Keurig Green Mountain’s Acquisition of Dr. Pepper Snapple has led to the creation of a newly merged company Keurig Dr. Pepper. This paper will analyze the merger, the nonalcoholic beverage industry that both companies compete in, as well as the strategies that both companies have had prior to the merger and how those strategies change in a combined venture. The overall value of the purchase will be looked at as well as any benefits that can be achieved for the Keurig brand by acquiring Dr. Pepper Snapple. Keurig Green Mountain’s (KGM) Acquisition of Dr. Pepper Snapple Group (DPS) On 29th January 2018, Keurig Green Mountain and Dr Pepper Snapple announced that they were to merge through a laid down agreed procedure. Under the approved …show more content…
New firms that want to sell beverages can be attracted by higher returns made by the Keurig Dr. Pepper. The new firms can decrease the profit made by Keurig Dr. Pepper. If the profit falls below zero, it can throw Keurig Dr. Pepper firm out of the market. To avoid this, Keurig Dr. Pepper (KDP) must employ unique strategies on how to create a barrier for entry of new rival firms into the market (Stone, 2018). The KDP has to make all necessary steps to maintain their market share. Such steps include utilizing their creditworthiness to acquire bank loans that can help the firm to expand and dominate the market ( Rahman et al., 2015). The organization can also lower prices of their products to create unfair competition with newcomers. The organization has huge capital to avoid low prices to attract many customers and discourage them from buying from recent firms. Keurig Dr. Pepper should also maintain favorable customer loyalty to ensure that customers will not shift and buy other substitutes from brand new business organizations. KDP will also set differentiated beverages for customers in a great way (Rahman et al., 2015). The uniqueness of their products will create a competitive environment with the other products from the rival …show more content…
Pepper Snapple. However, KGM is the firm that got more power in the newly formed business entity. They had to change some part of their strategy to accommodate the Dr. Pepper Snapple. Contrasting strategies between the two may lead to a better overall strategy if the merger of the two companies proves to be successful. Dr. Pepper Snapple has long operated on the cost minimization strategy as it has tried to stay competitive in the soft drink industry with the likes of Coca-Cola and PepsiCo. Combining this cost strategy with Keurig’s strategy of developing strong supplier relationships and strong core values can move the new Keurig Dr. Pepper company forward in the
The purpose of this case study is to explore the implications for expanding the products offered by Mountain Man Brewing Company (MMBC) from one product, Mountain Man Lager, to adding a Light version of the beer. This paper will evaluate the following:
Keurig Green Mountain in many ways has delivered on all of key goals and priorities. Green Mountain Coffee (GMC) has welcomed a significant number of new brands into the Keurig® family; launched the Keurig® 2.0 system and accelerated new product innovation; implemented continuous productivity and efficiency enhancements throughout the company’s operations; and began the process of globalizing the Company with the launch in the U.K. At the same time, we generated significant value for shareholders by investing behind organic growth and returning nearly $1.2 billion to shareholders via dividends and share repurchases.
aspects: Carbonated soft drinks industry's structure, evaluation of driving change factors in this industry and finally analysis of key strategic factors it is faced with.
There are six major competitors: Gevalia, Illy Café, Millstone, Peet's Coffee and Tea, Seattle's Best and Starbucks. Starbucks seems to have a strong share in the available market. Starbucks is highly aggressive in the retail market and will have an enormous impact on future sales and profit of Green Mountain Coffee. Starbucks is already the leading retailer, roaster, and brand name coffee in the world. In 2002, sales were at $3.3 billion up 90 million dollars since 2001. With the help of the retail market, Starbucks may soon have a bigger share in the wholesale market. Our market portfolio is narrow in a sense we only supply the wholesale market.
Control of market share is the key issue in this case study. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year. Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share.
With the emergence of retail sector, the marketing and advertising strategies of soft drink companies changed drastically. The soft drink industry was not just limited to production of soda drinks. With the changing preference and choices of customers, healthy drinks were also lunched. Minute Maid, Tropicana and diet soda are some of the examples of the changes made by these giants in order to garner the attention of the public. In the year 2013, more than 90% of the market was dominated by three major soft drink companies. The industry seems to be going in the oligopoly manner for a long time now. Coca cola remains the undisputed leader of this industry with nearly 50% market share closely followed by Pepsi. (Datamonitor, 2005)
Also, competing companies need to face the barriers of mergers and acquisitions. With Pepsi buying out “PBG and Pepsi America”, an independent bottling company, new entrants will have difficulty finding other distribution channels (p.12). Further, dominant companies like Coca-Cola spend “2.34 million dollars” on advertising costs, which helps the company achieve brand value and brand loyalty for the company (p.19). Customers who are loyal towards the brands are not interested in trying the competitor’s products. Hence, the entrant would need to invest in marketing to promote its brand, which would prove costly to the company.
Dr Pepper Company is the oldest major manufacturer of soft drink concentrates and syrups in the United States. Dr Pepper is the company's principal brand. Cadbury Schweppes PLC acquired Dr Pepper/Seven-Up Cos. Inc. in March 1995. The new business will be called the Dr Pepper Company, which will focus on the Dr Pepper brand by handling all beverage system sales, which account for 75 percent of its business, in addition to related independent bottlers. The second operating group will be Cadbury Beverages/Seven Up Co., which will service independent bottlers not carrying Dr Pepper. Dr Pepper/Seven Up soft drink brands now hold about 16 percent of the U.S. market. Dr Pepper and Seven-Up are among the top 10 carbonated soft drinks, with Dr Pepper being the top non-cola soft drink. Other soft drink include: A&W Root Beer, Canada Dry, Schweppes, Welch's, Sunkist, Squirt, Crush and Hires (Levy 1999). According to the soft drink industry report, there is large sales growth recently in non-colas. Dr Pepper was number three in the industry. The reason is because non-colas have above-average caffeine level, and will be aimed at the 12-to 21-year-old market. Obviously, management sees this product as an opportunity to more fully participate in the growing popularity of non-colas.
Its primary competitors are PepsiCo, Dr. Pepper Snapple Group, and less obvious, Starbucks and Nestle. As Coca-Cola partners with Dunkin Donuts on a new joint venture offering bottled coffee products, they enter into a niche product market where Nestle and Starbucks are their primary competitors (WSJ). Thus, if one was to classify Coca-Cola as something other than non-alcoholic beverages, then they could classify them as a bottling company. We chose to stick with the beverage industry because it requires more expertise to understand the chemistry and manufacturing involved with advantages in the unfamiliar bottling industry than it does to understand how brand equity drives competitive advantages. Trends, Opportunities, and Threats Although Coca-Cola is a very prominent brand across the world, it does face opportunities and threats that require adaptation and change.
Despite the fact that Krispy Kreme’s same-store sales are increasing every quarter, the company is not in control of the specialty foods industry. Starbucks Coffee, Krispy Kreme’s leading competitor, has been experiencing astonishing sales that surpass even Krisp...
As we all should know, PepsiCo is one of the world’s leader in convenient food and beverages. PepsiCo shares are traded worldwide and particularly in NYSE (United States). PepsiCo is in the same line with Coca cola and Cadbury Schweppes as the dominating beverage companies. PepsiCo has successfully built a great brand name rivaling with coca cola, probably because PepsiCo unlike coca cola has its own bottling companies. With a competitive strategy based on differentiation rather than cost leadership like its fellow competitors PepsiCo invests highly in new packaging, flavors, formulas to outsmart their competition. Founded in 1919, producing a variety of sweet and grain-based snacks, carbonated and non-carbonated
Today Coca-Cola markets and connects with consumers using a portfolio of nearly 400 brands in over 200 different countries. Coca-Cola has five strategic business units: North America, Africa, Asia, Latin America, and Europe, Eurasia and the Middle East. The company adopted their strategies of success using the following strategic priorities: A. Accelerated carbonated soft-drink growth, led by Coca Cola B. selectively broaden the family of beverage brands to drive profitable growths C. grow system profitability and capability together with our bottling partners. D. Direct investments to highest potential areas across markets. E. Drive efficiency and cost effectiveness everywhere. In 2003 Coca-Cola Company products comprised of about 10% of total worldwide sales of non-alcoholic beverage products. The company's' primary competitor in many countries is PepsiCo. Other significant competitors include Nestle S.A., Cadbury Schweppes plc, Groupe Danone, and Kraft Foods Inc., among others. The remaining portion will evaluate the performance and give an investment outlook of the Coca-Cola Co using market and ratio analysis.
By Altering Strategic Choices Coca Cola is enclosed with a number of strong points that can expand upon as the company changes their strategic choices. A few of the strengths to concentrate on is maintaining a predominant market share and prevalent supply of drinks. Another strength is a strong marketing and advertising plan, customer loyalty, and negotiating power amongst others. Coca-Cola’s strategic options have boundaries that revolves throughout its present status in the market.
The “Top Challenge Trend” is likely that of “Faster Pace of Innovation” causing increased competition due to lower barrier of entry. (Carpenter, Bauer, & Erdogan, 2012) With the increase competitors from both major competitors like PepsiCo vs generic branding of sodas at cheaper rates. The market is flooded with new flavors and new competitors all the time.
The Beverage Industry is a very mature industry and includes companies that market nonalcoholic beverages and alcoholic items. There is room for growth opportunities but there are very few compared to existing businesses in the sector. Since the growth mainly comes from those already in this industry, many of the companies seek to diversify their offerings to continue to compete. One of the main ways to diversify their offerings is too seek out arrangements or acquisitions that expand their geographic reach, acquire new products, and expand their operations. Both sides of the market nonalcoholic and alcoholic have very sizeable companies that control large parts of the market. These companies are usually more stable and have little to no chance