Strategic marketing plan

APPENDIX F

CONSUMERS

Typical buyers within this industry are large retailers who hold a great amount of financial muscle which allows them to make large purchases and enter into long term contracts with market players. The loss of one retailer could significantly impact upon a manufacturer’s revenue and switching costs are usually low. This boosts buyer power somewhat. Industry consumption volumes; increased with a CAGR of 2.2% between 2006 and 2010, to reach a total of 245.2 billion Kg in 2010. The industry's volume is expected to rise to 262.3 billion Kg by the end of 2015, representing a CAGR of 1.4% for the 2010-2015 period¹³⁸.
The age demographic of Ready To Drinks (RTDs) such as Breezers, UDLs and Cruisers has matured¹³⁹.

(Might mean that this segment reduces the amount of Cola products purchased as a ‘mixer’ as they consume pre-mixed drinks).

Increasing utility bills was by far the biggest concern among Australian consumers, with 30 per cent citing it as a major concern over the next six months – up 10 per cent compared to a year ago. In addition, two-in-three consumers (65 per cent) said they had already taken action to try and save on gas and electricity over the past year, and even when economic conditions improve, saving on gas and electricity was the number one action cited to reduce household spending¹⁴¹.

This behaviour has been observed in Australia with shoppers increasing their store repertoire. Furthermore, 30 per cent of Australian shoppers claim ‘they will still look for cheaper grocery brands even though the GFC is over’ (Nielsen Global Consumer Confidence Survey, June 2010)¹⁴².

A strong labour market and perceived financial position may be driving up our confidence, but in reality, while we are also seeing a return in business confidence among grocery manufacturers – it has been tempered somewhat by the sluggish growth performance of the grocery channel overall (value sales growth for total grocery excluding tobacco dropped from a healthy 7.8% for the Moving Annual Total (MAT) 16 August 2009, to just 3.6% for the same period this year).

This was driven by a combination of continued deep discounting by the retailers, a 5% fall in value for grocery baskets compared to a year ago, and the rise of the savvier shopper who is continuously on the hunt for “value for money”. Private label perception in the eyes of the shopper has come a long way over the past five years, with many seeing the benefits it can offer in terms of “value for money”, and as a good quality alternative to name brands¹⁴⁴.

Online Shopping: As Australians demand better deals on everything they purchase, online trading is also playing a larger role in the shopping channel mix, with the key drivers being the availability of a broader range of products and services and the ability to get products and services at a cheaper price than they are available through traditional retail channels. Among Australia’s internet population, the vast majority (96%) have made an online purchase¹⁴⁵.

Australian soft drinks market value between 1996 – 2001 has grown by $128.9 Mn

The latest results for the Nielsen Global Online Consumer Survey undertaken in June, shows that Australian consumer confidence has slipped three points to 108 in the second quarter of 2010 compared to the previous three months; with 36 per cent of consumers having a pessimistic view of the state of their personal finances over the next 12 months (up six points from Quarter 1); and only half 50 per cent) saying the next 12 months is a good/excellent time to buy what they want and need – the lowest this score has been over the past four quarters. Increasing utility bills was by far the biggest concern among Australian consumers, with 30 per cent citing it as a major concern over the next six months – up 10 per cent compared to a year ago. In addition, two-in-three consumers (65 per cent) said they had already taken action to try and save on gas and electricity over the past year, and even when economic conditions improve.¹⁴⁶ Saving on gas and electricity was the number one action cited to reduce household spending. The economy was ranked the second biggest major concern with 21 per cent of respondents – up four points in just three months – a reflection of the widespread voter dissatisfaction we have seen over the past few months. Not surprisingly, restraint and vigilance continues to be a key theme among Aussie consumers with around two-in five channelling their spare cash into savings (41 per cent), and 38 per cent of consumers channelling any surplus cash into paying off debts, credit cards and loans.¹⁴⁷

Furthermore, more than half of Australian consumers cited they were actively cutting down on take-away meals, out-of-home entertainment, and new clothes.¹⁴⁸

The key to success of retail sector lies in responding to needs of the shopper of today and the future.¹⁴⁹

Australian population will embark in significant changes including cultural diversity,ageing population and general population growth, understanding the impact of these changes will have on shoppers and their purchasing behaviour is critical in capitalising opportunities these trends will offer to retail sector.¹⁵⁰

Global financial crisis(GFC) caused the shoppers to reassess how they spend and shop. There has been a fundamental shift in shopper sentiment from the spend thrift ,debt driven early noughties to a greater sense of caution and restraint post GFC.¹⁵¹

The shopper has become savvy

The shopper buys private labels in one category and premium price brand in another

Private label products have been launched successfully into more and more categories .

Shoppers stick with brands as long as they perceived to be good enough. ¹⁵²

Rising confidence in Australia in 2010 defied the trend of other developed markets and reflected the strongest outlook Australia has had in more than two years for job prospects, personal finances, and the ability to buy things over the next 12 months. Australia was the third most confident market globally, boasting a Consumer Confidence Index score of 115 which was 25 points above the global average of 90. An overwhelming 74% of Australians said their perception of local job prospects over the next 12 months was excellent or good; 70% believed that the state of their personal finances was positive; and 59% (the highest score globally) claimed the next 12 months was an excellent or good time to buy the things they wanted and needed.

The results are consistent, with the continued rise in Australia’s employment growth fuelling a strong labour market and underpinning household income. Our economy also benefited from expansion over the first half of 2010 with Gross Domestic Product (GDP) growth forecast to be around 3.25% for the year – a result of rising commodity prices, increased public investment and a growing population.¹⁵³
The Demanding Consumer

“Hard times have a way of transforming consumers and the past couple of years have been harder than most. While the Australian economy emerged in 2010 relatively unscathed from the GFC, the downturn has left an indelible impression on consumers’ attitudes and purchasing behaviours.

During the economic downturn, consumers shopped around for specials to cut costs, and this has created a new, savvy consumer who is more demanding than ever. Despite the positive outlook among Australians, we are still seeing evidence of cautionary behaviour, with almost half of all consumers channelling their spare cash into savings (47%), and 40% using surplus cash to pay off debts, credit cards and loans.
Plus, the majority of consumers are curbing their household expenditure by trying to save on gas and electricity; cutting back on take-away meals, new clothes purchases and out-of-home entertainment, and making the switch to cheaper grocery brands. A strong labour market and perceived financial position may be driving up our confidence, but in reality, while we are also seeing a return in business confidence among grocery manufacturers – it has been tempered somewhat by the sluggish growth performance of the grocery channel overall (value sales growth for total grocery excluding tobacco dropped from a healthy 7.8% for the Moving Annual Total (MAT) 16 August 2009, to just 3.6% for the same period this year). This was driven by a combination of continued deep discounting by the retailers, a 5% fall in value for grocery baskets compared to a year ago, and the rise of the savvier shopper who is continuously on the hunt for “value for money”.

Australian shoppers are prepared to shop around for the best deal. The average shopper repertoire now includes about four different stores in a week. In fact, it’s estimated that more than 30% of all Australian grocery purchases are made on promotion. Aside from heavy retailer promotional activity, we are seeing a decline in the amount spent per shopping trip – from $49.80 in 2009 to $48.40 this year; and each of these trips have become more rational with a 5% increase in the purchase of items costing less than $5, while the purchase of items priced between $10-15 has declined by 4%.”¹⁵⁴

Private label perception in the eyes of the shopper has come a long way over the past five years, with many seeing the benefits it can offer in terms of “value for money”, and as a good quality alternative to name brands. Private label continues to steadily gain traction with its representation in all of the major grocery retailers, recording an increase in value share for the quarter to 2 October 2010, to just under a quarter (23.9%) of total supermarket sales. Nielsen Homescan indicates that everybody buys private label products (100% household penetration), with the average household spend reaching over $200 for the first time ever in the latest quarter – up $3.48 on the previous quarter.
Online Shopping

“As Australians demand better deals on everything they purchase, online trading is also playing a larger role in the shopping channel mix, with the key drivers being the availability of a broader range of products and services and the ability to get products and services at a cheaper price than they are available through traditional retail channels. Among Australia’s internet population, the vast majority (96%) have made an online purchase.”¹⁵⁵

“Cultural diversity from changing immigration, population growth and ageing consumers is set to impact Australian retailing in the next four decades. Key insights from the 2010 Nielsen Shopper Trends Report reveal that the Australian shopper is evolving, and to succeed in the future, retailers and manufacturers will need to develop strategies that accommodate growing ethnicity, population increases and an ageing society. Nielsen research shows that among Australian households in 2010, Thai cuisine was the second most popular eaten out-of-home (after traditional Australian); followed by Italian, Chinese and Japanese. Asian food items in Australian family pantries has grown by 268,000 households since 2007. This represents an opportunity for grocery marketers to provide simple and convenient Asian meal solutions. From a marketers perspective, it is important to understand how ethnicity impacts on how people shop and demand for products and brands – which products and brands consumers are looking for and where they expect to find them.

Over the past 50 years Australian households have been adopting Mediterranean cuisine as part of their everyday menu, with ingredients available in both supermarkets and specialist retailers. Now, as migrant ion shifts from European count rise towards Asian countries, there is a need to understand how these influences will change the way Australians shop, what they buy, where they buy it from and what they eat.”¹⁵⁶
Australian Population

“In the 12 months to 30 June 2010, Australia's population increased by 377,100 people, reaching 22,342,000. The annual growth rate for the year ended 30 June 2010 (1.7%) was lower than that recorded for the year ended 30 June 2009 (2.2%).”¹⁵⁷

Table: 1
Median Age

“At June 2010, the median age of the Australian population (the age at which half the population is older, and half is younger) was 36.9 years, up from 36.5 years in 2005. The median age of males increased from 35.7 to 36.0 years and the median age of females increased from 37.3 to 37.8 years over this period.
The median age of all states and territories increased between 2005 and 2010. In 2005, South Australia and Tasmania had the equal oldest median age, both at 38.6 years. However, between 2005 and 2010, the median age of Tasmania increased more than any other to become the oldest state or territory at 39.9 years in 2010. The Northern Territory remained the youngest state or territory with a median age of 31.2 years, up from 30.7 in 2005.

The SD with the lowest median age at June 2010 was Northern Territory - Bal (29.4 years), followed by North West in Queensland (29.9) and Kimberley in Western Australia (30.7). The highest median ages were recorded in Yorke and Lower North in South Australia (46.5 years), Mid-North Coast in New South Wales (44.6) and Southern in Tasmania (44.2).”¹⁵⁸

“At June 2010, there were 15.09 million people of working age (15 to 64 years), an increase of 1.36 million or 9.9% since June 2005. The proportion of the total population in this age group increased marginally from 67.3% to 67.6% over this five-year period.

The Northern Territory had the highest proportion of people of working age at June 2010 (71.4%), overtaking the Australian Capital Territory (71.2%) for the first time in over 20 years. Tasmania continued to have the lowest proportion (65.2%).

Between June 2005 and June 2010, Victoria had the largest growth of people aged 15 to 64 years (361,000), followed by Queensland (350,900) and New South Wales (339,300). Western Australia had the fastest growth of people of working age (14.1% over this five-year period), followed by Queensland (13.0%).

The SDs with the highest proportions of working age people at June 2010 were Pilbara in Western Australia (72.7%), Darwin (72.7%) and Canberra (71.2%). The SDs with the lowest proportions were Yorke and Lower North in South Australia (61.0%), Mid-North Coast in New South Wales (61.5%) and Wimmera in Victoria (61.9%).”2

Adults aged 19 years and over

Food intake

Non-alcoholic and alcoholic beverages accounted for over 60% of total food and beverage intake, by weight, for adult Australians (2,460 g for men and 2,020 g for women). The contribution of beverages to the total weight of food and beverage intake may have been influenced by climate and was highest in the Northern Territory (74% for men) and one of the lowest in Tasmania (59% for men). The contribution of alcoholic beverages to food and beverage intake was higher for men (10%) than women (3%) (see tables 2 and 3) ¹⁵⁹

Coca-Cola Amatil:

Coca-Cola Amatil (CCA) manufactures, distributes and markets carbonated soft drinks, still and mineral waters, fruit juices, coffee and other alcohol-free beverages. The company also distributes alcohol-based beverages through its joint venture company Pacific Beverages. It is also involved in processing and marketing of fruits, vegetables and other food products. The company operates in Australia, New Zealand, Fiji, Indonesia and Papua New Guinea. It is headquartered in Sydney.¹⁶⁰

The beverage business consists of non-alcoholic and alcoholic businesses. The company, through its non-alcoholic beverage business, manufactures, distributes and markets carbonated soft drinks.¹⁶¹

The company’s sparkling beverages brands include: Coca-Cola, Diet Coke, Coca-Cola Zero, Sprite, Sprite Zero, Fanta, Lift, Deep Spring Natural Mineral Water, Appletiser, Grapetiser, Kirks, and Bisleri. Its still beverages brands include: Mount Frankling Lightly Sparkling Water, Pump, Pumped, Vitamin water, PowerAde Light, PowerAde Isotonic, Nestea, Neverfail Spring Water, Goulburn Valley, Goulburn Valley dairy co., Goulburn Valley fruity drink, Fruitbox, Grinders, and Peats Ridge Springs. The company's alcoholic beverages brands are Peroni Italy, Bluetongue, Miller, Russian standard vodka, Grolsch, Pisner Urgwell, Peroni Leggera, The Macallan, Canadian Club, Maker’s Mark, The Famous Grouse, Souza, Highland Park, Bols Amsterdam, Cockburns, Harveys Bristol cream, Basil Haydens, Oldcrow, Galliano, Bbakers, Millerchill, Bookers, and Tamdhu. Its food (SPC Ardmona) brands include: SPC, Goulburn valley, Ardmona, IXL, and Taylors.¹⁶²

The company recorded revenues of A$4,609.4 million (approximately $4,240.4 million) in the fiscal year ended December 2010, an increase of 1.1% over 2009. The company's operating profit was A$844.9 million (approximately $777.3 million) in fiscal 2010, an increase of 7.3% over 2009. Its net profit was A$497.3 million (approximately $457.5 million) in fiscal 2010, an increase of 10.8% over 2009.¹⁶³

Coca-Cola was introduced to Australia in the 1930s. In 1964, British Tobacco Company (Australia) purchased a controlling interest in Coca-Cola Bottlers (Perth).¹⁶⁴

AMATIL changed its name to Coca-Cola Amatil (CCA) in 1989, and the Coca-Cola Company became CCA's major shareholder.¹⁶⁵

CCA expanded in South East Asia with the formation of joint ventures with the Indonesian Tirtalina Group and the Indonesian Pan Java Group in 1991. In the following year, the company sold its Snack Foods Division to United Biscuits of the UK. The company opened its new plant at Richlands in Brisbane, Australia in 1994.¹⁶⁶

CCA acquired Rio Beverages in New Zealand in order to increase its exposure to the juice and lifestyle beverages segments in New Zealand and Australia, in 2002. In the same year, the company acquired Pacific Beverages; and CCA sold its PET manufacturing assets for approximately $157 million.¹⁶⁷

In 2003, CCA acquired Neverfail Springwater, a specialist in the delivery of bulk water to Australian homes and offices; and Peats Ridge Springs.¹⁶⁸

CCA opened an automated materials handling facility in Mentone, Victoria and also purchased Crusta Fruit Juices in Australia along with its subsidiary, Quenchy Crusta Sales, a cold chain distribution company, in 2004. In the same year, CCA acquired Quirk's Refrigeration.¹⁶⁹

The company purchased the Northern Territory soft drink sales, distribution and production assets from Parmalat Australia in 2005. This acquisition made CCA the sole licensee of Coca-Cola products in Australia.¹⁷⁰

The company signed a new three-year agreement with the National Rugby League Partnership (NRL) in March 2010.¹⁷¹

Brands - Sparkling beverages: Coca-Cola Diet Coke Coca-Cola Zero Sprite, Sprite Zero, Fanta Lift Deep Spring Natural Mineral Water Appletiser, Grapetiser Bisleri¹⁷²

Still beverages - Mount Frankling Lightly Sparkling Water Pump Pumped Vitamin water, PowerAde Light PowerAde Isotonic Nestea Neverfail Spring Water Goulburn Valley, Goulburn Valley Dairy Goulburn Valley fruity drink Fruitbox Grinders Peats Ridge Springs¹⁷³
Major competitors of Coca-Cola Amatil Ltd: National Beverage Corp. PepsiCo, Inc. Just Water International Limited¹⁷⁴
According to Group Managing Director statement the Coca-Cola Amatil Ltd is focused on: effectively balancing pricing, volume growth and market share to improve our profitability and market position as well as infrastructure programs in expanding capacity, operational efficiency and cold drink coolers, as well as successful new product and package innovation.¹⁷⁵

CCA will continue to focus on executing its organic growth strategy. Company focus will be on efficiency, service and revenue gains right across the business. Investment in capacity and capability improvements, capacity expansion and the accelerated rollout of cold drink coolers. CCA’s major capital investment program continued to reduce operating costs and materially improve customer service levels in 2010, leading to higher returns for CCA’s shareholders.¹⁷⁶

Continue to grow the core Australasian business through further new product and package innovation, acceleration of our cooler placement programme and delivery of efficiency gains from Project Zero; Accelerate the growth of our Indonesian business with increased investment in one-way-pack production capacity and rollout of cold drink coolers into the market place; and continue to grow our share of the alcoholic beverages market in Australia and New Zealand.¹⁷⁹

current strategies:

SCA:

Intent:

Market value(11) Beverage manufacturers usually differentiate their products, meaning they can occupy different areas of the beverage industry at the same time, reducing their reliance on revenues from one product.

INDUSTRY PROFILE, Global Beverages, Reference Code: 0199-2014 Publication Date: May 2011, www.datamonitor.com,
Company Profile – PepsiCo: global snack and beverage company (carbonated/non carbonated, swwet, salty, wholegrain). PepsiCo operates in 200 countries and has large scale operations in north America, mexico and the UK. PepsiCo operates through business units; PAF, PAB, PI, the business units are further divided into six reportable segments FLNA, QFNA, LAF, PAB, Europe and Asia and AMEA (p 26-7).Coke-Cola Company engages in the manufacturing, distribution and marketing of non-alcoholic beverages consentrates and syrups. The company okwns the worlds most valuable brand: Coke Cola. Coke Cola primarily produces sparkling beverages. Most of the products are manufacturered and sold by bottling partners (convert them into finished packaged products). Coka-cola bottles beverages either in plastic, glss or cans. (P 30 -4). ANHEUSER-BUSCH INBEV – engaged I the production, distribution and sale of beer and soft drinks. Company sells lagers, premium beers ad specialty brews in over 23 countries, The companies offer a portfolio of over 200 brands, that includes global flagship brands Budwiser, Stella Artois and Becks¹⁸⁰.
Top 3 players in the AUS market – Coca-Cola, Asahi Brewery and PepsiCo. These 3 hold 54.9% of the total soft drink market Companies may choose one of two distribution channels; (1) intergrated buiness approach – selling reaty-tooncume drinks to retailers or adopt a business model where they sell raw materials to a network of bottling companies¹⁸¹.

Australia’s resources boom boosted advertising spend- ing in 2010 to the pre-GFC levels of 2008. The strenght- ened economy helped Australia out-do markets globally and a market boom in August, with significant ad spend- ing during the federal election, ensured the Australian media market was surging¹⁸².

Compared to 2009, the media market last year ampli- fied by an estimated 13% and remained strong, albeit at lowering percentage increases after mid-year.

Improved performances was key as the market started lifting in the second half and particularly in the last quar- ter of 2009¹⁸³.

On a year-to-date basis to November 2010 - adjusted to reflect equal numbers of weeks to 2009 - only five of the 39 major categories decreased¹⁸⁴.

Among the top 20, which combined represented 89% of all media ad spending, only the Media category recorded a marginal 1% decline¹⁸⁵

COMPANY

Strengths:

current strategies:

SCA:

It is imperative for manufacturers to shorten the time to market so they can build their initial market share. Redbull's stranglehold in energy drinks is a prominent example of the benefits of first mover advantages. In the drinks industry, it is often the early bird that catches the worm.¹⁸⁶

Traditional cola was the baby-boomers' drink of choice when they were young. As obesity and other health concerns become more of an issue among aging boomers, manufacturers are racing to court and understand today's youth.¹⁸⁷

…a number of manufacturers have introduced new stevia products, including Coca Cola and PepsiCo.¹⁸⁸

[INTERNATIONAL/GLOBAL MARKET] The global beverages industry grew by 15% in 2010 to reach a value of $1,749,350.9 million. In 2015 the global beverages industry is forecast to have a value of $1,909,008.8mil. The compound annual growth rate of the industry period 2010-15 is forecast to be 1.8%. Market volume The global beverages industry grew by 13% in 2010 to reach a volume of 245,177.3 million Kg¹⁸⁹.

The compound annual growth rate of the industry in the period 2006–10 was 2.2%. Market volume forecast In 2015, the global beverages industry is forecast to have a volume of 262,286.5 million Kg, an increase of 7% since 2010. Market segmentation I - Beer, cider & FABs is the largest segment of the global beverages industry, accounting for 33.5% of the industry's total value¹⁹⁰.

Market segmentation II - Europe accounts for 46% of the global beverages industry value. Industry Performance; The performance of the industry is forecast to decelerate, with an anticipated CAGR of 1.8% for the five- year period 2010-2015, which is expected to drive the industry to a value of $1,909 billion by the end of 2015¹⁹¹.

Since the economic downturn, manufacturers have sought cost-effective packaging, which also helps differentiate products. There has been expansion in the use of newer substrates (such as RPET, PLA and other biodegradable plastics, barrier films and pouches). Innovative packaging shapes and designs are aimed at specific target consumers. Value added functional features have been introduced (i.e. re-closable can ends and pouches designed for vending applications), which are used to attract more customers¹⁹².

Entrance to the industry could prove problematic when the large scale of leading incumbents and brand loyalty is taken into account, however substitutes are cheaper and just as popular with consumers, providing new entrants with an avenue to entrance. All of these factors increase rivalry between players. Entrance to this industry can be achieved by starting up a new company, an existing company diversifying operations or by the acquisition of an existing company. There is growing opportunity to enter the industry on a small scale by occupying a niche. In order to compete with leading incumbents, new entrants must operate on a large scale. This requires significant capital outlay, which poses a barrier to entry for some. Furthermore, leading incumbents have strong brands already present within the industry. Brand loyalty is key in this industry and can therefore provide increased competition¹⁹³.

SWITCHING COSTS aren’t high, leading companies such as Nestle have diversified operationse e.g Nestle producing tea and coffee as well as soft drink. Overall there is a moderate threat from alternatives! Industry Competition: The global beverage industry is fragmented with leading incumbents such as Coca-Cola, Pepsi Co, Nestle and Anheuser Busch holding. Moderate industry growth over recent years does little to reduce the level of rivalry, however developing markets in the middle east provide market players with viable expansion opportunities. Overall, there is a moderate degree of rivalry in this industry. 35.1% of the total industry value. The large number of industry players serves to increase rivalry. The main substitutes to soft drinks and alcoholic beverages are other beverages such as tea, coffee or milk. Products are easily differentiated with brand loyalty having key influence¹⁹⁴.

Market share - The Coca-Cola Company is the leading player in the global beverages industry, generating a 16.3% share of the industry's value¹⁹⁵.

Market rivalry

The global beverage industry is highly fragmented. The presence leading incumbents and lare numbers of market players boosts rivalry.
The global beverage industry is characterized by the presence of large companies such as PepsiCo and Coca-Cola.

Market Growth: The global beverages industry is forecasted to experience decelerated revenue and volumes growth during 2010-2015. Industry Growth and Decline; In comparison, the European industry declined with a compound annual rate of change (CARC) of less than 0.1%, and the Asia-Pacific industry increased with a CAGR of 6.1%, over the same period, to reach respective values of $805.5 billion and $400.7 billion in 2010¹⁹⁶.

Aus softdrinks generated tot revenues of $11 billion in 2010 representing compound annual growth rate (CAGR) of 3.3% for the period spanning 2006 – 2010. Carbonate sales are the most lucrative for the Australian soft drinks market in 2010 – generating total revenues of 6.6billion, equivilent to 59.9% of the overall market value. To reduce the threat of substitutes, big players offen have diverse product offerings e.g PepsiCo offers breakfast cereals and a range of soft drinks. Overall there is a moderate threat for substitutes¹⁹⁷.

Market Value The Australian Carbonated Soft Drinks market grew by 3.7% in 2001, to reach a value of $1,446 million. The compound annual growth rate of the market in the period 1996-2002 was 3.8%. The strongest growth was in 1997, when the market grew by 6.9%.The largest fall in the market was recorded in 2000, when the market shrank by (1.1%).

Market Segmentation I Cola is the largest sector of the Australian Carbonated Soft Drinks market, representing 72.3% of the market in value terms. Mixers is the smallest sector of the Australian Carbonated Soft Drinks market, representing 4.8% of the market in value terms. Market Share I Coca-Cola products account for the largest share of the Australian Carbonated Soft Drinks market, with 41.2% of the market in value terms. The top three brands in the Australian Carbonated Soft Drinks market (Coca-Cola, Diet Coke, Diet Pepsi) account for 64.7% of the market between them¹⁹⁸.

Market Distribution Off-trade accounts for the largest share of distribution in the Australian Carbonated Soft Drinks market, with 56.2% of the market in volume terms.

Market Forecast In 2006 the Australian Carbonated Soft Drinks market is forecast to reach a value of $1,703 million, an increase of 13.8% since 2002. The compound annual growth rate of the market in the period 2002-2006 is predicted to be 3.3%¹⁹⁹.

MACRO

In Brief: Market value in Aus soft drinks grew by 3.3% in 2010 to reach value of $10,953 million. Market value forecast: In 2015 Aus soft drinks forecasted to vale $12,721.8mil. Market Volume: Aus soft drink market grew by 2.9% in 2010 to reach a volume of 4,649.7 million litres. Market volume forecast n 2015 for the Aus market = volume of 5,308.1 litres (increase of 14.2% since 2010). Market segmentation: carbonates is the largest segment of the soft drinks market in Aus accounting for 59.9% of the markets total value. Aus counts for 85% of the Asia Pacific soft drinks market value. Market Share: Coca-Cola Company is the leading player in the Australian soft drinks market, generating 39.4% share of the markets volume. Market Rivalry: Aus soft drink market = concentrated, top 3 players holding 54.9% of the total market volume. The market has the presence of leading players such as the coca-cola company, Asahi Breweries and PepsiCo²⁰⁰.

ENVIRO FORCES

Threats to the industry may be reduced consumer spending in natural disaster states??

Commentators, including Princeton University’s Alan Blinder, estimate 40 million jobs could be at risk of being offshored over the next 20 years and suggest American workers should specialize in services that can be delivered face-to-face. In contrast, Jensen and Kletzer expect the process of globalization in services will proceed much as it has in manufacturing: They estimate only 15–20 million jobs are at risk of being offshored to low-wage, labor-abundant countries; approximately 40 percent of these jobs will be in the manufacturing sector, long considered “at risk”?²⁰².

http://www.iie.com/publications/interstitial.cfm?ResearchID=880
LEGAL
TECHNICAL

Pepsi has announced plans to produce its own vanilla-flavored cola, following the success of Coca-Cola's Vanilla Coke. Copycat competition is coming from own brand colas as well. Soft drinks makers need to shorten the time it takes to get new products to market so they can make the most of any first mover advantage. Pepsi is launching a vanilla-flavored cola drink to challenge Coca-Cola's rival product. The two companies are renowned for going head to head in the cola drink market where product imitations are commonplace and competition is aggressive. Coca-Cola launched Vanilla Coke in May last year. The product has proved successful - it has sold over 90 million cases in the US. These new developments in the soft drink market highlight the increasing threat of own label brands taking market share.²⁰³ Marketing practitioners are now faced with growing demands to show greater awareness and speed in planning product launches to reduce the threat of being pre-empted.²⁰⁴

Macro/Technical In result of inadequate programs new technological advancements and efforts to expand economic liberalization are receiving significant political backlash²⁰⁶.

The buyer power of retailers is moderate. Supplier power isn’t great, as most inputs are readily available commodities. Would be difficult for new entrant to compete with brand strength and reach existing players – may be possible to achieve small scale success stressing unique production method or nutritional benefits. Even if new entrants opted for business model employing use of bottoling partners (eliminating much of the production process) there is still need to invest in manufacturing capacity in order to produce the concentrates²⁰⁸.

…advertainment is very costly and for smaller companies there are cheaper alternatives with proven success rates such as guerilla marketing.²⁰⁹

Is it possible that the global bevarage market could see a major shift in the next decade? More consumers are becoming concious about the health threats that some carbonated drinks pose, and about the benefits from drinks such as green tea. Coca-Cola and Pepsi are taking steps to make some of their carbonated products more appealing to this segment of consumers. But will this trend be concentrated mostly in Asia, or will it be a truly global phenomenon?”²¹⁰

(5) Costs to workers, families, firms and communities are exacerbated by the lack of national comprehensive strategy to deal with these economic disruptions. The collection of out-of-date/ inadequate programs provide too little assistance for those in need.

Workers are the first to feel negative consequences of economic restructuring due to increased domestic and international competition.

Designing a National Strategy for Responding to Economic Dislocation by Howard F. Rosen, Peterson Institute for International Economics Testimony before the Subcommittee on Investigation (pto) and Oversight House Science and Technology Committee
June 24, 2008 http://www.iie.com/publications/testimony/t

(16) There has been increased demand for organic products, including organic wines, spirits and beers. These specialty products can often be sold at a higher price.

INDUSTRY PROFILE, Global Beverages, Reference Code: 0199-2014 Publication Date: May 2011, www.datamonitor.com,
(19) Players in the Australian soft drink market need to distinguish their products to some extent by stressing the health benefits (esp’ juices and functional drinks) as well as taste.

Trend moving away from soft drinks and moving towards healthier healthier fruit juice and bottled water.

INDUSTRY PROFILE, Soft Drinks in Australia, Reference Code: 0125-0802, Publication Date: May 2011,
(29) Key insights from the 2010 Nielsen ShopperTrends

Report reveal that the profile of the Australian shopper

is evolving, and in order to succeed in the future, retailers and manufacturers will need to develop strategies that accommodate growing ethnicity, population increases and an ageing society. “From both a supplier and retailer point of view, it is important to understand how ethnicity impacts shopping patterns.”
ECONOMIC

Costs to workers, families, firms and communities are exacerbated by the lack of national comprehensive strategy to deal with these economic disruptions. The collection of out-of-date/ inadequate programs provide too little assistance for those in need.

Workers are the first to feel negative consequences of economic restructuring due to increased domestic and international competition²¹¹.

There has been increased demand for organic products, including organic wines, spirits and beers. These specialty products can often be sold at a higher price²¹².

Players in the Australian soft drink market need to distinguish their products to some extent by stressing the health benefits (esp’ juices and functional drinks) as well as taste.Trend moving away from soft drinks and moving towards healthier healthier fruit juice and bottled water²¹³.

Key insights from the 2010 Nielsen ShopperTrends

Report reveal that the profile of the Australian shopper

is evolving, and in order to succeed in the future, retailers and manufacturers will need to develop strategies that accommodate growing ethnicity, population increases and an ageing society. “From both a supplier and retailer point of view, it is important to understand how ethnicity impacts shopping patterns.”²¹⁴

The Peterson Institute calculates that the US economy is approximately $1 trillion richer each year owing to past globalization—the payoff both from technological innovation and from policy liberalization—and could gain another $500 billion annually from future liberalization (Bradford, Grieco, and Hufbauer 2005 [pdf])²¹⁵.

They expect these losses to be offset by job gains in high-wage activities from services exporting. The United States will retain its comparative advantage in high-skill, high-wage production and increase these activities in tradable service industries as trade barriers diminish. While the loss of low-wage activities that are offshored and the gain from high-wage service exports will cause dislocation, the globalization of services production is likely to have productivity-enhancing effects similar to the impact of globalization in the manufacturing sector, offering significant potential to improve living standards in the United States and around the world²¹⁶

(4) Trade Adjustment Assistance (TAA) - TAA provides workers 78 weeks of income maintenance payments, in addition to the traditional 26 weeks of UI, for as long as they participate in training. In addition, the program includes a 65 percent HCTC, a limited wage insurance program, and job search and relocation assistance. Under wage insurance, otherwise known as Alternative Trade Adjustment Assistance (ATAA), workers above the age of 50, earning less than $50,000, can receive half of the difference between their old and new wages, for up to 2 years, subject to a maximum of $10,000. This program is designed to assist the large number of workers who experience earnings losses after reemployment. In order to be eligible for TAA, workers must have been laid off from a plant for which at least one of the following 3 criteria "contributed importantly" to its decline in employment and sales: - an increase in imports - aid off from an upstream or downstream producer a shift in production to another country²¹⁸

The 2009 update of TAA addressed both of these major shortcomings (that the bill originally only covered workers in the production of goods not services and that it focused primarily onof the program and updated it in many small but important ways. Though it did not receive the attention it deserved, the 2009 TAA bill was one of the most important revisions of US worker adjustment legislation in decades²¹⁹.

Obama Administration extension of the TAA (Trade Adjustment Assistance) program due to a largely eclipsed debt-limit rancor. TAA provides training and other assistance to workers who lose their jobs due to foreign competition²²⁰.

Virgin Australia:

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initial success in the pub and restaurant trade. The drink was packaged in a “Pammy” bottle based upon the body of Pamela Anderson. After gaining a peak of 8 percent share of the UK market, sales declined. In 1997, Virgin Cola lost about £5 million on revenues of £30 million. In 1998, Virgin acquired Cott’s share of the business and launched Virgin Cola with a $25 million investment and the goal, according to Branson, of “driving Coke out of the States.”11 Despite gaining massive publicity, there was little evidence of Virgin being able to convert media coverage into sales. By 2002, Virgin Drinks Company was still marketing Virgin Cola in the UK, Continental Europe, and Asia, but no sales figures were available.