The Trends in of Liquid Refreshment Beverage Industry - Case Study Example

Da River Café Beverages DA River Café Beverages SWOT Analysis Introduction The Green Tsunami is a healthy non-alcoholic beverage that belongs to the Global Liquid Refreshment Beverages Industry. The drink is a produce of the Da River Café Beverages Company, which is an upstart manufacturer located in the Jacksonville, the North Carolina. The company is an associate of the Southern Hospitality, Irish Heritage & the Fountain Shop Soda’s creation of the beverage industry. The Green Tsunami is produced from a mixture of refreshments and natural ingredients such as kales, spinach, mangoes, bananas, and coconuts. Therefore, the product, undoubtedly provides the consumers with a refreshing feeling of wellness and healthy because it contains natural ingredients unlike the traditional carbonated drinks offered by the other manufacturers. The non-alcoholic industry players include bottlers, manufacturers and the distributors. The industry offers a diverse range of products such as energy and sports drinks, non-carbonated and carbonated drinks, bottled water and functional beverages like coffee and tea. Da River Café Beverages is an upstart company manufacturing juices, smoothie, and energy beverages and focuses on the wellness and health of the consumers as the ultimate goal. The Trends in of Liquid Refreshment Beverage Industry Reveal Valuable Information for Business Managers Currently, the Coca-Cola Company leads in the market with an approximately 34% share of the total sales volume of the beverage industry, followed by the PepsiCo with a 24.3%, DR Pepper Snapple with 11% share and finally, the Nestle Waters with a 10.25% share. In Regard to the industry’s segmentation, statistics indicates the whole industry is likely to continue growing and expanding in the future. For instance, according to Harvey (2014), the functional beverages that comprises the energy drinks continues to record the highest growth rates in sales volume of about 23.1% per year, followed by bottled water with an annual increment in sales volume of 5.8%. On the other hand, the diet and non-diet drinks continues to grow at 0.5% annually while the fruit beverages sector continues to experience an annual decline in sales volume of -4.1% (Harvey, 2014). Overly, the whole industry continues to experience an annual percentage growth rate of about 25.3% (Harvey, 2014). The above industry segmentation indicates that consumer preferences are shifting towards non-carbonated drinks and, therefore, this favors DA River Café Beverages since Tsunami is tailored to customers that prefer healthy and non-carbonated drinks. According to (Storey, 2010), the beverages with sugary ingredients are becoming less and less popular because consumers are shifting towards healthier drinks such as sports drinks because of the perceived healthy and wellness benefits they are associated with. Moreover, these trends have been triggered by the increased obesity rates in the U.S. and global arena necessitating consumers to turn to products manufactured from natural elements. Thus, the energy drinks are gaining an edge over the traditionally carbonated drinks as consumers continue to increase annually. For instance, in 2012, statistics indicates that the industry’s revenues soared to $ 160.2 billion (Harvey, 2014). In the US alone, the soft drink manufacturing industry registered an overall growth rate of 1·8% between 2010 and 2015. Conversely, data from the Beverage Marketing Corporation in the U.S. suggests that in the next five years, the industry’s growth in revenues is likely to surpass $ 400 billion mark (Harvey, 2014). Therefore, this is a good indication that the industry is likely to boom in the future. Thus, with consumers’ preference shifting to tea and coffee based drinks, Da River Café Beverages is undeniably on the path of success, growth, and expansion. Strategic positioning for DA River Café Beverages Located in North Carolina U.S.A, DA River Café Beverages offers various non-alcoholic solutions to the consumer market. The company’s drinks are better and unique drinks for consumers because of the refreshing and healthy characteristics associated with them. Moreover, the company’s product line is unique from the traditional carbonated and alcoholic drinks line. For this reason, the company has two alternative choices in positioning its products’ line. The company can standardize its product globally to reap the potential benefits of economies of scale or can adapt them to a particular market niche for more market penetration. Alternatively, the company can employ an integrated approach, by using both methods simultaneously, an approach known as Vrontis Adapt Stand. DA River Café Beverage is not a well-known brand in the market. Consequently, the company will, therefore, have to choose a positioning strategy, which is cost-effective and manageable (Urban, Hauser, & Urban, 1993). It can apply a quality, competitive or value positioning strategy. In this case, the company will, however, have to implement a value positioning strategy that prices the company’s products below the industry level or in line with industry prices, but by focusing on customer perception factors such as price, quality, packaging and branding and service quality (Zeithaml, Parasuraman, & Berry, 1990). Thus, by incorporating these factors the company will be able create a perception in the minds of the consumers that the products are quality and can give them value for their money (value addition) and thus the company will be able to create a competitive edge in the market. For instance, the company will package Green Tsunami in a distinctive and exceptional manner and offer free delivery services. Lean startup refers to a business practice of developing a product that satisfies the early needs of customers (Blank, 2013). DA River Café Beverage will use this method to avoid the risk of product failure (risk avoidance). The quality of a product is a crucial characteristic that differentiates a company from its rivals. Therefore, the use of lean startup will be a crucial strategy that will enable the company to focus on the wellness and healthy of consumers gap that exists in the market for its line of products. DA River Café Channels of Distribution After successfully manufacturing the product, the next stage will be to determine how the product reaches the consumers. Weitz, and Jap (1995) states that distribution channels are systems by which products are availed to customers. The company will use the direct channel as its primary method of distribution. Since the channel eliminates intermediaries, it will enable the company to reduce its costs of operations and maximize profits. Moreover, given that the product is new in the market it is essential that the company minimizes its sales and distribution costs to reduce the overall costs of overheads. Direct selling is also chosen because of the nature of Green Tsunami product, which is best served when it’s fresh and expires quickly. Another reason for choosing the direct channel method is to avoid competition. Supermarkets have a numerous stocks of non-alcoholic drinks; hence, DA River Café Beverages can evade this stiff competition by providing better services to consumers to attract them to its brand. The Company will, therefore, begin with a local store and a mobile truck that will transport the Green Tsunami to places such as local events like sports in the local community and use personal selling to enhance sales revenue. Types of Risks DA River Café Beverages Face and Mitigation Plans Businesses whether established or start-ups face risks in the marketing environment. A business risk is the probability of earning insufficient profits or incurring losses as a result of market uncertainties such as changes in consumer behavior; unexpected change in government policy and unhealthy competition. The Green Tsunami products face a number of risks associated with new products such as competitive risks, market risks and product risks (Cooper, Edgett, & Kleinschmidt, 2001). The Green Tsunami product is at the introductory stage; hence, it exposes the company to product risks, which occur even when a product is unique and of high quality. Manufacturing and subsequent launching of the product reveal defects. Green Tsunami may have many substitutes in the market due to lack of novelty. Market risks can emanate from inadequate market information, which can result from the misinterpretation of market segmentation, size and trends (Dowd, 2007). Moreover, the projected revenue growth rate in the beverage industry is only theoretical and can be misleading because many companies often do not release all financial statements and information regarding marketing trends. The management of the above risks is important to enable the company to mitigate them. The most appropriate methods that DA River Café Beverages can apply to mitigate the above risks include risk retention, risk retention, and risk avoidance. The company can avoid market risks by conducting extensive market analysis research. This will enable it avoids making baseless assumptions about crucial market characteristics such as market share. Risk retention can also be applied to mitigate risks associated with product risks such as failure. For instance, the company can modify its product to conform to consumer demands. Risk transfer can be applied in the event of the emergency competitive risks. The risks can transferred to competitors through careful analysis of the competitors’ marketing strategy (McNeil, et al., 2010) SWOT Analysis of DA River Café Beverages SWOT stands for Strengths, weaknesses, opportunities and threats. It is a tool used to plan when undertaking a new business venture. The following matrix table summarizes the SWOT of DA River Café Beverages and Green Tsunami. Strengths Growing market segment with more consumers preferring non-carbonated drinks Low pricing strategy Healthy based product (Green Tsunami) Large market target Good relationship with various stakeholders such as the military Weaknesses Stiff competition in the industry with Nestle Inadequate market information High operational costs that may occur as a result of emphasizing on product value. This affect profitability levels Opportunities Opportunity to meet new customers’ needs at first(launching a new product) Increasing demand for non- carbonated products Global market penetration Threats Competition. The Presence of strong brands such as Coca-Cola which are difficult to replace Possibility of new entrants offering similar products to “Green Tsunami” that can result in shrinking on market References Blank, S. (2013). Why the lean start-up changes everything. Harvard Business Review, 91(5), 63-72. Cooper, R. G., Edgett, S. J., & Kleinschmidt, E. J. (2001). Portfolio management for new products. Basic Books. Dowd, K. (2007). Measuring market risk. Hoboken, NJ:John Wiley & Sons. Harvey, C.A (2014). The Futures Report: Whats Ahead for Beverages – 2014. Retrieved from http://www.marketresearch.com/Beverage-Marketing-Corporation-v1293/Futures-Ahead-Beverages-8667231/ Storey, M. (2010). The shifting beverage landscape. Physiology & behavior, 100(1), 10-14. Urban, G. L., Hauser, J. R., & Urban, G. L. (1993). Design and marketing of new products (Vol. 2). Englewood Cliffs, NJ: Prentice Hall. Weitz, B. A., & Jap, S. D. (1995). Relationship marketing and distribution channels. Journal of the academy of Marketing Science, 23(4), 305-320. Wilk, R. (2006). Bottled Water The pure commodity in the age of branding. Journal of Consumer Culture, 6(3), 303-325. Zeithaml, V. A., Parasuraman, A., & Berry, L. L. (1990). Delivering quality service: Balancing customer perceptions and expectations. Simon and Schuster. Read More