5) The Cola Wars have been raging for many years, mainly between Pepsi and Coca-Cola. There have been, and are, minor players in the game, who are able to exist, but none of these have a share of the carbonated soft drink (CSD) market that comes close to equaling Pepsi or Coke. To evaluate the CSD industry, I will use Porter's Five Forces Model.
First, one must look at the center of the model, which talks about the competitors and their rivalry. Pepsi and Coke essentially have a duopoly over the CSD industry. They are tough competition for each other. For example, there have been many years where both Coke and Pepsi had dueling commercials playing during the Super Bowl. This aggressive competition has undoubtedly hurt both of their profitability at different levels, over the years.
Next, we look at the substitute products. Since we are looking at the CSD industry, we are looking for substitutes for CSDs. These substitutes include, but are not limited to tea, coffee, juice, milk, sports drinks, and bottled water. To another degree, we can include alcoholic drinks like beer, wine, and liquor. The number of substitute products, as well as producers, have increased over the years, due to declining prices in both categories. As these substitute products have become more popular, they've become more of threat to the CSD industry.
The next part of the Five Forces Model looks at the barriers to entry. The first, and possibly biggest, barrier to entry is branding. Worldwide, everyone knows Coke and Pepsi. Everyone knows their taste, their slogans, and their symbols. For a new entrant to make a dent in this duopoly, they would have to be extremely bold. Another barrier is the distribution relationship with retailers. Coke and Pepsi are wanted in every convenience store, super market, and restaurant around. The brand of a new entrant would be directly related to the venues in which it could be found. If it will be available in many establishments,...