Soft Drink Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 375 soft drink manufacturers in the US produce carbonated and non-carbonated beverages. Major flavor groups include cola, heavy citrus, lemon-lime, pepper, orange, and root beer. The category also includes regular (or full-calorie), diet, and seltzer beverages. Firms may also produce bottled water; sports drinks; energy drinks; juice, dairy, or plant-based beverages; and tea and coffee drinks.

Carbonated Market Stems Decline

The carbonated soft drink (CSD) market is mature, with health-conscious consumers turning to more wholesome options including bottled water.

Capital-Intensive Operations

Soft drink manufacturing is a volume-driven business that is heavily reliant on sophisticated production facilities.

Industry size & Structure

The average soft drink manufacturer employs about 191 workers and generates about $98 million annually.

    • The soft drink manufacturing industry consists of about 375 firms that employ about 81,500 workers and generate $37 billion annually.
    • The industry is highly concentrated; the top 50 companies account for 92% of industry revenue.
    • Large firms, including Coca-Cola, PepsiCo, and Dr Pepper/Snapple, have international operations and own brands with a global presence.
                                    Industry Forecast
                                    Soft Drink Manufacturers Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Feb 21, 2024 - Producer Price Increases Eased in 2023
                                    • The producer price index (PPI) for soft drink manufacturers, which measures prices before reaching consumers, increased 4% in December compared to a year ago, according to the latest data from the US Bureau of Labor Statistics. Prices lost some of their fizz last year compared to 2022 when producers hiked prices 11.8%, per the BLS, to compensate for higher costs on inputs including aluminum cans, packaging, and labor. In a signal the industry is trying to contain costs, overall employment growth by soft drink manufacturers was relatively flat in 2023, BLS data shows. Growth in consumer spending in 2023 helped support higher prices for soda and other soft drinks.
                                    • Sales of soft drinks and other sugar-sweetened-beverages (SSB) plunged in cities where those beverages are taxed, Food Dive reports citing research published in JAMA Health Forum. Researchers studied five cities – Boulder, Co.; Philadelphia; Oakland; Seattle; and San Francisco – and found that prices rose and volume sales fell immediately after the tax was imposed, and both outcomes were sustained in the months after. The decline in consumer purchase volumes was about equal (down by a third) to the 33.1% increase in the price of SSB, per the research. The American Beverage Association, which represents soft drink makers, said in a statement that the industry’s strategy of offering more choices with less sugar, smaller portions, and clear calorie information is working and that the taxes failed to meaningfully improve public health or reduce calories. As of November 2022, eight US jurisdictions and 50-plus countries had imposed some form of sugar-sweetened tax.
                                    • Brominated vegetable oil (BVO), an ingredient mostly used in store-brand sodas to keep citrus flavoring from floating to the top, has been banned under a new California law, The New York Times reports. The law (AB 418) banning the manufacture and sale of drinks containing BVO, was signed by California’s governor in October and will take effect in 2027. It is the first law in the US to ban BVO and may have a nationwide effect. A similar bill has been introduced in the New York Legislature. A 2022 study by the US Food and Drug Administration found that BVO may disrupt hormones in rats and the agency recently proposed a rule that would amend its regulations to remove the authorization of the use of BVO as a food ingredient. BVO is currently authorized for use as a stabilizer in flavoring oils in fruit-flavored beverages.
                                    • The booming market for energy drinks is raising concerns that beverages being pitched as healthy are resulting in children and teenagers consuming caffeine in unhealthy amounts, The New York Times reports. The energy drink market’s US sales surged to $19 billion from $12 billion over the past five years, according to Circana. Growth has largely been driven by a wave of no-sugar, low-calorie drinks that claim to boost energy as well as replenish fluids with electrolytes and other ingredients, according to NYTs. At the same time, the caffeine content in many popular energy drinks has soared. For example, a 12-ounce can of Prime Energy – a brand found in some school lunchrooms – contains 200 milligrams of caffeine, roughly equivalent to two Red Bulls, two cups of coffee, or six cans of Coca-Cola. A 12-ounce can of Red Bull contains more than three times the caffeine in a 12-ounce can of Coke.
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