When comparing costs of concentrate producers and bottlers in Exhibit 4, concentrate producers are shown to receive a larger percent of net sales from their operating income. Although bottlers make more money per case in net sales, the cost of goods sold is $2.45 more for bottlers, and they spend more on each of direct marketing, selling and delivery, and general and administration expenses. This means that they only receive an operating income that is 8% of net sales, while concentrate producers receive 32% of net sales in operating income. The cost of goods sold is likely much higher for bottlers due to the capital-intensive bottling process that involved high speed production lines that could only products of similar type and packages of …show more content…
The categories with the largest shares are supermarkets and fountain/vending channels, with 37% and 31% of the industry volume, respectively, as seen in Exhibit 6 (Yoffie & Kim, 2011). In terms of profitability; however, fountain and vending products reign supreme with the highest profitability index (Yoffie & Kim, 2011). Success in this area is due to lower levels of investment required to achieve sales and may be the result of the level of convenience that these products …show more content…
Since the CSD industry is a global industry, it is clear that Coca-Cola has a competitive advantage over Pepsi. Coca-Cola receives 80% of its sales from international markets, while Pepsi only receives about 50% (Carpenter, Sanders, & Harling, 2012; Yoffie & Kim, 2011). This means that Pepsi relies on its U.S. market significantly more than Coke. This also demonstrates that Coke has more resources and capabilities that allow it to expand its market, and expand it more