Market Structure & Company Competition

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'Cott's prime strategy is to expand its portfolio of high-margin beverages (such as non-carbonated beverages), foray into new geographic markets and drive profit margins. The company has undertaken a major cost reduction programme, which focuses on five core areas namely fixed cost reduction and asset optimization; Sub-Zero-Based Budgeting (SZBB); optimization of SG&A expenses; rationalization of SKUs; and centralization of procurement process. Cott's prime competitors include the US-based companies Coca-Cola and PepsiCo; and the UK-based Cadbury Schweppes. Brands owned by these three companies account for nearly 82% of the average soil drink sales (in terms of volume) in the company's North American and UK markets.'

Headquartered at the US, Coca-Cola is the targest global manufacturer (in terms of sales) and marketer of carbonated and noncarbonated beverages and syrups. Some of the company's popular brands include Coca-Cola and caffeine-free Coca-cola, Coca-Cola Classic, Coca-Cola with Lime, Diet Coke with Lime, Diet Coke (also sold as Coca-Cola Light in many countries), Sprite, caffeine-free Diet Coke, Diet Cherry Coke, Fanta, Thumps Up, Coca-Cola C2, Dasani and Kinley among many others.. During the year 2005, the company acquired Multon, a Russia-based juice business, which owns brands such as DOBRIY, Nico and Rich and thus strengthened its presence in Ukraine, Belarus and Russia. Coca-Cola has also been active in new product launches and product exlensions. In 2005, the company launched products in line with consumers' preference for health-conscious diets. Powerade Option (a low calorie sporls drink), Sugar Free Full Throttle, Coca-Cola Zero (zero calorie cola) were some of the producls launched for the company's North American market Coca-Cola also reformulated the Fresca range of beverages to include calorie-free variants of the Sparkling Peach Citrus and Sparkling Black Cherry brands. In France, Coca-Cola inlroduced Tab Energy, Diet Black Cherry, Full Throttle Fury, among olhers, during 2006.

(Just - Drinks: Cott Corporation 2006 company profile edition 1,7-8. Retrieved October 13)

- Expanding on the idea of the five core areas of Cott Corp's major cost redutcion programme:

"These programs will be entrenched in Cott's policies and operating practices as permanent drivers of profitability and are expected to have a positive impact on the business in 2007 and beyond. In SG&A optimization, Cott reported that it will have eliminated 77 positions by July 28, 2006, resulting in annualized savings of approximately $8 million with the full benefit beginning in 2007.(We will have to find out if this ever took place) In the area of centralized procurement, Cott previously announced the successful implementation of a new demand planning system, the first phase of a total supply and inventory management solution supplied by Manugistics Inc., which is expected to deliver annualized savings of approximately $2.5 million when fully implemented. The previously announced transition of its North American transportation management to Transplace is expected to deliver approximately $2 million in annual savings beginning next year and a recently completed agreement with Ecolab to centralize procurement and management of global cleaning, sanitation and lubrication programs is expected to reduce overall costs by approximately $4 million over five years."

"KEY PRIORITIES ESTABLISHED FOR TOP-LINE GROWTH

The model encompasses:

'''1) Superior in-store execution 2) Penetration of new, high-margin beverage segments 3) Expansion to new, high-margin channels 4) Expansion to new global customers and geographies with Cott and Royal Crown International'''

In the area of penetrating new, high-margin beverage segments, Cott is making progress expanding its portfolio of energy drinks with new flavors and packaging formats to new customers and channels in the U.K., Canada, and the U.S. In addition, Cott has recently developed a line of premium ready-to-drink single serve teas - a segment that boasts more than 25% growth year-over-year - and has gained authorizations from major North American Cott customers. These teas, offered in 20-ounce PET bottles, and will begin shipping in the third quarter.

In the area of geographic expansion, the new business in Brazil is on track and expected to expand further in that country through the balance of the year. Cott also reported that it has entered into arrangements with three bottlers in China to meet the future needs of key customers in one of the fastest growing CSD markets worldwide. Growth in other international locations continued at a robust pace in the first half with volume growth of 60% in the Philippines with the Company's RC(R) brand, and significant double-digit growth in other markets in Asia Pacific and the Middle East." (Cott Corporation announces second quarter results and significant new cost reduction program.pfd, 4-5, retrieved October 14, 2009)

--- Summing it up, Cott Corp's model for growth has the 4 priorities that were mentioned above. They are also planning in expanding their energy drinks line, and making some new packaging for existing ones in Canada, U.S. and the UK. They also developed a line of ready to drink teas, which is a sector growing 25% a year on the market, and will be ready to ship in the third-quarter (of 2006). They will be shipped in 20-ounce PETs. Cott was also looking into expanding its businesses in Brazil further. They have also closed a deal with 3 bottlers in China to meet the future needs of their customers (which means that they are expecting a big growth in sales I believe), and their international growth was really good (60% in the Phillipines with RC and other double digit growth).

Top Competitors Coca-Cola, Dr Pepper Snapple Group, PepsiCo

All Competitors Coca-Cola, Dr Pepper Snapple Group, PepsiCo, American Beverage, Britvic Plc, Colgate-Palmolive, Cool Mountain Beverages, Danone Water, Energy Brands, Ferolito, Vultaggio, Florida's Natural, Fuze Beverage, Gatorade, Hain Celestial, Hansen Natural, Impulse Energy USA, IZZE, Jones Soda, Leading Brands, Mott's, Naked Juice, Nestlé, Nestlé Waters North America, Odwalla, Red Bull, Reed's, Snapple, South Beach Beverage, Sunny Delight, Tropicana, Welch's, Wet Planet Beverages, XELR8, Clearly Canadian, Global Beverage, National Beverage, Suntory Holdings,

http://proquest.umi.com.ezproxy.lib.ucalgary.ca/pqdweb?RQT=501&idlqry=COTT+CORP&idltype=company&idlkbase=2&idlmode=1 (alot more info)

Market Structure

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Market Analysis

The Canadian carbonated soft drinks market declined marginally between 2004 and 2008. The market is expected to follow a similar trend in the forthcoming five years. The Canadian carbonated soft drinks market generated total revenues of $3.4 billion in 2008, representing a compound annual rate of change (CARC) of -0.3% for the period spanning 2004-2008. In comparison, the United States market declined at a CARC of -0.5% while the Mexican market grew with a compound annual growth rate (CAGR) of 3.3%, over the same period, to reach respective values of $63.2 billion and $14.4 billion in 2008. Market consumption volumes increased with a CAGR of 0.6% for the period 2004-2008, to reach a total of 3.4 billion liters in 2008. The market's volume is expected to rise to 3.5 billion liters by the end of 2013, representing a CAGR of 0.7% for the 2008- 2013 period. Standard cola sales proved the most lucrative for the Canadian carbonated soft drinks market in 2008, generating total revenues of $1.9 billion, equivalent to 55% of the market's overall value. In comparison, sales of diet cola generated revenues of $723.7 million in 2008, equating to 21.5% of the market's aggregate revenues. The performance of the market is forecast to decline marginally, with an anticipated CARC of -0.1% for the five-year period 2008-2013, which will lead the market to a value of $3.3 billion by the end of 2013. Comparatively, the United States market will decline at a CARC of -0.6% while the Mexican market will grow with a CAGR of 3%, over the same period, to reach respective values of $61.4 billion and $16.8 billion in 2013.

(Canada - Carbonated Soft Drinks © Datamonitor, published August 2009, page 8)

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Forecast values

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