EXTERNAL ENVIRONMENT: REMOTE ENVIRONMENT
ECONOMIC FORCES
The Australian soft drink market is in a steady position which leaves opportunities for new entrants.
Competition is fierce however, niche markets are still available to introduce new products into.
Scenario:
1. The soft drink market is so influenced by the markets top 3 companies’ that any new entrant is
immediately counter attacked.
2. The global financial crisis has had such an effect on the market that consumers’ are more hesitant
to invest in Virgin’s new venture.
3. The global financial crisis has lead consumers to become more spending conscious, reduced
spending, reducing the likelihood of consumers trying a new brand. – reference consumer trends
Implications:
Compared to the dominant competitors, our price point will not be as competitive which could
influence consumer purchasing decisions however compared to other healthy alternatives within the
product category. A slip in consumer confidence as a result of the Global Financial Crisis. This
threatens entry into any market and considering the rise in the cost of living which affects the
carbonated soft drink market as it is a luxury.
OPPORTUNITIES
MARKET VALUE:
“The Australian soft drinks market grew by 3.3% in 2010 to reach a
value of $10,953 million.”1
The growing market value of the soft drink industry in Australia is an
opportunity for new entrants.
THREATS
The top 3 players in the soft drink market (Coca-Cola, Pepsi
and Asahi breweries) hold the largest market share in
Australia (54.9%)
“Coca-Cola Company, is the leading player in the Australian
soft drinks market, generating a 39.4% share of the
market’s volume.”2
MARKET VALUE FORECAST:
In 2015, the Australian soft drinks market is forecast to have a value of
$12,721.8 million, an increase of 16.1% since 2010.”3
The increasing market value forecast for the soft drinks market creates
an opportunity for new entrants to enter a market with an increasing
value forecast.
“The major economic issue facing PepsiCo is the rising input costs of
“Consumer confidence has slipped in the last quarter with
more Australians apprehensive about economic
uncertainty, financial security, and rising gas and electricity
prices.”4
1
DATAMONITOR. 2011. Soft Drinks in Australia. Available at:
http://360.datamonitor.com.ipacez.nd.edu.au/Product?pid=889413C8-178F-43C0-8BD7-4FD8C32C0B1F. [Accessed 05 March
12]
2 DATAMONITOR. 2011. Soft Drinks in Australia. [ONLINE] Available at:
http://360.datamonitor.com.ipacez.nd.edu.au/Product?pid=889413C8-178F-43C0-8BD7-4FD8C32C0B1F. [Accessed 05 March
12].
3 DATAMONITOR. 2011. Soft Drinks in Australia. [ONLINE] Available at:
http://360.datamonitor.com.ipacez.nd.edu.au/Product?pid=889413C8-178F-43C0-8BD7-4FD8C32C0B1F. [Accessed 05 March
12].
4 INDUSTRY PROFILE, Global Beverages, Reference Code: 0199-2014 Publication Date: May 2011, www.datamonitor.com,
their businesses due to structural inflation. Agricultural, energy, and
some metal industries are going through periods of steady inflation.”5
The soft drinks segment recorded revenues of $4, 463.9 million in
FY2010, an increase of 10.2% over FY2009.6
A 10.2% increase in revenue in 1 year again illustrates that the soft
drinks industry in Australia is a valuable market to enter into.
5
https://docs.google.com/viewer?a=v&q=cache:C67SCDV7P8IJ:www.aaronksparks.com/portfolio/mktg360pepsireport.pdf++The+major+economic+issue+facing+PepsiCo+and+its+subdivisions+is+the+rising+input+costs+of+their+businesses+due+to+st
ructural+inflation.+Agricultural,+energy,+and+some+metal+industries+are+going+through+periods+of+steady+inflation.&hl=e
n&gl=au&pid=bl&srcid=ADGEEShaOJyPLjytXxMbioGVhx4wuE4Ag95Fpu9cA2LBhl9OHVV0HDGlt-ajqmPki7zCeQw1NcIBcOHS2IyMGk8zL13k8pkKErSSbK7SmtE0RJSg8ySkIsd5hgpi61R32k5pFIJaiKR&sig=AHIEtbQPGJ83HM7uJSPWnYyRvsQrecWCuA
6
Asahi Group Holdings, Ltd, Datamonitor, 26 Aug 2011, p.11
SOCIO-CULTURAL FORCES
Socio-cultural forces heavily impact the carbonated soft drink market. The Australian populations
expenditure on food and non-alcoholic beverages heavily impacts the carbonated soft drink market.
Socio-cultural trends also have an impact on the market. The ‘health’ trend changes the way that
competitors formulate new products and recreate their existing products.
Scenario:
1.
The top 3 players each introduce brand new flavours to keep up with the health trend, which
expands the market but makes it harder for new entrants to succeed.
2.
The ‘healthy’ trend is moving into the later stages of maturity of the product life cycle and
consumers’ become bored/skeptical of it.
3.
A further population increase will expand the market and develop more opportunities for a
niche market to be introduced.
4.
An increase in the birth rate will increase the amount of children that are present during the
late growth, early maturity stages of a new product.
Implications:
Marketing a carbonated soft drink as a healthy alternative consumers may be sceptical (consider
vitamin water, was marketed as a healthy alternative but is full of sugar.)
7
OPPORTUNITIES
THREATS
Since 1994, household spend on food and nonalcoholic beverages have increased by 14%,
with the population spending over $16 a week
more on these commodities.7
Coke is looking to introduce another product into
its line of cola flavoured soft drinks: “Green Tea
Coke”. This will appeal to women who are healthconscious and parallels with the increasing
market for health products.8
Australian Bureau of Statistics. 1999. Household Expenditure Survey, Australia. Available at:
http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/6535.0/ Accessed 22 February 12
8 Global Edge. 2009. Viktoriya Ivanova [ONLINE].. http://globaledge.msu.edu/blog/archive/2009/6. Accessed 20 February 12
“Meals out and fast foods” (which are both
sufficient opportunities to purchase a
carbonated beverage such as cola) is the
highest-ranking expenditure for households in
1999. 9
POLTICAL AND LEGAL FORCES
The impact that political and legal forces have on the carbonated soft drink market basically relate
purely to the labelling and ingredient content in the products.
Scenario:
1.
2.
Labelling laws change forcing companies to recall products and relabel, costing large
amounts of money
Drought affects Australia increasing water usage costs even higher than they already are.
Implications:
Virgin Cola does not have the money to spend on relabelling or changing the label of their soft drinks,
therefore labelling must abide by the conditions of the ACCC to prevent any issues.

OPPORTUNITIES
THREATS
Regulations by the government are costly to
The ACCC requires by law that labelling give sugar
and kilojoule content.
10
3
abide by. Water usage costs are high after
drought.
5
TECHNOLOGICAL FORCES
9
Australian Bureau of Statistics. 1999. Household Expenditure Survey, Australia. Available at:
http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/6535.0/. Accessed 22 February 12
10 Australian Competition and Consumer Commission. 2009. Food Labelling Guide. [ONLINE] Available at:
http://www.accc.gov.au/content/item.phtml?itemId=877504&nodeId=857ee6d77362422e3f724e2ad61a0271&fn=Food%20La
belling%20Booklet.pdf. [Accessed 09 March 12].
Technological forces have a high impact on the carbonated beverage market in Australia, continuing
technological advancements allow the supply chain of competitors to become faster and faster. The
development of things such as recyclable bottles and new and improved vending machines also adds
another dimension to the carbonated soft drink market.
Scenario:
1.
Advanced technology allows companies’ to develop 100% recyclable bottles and cans making
them available to all companies’
2.
Technological advancements in the supply chain are extremely expensive and new brands
are not able to afford them
3.
Competitors with economies of scale are able to invest in sustainable cropping techniques
Implications:
OPPORTUNITIES
THREATS
New and improved ingredients can be used in
Virgin Cola, ingredients that are cheaper can be
found and worked with.
Coke have been researching and planning to
develop the new “PlantBottle” which is aiming at
being 100% recyclable. 11
This technological advancement by Coke is a
threat to other soft drink market holders
Technological advancements can result in more
efficient supply chain management
Technology impacts this industry less which
means less capital investment
NATURAL ENVIRONMENT FORCES
11
Global Edge. 2000. Coca-Cola Amatil. Available at: http://globaledge.msu.edu/blog/post/562/ge-blog-series--go-green--part4.2---planting-new-ideas .Accessed 08 February 12
Primary inputs for soft drinks manufacturers include concentrates, a range of natural and synthetic
sweeteners such as corn syrup and refined sugar (sucrose), aspartame, and similar ingredients 12.
Scenario:
1.
Drought
2.
Natural disasters decreasing efficiency of raw material supply, supply chain efficiency
Implications:
Companies must take into account the unpredictablility of natural disasters which heavily effect
natural and raw materials.
OPPORTUNITIES
THREATS
“In the 12 months to 30 June 2010, Australia's
population increased by 377,100 people,
reaching 22,342,000. The annual growth rate for
the year ended 30 June 2010 (1.7%) was lower
than that recorded for the year ended 30 June
2009 (2.2%).” 13
12
Due to Australias unpredictable weather, water
availability in the last decade has been scarce, this
creates rising costs for water usage which will
affect the cost of raw materials to create the
product.
Datamonitor 2011. Soft Drinks in Australia, Available: http://360.datamonitor.com.ipacez.nd.edu.au/Product?pid=889413C8178F-43C0-8BD7-4FD8C32C0B1F. Accessed: 05 March 12.
13
Australian Bureau of Statistics. 2010. Population by Age and Sex. Available at:
http://www.abs.gov.au/ausstats/abs@.nsf/mf/3201.0. Accessed 05 March 12