Bottled Water Competitive Analysis

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Competitive Analysis The four major players in the bottled water industry include PepsiCo, Inc., Nestle, and The Coca-Cola Company. In 1987, PepsiCo Inc. attempted to enter the bottled water market but was unsuccessful until 1997 when they introduced Aquafina. In 1992, Nestle Waters acquired Perrier and became the world’s largest seller of bottled water. The last major competitor in the bottled water industry is The Coca-Cola Company. The Coca-Cola Company did not enter the market until 1999 with Dasani. In 2006 Nestle held the largest U.S. market share at 30.5%. Leading in second was PepsiCo, Inc. with 13.8% market share. Lastly, The Coca-Cola Company held 11.9% of total U.S. market share (“United States - Bottled Water”). Buyer Power:…show more content…
Entry Barriers: Low to Moderate • Since brand names are highly important in this industry it would be difficult to convince major retailers for shelf space. • New entrants may find it difficult to compete with prominent, multinational brands that already exist. • The strong growth in the U.S. market within the last five years should encourage new entrants. Substitute Products: Low • The only substitute for bottled water is tap water. Competitive Rivalry with Sellers: Moderate • Factors such as switching costs and high storage costs tend to intensify rivalry. • Bottled water is differentiated by its composition and attributes, but also benefits from investment and branding. Forces that Affect Demand & Factors that Affect Cost Forces that affect demand • Geographic locations • Availability/convenience • Consumer preferences Factors that affect costs • Raw material quality affects costs since it must be free of various criteria, like contamination, and must have specified mineral…show more content…
The main basis for competitive advantage is governance. The bottled water industry has excellent distribution chain operations with equipment specific to the industry. Industry competitors compete through market presence, with an oligopoly controlling the majority of the market through persistent acquisitions. This type of operational context is called ordinary economizing and includes well established competitors and customers (Porter, 1980). Key Factors for Survival & Key Success Factors There are a host of key factors for survival. Among them include inputs, distribution and name recognition. Bottled water industry inputs include the natural or public sources from which the water is bottled, treatment equipment and bottling and packaging suppliers (“Types and Treatment of Bottled Water”). Firms purchase or pay yearly amounts to access springs or municipal water systems. Firms must also decide what processing steps to apply to the water in order to meet FDA guidelines. While firms process their own water, bottling and packaging suppliers are readily available and more cost effective than bottling and packaging in

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