Globalization Drivers for the Food & Beverage Industry (Pepsi and Nestlé)

|39 pages |17-05-2010 | | Not evaluated |
Price : €9.00

Presentation

The packaged food and beverage industry has evolved to occupy a pre-eminent place in today's society as an increasing number of people around the world are consuming ready-to-eat food and snacks prepared outside their homes. According to market analyst Datamonitor, approximately 5.2 million more people living in Britain will consume their 3 daily core meals outside of their homes by 2010. In the United States of America approximately $45.6 billion was spent on packaged snacks and confectionery in 2005 and the figure is set to increase in subsequent years.
These statistics are in tandem with the increasingly mobile lives of people around the world. This increasing mobility has created expectations from the consumer for a certain level of mobility and consumption convenience in their food and beverages as well. Clearly, food and beverages cannot get any more mobile than packaged food and beverages. Given the importance of the food and beverage industry and the vast opportunities that the players in the industry have for global growth and expansion, this report aims to analyze the industry and highlight how globalization has affected the industry.
Using Michael Porter's Five Forces Model, a general overview of the food and beverage industry has been provided in Appendix A. In the first section of the report, four key globalization drivers that can explain the main reasons that are prompting the companies in the industry to globalize their operations and sales will be discussed. In the next section of the report, two major companies within the industry, namely PepsiCo and Nestlé, will be analysed, with the primary aim of understanding how these companies have reacted to the globalization drivers mentioned in section one of the report. Although there is a wide spectrum of product lines in the food and beverage industry, ranging from snacks and confectionery, to baby food and bottled mineral water, our report will concentrate mainly on a select few product lines. They include soft drinks, juices and bottled mineral water in the beverage sector as well as ready-to-eat and hot breakfast cereals and health foods such as granola/oatmeal bars and prepared dishes that are catered to the weight management needs of consumers, in the food sector. These two sectors were chosen for further discussion primarily because both PepsiCo and Nestlé have both developed extensive product lines in these areas.

Extract

New and untapped markets have emerged all over the world. Due to the intense rivalry in the industry and increasing product saturation in current markets, companies in the industry must look to these untapped foreign markets to sell their products and increase their market share and profits. For example, multinational firms in the food and beverage industry are increasing their efforts to produce, market, and sell their products in foreign countries, such as India and China, where the middle class has grown significantly over the last couple of decades. Market leader, Coca Cola, has made tremendous advances in the Indian soft-drink market by capturing a large share (33.9%) of a new and emerging consumer base in India. By 2010, the Indian market for carbonated soft drinks is in turn expected to grow to a value of US$6.5 billion. Moreover, India currently accounts for 8.9% of the revenues in the Asia-Pacific carbonated soft drinks market. Increasing disposable incomes and changing lifestyles are giving people all over the world more buying power to purchase products from the large, established food retailers and, creating an
increased awareness of the product lines of the companies in the industry. Changing lifestyles have also altered dietary habits and have threatened sustained growth of companies in their existing markets. The dominant trend affecting the food and beverage industry is the “food-on-the-go” trend, wherein people have increased their consumption of packaged and ready-made food and beverages in order to keep up with their increasingly mobile and hectic lifestyles, providing a clear opportunity for growth for the companies in the industry. Consequently, as a result of the increasingly mobile and hectic lifestyles of people around the world, there are threatening demographic trends for the food and beverage companies, such as declining birth rates plaguing major countries in Europe and North America, that are currently the largest markets for most of the packaged food and beverage companies. A major concern for Nestlé, is that falling birth rates could seriously affect future demand for food products in Europe. The population in Europe is expected to decrease to 431.2 million people by 2050, down from 455.2 million people in 2005. Thus, companies in the food and beverage industry increasingly realize that they must look across borders for new customers[...]

Globalization Drivers for the Food & Beverage Industry (Pepsi and Nestlé) Globalization Drivers for the Food & Beverage Industry (Pepsi and Nestlé)
Price : €9.00

Table of Contents

I) The Food and Beverage Industry
- Introduction
- Brief Industry Analysis: Industry Competition
- The Drivers of Globalization within the Packaged Food and Beverage Industry
1) Market-Seeking Driver – increase the size of potential markets
2) Cost Reduction Driver- attained through economies of scale
3) Extending the Product Life Cycle Driver
4) Value Chain Optimization Driver

II) Nestlé
- Introduction
1) Market Seeking Driver
2) Cost Reduction Driver
3) Value Chain Optimization Driver
4) Extending the Product Life Cycle Driver

III) PepsiCo
- Introduction
1) Market Seeking Driver
2) Cost Reduction Driver
3) Extending the Life Cycle Driver
4) Value Chain Optimization Driver

IV) Differences and Similarities between Nestlé and PepsiCo
1) Stages in Globalization Strategies
2) Marketing
3) Local market size growth prospective (Market Seeking)
4) Human Resource Systems

V) Recommendations
-Nestlé
-PepsiCo

Appendices & Work Cited List

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