The Coca-Cola Company holds the largest market share and is the leading player in the Australian soft drinks market, generating a 39.4% share of the market's volume.
Asahi Breweries, Ltd. accounts for a further 8.1% of the market (refer to Appendix E.4).
COCA-COLA AMATIL (CCA)
The company is headquartered in Sydney and 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 the processing and marketing of fruits, vegetables and other food products.
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.18
The company ‘strives to refresh the world, inspire moments of optimism and happiness, create value and make a difference’.19
Major products and services include alcoholic beverages and food as well as logistics business and restaurants. Non- alcoholic beverages include: coffee, carbonated beverages, tea-based drinks, water, fruit and vegetable drinks, chilled beverages. 20 Brands offered within the CSD category include Coca-Cola, Diet Coke, Coca-Cola Zero, Sprite, Sprite Zero, Fanta, Lift, Deep Spring Natural Mineral Water, Appletiser, Grapetiser, Kirks, and Bisleri. The company enjoys the continued growth of Coke Zero which now holds over 40% share of the diet cola category in the immediate consumption channel. Mother energy drink grew volume by 6% as a result of new flavour and pack variants and now has 24% of the total energy drink market.21
The business recovered cost of goods sold through a pricing and mix strategy and CCA’s beverage market leadership position continues to dominant volume and value share across all channels despite more aggressive competitor pricing. 22
The synergies enjoyed are the exceptional capacity and capabilities throughout the by the company span entire supply chain and distribution. CCA’s major capital investment program reduced operating costs and delivered effective customer service 23 however the company continues to focus on efficiency, service and revenue gains right across the business. This will be achieved through the effective balancing of pricing, volume growth and market share. Competitive position will be further strengthened via capacity expansion, increased operational efficiency and introduction of cold drink coolers, as well as successful new product and package innovation.24
The competitive intent of the company is to increase capability and capacity expansion, diversifying business ventures with the rollout of cold drink coolers. CCA will continue to focus on executing its organic growth strategy in conjunction with the acquisition of Fijian brewery, spirits and soft-drinks assets, creating synergies from CSD sector, which includes brands such as Fiji Water, Cascade and Hi-C. Other possible strategies include a distribution deal with Adelaide-based family-owned Coopers Brewery.25
Resources, similar to growth strategies, include acquisitions such as Neverfail Springwater. Such an acquisition considerably strengthens the company's core competencies and competitive position. CCA also owns an established plant at Richlands in Brisbane, Australia and automated materials handling facility in Mentone, Victoria, Crusta Fruit Juices and its subsidiary, Quenchy Crusta Sales, a cold chain distribution company, Quirk's Refrigeration26 and the Northern Territory soft drink sales, distribution and production assets. The company dominance throughout the entire supply chain positions the company in an extremely sustainably competitive position. This engagement of major supply chain partners is part of CCA’s strategy to strengthen their competitive position, which they have done so through the development of collaborative capabilities and engaging supply chain partners.27
However the company's source of competitive advantage extends further to innovative packaging and advertising, the coke trademark (patent?), the three-year agreement with the National Rugby League Partnership (NRL) from March 2010 and Project Zero. 28
STRENGTHS
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Supply chain, market and natural resources dominance
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Well known, market leading brand
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Innovative advertising, branding and packaging
WEAKNESSES
THREATS
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Major competitors: National Beverage Corp. PepsiCo, Inc. Just Water International Limited29
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Changing consumer habits
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Industry decline
ASAHI GROUP HOLDINGS (SCHWEPPES AUSTRALIA)
Asahi Group are engaged in beer brewing but also produces and markets soft drinks.30
The four segments the company operates through include alcoholic beverages, soft drinks, food and others. Asahi acquired Australian beverage business owned and operated by Cadbury (Schweeps Australia) later entering into a binding share purchase agreement to acquire 100% of the issued shares of P&N Beverages Australia, the third largest soft drink company by volume in Australia. 31The company enjoys a powerful position in the beverage market through a strong product portfolio and dominates a significant share of the market in the snack and beverage industry with worldwide brands.
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Cottee's (includes cordial drinks, Schweppes Australia)
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Solo – lemon-flavoured drink, owned by Schweppes Australia. Passiona (passionfruit-flavoured soft drink available previously from Cadbury-Schweppes, now Schweppes Australia)
The company's mission is:
“Asahi aims to satisfy its customers with the highest levels of quality and integrity, while contributing to the promotion of healthy living and the enrichment of society worldwide.”32
Major products and services include alcoholic beverages and food as well as logistics business and restaurants. Non- alcoholic beverages include: coffee, carbonated beverages, tea-based drinks, water, fruit and vegetable drinks, chilled beverages. Schweppes Australia (under license) manufactures and distributes Pepsi, Pepsi Max, Pepsi Light and Pepsi Light Caffeine Free within Australia.33
The company has ownership interest in food manufacturing, processing and bottling plants34 with the successful launch of product extensions creating additional revenue streams and growth avenues.35
Company resources include the strategic acquisitions two large bottlers and the relationship shared with large retail and wholesalers through a customer warehouse channel that delivers products directly from manufacturing plants/warehouses to customer warehouses/retail stores.36
The soft drink segment enjoys the operation and technology synergies of Asahi Soft Drinks Company, which also manufactures and distributes coffee, carbonated beverages, tea-based drinks, water, fruit and vegetable drinks, and chilled beverages.37 Due to the manufacturing and selling of leading snack foods including Lay’s, Doritos, Cheetos the company owns snack manufacturing and processing plants in Australia.38 The established presence of the company allows the expansion of its markets through the related synergies of expanded operations, also reducing business risk.39 The complimentary combination of snack and beverage business imparts unique competitive advantages enabling leverage and efficiency within an existing distribution system, providing a barrier to entry for new entrants. Such a model is considered a core competency of the company as such a encompasses diverse Strategic Business Units (SBUs) and would be costly, timely and difficult for competitors to replicate40 Furthermore, the diversified product base, multi-channel distribution system and investment in emerging markets act as a sustainable competitive advantage, protect the company from a downturn specific to a market or business line or distribution network, and reduce business volatility.41
Current strategies incorporate environmental sustainability with recent consideration in sustainable crop farming technology. Current strategies also include the evolving health conscious consumer trends with investment in coconut water and the decision to ensure the portfolio become more ‘natural ingredient based’. 42 The formation of joint ventures with complimentary businesses such as Lipton and Sakata further strengthen the company's competitive position.43
The strengthen such competencies the company heavily invests in corporate social responsibility, resource and development, brand building, and sustainable growth44 with a particular focus also on good-for-you portfolio of products.45
Maree: Should i expand further on
GENERIC LEVEL BUSINESS/COMPETITIVE STRATEGY
CURRENT GROWTH STRATEGIES
CURRENT COMPETITIVE POSITION
STRENGTHS
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Supply chain management efficiency46
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Distribution influence
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Large scale operation units
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Established brand name
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Economies of scale
WEAKNESSES
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Late entry into markets where Coke already had established distributor and consumer space.
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PepsiCo also lagged behind in the potential growth market of low or no sugar-based beverages.47
OPPORTUNITIES
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An opportunity for the Asahi Group Holding Ltd is the strategic acquisitions to expand business 48
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Power to negotiate exclusive supply contracts49
THREATS
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Main competitor, Coca-Cola has strong brand recognition across the globe with key brands and widespread popularity.
THREAT TO VIRGIN
The company launched eco-friendly, recyclable and compostable cups in the US.50
Threat to industry or Virgin??
Maree: should I include competitive strategies (e.g. Low cost defender’s for both) in this section accompanied with brief description (p.68)?
MINOR COMPETITORS
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Bickford's (includes juices, sodas, teas, sparkling water with fruit flavor, energy drinks, bottled water)
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Bundaberg (includes diet varieties, flavored CSD includes lemon lime bitters and ginger beer)
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Cascade (includes fruit juices, ginger beer, flavored CSD including sparkling apple juice and sparkling blackcurrant)
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Golden Circle Company (includes fruit juices, cordials and CSD)
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Kirks (line of sodas marketed by Coca-Cola Amatil) marketing core competency
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LA Ice Cola (includes cola available in four varieties including sugar free and diet variety)
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Leed (includes carbonated lemonade) – distributed by coke
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Lido (includes lemonade)
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Leed (includes carbonated lemonade) Kirks (line of sodas marketed by Coca-Cola Amatil)
Description: The key competitors in the Australian CSD industry are extremely efficient and dominant throughout the supply chain. While consumers determine retailer purchases, it is the key competitors that have formed strategic partnerships, own plants and warehouses, determine the degree of new entrant access to raw materials and solely contract bottlers. Implications: These players have the resources, capabilities and budgets to defend their market position and employ attack strategies if required.
OPPORTUNITIES | RATING* | THREATS | RATING* | Changing consumer trends | 4/5 – 5/5 |
Competitor dominance
| 5/5 – 5/5 | Limited product innovation | 5/5 – 1/5 | Competitor synergies in supply & distribution channels | 4/5 – 4/5 |
The rating is based on a double-digit 5-point scale for the degree of significance and for probability of occurrence. The first number/5 represents the degree of significance rating out of 5, 5= extremely significant and 1 = not very significant. The second number/5 represents the probability of occurrence, 5= extremely likely and 1 = low probability.
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