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 217 workers and generates about $97 million annually.

    • The soft drink manufacturing industry consists of about 375 firms that employ about 81,200 workers and generate $36.5 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

                                    Apr 21, 2024 - CSD Prices Keep Rising
                                    • The producer price index (PPI) for soft drink manufacturers, which measures prices before reaching consumers, increased by 5.7% in March compared to a year ago. Producer prices for soft drinks have risen this year to date and hit a new high in March despite pressure from large grocery chains and the Biden administration to lower prices for consumers. Soft drink manufacturers have continued to raise prices even as their costs have declined, leading to rising profit margins.
                                    • Fed up with steeply rising prices for soft drinks, US consumers bought hundreds of millions fewer cans, bottles, and fountain drinks last year, The Daily Mail reports. Soft drink giant Coca-Cola raised the price of its drinks by around 10% in 2023, which, while boosting dollar sales, resulted in shrinking volumes. In North America, the company’s biggest market, a long succession of price hikes has coincided with sales volume falling 1% in 2023. In an earnings call with investors, Coca-Cola CEO James Quincey said that in North America, the company was starting to feel the impact of high prices and would moderate them in response. According to Daily Mail, Pepsi drinkers are also rebelling against high prices, with revenue falling in its latest quarter for the first time in 14 quarters.
                                    • 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.
                                    • 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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