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margin pressures to drive beverage sector convergence
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beverage companies will need to move beyond their traditional categories in terms of future mergers with increasingly health focused consumers and an unprecedented level of retail pricing pressure creating serious challenges for the sector, says a rabobank report. acquiring competitors within their core segment is becoming increasingly complicated for leading beverage manufacturers due to the tighter competition regulation and existing level of consolidation within the industry. the report convergence in the beverage sector holds that, as a result, many companies are expected to look for opportunities outside of their core segments. and the convergence process can help beverage companies improve their strategic positioning by building a strong portfolio of must-have brands across numerous segments, notes the publication. “acquisitions outside a company’s core segment can allow the company to grow revenues and improve operational efficiency in a mature market without cannibalizing existing brands and without raising anti-trust concerns,” said steven rannekleiv, executive director of rabobank’s food & agribusiness research and advisory. he also states that combining operations across segments can help reduce costs and maximise distribution efficiency. in the us the top two non-alcoholic beverage suppliers now have a 65 per cent market share, and the top three rum suppliers and top two beer suppliers now own 75 per cent and 78 per cent of their markets, respectively, according to the report. ongoing consolidation of retailers in the us, which is informing price and delivery pressures, are also driving beverage company convergence strategies, said rabobank, and in order to realize a competitive advantage, beverage makers are increasingly growing their portfolios with ‘critical’ alternative category brands, the analysts point out. there has already been a notable shift by soft drink industry leaders in this regard, with both pepsico and its major rival coca-cola diversifing into healthier product categories as consumer preferences shift towards alternatives such as energy drinks, functional waters and juices. the beverages behemoths have been buying up beverage companies, particularly in the us, as they seek to garner some of this shifting market share. last autumn saw pepsico acquire brazil’s leading coconut water company, amacoco, as part of this bid to transform its beverage portfolio towards more healthful products, while coca-cola invested in coconut water company zico only a couple of weeks after the pepsi-co acquisition. other recent pepsico buys include us-based healthy juice company naked juice, uk-based functional waters firm v water, russian juice company lebedyansky, and juice maker sandora in the ukraine. the report states that carbonated soft drink (csd) sales have been steadily losing market share to bottled water, ready-to-drink teas and other noncarbonated beverages, with csds' share of non-alcoholic beverages in the us dropping 21 per cent over a ten year period from 1998 to 2008. in the same period, state the analysts, bottled water's share grew from 4 per cent to 20 per cent. areas of convergence opportunities that the analysts envisage include ventures between global soft drinks and beer companies, large soft drink companies investing in health and wellness positioned juice and dairy segments as well as globally focused spirits firms and breweries merging.
Source :foodanddrinkeurope.com
Date :
3
June
2010
Category :
Beverages
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the key food sectors in australia are weathering the global recession well, the latest research from leatherhead’s global food markets shows, with frugalism far less prevalent than in most other global markets. although there are signs that consumers have begun to economise during the slowdown, many sectors reported strong growth in 2008, with 2009 sales estimates also positive. baby food sales, for example, rose 8.
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it’s a common story in the beverage industry. an independent distributor works like hell to make a brand like red bull, sobe, snapple and vitaminwater a hit. then, once the middle man achieves success, the brand gets pulled away and given to a larger distributor. either that or the brand strikes a deal with coca-cola or pepsico who have their own powerful distribution networks. now the small distributor has lost one of its top sources of revenue.
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flavour industry innovators are seeking inspiration from ever more exotic superfruits like lula and camu camu, in a bid to both harness their healthy reputation and present new offerings to counter consumers' organoleptic boredom. the term 'superfruit' refers to any fruit that has a particularly high antioxidant content or is packed full of other beneficial nutrients.
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amendments to australia's food code continue, with the nation's food agency calling on companies and organisations to comment on a host of new proposals, including the addition of phytosterols to fruit juices and fruit drinks. the food standards australia new zealand (fsanz) warned, at the same time, that changes to the code will only be approved if there are "no concerns for public health and safety and that adequate and accurate information is provided to consumers.
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Coca.Cola
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PEPSI
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Mcdonald
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Nestle
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Mars
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Baskin & Robins
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Nutrika
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Mumika
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Chika
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