Australian Beverages Essay

998 words - 4 pages

Understanding the external environment (Industry attractiveness)
1. Identify the industry, product segments and value chain.
The industry is the Australian Non-alcoholic beverage industry. Currently, Australian Beverages Ltd is the second largest competitor behind Butlers Corporation. Industry consolidation has been occurring but is not expected to continue in the future due to the relatively high market shares held by major competitors. Core operations cover processing and bottling (not retailing). Product segments include CSD (in decline stage), Diet CSD, Fruit Drinks, Milk Drinks, Energy Drinks, Sports Drinks, and Ready to drink coffee/tea. Entry into the snack food market was recently ...view middle of the document...

Research shows people want better tasting and healthier alternatives to many soft drinks (Water is now a “fashion accessory”)
 Increase in Australian population increase in per capita consumption of bottled water in addition to soft drinks
 Consumption levels low in comparison to other countries (market potential) | F


F Positive


Society  Health consciousness- changing drinking habits away from CSDs to healthier beverages H/F Neutral
Overall Impact of society factors
Technology  Product efficiencies
 World-class manufacturing plants
 Automation (lower labour cost)
 Process re-engineering
 PED packing innovation reduces packing by 20%
 Information Technology – Vendor Management Inventory Information (used to identify consumer trends and consumption F


H/F Positive

Environment  Availability of clean drinking water (alternative)
 Recycling of empty bottles
 First in industry to implement Triple Bottom Line Reporting F

H/F Negative

Law  Banning of television advertisements for CDS’s F Negative
Total – all factors Positive

4. What have been the key issues affecting historical and future industry profitability? What was their impact or likely impact and overall assessment of the industry’s future profitability?
Bottled water industry profitability has been high overall. This is due in part to the strong growth that the industry has achieved. Using Porter’s five forces model, it can be concluded that industry rivalry is low but has the potential to increase in intensity. Future profitability of the industry is expected to continue at current levels. However, it is noted that the buyer power of large retailers (supermarket) will increase as sales through this distribution channel will increase. This will have a negative impact on profitability. Without economies of scale, modern technology and smart systems, it will be difficult for small competitors to generate an acceptable return on investment and maintain current levels of profitability.
Threat of New Entrants • Economies of scale – to achieve volume of manufacturing required to be competitive, the level of capital investment is high
• Product differentiation – large retailers prefer to deal with large manufacturers of...

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