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Microeconomic: The Soft Drinks Industry

Topic: Economics
Words: 375 Pages: 1
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Table of Contents
  1. Introduction
  2. A Microeconomic Variable for Industry
  3. How Government Might Impact the Industry
  4. Sources

Introduction

As the target industry to analyze, the soft drinks sphere is selected. This area is characterized by sustainable income, and the examples of global corporations, such as Coca-Cola and PepsiCo, prove this. The main share of production falls on carbonated soft beverages. According to Sabetta (1), despite the drop in demand for these products in 2021 compared to 2020, the revenues of the leading manufacturers remain enormous. The Coca-Cola Company produces not only its main product but also other types of drinks under its brand (Dr. Pepper, Coca-Cola Zero, and some others), which expands the market coverage and serves as a diversification tool (Sabetta, 1). Although many manufacturers compete locally, on the global stage, few rivals operate.

A Microeconomic Variable for Industry

A convenient microeconomic variable to assess the performance of the soft drinks sphere is the market share parameter. In Figure 1, the evolution of the soft drinks market from 2004 to 2021 is presented with a focus on the US economy (Statista, 2). According to these data, one may notice that, for more than 15 years, Coca-Cola has held a strong position as a leader in its niche, and its market share has remained relatively stable. As a result, one can argue that political, economic, or other fluctuations do not significantly affect demand for popular soft drink brands.

US Market Share of Carbonated Soft Drinks
Figure 1: US Market Share of Carbonated Soft Drinks (Statista, 2)

How Government Might Impact the Industry

One of the control methods promoted by the government and affecting the industry in question is the restriction of sales. As Tahmassebi and BaniHani (3) argue, due to public health concerns, authorities often impose regulations that severely restrict the distribution of soft drinks, including through advertising campaigns. These measures are designed to reduce the risk of health problems in the population due to the increased consumption of such drinks, which mostly contain a large amount of sugar.

Sources

  1. Lauren Sabetta. 2022 State of the Beverage Industry | Carbonated Soft Drink Market Shifts Gears. Web.
  2. Statista. 2023. Market Share of Leading Carbonated Soft Drink (CSD) Companies in the United States from 2004 to 2021 (Chart). Web.
  3. J. F. Tahmassebi and A. BaniHani. 2020. Impact of Soft Drinks to Health and Economy: A Critical Review. Web.