Competition in Energy Drinks, Sports Drinks and Vitamin-Enhanced Case Study

Competition in Energy Drinks, Sports Drinks and Vitamin-Enhanced Beverages - Case Study Example The commercial attributes of the substitute drinks segment of the industry are different from other groups of drinks. Substitute beverages competed based on differentiation from ancient drinks like carbonated drinks or fruit drinks. In addition, the market began with reduced competition, which later led to abrupt transformation as various new product lines joined and profit margins seriously suffered from reduction of prices. The entire beverage industry face reduced profit margin emanating from increased competition and inability to differentiate their products. The buyers’ negotiation ability and advantage was a significant competitive force. Emerging brands with reduced market shares were highly vulnerable to purchasers’ advantage as storage space was limited whereas top brands had substantial shelf space. Supplier’s advantage and negotiation power represented the weakest force of competition. Several substitute beverage ingredients sellers had to struggle to market their brands. New ingredient suppliers had a relative advantage in bargaining with producers of energy drinks than popular ingredient suppliers. The competition between substitute beverage sellers was the strongest force. Rivalry between key brands centers mainly on the brand reputation, attractive taste, appealing packaging, sales advertisement and promotion, and attaining better shelf space access and reinforcing distribution abilities. Competitive forces that have a substantial impact on attractiveness of industry include substitute beverage brand, reduced switching cots on consumers’ part, aggressiveness and activeness of suppliers’ efforts and a strong focus on endorsements, promotion of sales and advertisements. Â  Beverage market is rapidly changing. The preferences for alternative products are increasing while the preference for traditional drinks decreasing. The driving factors for substitute drink industry involve