Nonalcoholic Beverages Industry Trends

Consolidation

With overall growth of the beverage market slow, national companies have grown through overseas sales and acquisitions. Coca-Cola now owns 20 major beverage brands, PepsiCo 15. Cott, the largest private-label soda maker, has grown in recent years through the acquisition of local bottlers.

Brand Management

To distinguish their products from the large number of available competitors, manufacturers have relied heavily on using familiar brand names for new products. For example, Coca-Cola now comes in several different versions that are sugar- or caffeine-free or both, but all under the Coca-Cola label. Gatorade and Tropicana orange juice are now available in many different versions. PepsiCo has agreements with Starbucks and Lipton to use their brand names on new beverages.

Private-Labels

Amid the perception by consumers that colas don't taste different, private-label sodas continue to be popular with budget-minded consumers and local supermarkets. Even though they're priced lower than national brands, private-label sodas have higher margins for grocers because they're cheaper to produce and don't have heavy marketing costs. Cott has a large share of the private-label market, mainly because it supplies Wal-Mart, the nation's biggest retailer.

Economies of Scale

Coca-Cola bottlers in North America have started an independent company expected to save money by giving them greater leverage in negotiations for contracts with suppliers and giant retailers. Projections indicate it could save about $100 million over the next few years through centralized bulk purchases of various goods from aluminum cans to vending machines. The company will also deal with major customers, such as Safeway, which now deals with several different bottlers.

Packaging

To increase convenience and consumption, beverage manufacturers are constantly experimenting with new product packaging. Coca-Cola introduced new packaging that conveniently fits 12 cans or bottles on a refrigerator shelf. The Fridge Pack was first used by a regional bottler, which saw sales of 12-packs increase 25 percent with the new packaging. In addition to Coke, the bottler has also applied the concept to Dasani water bottles.