Recently there has been a lot of activity in the beverage industry. On Saturday, it was reported that Coconut Water, specifically the companies Vita Cocoa, Zico, and O.N.E., are becoming the new money making beverage. Last year it was reported that "sales rose to as much as $400 million"(Esterl). As the sales of soda begin to flatten out, sales of coconut water continue to grow. The beverage industry is a "$100-billion-plus market" (Esterl) for non-alcoholic beverages; therefore, well known companies such as Coke and PepsiCo are investing in coconut water companies. Studies have shown that coconut water is a "natural re hydration tool rich in electrolytes, particularly potassium, which prevents cramping" (Esterl) benefiting athletes, in particular. The popularity of this water is changing the beverage industry. No longer will sport drinks such as Powerade and Gatorade dominate the market, especially with the backing of two of the largest beverage companies. Coconut water has become a huge trend in the industry and is clearly here to stay.
Citation:
Esterl, Mike. "Vita Coco vs. Zico: The Beverage Wars Move to Coconuts - WSJ.com."Business News & Financial News - The Wall Street Journal - Wsj.com. Web. 12 Feb. 2012.
http://online.wsj.com/article/SB10001424052970203315804577207313086829188.html?KEYWORDS=beverage
PepsiCo has recently cut 8,700 jobs, but is increasing it's 2012 budget by $600 million, in attempt to keep up with it's competition Coke. PepsiCo announced that its profits will fall by 5% this year, while its share price fell by 3.7% to $64.29 on Thursday. Differing from the double-digit annual revenue growth and 8% earnings-per-share growth that the company has seen over the past five years. To build the company back up, PepsiCo has planned to focus its marketing expenditures on 5 main brands: Pepsi-Cola, Mountain Dew, Gatorade, Tropicana and Lipton. This effort began last Sunday, when Pepsi-Cola ran its fire Super Bowl TV ad in three years. The company is trying everything it can to increase the profit. They plan to "roll out its first-ever global marketing campaign for Pepsi-Cola" in the spring. While PepsiCo owns products such as Quaker oatmeal, a healthy alternative, compared to Doritos and Lay's, CEO, Indra K. Nooyi stated that, "This is an 'and' game, not an 'or' game"(PepsiCo) insisting that the company will continue to produce healthy products as well as the well known salty and sugary snacks. PepsiCo has about 125,000 workers in the United States, but the job cuts, which represent about 3% of the company's global work force, will be implemented in 30 countries. Although with this decrease in employees, the company does plan to increase its dividend by 4% in June and buy $3 billion in stock.
This new shift and approach that PepsiCo is taking could be very beneficial for the beverage industry. Its investment to improve its company will increase its share value, if all goes according to plan. This change in focus will lead to more competition among the big name companies such as Coke and Diet Coke. PepsiCo is approaching 2012 in a new manner in hopes the company takes a turn for the best.
Citation:
"PepsiCo Cuts Work Force, Posts Rise in Profit - WSJ.com." Business News & Financial News - The Wall Street Journal - Wsj.com. Web. 12 Feb. 2012.
http://online.wsj.com/article/SB10001424052970203646004577212742610551170.html?KEYWORDS=beverage
The coconut market is very profitable and consumers want to buy it. The "natural" aspect of it is appealing to customers and allows other other energy drinks such as gatorade to rethink their strategy to attract "green" consumers.
ReplyDeleteWoah... two posts!
ReplyDeleteRegarding the first post, it compliments Sophie's nicely. Try to avoid sweeping statements or state them as your opinion. Such as "I believe that sport drinks such as Powerade and Gatorade will no longer dominate the market"
Indra Nooyi is going to be a very interesting person to look at during your research.
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