Five force analysis of

Beverage industry
 Introduction of Industry
 In beverage industry there so many product we
can include like
 Cold Drinks
 Hot drinks

 Alcoholic drinks

 Non alcoholic drinks

 Growth of Industry
 Soft drink market is close to 6000 cr. With growth
at 10 – 12%
 India is becoming the largest manufacturer of tea
with 28% of global production at 956 ml. kg
annually
 Fruit juice and fruit based drink is growing at 35-
40%
 India is 5th largest producer of coffee.
 Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants

Bargaining Rivalry Among Bargaining

Power of Competing Firms Power of
Suppliers in Industry Buyers

Threat of
Substitute
Products
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
 Threat of New Entrants
Economies of Scale

Barriers to Product Differentiation

Entry Capital Requirements

Switching Costs
Access to Distribution Channels
 Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants

Bargaining
Power of
Suppliers
 Bargaining Power of Suppliers
Suppliers are likely to be powerful if:

Supplier industry is dominated by a

Suppliers exert power
in the industry by:
* Threatening to raise
prices or to reduce quality
few firms
Suppliers’ products have few substitutes
Buyer is not an important customer to
supplier
Suppliers’ product is an important
input to buyers’ product
Suppliers’ products are differentiated
 Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants

Bargaining Bargaining
Power of Power of
Suppliers Buyers
 Bargaining Power of Buyers
Buyer groups are likely to be powerful if:

Buyers compete
Purchase accounts for a significant with the supplying
fraction of supplier’s sales industry by:

Products are undifferentiated * Bargaining down prices

Buyers face few switching costs * Forcing higher quality

* Playing firms off of
Product unimportant to quality each other
Buyer has full information
 Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants

Bargaining Bargaining
Power of Power of
Suppliers Buyers

Threat of
Substitute
Products
 Threat of Substitute Products
Keys to evaluate substitute products:

Products
with similar • Hot drinks and soft drinks are
function main substitute for each other.
limit the • Availability of product matters at
prices firms this stage
can charge • Switching cost should be lower
 Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants

Bargaining Rivalry Among Bargaining

Power of Competing Firms Power of
Suppliers in Industry Buyers

Threat of
Substitute
Products
 Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Increasing consumer warranties or service
Making new product introductions

Occurs when a firm is pressured or sees an opportunity

Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but
may be costly to smaller competitors
 Existing Players
 Soft Drinks
 Pepsi co
 Coca cola

 Parle

 Hot Drinks
 Tata
 Lipton

 HUL