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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

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

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

Industry Profile Excerpts

Industry Overview

The 340 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. Firm may also produce bottled water; sports drinks; energy drinks; juice, dairy or plant-based beverages; and tea and coffee drinks.

Capital-Intensive Operations

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

Carbonated Market Decline

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

Industry size & Structure

The average soft drink manufacturer employs about 237 workers and generates about $110 million annually.

    • The soft drink manufacturing industry consists of about 340 firms that employ about 80,600 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

                                    Coronavirus Update

                                    Nov 21, 2021 - Uncertainty may Affect Near-term Demand
                                    • COVID-19 cases are climbing nationally as the country heads into its second holiday season during the pandemic, and demand for soft drinks may be affected if celebrations are scaled back or cancelled. The seven-day average for new COVID-19 cases was above 95,000, on November 18 a 33% increase from two weeks prior, according to data from The New York Times. Cases increased in 39 states and Washington DC during the prior two weeks, and doubled in Massachusetts and Rhode Island. Experts don’t expect any potential surge to reach the levels of last year, however, as about 60% of the population was fully vaccinated by November 18.
                                    • Pandemic-related labor shortages at manufacturing and distribution firms, combined with rising consumer demand, have caused glass bottle shortages. Companies like soft drink manufacturers, food processors, breweries, and distilleries are slowing production of some items. Many companies are already dealing with an aluminum can shortage caused by similar pandemic-related issues. JoAnn Elardo, the founder of the Wicked Dolphin Distillery in Cape Coral, said that bottle suppliers began telling her earlier in the year that there may be a problem on the horizon. “The consumer is going to start to see things being sold out,” said Elardo. “Not only with our brand but with other brands. They’re not going to be able to get their product.”
                                    • Many analysts say that soft drink manufacturers should prepare for an upcoming pandemic-related spending shift that is increasingly referred to as revenge shopping. Consumers will sweep through sectors as pent-up demand is unleashed, according to management consulting firm McKinsey. That has been the experience of all previous economic downturns. One difference, however, is that services have been particularly hard hit this time. The bounce back will therefore likely emphasize those businesses, particularly the ones that have a communal element, such as restaurants and entertainment venues. A significant portion of soft drink sales may shift from grocery stores back to restaurants and entertainment venues as a result.
                                    • The federal Equal Employment Opportunity Commission said that employees may be barred from the workplace if they refuse the COVID-19 vaccine. "Requiring a vaccine is a health and safety work rule, and employers can do that," said Dorit Reiss, a professor at the University of California Hastings College of Law. There are, however, some exceptions to a blanket requirement. A collective bargaining agreement may require negotiating with a union before mandating a vaccine. The Americans with Disabilities Act allows workers who don't want to be vaccinated for medical reasons to request an exemption.
                                    • Soft drink manufacturers may eventually pay more for aluminum cans because of the coronavirus pandemic, which has driven up demand for all types of canned drinks while reducing the supply of recycled aluminum. US producers of aluminum can sheet have been importing aluminum from Latin America to help fill the gap created by empty used beverage containers (UBCs) not making their way back to secondary smelters, according to an analysis by energy and commodities information provider Platts. Prices paid for UBCs by can sheet mills rose to 65% of the value of primary aluminum in late June, according to Platts, well above what it considers a more “typical” 58 percent figure.
                                    • The raw material for aluminum can production is not currently in short supply, but the capacity to produce the cans is. Can manufacturers have announced plans to build at least three new factories within the next 18 months, but that won't help solve the immediate supply issues. Can maker Ball Corp. will open two new US plants and is adding two new production lines to existing US facilities. The company is working with its foreign plants to distribute cans to the North American market in the near term.
                                    • Some industry experts expect the can shortage to continue after the coronavirus pandemic has ended. About 70% of all new beverages are introduced in cans, according to John Hayes, CEO of aluminum can maker Ball. “I could make a very compelling argument right now, given the growth rates we’re seeing, that that will create a shortage in the can market in 2022 or 2023 as well,” Hayes said.
                                    • Some soft drink manufacturers are optimizing supply chains to ensure availability of the products most in demand during the coronavirus pandemic while removing products that aren’t. Coca-Cola CEO James Quincey said that the company was "ruthlessly prioritizing to deliver on core SKUs" to drive efficiency in its supply chains and streamline operations for retail customers. Simon Croom, professor of supply chain management at the University of San Diego, notes that response times, inventories, and performance are all adversely affected by adding SKUs. "SKU rationalization is something all companies always look to do … But in good times, it's not something companies spend too much time on," Suresh Acharya, professor of practice in the University of Maryland's online Master of Science in Business Analytics program, says. "The ROI on the long tail (products that interest a few but are offered because of its special appeal) is questionable," said Acharya.
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