The Cola Wars CaseGroup 6

Magnus Hallberg, 20677

Marie Martinson, 20447

Alexej Cederholm, 70383

Michael Berman-Grutzky, 70384

Outline

• Executive Summary

• The Competitive Five Forces –

I. The concentrate business

• The Competitive Five Forces –

II. The bottling business

• Conclusions

• Sources

Executive Summary

• We have gone through a Five Forces analysis of the concentrate business and the bottling business.

• Still big profit potential, but increasing threat from substitutes.

• The concerns for the future are health and environment oriented, and respecting those fields will be the key to success.

The Competitive Five Forces

I. The concentrate business

Buyers

• Few alternatives

• Price sensitive

• Fragmented group

The Competitive Five Forces – I. The concentrate business Group 6

Suppliers

• Not a major cost

• Few inputs

• Many suppliers

The Competitive Five Forces – I. The concentrate business Group 6

Potential Entrants

• High capital requirements

• Economies of scale

• Unequal access to

distribution channels

The Competitive Five Forces – I. The concentrate business Group 6

Rivalry among competitors

• Fierce competition

• Aggressive price competition

• High fixed costs – high exit

barriers

The Competitive Five Forces – I. The concentrate business Group 6

Substitutes

• Health debate

• Acquisitions

• Total beverage companies

• Soda Stream etc

The Competitive Five Forces – I. The concentrate business Group 6

The Competitive Five Forces – I. The concentrate business Group 6

The Competitive Five Forces – Summary I

The Competitive Five Forces

II. The bottling business

Buyers

• Fragmented

• Limited influence on product and

price

• Fountain customers powerful

The Competitive Five Forces – II. The bottling business Group 6

Suppliers

Cans:

• Large part of total cost

• 2-3 suppliers compete for same

contract

Concentrate:

• Vertically integrated or franchised

• Switching cost high

• Gets marketing help from concentrate

business

The Competitive Five Forces – II. The bottling business Group 6

Potential Entrants

• Capital intensive

• Economies of scale

• Customer switching costs low

The Competitive Five Forces – II. The bottling business Group 6

Substitutes

• Alternative package solutions

• Fountain at home

• Soda Stream etc

The Competitive Five Forces – II. The bottling business Group 6

Rivalry among existing competitors

• Soft Drink Interbrand

Competition Act

• Advertising high

The Competitive Five Forces – II. The bottling business Group 6

The Competitive Five Forces – II. The bottling business Group 6

The Competitive Five Forces – Summary II

Conclusion

Still big profit potential, but there

is an increasing threat from the

substitutes.

Concerns of the Future

Health and Environmental Issues

• Sugar/caffeine/taurine scepticism

• Low calorie options demanded

• Recycling

Concerns of the Future Group 6

Sources

Articles

Porter, M. (2008), The Five Competitors that Shape

Competitive Strategy, Harvard Business Review, Jul-

Aug 1998

Websites

http://www.albany.edu/faculty/miesing/teaching/materi

als/col wars.pdf

http://www.slideshare.net/adhirock/cola-wars-case

http://www.thecocacolacompany.com/presscenter/nr_2007

0905_ccna_support_recycling.html