Strategic Management Assignment

1. Submitted to : Dr. Vinay Singh
Dr. Vishal Vyas
Anni Gupta (2013IPG-022)
Anshul Prasad (2013IPG-023)
Deepak Kumar (2013IPG-037)
Mohit Jain Sethia (2013IPG-067)
ABV- Indian Institute of Information
Technology and Management Gwalior
BEVERAGE INDUSTRY
ANALYSIS

2. Contents
• Industry Overview
• Value chain Analysis
• Porter’s five forces model
• SWOT Analysis
• PESTLE Analysis

3. 400 Billion Dollar Industry
Expected growth of 350 % in 2025

4. Industry Overview

5. Industry Overview
• The beverages category
contributes 8-9 per cent to the
total FG market in India.
• With the entry of major
international beverage players
over the last few decades, the
market has evolved and has
made way for many products,
which have found an
immediate connect with Indian
consumers.

6. Industry Overview
As per market research, the non-alcoholic beverage industry in India stood at US$2.5
billion in 2015. The market is estimated to grow at a CAGR of over 17% in between
the period from 2016 to 2020 to reach US$4.9 billion by 2020. The following figures
depict the growth of non-alcoholic beverage industry in India from 2011 to 2015,
and the estimated growth from 2016 to 2020.

7. Value Chain Analysis

8. Value Chain Analysis
A generic value chain includes primary activities such as inbound logistics, operations,
outbound logistics, marketing sales and service, and support activities such as firm
infrastructure, human resource management, technology development, and
procurement.

9. Porter’s Five Forces Model

10. Porter’s Five Forces Model - Framework

11. Threat of New Entrants (MODERATE)
• Existing firms have cost and performance advantage in this industry. This is
because existing firms have already purchased large capital expenditures and have
economies of scale. They also have direct supply and distribution channels setup.
• Only already established player can try out new things.
• A new comer 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.

12. Threat of Substitutes (HIGH)
• Other new products keep coming in the market.
• Customers would not incur costs in switching to substitutes. The choice of
switching to a substitute for a customer would in most cases be the difference of
cents.
• Price is a point of concern for some consumers

13. Bargaining Power of Suppliers (LOW)
• Already established companies such as Coca Cola and PepsiCo etc. are trying their
hand.
• 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.

14. Bargaining Power of Buyers (HIGH)
• The target buyers are young which are willing to try new things.
• Brand loyalty need time to develop.
• 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. Soft drinks are not a
need and people won’t pay any price for it.

15. Rivalry among Existing Players (HIGH)
• 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.
• There are significant brand identities among the firms in the industry, which is why
brand names are an important competitive edge amongst new businesses.
• No much new can be done in the segment, so various brands are trying out
different opportunities.

16. SWOT Analysis

17. Strengths
• Basic consumer needs
• Large and growing market
• Demographic Advantage
• Low costs
• Alcoholic Bans
• Popularity
• Low operational costs

18. Weaknesses
• Negative Claims regarding components
• Health awareness
• Traditional preservation
• FSSAI regulations
• Ecological Hazard
• Counterfeit Products

19. Opportunities
• Establish facts and utilize PR
• New generation trends
• Replace alcohol
• Replace Tea and Coffee
• Rising disposable income sector
• Untapped rural market

20. Threats
• Health issues
• School and Parental perception
• Ecological issues
• Distribution costs
• Government stand
• Competition
• Tax and regulatory structure

21. PESTLE Analysis

22. PESTLE Analysis
Political
• Political stability in major economies (opportunity)
• Improved intergovernmental cooperation (opportunity)
• Government initiatives against carbonated drinks (threat)
Economic
• Economic stability of most major markets (opportunity)
• Rapid growth of developing economies (opportunity)
• Slowdown of the Chinese economy (threat)

23. PESTLE Analysis
Social
• Higher health consciousness (threat & opportunity)
• Increasing busy lifestyles (opportunity)
• More discriminating attitudes about product quality (opportunity)
Technological
• Moderate R&D investments in the food and beverage industry
(opportunity)
• Improving knowledge management systems (opportunity)
• Increasing automation in business (opportunity)

24. PESTLE Analysis
Legal
• Regulation on FSSAI ingredients (opportunity)
• Health and product safety regulations (opportunity)
• Moderate rate of regulatory change (opportunity)
Ecological
• High focus on business sustainability (opportunity)
• More complex expectations and standards on waste disposal
(opportunity)
• Climate change (threat & opportunity)

25. Thank You!