Rtd Fruit Drink Analysis

Analysis

Factors

Aggregate Market

Category Size +

• 16 billion liters in 2009 were worth $2.14 billion.

• The market is divided into segments: Fruit drink (0-29% juice), Vegetable juice, Nectar (30%-99% juice), 100% fruit juice (from concentrate), and 100% fruit juice (not from concentrate).

Category Growth

• Annual growth rate from 2005 to 2009 of 0.6 %.

• Future growth rate from 2009 to 2014 of 0.6%.

Product Life Cycle

• Have been steadily increasing in the 2000’s with New Age beverages.

Sales Cyclicity

• 100% Fruit Juice drinks are priced for convenience and nutritional level. Their price can fluctuate with climatic crop conditions. The base dollar point is $1-$3 per drink. New Age Drinks (0-29%) are not susceptible to climatic crop conditions and experience more stability in price and availability.

Seasonality

• Increase in outdoor and sport activity during the spring and summer will result in an increase in sales of New Age Drinks

• Year round

Profits

• Increased category competitiveness may lead to lower pricing and profits.

• Technological breakthroughs, innovative manufacturing techniques and packaging materials will effect profitability in a competitive market

Category

Threat of new Entrants/exits

• Barriers to entry are substantial. New companies-competitors will be forced to compete with the existing players who have already considerable market strength. Almost 43% of the market is shared among three competitors who have brand ownership and integrated vertical operations to the wholesale and retail level. In addition, the leading companies’ strong market share allows them to develop new products further capturing available market capacity. The brand name recognition in the category is a significant advantage over new competition. Moreover at the retail level the competition for shelf space will be difficult for new comers. Recognized brands will not take second place-and retailers will not take the risk to promote unknown brands at the expense of proven profitable ones- in the drink displays compared to new brands. Barriers to entry