savvy and socially informed, thanks to the Internet. While core
industries, like appliances, electronics, textiles, and other domestic products have already
established their presence in the commerce domain, this sector has been relatively slow on
the upkeep.
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Of late though, wholesalers and retail companies have already begun to invest in grocery e-
commerce, however, it is important that most manufacturers have a presence on the World
Wide Web, in order to tackle what seems to be one of the most crucial challenges of food
and beverage industry.
Citing an instance of the same, Reliance Industries’ retail arm, Reliance Retail Ltd., has
made it to the headlines for planning to test its food and grocery app prior to the venture’s
commercial launch.
Undeniably, the challenges faced by food and beverage managers are dime a dozen, owing
to the ridiculously fierce competition and the fact that a single change is bound to affect the
entire supply chain.
Newer markets, changing consumer spending, increasing food prices, global appetite, and
advanced technology are slated to bring about extensive changes in this sector in the next
few years. Despite the consistent challenges of food and beverage industry, it is predicted to
show healthy gains in the future.
It remains to be seen how the global F&B market will fare in the forthcoming years, driven
by disposable income levels, changing lifestyles, and favorable government reforms.
1.7 Future outlook and projections for the sector:
The global beverage market is evaluated at US$1,544.61 billion for the year 2018 and is
projected to grow at a CAGR of 3.1% to reach the market size of US$1,854.589 billion by
the year 2024.
The market is projected to grow at a decent rate during the forecast period owing to
the growing per capita global consumption of drinks in major developing regions
owing to rising disposable income and changing preferences of consumers towards
ready to drink beverages.
45. 45
Growing focus by key market players are investing heavily on mergers, acquisitions,
and productlaunches in orderto gain a competitive advantage over other players also
show the growth potential of the market in the coming years.
The growing per capita consumption of alcoholic drinks and consumer preferences
regarding premium products is also expected to augment the market growth.
Rising health concerns regarding the sugar content of packed beverages coupled with
health concerns regarding consumption of alcohol may hinder the growth of the
market during the forecast period.
The launch ofnew products inthe non-alcoholic segment suchas with drinks healthier
content and zero sugar is further projected to create ample opportunities for the market
during the forecast period and beyond.
Geographically the Asia Pacific is expected to hold the dominating share in the market
owing to rising disposable income, rapid urbanization coupled with changing the
lifestyle of consumers.
Some of the major players discussed in this report are Unilever, The Coca Cola
Company, GCMMF (Amul), Bacardi Limited, Carlsberg Breweries A/S, and
Heineken N.V. among others.
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Chapter - 2: Review of Literature:
Brand preference in soft drinks sector:
William R. George (1999) reveals purpose of study of factors responsible for brand
preference in soft drink industry, increasing competition more, due to globalization is
motivating many companies to base their strategies almost entirely on building brands.
Brand preference means to compare the different brands and opt for the most preferred
brand. This brand preference is influenced by various factors.In the identification of factors
affecting the brand preference, it was concluded that Brand persona is the most effective
factor that affects the brand preference. This Brand persona deals with the personality
aspects orthe external attributes of brand, thus it can be said that consumer prefer any brand
by looking at the external attributes of a brand.
Colour and flavour rule consumer preferences:
Donnelly (1995) said intensity of color and the flavors are the key drivers behind
consumer acceptance of soft drinks. But packaging and labelling are not as important for
winning over consumers, according to findings published in the journal Food Quality and
Preference,
The study involved consumers at different stages of development and highlights the
importance of adopting a “sensory marketing approach,” said the researchers from French
research organisation Adriant, the University of Rennes. “Companies need to continuously
innovate to maintain market leadership,” wrote the researchers.
“When the market is overloaded the challenge consists in creating innovative products
able to attract and satisfy consumers.” “This experiment showed the feasibility of the
proposed multi-sensory design method based on mixed qualitative and quantitative
approaches.”Thestudy also demonstrates the importance of flavour and colour selection for
new products.
47. 47
The global flavours market was been valued at some US$18bn in 2006 (Business
Insights). Meanwhile, the value of the international colourings market was estimated at
around $1.15bn in 2010, up 2.5% from $1.07bn in 2007, according to Leatherhead Food
International (LFI). Natural colours now make up 31 per cent of the colourings market,
compared with 40 per cent for synthetics, according to LFI.
Sense of consumers:
Stephen Daniells (2008) said these four factors were identified for the formulation:
four colour intensities), three flavourings, two label types (soft versus hard), and two pack
sizes (standard versus oversize). By using bothquantitative (hedonic testing) and qualitative
(focus groups) approaches, the researchers found that “the main factors which drive
consumer preference for this concept are colour intensity and flavouring”.
Indeed, colour intensity accounted for43% and flavour 32% ofthe consumers’ overall
liking. “Pack size and label type are taken into account by the consumer to a lesser extent,”
they added. “This methodology of a qualitative screening associated to a conjoint analysis
on relevant sensory attributes has shown good performances to fit consumers’ expectation:
it has now to be reproduced, as every brand, concept and product is a unique combination
designed for a specific consumer group,” concluded the researchers.
Taste or health:
Beverly J. Tepper (1998) examined the relative contributions of taste and health
considerations on consumer liking and purchase intent of cola drinks. Eight types of
commercial cola drinks were evaluated by 305 adult consumers who also completed a brief
questionnaire on soft drink consumption habits.
Data were analyzed using factoranalysis. Results revealed that purchaseintent of cola
drinks was strongly related to degree ofliking and to several key sensoryattributes including
saltiness, drinks flavor and greasiness. These variables emerged as the first factor in the
48. 48
analysis, suggesting that consumers perceive these characteristics as being most important
in their choice of cola drinks. Second described a health dimension and was related to
respondents' attitudes toward fat in the diet.
Third factor comprised two remaining sensory attributes (color and crunchiness),
which apparently were of minor importance to the respondents. These data suggest that in
spite of current concern about reducing dietary fat, health remains secondary to taste in the
selection of cola drinks for consumers in this population.
Consumer awareness and consumption pattern of soft drink product:
Mita Sujan (1990) aimed to investigate the degree of brand awareness of various soft
drink products in relation to background and education of the household, the consumption
pattern of various soft drink products consumed by respondents in the light of their areas,
income levels and education. a sample of 200 respondents comprising 100 form rural area
and 100 from urban area were taken.
Data are analyzed with the help of mean. The finding of this study reveals that there
is low degree of brand awareness in rural areas, whereas there is a moderate degree ofbrand
awareness in urban area.
The highly educated rural and urban respondents have high degree ofbrand awareness
for soft drink products, and the less educated rural and urban respondents have low degree
of brand awareness for soft drink products.
Marketing Strategy:
Marketing strategy is conceptually very simple. It begins with an analysisof thetarget
market which includes company, conditions, competitors, and consumers. Next, Market
segmentation:
This involves identifying product-related need sets, grouping customers with similar
need sets, describing each group and selecting an attractive segment to serve.
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The marketing mix includes the product, price, communications, distribution, and
services provided to the target market. The final stage Outcomes involves analysis of firm’s
product position and customer satisfaction resulting from implementation of the
strategy.(Tanner Okun1990)
Brand preference:
Brand preferences represent a fundamental step in understanding consumer choices.
A deeper understanding of such preference dynamics can help marketing mangers’better
design marketing program and build a long term relationship with consumers.
Despite the existence of some studies investigating how brand preference is built and
changed, most of them focus on examining factors from consumer behavior perspective or
advertising perspective. (Schmitt 1999)
Advertisement effectiveness:
Advertising effectiveness pertains to how well a company's advertising accomplishes the
intended. Small companies use many different statistics or metrics to measure their
advertising effectiveness.
These measurements can be used for all types of advertising, including television, radio,
direct mail, Internet and even billboard advertising. A company's advertising effectiveness
usually increases over time with many messages or exposures. But certain advertising
objectives can be realized almost immediately. (Rick Suttle 2009)
Brand awareness:
Brand awareness is a Extent to which a brand is recognized by potential customers,
and is correctly associated with a particular product. Expressed usually as a percentage of
target market, brand awareness is the primary goal ofadvertising in the early months or years
of a product's introduction.(Aaker1999)
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Celebrity endorsement:
Celebrities are people who enjoy public recognition by a large share of a certain group
of people. Whereas attributes like attractiveness, extraordinary lifestyle or special skills are
just examples and specific common characteristics cannot be observed, it can be said that
within a correspondingsocialgroup celebrity generally differ from the socialnorm and enjoy
a high degree of public awareness. Last but not least, celebrities act as spokespeople in
advertising to promote products and services (Friedman 1995)
Customer satisfaction:
Customers are always aiming to get maximum satisfaction from the products or
services that they buy. Winning in today’s marketplace entails the need to build customer
relationship and not just building the products; building customer relationship means
delivering superior value over competitors to the target customers.
Whether an organization provides quality services or not will depend on the
customers’ feedback on the satisfaction they get from consuming the products, since higher
levels of quality lead to higher levels of customer satisfaction (Kotler& Keller. 2009)
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Chapter - 3: Research Methodology
3.1 Statement of the problem:
There are people and they all are a potential consumer in the soft drink market. Since there
are so many products, the most important thing for organizations is to understand what are
consumer wants and needs in this competitive business environment. In the market since
there is similar type and prices, analyzing and identifying factors that influence the customer
is vital. Moreover, consumers want to try on something new like taste of excitement and so
on. Therefore, it becomes more important to answer consumer’s demands to retain the
customer.
Being aware that customers are performing a major role in marketing, finding out how
the factors that are essentially affecting the purchasing intentions are important. Analyzing
the process of buying activities, how customer decide and make purchase over the market
and what their needs are to be identified by soft drink providers in order to satisfy and
succeed in the competitive business environment. Customer behaviors are influenced by
different factors such as culture, social class, references group relation, family, salary level
and salary independency, age, gender etc. and so they show different customer behaviors.
3.2 Objectives of the research:
The objectives of this study are as under:
To do Industry Analysis of Alcohol & Beverage Industry.
To study various Strategies adopted by Kingfisher & PepsiCo.
To analyze and study in efficient way, the Key Financials of Kingfisher & PepsiCo.
To perform PESTLE and SWOT analysis of Kingfisher & PepsiCo.
To find out the different factors effecting the growth of Kingfisher & PepsiCo.
To analyze various Road-blocks of Alcohol & Beverage Industry.
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3.3 Methodology and Data collection:
a. Research Design: Descriptive
b. Sampling Design: Random Sampling
c. Data Type: Secondary.
SECONDARY SOURCE:
The secondary data are collected through various sources like:
1. Through information on the internet related to company, competitors etc.
2. Review of articles being published on the topic in various journals online and using data
from other websites.
3.5 Scope of the study:
This study basically tries to discover the current position of Alcohol & Beverage Industry
with special reference to Kingfisher & PepsiCo in the market. It also tries to discover the
consumption habit of the customers, individually as well as society at a large. Various
Marketing Strategies, Financial Strategies of both the companies also constitutes a major
criterion of the study.
3.6 Limitations of the study:
The study limits itself to only the distribution effectiveness of specific Company of
Alcohol & Beverage Industry.
Since the study was undertaken for a stipulated period. The analysis mentioned here
may vary and due considerations have to be given to other factors also while making
decision based on this research work.
The study is done purely on SecondaryData. Any irregularity, errors & omission, etc.
may have adverse impact.
The Researcher is in no way advocates or publicize the consumption or intake of
Liquor in whatever way or manner.
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Chapter - 4: Company 1 Information - PepsiCo
4.1 Company Overview
PepsiCo was founded in New York in 1965. It is Producing Non-alcoholic beverage and
Food processing items. Pepsi is a carbonated beverage that is produced and manufactured
by PepsiCo. It is sold in retail stores, restaurants cinemas and from vending machines. The
drink was first made in the 1890s by pharmacist Caleb Bradham in New Bern, North
Carolina. The brand was trademarked on June 16, 1903.
PepsiCo gained entry to India in 1988 by creating a joint venture with the Punjab
government-owned Punjab Agro Industrial Corporation (PAIC) and Volta’s India Limited.
This joint venture marketed and sold Lehar Pepsiuntil 1991, when the use of foreign brands
was allowed; PepsiCo bought out its partners and ended the joint venture in 1994.
Others claim that firstly Pepsiwas banned from import in India, in 1970, for having refused
to release the list of its ingredients and in 1993, the ban was lifted, with Pepsi arriving on
the market shortly afterwards. These controversies are a reminder of "India’s sometimes
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acrimonious relationship with huge multinational companies." Indeed, some argue that
PepsiCo and The Coca-Cola Company have "been major targets in part because they are
well-known foreign companies that draw plenty of attention."
PepsiCo’s foods company, Frito-Lay, is the leader in the branded salty snack market and all
Frito Lay products are free of trans-fat and MSG. It manufactures Lay’s Potato Chips,
Cheetos extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar
brands. The company’s high fibre breakfast cereal, Quaker Oats, and low fat and roasted
snack options enhance the healthful choices available to consumers.
Frito Lay’s core products, Lay’s, Kurkure, Uncle Chipps and Cheetos are cooked in Rice
Bran Oil to significantly reduce saturated fats and all of its products contain voluntary
nutritional labeling on their packets. The group has built an expansive beverage and foods
business.
To supportits operations, PepsiCo has 43 bottling plants in India, of which 15 are company
owned and 28 are franchisee owned. In addition to this, PepsiCo’s Frito Lay foods division
has 3 state-of-the-art plants. PepsiCo’s business is based on its sustainability vision of
making tomorrow better than today. PepsiCo’s commitment to living by this vision every
day is visible in its contribution to the country, consumers and farmers
4.1.1 BRIEF HISTORY
PepsiCo, Inc. is founded by Donald M. Kendall, President and Chief Executive Officer of
Pepsi-Cola and Herman W. Lay, Chairman and Chief Executive Officer of Frito-Lay,
through the merger of the two companies. Pepsi-Cola was created in the late 1890s byCaleb
Bradham, a New Bern, N.C. pharmacist. Frito-Lay, Inc.was formed by the 1961 merger of
the Frito Company, founded by Elmer Doolin in 1932, and the H. W. Lay Company, founded
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by Herman W.Lay, also in 1932. Herman Lay is chairman of the Board of Directors of the
new company; Donald M. Kendall is president and chief executive officer. The new
company reports sales of $510 million and has 19,000 employees.
4.2 Product Portfolio
PRODUCT PROFILE OF PEPSICO
There are Eight brands of Pepsi in India and they are differ in taste, flavor and also in their
colors.
PEPSI
Pepsi is considered to be cold drink. It is generally preferred by all sections of consumer.
This is a case cow brand for the company in terms of sales revenue.
MIRANDA
Miranda is considered to be lemony in taste, and comes under the light drink.
7UP
7up is a good product at Pepsi and contains at lemon flavor.
MOUNTAIN DEW
Mountain dew is also consider to be a cold drink. It is light comperision to pepsi. It is
preferred by all section of consumer but especially to teen-age. It is big source of company
to cash its publicity
SLICE
SLICE MANGO, in slice cold drink no gas only based onjuice. It is a non-aerated softdrink.
It is preferred mostly Children & Women.
Tropicana
In Minute maid pupply orange cold drink no gas only based on orange juice. It is a non-
aerated soft drink.
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Eversses Soda
This is sodadrink. It has no colour and no flavor. It is generally used with alcohol and used
by adults.
Aquafina water
It is mineral water.
4.3 Key Financials
4.3.1 Market Share of PepsiCo
Figure 4.3. 1 Market Share of Soft Drink Companies in India
According to the data, all the hundreds of local brands put together increased their value
share in the Rs 20,000-crore-plus non-alcoholic ready-to-drink retail beverages market to
24% last year, which is almost half the size of industry leader Coca-Cola’s 49.9% share and
well ahead of PepsiCo's 19.6%. – Source - Economic Times, Feb., 20, 2020.
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4.3.2 Profit margin of PepsiCo
Figure 4.3.2. 1 PepsiCo Profit Margin 2006-2019
4.3.3 Other Financials of PepsiCo
PEP (PepsiCo) Financial Summary
For the fiscal year ended 28 December 2019, PepsiCo, Inc. revenues increased 4% to
$67.16B. Net income applicable to common stockholders excluding extraordinary items
decreased 41% to $7.31B.
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Figure 4.3.3. 1 PEP (PepsiCo) Income Statement
Figure 4.3.3. 2 PEP (PepsiCo) Balance Sheet
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Figure 4.3.3. 3 PEP (PepsiCo) Cah Flow Statement
Figure 4.3.3. 4 PEP (PepsiCo) Earning
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Figure 4.3.3. 6 Overall Summary of PepsiCo Stock
4.4 Business Strategies
In the context of modern business management, it has become imperative for any business
organisations to lay emphasis on the development of effective business strategy. The
business organisations have been focusing on the continuous development and modification
of business strategies with the objective of increasing market share.
Financial profitability can only be ensured if the market shares increases and revenue
generation is ensured. The organization like PepsiCo is no exception to these general rules
of the business management. PepsiCo has been focusing on the development of effective
business strategy for ensuring the market penetration in the different areas of the globe. For
ensuring the development of effective marketing penetration strategy, PepsiCo has been
laying emphasis on the product proliferation.
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Through the process of product proliferation, the organisation has been offering different
kinds ofproducts with the objective ofaccelerating the growth of business revenue. PepsiCo
has been able to increase its market share through stretching its product lines thereby
resulting in increasing operating income and revenue. In the year 2016, the organisation has
been able to increase its financial profitability level through earning the approximation of
63 billion US Dollars.
Due to the effectiveness of productproliferation strategy, the organisation has been able to
offer an array of products starting from the food to beverages. Apart from Pepsi, other
products like Lays, Mountain Dew, Diet Pepsi etc. have earned popularity amongst the
products users. Keeping in mind the increasing level of health consciousness amongst the
customers, PepsiCo has introduced Diet Pepsi with the objective of improving sales
performance.
In addition, the organisation has been able to augment and update the existing product
portfolio. PepsiCo has been able to facilitate the attraction of the new customers as well as
the customers of the rival companies. The strategy of increasing reach and promotions of
existing products has helped PepsiCo in improving sales performance.
In these ways, the organisation has been able to ensure the effective implementation of
marketing penetration in different continents, such as Asia, Latin America and so on.
PepsiCo has been able to increase the level ofbusiness profitability through laying emphasis
on the development of product. No productcan be developed if the innovation is not given
prime importance.
The innovation can be ensured through giving importance to the research and development
related activities. Improving the quality of products has been given prime importance.
PepsiCo has been able to increase its level of strength through bringing about improvement
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in the quality of food and beverage products. The role of organisational leadership cannot
be denied when it comes to the matter of improving the quality of service and products.
The continuous emphasis on the quality and innovation has helped PepsiCo in holding its
market share in the market thereby resulting in improving business profitability. In addition,
the organisation has been able increase the effectiveness level of business activities through
making modification in the existing range of its products. PepsiCo has adopted effective
growth strategies in the context of global food and beverages industry.
The organisation has been able to improve the effectiveness of its business activities through
adopting effective cost-leadership strategy. PepsiCo adopted the strategy of offering its
products affordable prices to the customers. The organisation has been able to lower its
operating costas a result of which, the financial performance of PepsiCo has been improved.
On the hand, PepsiCo has focused on the differentiation of its products and services for
increasing the reach to the customers. PepsiCo has been able to increase the sales volume of
Lay’s potato chips becauseofthe existence of reduced saturated fat elements. For developing
the market, PepsiCo has been focusing on increasing the number of distribution networks
worldwide.
Expansion of supply chain strategy has been given prime importance as it has been proved
as utilitarian in the growth ofdistribution networks regulated byPepsiCo. Costminimisation
and cost-efficiency have been give utmost level of importance for keeping the operating
costs at balanced level.
The diversification strategy adopted byIndraNooyihas helped PepsiCo in increasing market
share worldwide. In US and India, the products like Tropicana, Mountain Dew etc. have
gained popularity amongst the consumers thereby resulting in the facilitation of increment
in sales.
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As a result, the organisation has been able to give a tough completion to its competitors like
Coca Cola, Kellogg, Con Agra and so on. The competency with respect to the M & A
(Merger and Acquisitions) have paved the way for PepsiCo for earning billions and billions
of business revenue thereby resulting in improving business performance. The role of
aggressive campaigns can be mentioned in this respect as it has played prominent role in
increasing the effectiveness of its promotional activities.
The effectiveness of the procurement and infrastructure has helped PepsiCo in increasing
the effectiveness of value chain activities. For improving the logistics related activities, the
organisation has laid emphasis on the different aspects, such as pricing, production,
deliverance and so on. Through improving storage and maintenance related facilities, the
organisation has been able to improve the operational efficiency of organisation. For
improving the service quality, PepsiCo has laid emphasis on the collection of feedback from
customers through online mode.
Because of the changing dynamics and increasing level of growth in the consumer demand
patter, PepsiCo can be able to increase its market share with the objective of acquiring
leading position in market. However, it will have to decrease the over-dependence on Wal-
Mart for increasing sales volume. For increasing net profit margin, PepsiCo needs to focus
on the continuous modification of its strategies. The tastes and preferences of the consumers
are ever changing.
For keeping pace with the changing pattern and dynamics in food and beverage industry,
PepsiCo needs to focus on increasing the brand awareness amongst the consumers. The
effectiveness of distribution networks needs to be levelled up with the objective of
improving sales performance. In this way, PepsiCo can be able to ensure competitive
advantage over the industrial rivals.
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4.4.1 Marketing Strategies
Market Positioning and segmentation:
Before moving on to the details of PepsiCo’s marketing strategy, take a look upon how it
has positioned its brand and products in the market. It has positioned itself as a snacks and
beverages brand that include nutritious and low calorie choices apart from normal soda
products. There are 22 iconic billion dollar brands in its portfolio. Pepsi is positioned as a
brand that reflects young energy and this is also a key theme across its advertising and
marketing campaigns.
The customers of Pepsiare mainly from the 13 to 35 age group. In other words you can say,
it is a brand for the millenials. Pepsi has maintained a pricing strategy that has made it an
affordable brand. Its customers are from all income segments including lower middle class
to upper class. Now, it has also released smaller options for its several soft drinks to make
its products more affordable and accessible. Its customers include the teenagers and youth
with a modern and fast moving lifestyle.
Large Investment in Marketing
Pepsihas traditionally relied heavily on marketing for driving sales and market growth. Like
CocaCola it too spends heavily on marketing and promotion. In 2017, its marketing budget
was 4.1 billion dollars and that of CocaCola was 3.9 Billion dollars. Pepsispent2.4 billion
dollars solely on advertising. However, the world of marketing has changed a lot with the
rise of the digital technology.
A large part of Pepsi’s marketing budget goes to digital marketing and advertising. Apart
from that, a large sum is also spent on television advertising and other traditional methods
of advertising. Any leading brand is investing heavily in digital technology for marketing
and better customer experience. Since the rise of social media, brands are connecting with
their customers in real time with promotional campaigns. On the one hand, social media has
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helped the brands with marketing to allow them to connect with millions of customers
globally in an instant and without any financial investment. On the other hand, it has also
made the brands more conscious regarding product quality and customer service because
any comment or news shared on social media reaches millions in a few seconds.
Product and Packaging Innovation:
Pepsi has continued to invest in product quality and packaging to stay the customers’ first
choice. However, apart from these things, it has continued to diversify its productportfolio
bringing new, healthier and more nutritious choices for its customers. Behind its excellent
marketing strategy, there is a diverse and rich productportfolio filled with a large variety of
flavors and nutritious and tasty choices. Product quality and packaging are very important
elements of Pepsi’s marketing strategy where it has continued to innovate whether in terms
of product quality, variety as well as packaging.
Its reward winning design team has continued to innovate with package design. Regularly
updating the package design also helps retain customers and attract new ones. Attractive
packages can also drive sales higher and it is why Pepsi has continued to innovate the
packaging style and sizes based on consumer demand and expectations. With time, people’s
taste and choice of flavours has changed a lot. They are looking for healthier products and
product innovation helps churn demand. However, apart from investing in product quality
and design, it is equally important to invest in marketing and Pepsi promotes its brand
through both digital and traditional channels.
Digital Marketing Campaigns and Big Data:
Digital strategy is a very important part of its marketing campaigns. Effectiveness of Pepsi’s
digital campaigns is also an important determinant of its sales and profits. Popularity of these
digital campaigns affects its level of sales and profits directly. Some ofits digital campaigns
have enjoyed immense popularity like the ‘Bring Home Happiness’ campaign containing a
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20 minutes long video. This video grew so popular that people watched it more than one
billion times. It leveraged the power ofsocial media to run the campaign. The brand is using
digital technology in other aspects of business too but in the area of marketing, the role of
digital technology and that of social media is especially very important.
Since a very large number of customers are now found online and can be reached through
social media and other digital channels, digital marketing has become the central focus of
Pepsi in terms of marketing. Apart from promoting its brands separately, Pepsi also uses
digital marketing for creating higher loyalty and higher customer engagement.
Its another promotional campaign titled ‘Made for This’ targeting the millennial generation
and featuring High school athletes was also highly popular. The campaign that featured
young athletes underscored that Gatorade was made to fuel young athletes and their passion.
Marketing and media environment are changing rapidly which have made it mandatory for
the brand to use new channels for advertising and promotions. Pepsiis also leveraging Big
Data to create real time marketing messages that help it market its brands more effectively.
The brand also uses consumer research for the purpose of designing marketing strategies
that help it grow its reach and effectiveness.
Sports Marketing and sponsorships:
Apart from these promotional campaigns, the brand has also relied heavily on sponsorships
and partnerships to grow brand awareness as well as for building customer loyalty. 2017
marked its second year of partnership with UEFA champions’ league. Through this
partnership, it has continued to promote some of its biggest global brands including Lays,
Gatorade and Pepsi across more than 100 markets.