Global Beverage Market

Market analysis

The global beverages industry is forecasted to experience decelerated revenue and volumes growth during 2010-2015.

The global beverages industry had total revenues of $1,749.4 billion in 2010, representing a compound annual growth rate (CAGR) of 1.9% for the period spanning 2006-2010. 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 2010.

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 period.

The beer, cider & flavored alcoholic beverages segment was the industry's most lucrative in 2010, with total revenue of $585.3 billion, equivalent to 33.5% of the industry's overall value. The soft drinks segment contributed revenue of $559.8 billion in 2010, equating to 32% of the industry's aggregate value.

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

2015. Comparatively, the European and Asia-Pacific industries will grow with CAGRs of 0.2% and 4.3% respectively, over the same period, to reach respective values of $814.4 billion and $493.8 billion in 2015.

FIVE FORCES ANALYSIS

The beverages market will be analyzed taking beverages manufacturers as players. The key buyers will be taken as retailers and on-trade companies, and raw material producers, packaging providers as the key suppliers. The global beverage industry is highly fragmented. The presence of leading incumbents and large numbers of market players boosts rivalry. The global beverage industry is characterized by the presence of large companies such as PepsiCo and Coca-Cola. However the market is still fragmented. There are a large number of buyers present; who have a large amount of financial muscle with enhances their power somewhat. Various raw materials are needed within this industry, with suppliers able to provide to a wide spectrum of sectors. 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. 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. Buyers must meet consumer end-user demand, meaning they must stock popular products, which reduces their power somewhat. Furthermore, 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. As retailers operate within a distinct business structure, there is a reduced likelihood of them integrating backwards, however certain brewers have integrated forwards by operating chains of pubs or other outlets. This further reduces buyer power as brewers can then sell directly to consumers. Overall, buyer power is moderate. The production of beverages requires an array of raw materials and processes, depending on the beverage. Wine and spirit distillery requires raw materials such as cereal grains and grapes whilst beer brewing requires malted grain and hops. The manufacture of soft drinks requires natural and synthetic sweeteners. Thus the range of suppliers used in this industry is varied. However, the raw materials required are highly specific