Assignment 3 Part 2: Business Plan – Draft
Points: 30
Unacceptable
Fair
Proficient
Exemplary
Criteria
Below 70% F
1a. Revise the Company
Description section based on
the feedback you have received.
Weight: 7%
1b. Revise the Industry Analysis
and Trends section based on
the feedback you have received.
Weight: 7%
1c. Revise the Strategic Position
& Risk Assessment section
based on the feedback you have
received.
Weight: 7%
1d. Revise the Target Market
section based on the feedback
you have received.
Weight: 7%
1e. Revise the Competition
section based on the feedback
you have received.
Weight: 7%
1f. Revise the Marketing Plan &
Sales Strategy section based on
the feedback you have received.
Weight: 7%
2a. Describe the ways in which
your company is committed to
being a good corporate citizen.
Weight: 7%
2b. Discuss how your
company’s activities will affect
the environment and identify the
steps you will take to mitigate
any negative impacts.
Weight: 7%
2c. Determine any health issues
/ claims related to the product
you are making, whether
negative or positive. Suggest
the strategy your company will
use to mitigate any negative
70-79% C
80-89% B
90-100% A
Did not submit or
incompletely revised the
Company Description
section based on the
feedback you have
received.
Did not submit or
incompletely revised the
Industry Analysis and
Trends section based on
the feedback you have
received.
Did not submit or
incompletely revised the
Strategic Position & Risk
Assessment section
based on the feedback
you have received.
Partially revised the
Company Description
section based on the
feedback you have
received.
Satisfactorily revised the
Company Description
section based on the
feedback you have
received.
Thoroughly revised the
Company Description
section based on the
feedback you have
received..
Partially revised the
Industry Analysis and
Trends section based on
the feedback you have
received.
Satisfactorily revised the
Industry Analysis and
Trends section based on
the feedback you have
received.
Thoroughly revised the
Industry Analysis and
Trends section based on
the feedback you have
received.
Partially revised the
Strategic Position & Risk
Assessment section
based on the feedback
you have received.
Satisfactorily revised the
Strategic Position & Risk
Assessment section
based on the feedback
you have received.
Thoroughly revised the
Strategic Position & Risk
Assessment section
based on the feedback
you have received.
Did not submit or
incompletely revised the
Target Market section
based on the feedback
you have received.
Partially revised the
Target Market section
based on the feedback
you have received.
Satisfactorily revised the
Target Market section
based on the feedback
you have received.
Thoroughly revised the
Target Market section
based on the feedback
you have received.
Did not submit or
incompletely revised the
Competition section
based on the feedback
you have received.
Partially revised the
Competition section
based on the feedback
you have received.
Satisfactorily revised the
Competition section
based on the feedback
you have received.
Thoroughly revised the
Competition section
based on the feedback
you have received.
Did not submit or
incompletely revised the
Marketing Plan & Sales
Strategy section based
on the feedback you have
received.
Did not submit or
incompletely described
the ways in which your
company is committed to
being a good corporate
citizen.
Did not submit or
incompletely discussed
how your company’s
activities will affect the
environment and did not
submit or incompletely
identified the steps you
will take to mitigate any
negative impacts.
Did not submit or
incompletely determined
any health issues / claims
related to the product you
are making, whether
negative or positive. Did
Partially revised the
Marketing Plan & Sales
Strategy section based
on the feedback you have
received.
Satisfactorily revised the
Marketing Plan & Sales
Strategy section based
on the feedback you have
received.
Thoroughly revised the
Marketing Plan & Sales
Strategy section based
on the feedback you have
received.
Partially described the
ways in which your
company is committed to
being a good corporate
citizen.
Satisfactorily described
the ways in which your
company is committed to
being a good corporate
citizen.
Thoroughly described the
ways in which your
company is committed to
being a good corporate
citizen.
Partially discussed how
your company’s activities
will affect the
environment and did not
submit or incompletely
identified the steps you
will take to mitigate any
negative impacts.
Satisfactorily discussed
how your company’s
activities will affect the
environment and did not
submit or incompletely
identified the steps you
will take to mitigate any
negative impacts.
Thoroughly discussed
how your company’s
activities will affect the
environment and did not
submit or incompletely
identified the steps you
will take to mitigate any
negative impacts.
Partially determined any
health issues / claims
related to the product you
are making, whether
negative or positive.
Partially suggested the
Satisfactorily determined
any health issues / claims
related to the product you
are making, whether
negative or positive.
Satisfactorily suggested
Thoroughly determined
any health issues / claims
related to the product you
are making, whether
negative or positive.
Thoroughly suggested
issues, and to ensure any
positive claims are true.
Weight: 7%
2d. Suggest your company’s
plan, through advertising,
distribution, and / or other
methods, to target and reach
only appropriate market
segments.
Weight: 7%
3. Clarity, writing mechanics,
and formatting requirements
Weight: 15%
4. For year one, revise and
submit the Income Statement,
Cash Flow Projections, and
Balance Sheet sections from the
“Business Plan Financials” MS
Excel template (see: Course
Required Files in Week 1).
Weight: 15%
not submit or
incompletely suggested
the strategy your
company will use to
mitigate any negative
issues, and to ensure any
positive claims are true.
Did not submit or
incompletely suggested
your company’s plan,
through advertising,
distribution, and / or other
methods, to target and
reach only appropriate
market segments.
strategy your company
will use to mitigate any
negative issues, and to
ensure any positive
claims are true.
the strategy your
company will use to
mitigate any negative
issues, and to ensure any
positive claims are true.
the strategy your
company will use to
mitigate any negative
issues, and to ensure any
positive claims are true.
Partially suggested your
company’s plan, through
advertising, distribution,
and / or other methods, to
target and reach only
appropriate market
segments..
Satisfactorily suggested
your company’s plan,
through advertising,
distribution, and / or other
methods, to target and
reach only appropriate
market segments.
Thoroughly suggested
your company’s plan,
through advertising,
distribution, and / or other
methods, to target and
reach only appropriate
market segments.
More than 6 errors
present
5-6 errors present
3-4 errors present
0-2 errors present
Did not submit or
incompletely, for year
one, revised and
submitted the Income
Statement, Cash Flow
Projections, and Balance
Sheet sections from the
“Business Plan
Financials” MS Excel
template (see: Course
Required Files in Week
1).
Partially, for year one,
revised and submitted the
Income Statement, Cash
Flow Projections, and
Balance Sheet sections
from the “Business Plan
Financials” MS Excel
template (see: Course
Required Files in Week
1).
Satisfactorily, for year
one, revised and
submitted the Income
Statement, Cash Flow
Projections, and Balance
Sheet sections from the
“Business Plan
Financials” MS Excel
template (see: Course
Required Files in Week
1).
Thoroughly, for year one,
revised and submitted the
Income Statement, Cash
Flow Projections, and
Balance Sheet sections
from the “Business Plan
Financials” MS Excel
template (see: Course
Required Files in Week
1).
Assignment 3 Part 2: Business Plan – Draft
Points: 30
Unacceptable
Fair
Proficient
Exemplary
Criteria
Below 70% F
1a. Revise the Company
Description section based on
the feedback you have received.
Weight: 7%
1b. Revise the Industry Analysis
and Trends section based on
the feedback you have received.
Weight: 7%
1c. Revise the Strategic Position
& Risk Assessment section
based on the feedback you have
received.
Weight: 7%
1d. Revise the Target Market
section based on the feedback
you have received.
Weight: 7%
1e. Revise the Competition
section based on the feedback
you have received.
Weight: 7%
1f. Revise the Marketing Plan &
Sales Strategy section based on
the feedback you have received.
Weight: 7%
2a. Describe the ways in which
your company is committed to
being a good corporate citizen.
Weight: 7%
2b. Discuss how your
company’s activities will affect
the environment and identify the
steps you will take to mitigate
any negative impacts.
Weight: 7%
2c. Determine any health issues
/ claims related to the product
you are making, whether
negative or positive. Suggest
the strategy your company will
use to mitigate any negative
70-79% C
80-89% B
90-100% A
Did not submit or
incompletely revised the
Company Description
section based on the
feedback you have
received.
Did not submit or
incompletely revised the
Industry Analysis and
Trends section based on
the feedback you have
received.
Did not submit or
incompletely revised the
Strategic Position & Risk
Assessment section
based on the feedback
you have received.
Partially revised the
Company Description
section based on the
feedback you have
received.
Satisfactorily revised the
Company Description
section based on the
feedback you have
received.
Thoroughly revised the
Company Description
section based on the
feedback you have
received..
Partially revised the
Industry Analysis and
Trends section based on
the feedback you have
received.
Satisfactorily revised the
Industry Analysis and
Trends section based on
the feedback you have
received.
Thoroughly revised the
Industry Analysis and
Trends section based on
the feedback you have
received.
Partially revised the
Strategic Position & Risk
Assessment section
based on the feedback
you have received.
Satisfactorily revised the
Strategic Position & Risk
Assessment section
based on the feedback
you have received.
Thoroughly revised the
Strategic Position & Risk
Assessment section
based on the feedback
you have received.
Did not submit or
incompletely revised the
Target Market section
based on the feedback
you have received.
Partially revised the
Target Market section
based on the feedback
you have received.
Satisfactorily revised the
Target Market section
based on the feedback
you have received.
Thoroughly revised the
Target Market section
based on the feedback
you have received.
Did not submit or
incompletely revised the
Competition section
based on the feedback
you have received.
Partially revised the
Competition section
based on the feedback
you have received.
Satisfactorily revised the
Competition section
based on the feedback
you have received.
Thoroughly revised the
Competition section
based on the feedback
you have received.
Did not submit or
incompletely revised the
Marketing Plan & Sales
Strategy section based
on the feedback you have
received.
Did not submit or
incompletely described
the ways in which your
company is committed to
being a good corporate
citizen.
Did not submit or
incompletely discussed
how your company’s
activities will affect the
environment and did not
submit or incompletely
identified the steps you
will take to mitigate any
negative impacts.
Did not submit or
incompletely determined
any health issues / claims
related to the product you
are making, whether
negative or positive. Did
Partially revised the
Marketing Plan & Sales
Strategy section based
on the feedback you have
received.
Satisfactorily revised the
Marketing Plan & Sales
Strategy section based
on the feedback you have
received.
Thoroughly revised the
Marketing Plan & Sales
Strategy section based
on the feedback you have
received.
Partially described the
ways in which your
company is committed to
being a good corporate
citizen.
Satisfactorily described
the ways in which your
company is committed to
being a good corporate
citizen.
Thoroughly described the
ways in which your
company is committed to
being a good corporate
citizen.
Partially discussed how
your company’s activities
will affect the
environment and did not
submit or incompletely
identified the steps you
will take to mitigate any
negative impacts.
Satisfactorily discussed
how your company’s
activities will affect the
environment and did not
submit or incompletely
identified the steps you
will take to mitigate any
negative impacts.
Thoroughly discussed
how your company’s
activities will affect the
environment and did not
submit or incompletely
identified the steps you
will take to mitigate any
negative impacts.
Partially determined any
health issues / claims
related to the product you
are making, whether
negative or positive.
Partially suggested the
Satisfactorily determined
any health issues / claims
related to the product you
are making, whether
negative or positive.
Satisfactorily suggested
Thoroughly determined
any health issues / claims
related to the product you
are making, whether
negative or positive.
Thoroughly suggested
issues, and to ensure any
positive claims are true.
Weight: 7%
2d. Suggest your company’s
plan, through advertising,
distribution, and / or other
methods, to target and reach
only appropriate market
segments.
Weight: 7%
3. Clarity, writing mechanics,
and formatting requirements
Weight: 15%
4. For year one, revise and
submit the Income Statement,
Cash Flow Projections, and
Balance Sheet sections from the
“Business Plan Financials” MS
Excel template (see: Course
Required Files in Week 1).
Weight: 15%
not submit or
incompletely suggested
the strategy your
company will use to
mitigate any negative
issues, and to ensure any
positive claims are true.
Did not submit or
incompletely suggested
your company’s plan,
through advertising,
distribution, and / or other
methods, to target and
reach only appropriate
market segments.
strategy your company
will use to mitigate any
negative issues, and to
ensure any positive
claims are true.
the strategy your
company will use to
mitigate any negative
issues, and to ensure any
positive claims are true.
the strategy your
company will use to
mitigate any negative
issues, and to ensure any
positive claims are true.
Partially suggested your
company’s plan, through
advertising, distribution,
and / or other methods, to
target and reach only
appropriate market
segments..
Satisfactorily suggested
your company’s plan,
through advertising,
distribution, and / or other
methods, to target and
reach only appropriate
market segments.
Thoroughly suggested
your company’s plan,
through advertising,
distribution, and / or other
methods, to target and
reach only appropriate
market segments.
More than 6 errors
present
5-6 errors present
3-4 errors present
0-2 errors present
Did not submit or
incompletely, for year
one, revised and
submitted the Income
Statement, Cash Flow
Projections, and Balance
Sheet sections from the
“Business Plan
Financials” MS Excel
template (see: Course
Required Files in Week
1).
Partially, for year one,
revised and submitted the
Income Statement, Cash
Flow Projections, and
Balance Sheet sections
from the “Business Plan
Financials” MS Excel
template (see: Course
Required Files in Week
1).
Satisfactorily, for year
one, revised and
submitted the Income
Statement, Cash Flow
Projections, and Balance
Sheet sections from the
“Business Plan
Financials” MS Excel
template (see: Course
Required Files in Week
1).
Thoroughly, for year one,
revised and submitted the
Income Statement, Cash
Flow Projections, and
Balance Sheet sections
from the “Business Plan
Financials” MS Excel
template (see: Course
Required Files in Week
1).
Points: 70
Assignment 3 Part 1: Operation, Technology, and Management Plan
Unacceptable
Fair
Proficient
Exemplary
Criteria
Below 70% F
1. Create an operations plan for
your NAB company using the
template in the text as a guide
(p. 214 | Operations Plan
Preparation Form). Extract
appropriate information from the
NAB Company portfolio, where
applicable. Other required items
in the template should be filled
in using your personal
preferences.
Weight: 15%
2. Provide a rationale for the
competitive advantages section
using appropriate functionallevel and business-level
strategies to explain the
competitive advantages.
Weight: 5%
3. Describe your research and
development activities and
explain how they will contribute
to the company.
Weight: 10%
4. Create a technology plan for
your NAB company using the
template in the text as a guide
(p. 227 | Technology Plan
Preparation Form). Extract
appropriate information from the
NAB Company portfolio, where
applicable. Other required items
in the template should be filled
in using your personal
preferences.
Weight: 15%
5. Provide a rationale for the
personnel needs section by
incorporating appropriate
functional-level strategies.
Weight: 5%
6. Create a management plan
for your NAB company using the
template in the text as a guide
(p. 248 | Management Plan
Preparation Form). Extract
appropriate information from the
NAB Company portfolio, where
applicable. Other required items
in the template should be filled
in using your personal
preferences. Form).
70-79% C
80-89% B
90-100% A
Did not submit or
incompletely created an
operations plan for your
NAB company using the
template in the text as a
guide.
Partially created an
operations plan for your
NAB company using the
template in the text as a
guide.
Satisfactorily created an
operations plan for your
NAB company using the
template in the text as a
guide.
Thoroughly created an
operations plan for your
NAB company using the
template in the text as a
guide.
Did not submit or
incompletely provided a
rationale for the
competitive advantages
section using appropriate
functional-level and
business-level strategies
to explain the competitive
advantages.
Did not submit or
incompletely described
your research and
development activities
and did not submit or
incompletely explained
how they will contribute to
the company.
Did not submit or
incompletely created a
technology plan for your
NAB company using the
template in the text as a
guide.
Partially provided a
rationale for the
competitive advantages
section using appropriate
functional-level and
business-level strategies
to explain the competitive
advantages.
Satisfactorily provided a
rationale for the
competitive advantages
section using appropriate
functional-level and
business-level strategies
to explain the competitive
advantages.
Thoroughly provided a
rationale for the
competitive advantages
section using appropriate
functional-level and
business-level strategies
to explain the competitive
advantages.
Partially described your
research and
development activities
and partially explained
how they will contribute to
the company.
Satisfactorily described
your research and
development activities
and satisfactorily
explained how they will
contribute to the
company. .
Thoroughly described
your research and
development activities
and thoroughly explained
how they will contribute to
the company. .
Partially created a
technology plan for your
NAB company using the
template in the text as a
guide.
Satisfactorily created a
technology plan for your
NAB company using the
template in the text as a
guide.
Thoroughly created a
technology plan for your
NAB company using the
template in the text as a
guide.
Did not submit or
incompletely provided a
rationale for the
personnel needs section
by incorporating
appropriate functionallevel strategies.
Did not submit or
incompletely created a
management plan for
your NAB company using
the template in the text as
a guide.
Partially provided a
rationale for the
personnel needs section
by incorporating
appropriate functionallevel strategies.
Satisfactorily provided a
rationale for the
personnel needs section
by incorporating
appropriate functionallevel strategies.
Thoroughly provided a
rationale for the
personnel needs section
by incorporating
appropriate functionallevel strategies.
Partially created a
management plan for
your NAB company using
the template in the text as
a guide.
Satisfactorily created a
management plan for
your NAB company using
the template in the text as
a guide.
Thoroughly created a
management plan for
your NAB company using
the template in the text as
a guide.
Weight: 15%
7. Using the flow charts on p.
242 as a guide, outline your
company’s management
hierarchy. Note: Charts or
diagrams must be imported /
included in the MS Word
document.
Weight: 15%
8. Provide a rationale for the
management structure and style
section by incorporating
appropriate functional-level
strategies.
Weight: 5%
9. Clarity, writing mechanics,
and formatting requirements
Did not submit or
incompletely outlined
your company’s
management hierarchy,
using the flow charts on
p. 242 as a guide.
Partially outlined your
company’s management
hierarchy, using the flow
charts on p. 242 as a
guide.
Satisfactorily outlined
your company’s
management hierarchy,
using the flow charts on
p. 242 as a guide.
Thoroughly outlined your
company’s management
hierarchy, using the flow
charts on p. 242 as a
guide.
Did not submit or
incompletely provided a
rationale for the
management structure
and style section by
incorporating appropriate
functional-level
strategies.
More than 6 errors
present
Partially provided a
rationale for the
management structure
and style section by
incorporating appropriate
functional-level
strategies.
Satisfactorily provided a
rationale for the
management structure
and style section by
incorporating appropriate
functional-level
strategies.
Thoroughly provided a
rationale for the
management structure
and style section by
incorporating appropriate
functional-level
strategies.
5-6 errors present
3-4 errors present
0-2 errors present
Weight: 15%
Grading for this assignment will be based on answer quality, logic/organization of the paper, and
language and writing skills, using the following rubric.
Assignment 3
Part 1: Operation, Technology, and Management Plan
-Watch this video before starting
https://www.kaltura.com/index.php/extwidget/preview/partner_id/956951/uiconf_id/24290031/e
ntry_id/0_nrfn5izd/embed/iframe?&flashvars[streamerType]=auto
Use the “NAB Company Portfolio”.
Write a three to six (3-6) page paper in which you provide the following information below.
Operations Plan (1 – 2 pages)
Note: Remember to assign a dollar amount to each operational cost you find, as you will need
these figures for your income statement and cash flow in Week 8.
1. Create an operations plan for your NAB company using the template in the text as a guide (p.
214 | Operations Plan Preparation Form - Click here for help accessing a specific page
number in your eBook). Extract appropriate information from the NAB Company portfolio,
where applicable. Other required items in the template should be filled in using your personal
preferences.
2. Provide a rationale for the competitive advantages section using appropriate functional-level
and business-level strategies to explain the competitive advantages.
o Note: Much of the research pertaining to the hints provided here can be found in the NAB
company portfolio.
o Hints: Consider whether you will rent or buy your facilities or outsource production to an
existing company.
o Hints: One of your biggest expenses as a startup non-alcoholic beverage company will be
transitioning from a small batch prototype of your beverage to production on a large scale.
Research the equipment you will need (vats, refrigerators, burners, ovens, bottling
equipment, and so on), whether you will rent or buy, how you will maintain and clean it, and
so forth. Consider how you will ensure quality control. What capacity do you intend to
reach?
o Hints: Deliberate your inventory control. Where do your supplies come from and what is
your turnaround time to produce your beverage once you have received an order?
o Hints: Consider your distribution method. Refer back to your notes for the SWOT analysis
assignment in Week 2 of class.
o Hints: How will you stay abreast of new developments in your industry? What new products
do you have in development now, in addition to your flagship product?
3. Describe your research and development activities and explain how they will
contribute to the company.
Technology Plan (1 – 2 pages)
o
Create a technology plan for your NAB company using the template in the text as a guide (p.
227 | Technology Plan Preparation Form ). Extract appropriate information from the NAB
Company portfolio, where applicable. Other required items in the template should be filled in
using your personal preferences.
Provide a rationale for the personnel needs section by incorporating appropriate functionallevel strategies.
Hints: Consider the type of technology your company will use to conduct the following
activities: manage personnel; take, fulfill, and track orders; manage inventory; communicate
with customers and provide customer service; and produce your beverage.
Management & Organization (1 – 2 pages)
Create a management plan for your NAB company using the template in the text as a guide
(p. 248 | Management Plan Preparation Form ). Extract appropriate information from the
NAB Company portfolio, where applicable. Other required items in the template should be
filled in using your personal preferences.
Using the flow charts on p. 242 as a guide, outline your company’s management hierarchy.
Note: Charts or diagrams must be imported / included in the MS Word document.
Provide a rationale for the management structure and style section by incorporating
appropriate functional-level strategies.
Format your assignment according to these formatting requirements:
. Cite the resources you have used to complete this exercise. Note: There is no minimum
requirement for the number of resources used in the exercise.
a. Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on
all sides; references must follow APA or school-specific format. Check with your professor
for any additional instructions.
b. Include a cover page containing the title of the assignment, the student’s name, the
professor’s name, the course title, and the date. The cover page and the reference page are
not included in the required page length.
The specific course learning outcomes associated with this assignment are:
•
•
•
•
Create a plan to implement a firm’s strategy and manage the change from current
operations.
Describe strategic planning techniques used to formulate alternative strategies designed
to achieve stated business goals.
Use technology and information resources to research issues in strategic management.
Write clearly and concisely about strategic management using proper writing mechanics.
Part 2: Business Plan – Draft
This assignment consists of two (2) sections: a draft of your business plan and an income
statement containing your business plan financials (i.e. Week 7 Discussion "The Financials").
Note: You must submit both sections as separate files for the completion of this assignment.
You must intend to raise money for your startup company. You can start with money from
friends and family but at some point you will need funds from outside investors, either angels or
venture capitalists, depending on how much money you project you will need to raise. Another
possible angle is to develop money through crowdfunding, assuming your product meets the
demand of such audiences.
Before you can raise money, you must develop a business plan that convinces an investor that
your company will succeed.
Section 1: Business Plan (MS Word or equivalent)
Read Chapters 18 and 19 of the course text: Successful Business Plan. Use the Plan Preparation
Forms at the end of each chapter of Successful Business Plan as a rough guide.
Write an approximately fifteen to twenty (15-20) page draft of your business plan in which you:
1. Revise the components of the following previously submitted sections based on the feedback
you have received.
1.
a. Company Description (Assignment 1)
b. Industry Analysis and Trends (Assignment 1)
c. Strategic Position & Risk Assessment (Assignment 1)
d. Target Market (Assignment 2)
e. Competition (Assignment 2)
f. Marketing Plan & Sales Strategy (Assignment 2)
2. Create an Ethics & Social Responsibility Plan.
Note: The Ethics & Social Responsibility plan should account for approximately three
to five (3-5) pages of the Business Plan Draft.
•
o
▪
▪
▪
▪
Describe the ways in which your company is committed to being a good corporate
citizen.
Hints: Consider the following areas:
Creating jobs
Following the laws of every jurisdiction in which your company operates
Fair and honest treatment of employees
Non-discrimination of employees and increasing diversity of your work force
o
Hints: If your company is designed as a social venture—in which you have a primary
purpose of achieving a social or environmental goal—describe what that goal is and what
aspects of your company are designed to reach that goal. Provide a rationale for why you
have or why you have not chosen this to be a social venture.
b. Discuss how your company’s activities will affect the environment and identify the steps you
will take to mitigate any negative impacts.
o
o
Hints: As a beverage company, consider such issues as your choice of packaging, disposal of
bottles / packages by consumers, and your use of resources, such as water in areas where
water may be scarce.
c. Determine any health issues / claims related to the product you are making, whether negative
or positive. Suggest the strategy your company will use to mitigate any negative issues, and
to ensure any positive claims are true.
5.
d. Many beverage products have negative health impacts on certain segments of a population
(e.g., children, pregnant mothers, etc.). Suggest your company’s plan, through advertising,
distribution, and / or other methods, to target and reach only appropriate market segments.
3. Format your assignment according to these formatting requirements:
Cite the resources you have used to complete the exercise. Note: There is no minimum
requirement for the number of resources used in the exercise.
a. Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all
sides; references must follow APA or school-specific format. Check with your professor for any
additional instructions.
b. Include a cover page containing the title of the assignment, the student’s name, the professor’s
name, the course title, and the date. The cover page and the reference page are not included in
the required page length.
.
Section 2: Business Plan Financials (MS Excel worksheets template)
For year one, revise and submit the Income Statement, Cash Flow Projections, and
Balance Sheet sections from the “Business Plan Financials” MS Excel template (see:
Course Required Files in Week 1).
The specific course learning outcomes associated with this assignment are:
•
•
•
•
•
Describe strategic planning techniques used to formulate alternative strategies designed to
achieve stated business goals.
Create a plan to implement a firm’s strategy and manage the change from current operations.
Analyze strategies for exerting the internal leadership needed to drive the implementation of
strategic initiatives and improve operating excellence.
Use technology and information resources to research issues in strategic management.
Write clearly and concisely about strategic management using proper writing mechanics.
Running head: TROPI-BOOST JUICES MARJKETING PLAN
Tropi-Boost Juices Marketing Plan and Sales Strategy.
Guerlen M. Goenaga
May 12, 2017
Dr. Henry Kerich
BUS599 - Strategic Management
Strayer University
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TROPI-BOOST JUICES MARKETING PLAN AND SALES STRATEGY
Company’s Target Market
Tropi-Boost Juices is a NAB company operating out of Tampa in the state of Florida.
Tropi-Boost Juices offers high-end quality products that distinguish itself for the freshness,
tropical taste, nutritional value, and energy booster properties that each juice bottle provides.
Tampa city is a rich market for the business, with a total population of 335,709. This is because
of its diverse culture. Many different cultures live in the city; including the Hispanics, Whites,
African American, Asians and many others. (Hispanics 77,472, Whites 211,217, Asians 11,560,
African American 87,872) these are cultures that appreciate quality and healthy drinks and foods
(Tampa census, 2010). The fact that the company will be able to produce drinks that are free of
preservatives and sugars will make it appreciated by many since these inclusions are of ill health
to the consumers (Grant, 2016). The town is full of educated individuals who understand the
meaning of a healthy living and would much appreciate drinks of this kind.
The youth age is also a major target for the market since they know the meaning of better
and healthier drinks and food choices. They make up a better portion of the total population of
the town about 78.2 % of the total population. This is the age bracket of (10-54) years. They are
the future leaders of the town’s economy and are therefore able to influence the food choice of
the general population. Since the drinks have also energizing content, it can be used for fitness
purposes. Therefore individuals who go for fitness exercise will be a major target market. These
will include almost all age group of the town’s population ranging from the old to the youths.
Fitness companies will, therefore, be able to buy the drinks in bulk to make access easier for
their customers in the places they will be working out. The drinks will also be able to provide
healthy experience to people that have not been able to drink natural energy booster drinks at any
time they desire (Baker, 2014).
TROPI-BOOST JUICES MARKETING PLAN AND SALES STRATEGY
Table 1: Tampa, FL population breakdown.
Company’s Market Competition
The company has several competitors in the market. This is one of the biggest risks it will
encounter since drinks have been produced by major companies and many other companies will
be emerging from time to time due to the high demand in the market. The competitors of the
company can be divided into major two groups. These are already established competitors and
new entry competitors. The already established competitors include Coke and Pepsi which have
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TROPI-BOOST JUICES MARKETING PLAN AND SALES STRATEGY
been in the limelight in producing nonalcoholic drinks globally with a share market of 35% and
26% respectively in the town. Another established competitor is also the Red Bull which is wellknown for its production of energy drinks. These companies have grown their roots to capture
their customers globally. To rise to their level, the business will have to major on its production
of good quality drinks and also use well-established marketing techniques which can aid in
popularizing the products with the intended customers. Emerging competitors will as well be
handled by sticking to the plan of quality produce. To attract more customers, we will also
reduce our price. People tend to opt for a cheaper product, and this will be an added advantage to
us. The relative price for drinks ranges from $4.95 to $7.00 (Berger, 2014) while our price will
be ranging from $2.79 to 2.99 for 8oz bottle depending on the sale location.
Company’s Message
The company business name is Tropi-Boost Juices. This is due to its production of its
high quality energizing tropical drinks. The business has its slogan which is ‘We are committed
to offering a fresh and revitalizing product that replenishes your body from inside out.’ In its
marketing tactics, the business uses a key word to mobilize its customers. The key word in
marketing material is: ‘healthier and enhanced drink option.’ The drinks will be packaged in
plastic bottles for easier use and avoid the risk of breakage as in the case of glass bottles. The
business will have a website where it will be able to communicate with its customers and dealers
the will be www.tropi-boostjuices.co.org (Berger, 2014). The logo of the business will be simple
to portray the information about the high-quality drinks it produces. It will have a design of a
beach with tropical coconut trees to show its originality.
4
TROPI-BOOST JUICES MARKETING PLAN AND SALES STRATEGY
Marketing Vehicles
To popularize the business to its intended customers, the business will use various
marketing vehicles to catch them. These will include both online techniques such as social media
as well as getting into physical contact with the customers through the following methods;
sponsoring events, exhibiting at trade shows attended by retailers, and so on. Since the world is
also advancing technologically, the business will major mostly on the social media part (Boso,
Cadogan & Story, 2015). Most of the people have access to social media be it Facebook or
Twitter, Instagram or even Youtube. We will have accounts on these sites where we will be
marketing our products. We will also create pages where customers will like them to get our
daily feeds. Ads will also be used to these sites so that when one enters these sites, they find our
ads will advertise about our products. Therefore, skilled personnel will be employed to manage
these online accounts.
5
TROPI-BOOST JUICES MARKETING PLAN AND SALES STRATEGY
References
Boso, N., Cadogan, J. W., & Story, V. M. (2015). Do Coordination Flexibility and Market
Orientation Leverage Entrepreneurial Strategy to Predict Export Sales Performance?
In The Sustainable Global Marketplace (pp. 125-125). Springer International Publishing.
Berger, R. (2014). Sales excellence opens up new revenue and profit potential and wards off
commoditization| Operations Strategy| Functional know-how| Expertise| Roland Berger.
Baker, M. J. (2014). Marketing strategy and management. Palgrave Macmillan.
Baker, M. J. (2014). Marketing strategy and management. Palgrave Macmillan.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Tampa census (2010). Retrieved on May 12, 2017 from
https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Table of Contents
Note #1 (Company Parameters) ................................................................................................................................ 4
Note #2 (Equipment & Inventory).............................................................................................................................. 5
Note #3 (Personnel, Business Expenses, & Financial Matters) .................................................................................. 7
Note # 4 (Websites - Data & Statistics) ...................................................................................................................... 9
Note # 5 (Market Research) ..................................................................................................................................... 10
A guide to the non-alcoholic beverage industry .............................................................................................. 10
Industry overview .............................................................................................................................................. 10
Dominant carbonates category ......................................................................................................................... 10
Major companies ................................................................................................................................................ 10
Understanding consumer craving for soft drinks ........................................................................................... 11
What’s a soft drink made of? ............................................................................................................................ 11
Stimulants in soft drinks.................................................................................................................................... 11
Ingredient facts................................................................................................................................................... 12
Understanding the value chain of the soft drink industry .............................................................................. 12
Industry Partners ............................................................................................................................................... 12
Bottling and distribution network .................................................................................................................... 13
Distribution: Third-party products .................................................................................................................. 13
Pricing power...................................................................................................................................................... 13
Key indicators of the non-alcoholic beverage industry................................................................................... 14
Factors influencing sector growth .................................................................................................................... 14
Consumption expenditure ................................................................................................................................. 14
Disposable income and consumer confidence .................................................................................................. 14
Understanding the soft drink industry’s key markets .................................................................................... 15
Income bracket ................................................................................................................................................... 15
Hispanics ............................................................................................................................................................. 16
Millennials........................................................................................................................................................... 16
Teens.................................................................................................................................................................... 16
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
The role of branding and advertising in the soft drink industry ................................................................... 17
The importance of advertising .......................................................................................................................... 17
Global brands ..................................................................................................................................................... 17
Strong individual brand portfolios ................................................................................................................... 17
Investing in brands............................................................................................................................................. 18
Why the soft drink industry is dominated by Coke and Pepsi....................................................................... 18
A rivalry for the ages ......................................................................................................................................... 19
Threat from new entrants ................................................................................................................................. 19
Significant investments ...................................................................................................................................... 19
Why growth is sluggish in the non-alcoholic beverage industry .................................................................... 20
Falling demand ................................................................................................................................................... 20
Key indicator—per capita consumption .......................................................................................................... 20
Health concerns .................................................................................................................................................. 21
The soda tax ........................................................................................................................................................ 21
In challenging times, soft drinks makers optimize and thrive ....................................................................... 21
Productivity measures ....................................................................................................................................... 21
Cost-cutting initiatives ....................................................................................................................................... 22
Soft drink industry now looking to still beverages to boost sales .................................................................. 22
Social pressures forcing change ........................................................................................................................ 23
Ready-to-drink beverages ................................................................................................................................. 23
International growth opportunities for the soft drink industry..................................................................... 24
Beyond borders .................................................................................................................................................. 24
Growth prospects ............................................................................................................................................... 25
Positive trends .................................................................................................................................................... 25
Competition outside the domestic market ....................................................................................................... 25
Strategic deals in the soft drink industry ......................................................................................................... 26
Industry alliances ............................................................................................................................................... 26
Recent Pepsi and Coca-Cola deals .................................................................................................................... 26
Other deal-making in the sector ....................................................................................................................... 27
Investing in soft drink companies with ETFs .................................................................................................. 27
Packaged investing ............................................................................................................................................. 27
Consumer staple ETFs....................................................................................................................................... 28
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Note # 6 (History & Industry Data/Forecasting & Technology) ............................................................................... 29
Cognitive health appeals to all demographics ................................................................................................. 29
Omega-3s popular ingredient for brain health................................................................................................ 29
Mental energy ..................................................................................................................................................... 30
Focus on claims................................................................................................................................................... 32
2016 New Product Development Outlook for beverages ................................................................................ 32
Organic named top trend for new beverages in new year .............................................................................. 32
Buzzing about flavors .................................................................................................................................... 33
Creating success ............................................................................................................................................. 35
Natural influence ............................................................................................................................................ 35
Sharing the work ............................................................................................................................................ 36
2016 expectations................................................................................................................................................ 38
Beverage Industry launches new app ............................................................................................................... 39
Introductory video shows how to use Bev Industry Mobile ....................................................................... 39
(The NAB Company Portfolio will have lists of things that the BUS599 students
would be able to sort through to conduct a SWOT Analysis and to apply to
appropriate sections of the NAB Business Plan.)
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Note #1 (Company Parameters)
This is the compilation of Data, Notes, and Information that have been put together to create a Business
Plan, along with Pro-forma Financial Statements, for a start-up company in the non-alcoholic beverage
industry.
The goal of my business plan is twofold:
1
2
To help identify and outline all the issues I will need to address in starting this company.
To present to funders to help raise money to finance this company.
NAB Background:
Melinda Cates has been selling her NAB at County Fairs for the past 7 years for $2 a bottle. She sells an
average of 10 Cardboard cartons each weekend a County Fair is open. From her calculations, it takes $.56 to
make a bottle of NAB when she calculates all the NAB ingredients and the cost of the bottle and cap. Her
rich uncle, Bill, just died and left her a small monetary inheritance. However, since he so enjoyed her
homemade NAB, he also left her equipment to start a small NAB business. Additionally, her uncle left her a
facility that will allow growth to start the business. It has the potential for expansion in order to meet larger
sales goals for the future.
Melinda and I have been close, trusted friends for years. She knew I attended Strayer University and earned
my MBA; so I agreed to assist her get the business up and running. I have agreed to put together a NAB
Business Plan, and I have agreed to be the CEO/President of the company for at least the next five years.
NAB Today:
Parameters for New Company
Here are the parameters in which I must work.
The business is a start-up: We are not yet in operation. We already have a “recipe” for a beverage,
but we are not yet making sales at any significant level.
Product: the only barrier is that it must be a non-alcoholic beverage (NAB). It is up to me to decide
upon what type of non-alcoholic beverage I intend to make and market. It can be sold in individual
sizes or wholesale.
Market size. I will start marketing and selling the NAB in my geographical area within a 100-mile
radius from my home address.
Business size. I can grow the NAB business to any size in excess of one million dollars in revenue by
year two. In other words, this cannot be intended to be a one- or two-person micro-business.
I intend to raise money. I will be looking for funding, and I have already started with friends and
family money. However, at some point, I will need funds from outside investors, either angels or
venture capitalists, depending on how much I project, I need to raise or receive from a group of
individual investors on Kickstarter.
I intend to have employees and develop my own organizational hierarchy.
I do not need to raise money for my personal financial support for the first six months. In other words,
I do not need to draw a salary for myself for the first six months of projections. Annual salary will be
$55,002 1st year; adjusted to $110,004 2nd year; finally adjusted to $165,008 for all remaining years
in position.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Note #2 (Equipment & Inventory)
The NAB Financial Worksheets will need to have the value of this equipment and inventory included.
Some of the items we currently own:
Owned Equipment:
Two (2) NAB Mixer Beverage Filling Machines (mixes up to 200 gallons each) – $28,500 each (value in
current $)
The Mixer Beverage Filling machine is a rinsing, filling, and capping (3-in-1) Monobloc machine, imported
from Italy. Because it is equipped with constant temperature controlling system, it can be applied to fill hot
or cold fruit juice, tea and other beverage into 16 oz. bottles. It is suitable for normal temperature filling or
hot filling 16 oz. bottles. It is one of the most advanced filling machine at present.
Two (2) Accutek AccuSnap Capper Bottling machines (for capping bottles) - $9,600 each (value in
current $) See Auto AccuSnap Capper, below.
Four (4) Vehicles (used panel vans) – $10,000 each (value in current $)
Three (3) Computers (Apple Macintosh) - $1,200 each (value in current t $)
Graphic Software -$$750 (value in current $)
Leased Equipment:
Labeling machinery - $450/month (in current $)
Printers - $550/month (in current $)
Current Inventory:
Glass Bottles (16 oz.), 24,000 - $33,000 (value in current $)
Labels, 24,000 - $840 (value in current $)
Metal caps, 24,000 - $300 (value in current $)
Cardboard Cartons (holds 48 bottles), 500 - $500 (value in current $)
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
NAB-ingredients, enough to make 24,000 bottles - $600 (value in current $)
NOTES on EQUIPMEENT
Accutek AccuSnap Capper - are continuous
motion machines that replace the tedious work
of manually pressing and/or placing snap caps.
Accutek AccuSnap Cappers prevent costly spills
by removing human error from this process.
This machine can also help prevent repetitious
motion injuries and strains to your workforce
that can result when manually placing snap caps.
Accutek AccuSnap Cappers systems are
available in three different styles, Belt, Roller,
and Plunger in order to offer solutions to a
variety of snap cap types. Milk jugs, dropper
inserts, lip balm caps, over caps, “top hat” seals,
twist cap with ratcheted rip seal, bar top caps,
and a variety of other cap applications are all
within the capabilities of Accutek AccuSnap
Capper. Each machine is designed to
accommodate a wide variety of container types.
A variety of gripper belt options is available to
stabilize different types of containers.
The Accutek AccuSnap Capper features an Accutek centrifugal bowl or cap elevator orientated arm. With an
automated delivery device, the Accutek AccuSnap Capper can reach speeds up to 120 CPM.
SnapCap007
Dimensions Height: 94” (238 cm)
Width: 24” (61 cm)
Length: 32” (91.4 cm)
Weight 800 lbs. (363 kg)
Speed Up to 120 CPM
Cap Size Min: 10mm / Max: 660mm
Electrical 110V AC 20 Amp (220 available)
Air Requirements 120 PSI @ 2 CFM
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Note #3 (Personnel, Business Expenses, & Financial Matters)
Personnel Requirements and Family Financial Investment
Personnel
Current Personnel:
Myself (Student Name Here): Fulltime CEO/President; no salary for the first six months
Stephen Job: Part Time (20 hrs/week) Computer Expert/Assistant: $10/hr
Melinda Cates: NAB Creator & Master Mixer (owns the patent on the NAB): has $40,000 inheritance
(Volunteer) Ian Glass: Retired PepsiCo plant production line foreman. Ian recently retired with 35 years
of loyal PepsiCo service in every position from janitor to production line foreman, and he and his wife
moved into your neighborhood. He is tickled that you have asked him to help develop a plan to get the
NAB Company’s production line going. He said he could help organize and sit on the planning committee
as a non-paid member until the NAB Company can hire its own Production Line Foreman. He hinted that
he retired from PepsiCo with an annual salary of $55,000, but he says that is just the starting salary that
large companies pay their foremen who are in an apprenticeship program. He does not think the NAB
Company will have to pay top dollar for someone who has the willingness to join the NAB Company as a
start up!
(Paid Consultant) Mary Cates, JD: Melinda’s sister who was a senior executive with the Federal Trade
Commission from 2001-2012. She left the FTC after a significant 30 year career with the federal government
in which she lead the research and support of numerous federal court findings against companies that violated
consumer deception and unfair practices laws. She would enjoy serving on the initial company-planning
group to make sure her sister’s recipe is successfully shared within the state!
Future Personnel:
Production Line Foreman (Note: in order to meet goals of creating a $1 M revenue company by year
two; you will need more than one shift of employees.)
Projection Line Workforce - (see note above)
Maintenance Workforce (see note above)
Business Expenses:
- Marketing
- Paid services (professional in nature)
- Telephone/fax
- Business Insurance
- Office Supplies
- Mailings and postage
- Printing services
- Inventory purchases
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Capital Expenditures:
- Additional equipment purchases to meet production goals
- Additional computer equipment
Facilities:
Need monthly estimates for the following areas:
- Building maintenance costs
- Utilities:
- Water/Sewer
- Gas
- Electricity
- Trash removal
Financial Matters:
Family Financial Investment:
Collected $20,000 from friends and relatives who would like to either have their seed money returned
by the end of this calendar year at no interest or by the end of the second year of operation with 5%
interest.
(If you chose, the early payoff you must adjusted your BPF on worksheet 8 to read 12 months and
0% interest, so that you are not paying loan payments automatically. If you chose to pay back
over 24 months than the original instructions on the BPF Worksheet Guidance.)
Financial Decisions:
- Employee raises
- Owner draw
- Taxes
- Investors
- Sales (local, regional, national, or global)
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Note # 4 (Websites - Data & Statistics)
Here are some websites for your continued used in reviewing statistics and data on the beverage (non-alcoholic)
industry:
http://marketrealist.com/2014/11/strategic-deals-soft-drink-industry/
http://www.statista.com/topics/1662/non-alcoholic-beverages-and-soft-drinks-in-the-us/
http://libdatab.strayer.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=1028
26573&site=eds-live&scope=site
http://www.bevindustry.com/articles/88194-nielsen-identifies-consumer-health-concerns
http://www.bevindustry.com/articles/88184-bai-brands-disrupts-cpg-space-with-low-calorie-allnaturalsolutions
http://wwww.bevindusstry.com/artiicles/86916-zzico-to-sendd-fan-to-sochhi-2014-wintter-olympic-games
http://www.bevindustry.com/videos?bctid=946203236001
http://www.ameribev.org/minisites/products/
http://beverageindustries.com/
Updated 2/26/2016
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Note # 5 (Market Research)
A guide to the non-alcoholic beverage industry
By Sharon Bailey • Nov 20, 2014 12:08 pm EST
Industry overview
The non-alcoholic beverage industry broadly includes soft drinks and hot drinks. Soft drinks contain
carbonated or non-carbonated water, a sweetener, and a flavor, and hot drinks include coffee and tea.
The soft drink category dominates the industry and includes carbonates, juice, bottled water, ready-todrink tea and coffee, and sports and energy drinks. Soft drinks are sometimes referred to as liquid
refreshment beverages (or LRBs). In the US, LRBs lead food and beverage retail sales. In this series,
we’ll focus on the soft drink or LRB market.
Dominant carbonates category
The global soft drink market is led by carbonated soft drinks (or CSDs), which had a market size of
$337.8 billion in 2013. In the same year, CSDs were followed by bottled water, with a market size of
$189.1 billion, and juice, with a market size of $146.2 billion. In a later part of this series, we’ll discuss
why CSDs have been losing popularity, and why sales of other beverages, including juices and ready-todrink tea, are increasing.
Major companies
The non-alcoholic beverage market is a highly competitive industry that includes two behemoths —The
Coca-Cola Company (KO) and PepsiCo, Inc. (PEP). Collectively, these companies hold about 70% of
Updated 2/26/2016
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
the US CSD market. Dr Pepper Snapple Group, Inc. (DPS), Monster Beverage Corporation (MNST),
and Cott Corporation (COT) are some other key players in the CSD market.
Many international markets are also dominated by Coca-Cola and PepsiCo, but include other companies
such as Groupe Danone, Nestle SA, and Suntory Holdings Limited.
Non-alcoholic beverage manufacturers, like Coca-Cola and PepsiCo, are part of the consumer staple
sector. You can invest in these companies through the Consumer Staples Select Sector SPDR ETF
(XLP).
Understanding consumer craving for soft drinks
By Sharon Bailey • Nov 20, 2014 12:08 pm EST
What’s a soft drink made of?
Soft drinks contain water, nutritive or non-nutritive sweeteners, and syrups. The primary nutritive
sweetener used in the US is high-fructose corn syrup (or HFCS), a form of sugar. Internationally, sucrose
is the main nutritive sweetener used in soft drinks. Soft drink makers also use non-nutritive or artificial
sweeteners such as aspartame, acesulfame potassium, saccharin, cyclamate, and sucralose. So what
drives a person to consume a soft drink?
Stimulants in soft drinks
People crave soft drinks because they contain two stimulants—sugar and caffeine. Also, the water in soft
drinks hydrates. Soft drinks contain considerable amounts of sugar, which is a form of carbohydrate.
Consumption of excess sugar releases a hormone called dopamine, which induces pleasure in the brain.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Caffeine, another key ingredient, stimulates the nervous system, and helps you to stay awake or restores
alertness. With its slightly bitter taste, caffeine’s also used to enhance the flavor of carbonated soft
drinks.
Ingredient facts
The Coca-Cola Company (KO) and PepsiCo, Inc. (PEP) are the leading soft drink manufacturers. A 12fluid ounce can of Coca-Cola contains 39 grams of sugar and around 34 milligrams of caffeine. A 12fluid ounce can of Pepsi contains 41 grams of sugar and 38 milligrams of caffeine. A 12-fluid ounce can
of Dr Pepper, made by Dr Pepper Snapple Group (DPS), contains 40 grams of sugar and 41 milligrams
of caffeine. Energy drinks made by leading companies such as Monster Beverage Corporation (MNST)
contain higher amounts of caffeine.
Despite the considerable demand for soft drinks across the globe, these drinks are facing severe criticism
for the ill-effects of high sugar content.
Beverages come under the consumer staple sector. The Consumer Staples Select Sector SPDR ETF
(XLP) is one way to invest in soft drinks companies.
Understanding the value chain of the soft drink industry
By Sharon Bailey • Nov 20, 2014 12:08 pm EST
Industry Partners
Soft drinks constitute a major part of the US food and beverage industry. Syrup or concentrate producers
and bottlers play a vital role in the value chain of the soft drink industry.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Bottling and distribution network
Companies in the soft drink industry reach the end market in two ways. One way is by selling finished
products, made at company-owned bottling facilities, to distributors and retailers.
Another, is by selling beverage concentrates and syrups to authorized bottling partners, who then make
the final product by combining the concentrates with still or carbonated water, sweeteners, and other
ingredients. The bottlers then package the product in containers and sell these beverages to distributors
or directly to retailers.
Also, both bottling partners and companies manufacture fountain syrups and sell them to fountain
retailers. Fountain retailers include restaurants and convenience stores, which produce beverages for
immediate consumption.
Distribution: Third-party products
The extensive reach of The Coca-Cola Company (KO) and PepsiCo, Inc. (PEP) allows them to produce
or distribute third-party brands. For instance, Coca-Cola is licensed to produce and distribute certain
brands of Dr Pepper Snapple Group, Inc. (DPS) and Monster Beverage Corporation (MNST). PepsiCo
sells Lipton and Starbucks brands under partnerships with Unilever and Starbucks, respectively.
Pricing power
Coca-Cola and PepsiCo’s wide distribution network gives them significant pricing power. Carbonated
soft drinks have similar prices due to the intense competition in the industry. Often, soft drink companies
extend lower prices under promotional offers. In recent times, such promotional offers have been used to
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
boost volumes of the carbonated soft drinks. That’s because they’re under pressure due to rising health
concerns and competition from healthy substitutes such as tea, energy drinks, and water.
The non-alcoholic beverage industry is part of the consumer staples sector. You can invest in this sector
through the Consumer Staples Select Sector SPDR ETF (XLP), which has notable holdings in CocaCola and PepsiCo.
Key indicators of the non-alcoholic beverage industry
By Sharon Bailey • Nov 20, 2014 12:09 pm EST
Factors influencing sector growth
The non-alcoholic beverage industry falls under the consumer staples category (XLP), which is noncyclical in nature compared to the consumer discretionary sector. In this part of the series, we’ll look
at the factors that impact the growth of the non-alcoholic beverage industry.
Consumption expenditure
The Bureau of Economic Analysis (or BEA) releases the personal income and outlays monthly
reports that indicate changes in individuals’ personal incomes, savings, and expenditures.
US consumption spending accounts for over two-thirds of the country’s gross domestic product (or
GDP). The US real personal consumption expenditure for non-durable goods measures consumer
spending on non-durable goods, such as food and beverages, on an inflation-adjusted basis.
Disposable income and consumer confidence
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Consumption expenditure depends on disposable income, which is measured as personal income less
personal current taxes. People tend to spend more with a rise in their disposable income. Increase in
consumer confidence also increases consumption expenditure. In the US, the Conference Board and the
University of Michigan each provide monthly reports on the consumer confidence index, which indicates
the degree of optimism about the state of the economy as reflected in consumer spending and saving
activities.
According to market-intelligence firm Euromonitor International, consumer-expenditure growth in
emerging markets has surpassed that in developed markets every year since 2000, and is expected to
continue doing so.
A favorable trend in consumer spending on non-durable goods is a positive indicator for the nonalcoholic beverage industry. It’s also good for the performance of exchange-traded funds (or ETFs)
that invest in the consumer staple sector. The Consumer Staples Select Sector SPDR ETF (XLP) has
holdings in the major soft drink companies like The Coca-Cola Company (KO), PepsiCo, Inc. (PEP), Dr.
Pepper Snapple Group, Inc. (DPS), and Monster Beverage Corporation (MNST).
Understanding the soft drink industry’s key markets
By Sharon Bailey • Nov 20, 2014 12:09 pm EST
Income bracket
The growing population and rise of the middle class, particularly in emerging markets, are key growth
drivers for non-alcoholic beverage companies. Market intelligence firm Euromonitor International
estimates the middle class around the world will include 1.5 billion households by 2020, a 25% rise
over 2012.
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Hispanics
Many companies are innovating products and investing in marketing campaigns that target fast-growing
population segments, such as the Hispanic community in the US. Hispanics include people of Cuban,
Mexican, Puerto Rican, Southern or Central American descent. People of other Spanish cultures or
origins, regardless of race, are also considered Hispanic. Nielsen estimates that by 2015, Hispanics will
have $1.5 trillion in buying power, reflecting a significant 50% rise from 2010.
Millennials
“Millennial” refers to the generation of people who were born between 1981 and 1996. According to
Nielson, there are 77 million Millennials in the US, representing 24% of the US population. Millennials
make extensive use of social media and mobile devices, and have more product awareness.
Major companies in the soft drink industry, including The Coca-Cola Company (KO), PepsiCo, Inc.
(PEP), Dr Pepper Snapple Group (DPS), and Monster Beverage Corporation (MNST), are focusing their
marketing strategies on this influential demographic group.
Teens
The teen population is a core demographic for the soft drink industry. At the 2014 Consumer Analyst
Group of Europe conference, Coca-Cola reflected on the importance of the 3.5 billion people who are in
their teens and early 20s.
Soft drink companies are part of the consumer staples sector. Investors can access this sector through the
Consumer Staples Select Sector SPDR ETF (XLP).
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The role of branding and advertising in the soft drink industry
By Sharon Bailey • Nov 20, 2014 12:09 pm EST
The importance of advertising
The soft drink industry is marked by severe competition and declining demand for carbonates. Major
companies in the industry sustain positions in this adverse scenario on the strength of company and
product branding and advertising strategies.
Global brands
The industry includes companies that enjoy huge popularity all over the globe. Brand consultancy
Interbrand ranked The Coca-Cola Company (KO) as the world’s third-most valuable brand, with a value
of $81.6 billion. Coca-Cola’s closest competitor PepsiCo, Inc. (PEP) ranked 24th, with a brand value of
$19.1 billion.
Strong individual brand portfolios
Coca-Cola and PepsiCo own impressive brands that generate more than a billion dollars each in
revenues.
•
Coca-Cola: The company owns more than 500 brands, and features 17 brands that generate more
than one billion dollars each in revenues, including Coca-Cola, Diet Coke, Powerade, Aquarius,
Bonqua, Dasani, Fanta, Schweppes, and Minute Maid.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
•
PepsiCo: The company’s massive brand portfolio includes 22 brands generating revenues of
more than one billion dollars each. Some of its better-known labels are Pepsi, Mountain Dew,
Gatorade, Mirinda, Aquafina, and Lipton.
Investing in brands
Soft drink makers continually invest in branding. In 2013, Coca-Cola and PepsiCo spent $3.3 billion and
$3.9 billion, respectively, on advertising and marketing activities.
The success of Coca-Cola’s Share a Coke campaign is a perfect example of the importance attached to
marketing in this industry. The Share a Coke campaign was first rolled out in Australia in 2011 and then
extended to more than 50 countries. The campaign allowed fans to put their names or those of their
family and friends right on the front of Coca-Cola bottles or cans, effectively personalizing the product.
The campaign increased the volume of the Coca-Cola brand’s sales. In 2013, it generated 5% and 1%
full-year volume growth in Germany and the Northwest Europe and Nordics region, respectively.
Peers in the industry such as Dr Pepper Snapple Group, Inc. (DPS) and Monster Beverage Corporation
(MNST) also focus intently on marketing. Dr Pepper Snapple, the third-largest company in the US soft
drink market, spent $486 million on advertising in 2013. Monster, a leading player in energy drinks,
incurred $181.8 million in advertising expenses.
Soft drinks come under the consumer staple sector. You can access this sector through the Consumer
Staples Select Sector SPDR ETF (XLP).
Why the soft drink industry is dominated by Coke and Pepsi
By Sharon Bailey • Nov 20, 2014 12:09 pm EST
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A rivalry for the ages
The Coca-Cola Company (KO) and PepsiCo, Inc. (PEP) have dominated the non-alcoholic beverage
industry for ages. Coca-Cola is the world’s largest non-alcoholic beverage company with more than 500
brands, including 17 brands that generate more than a billion dollars each in revenue. PepsiCo owns
leading brands across its snack foods and beverage portfolio, including 22 brands that generate more
than a billion dollars each in revenue. According to Beverage Digest, the companies have a combined
share of about 70% of the US carbonated soft drink (or CSD) market.
Both companies have a wide geographic presence in more than 200 countries. The rivalry between these
two companies, popularly called the cola wars, is legendary. Both have spent huge sums of money
on mutually targeted advertisements over decades.
Threat from new entrants
The industry does not face any major threats from new entrants because Coca-Cola and PepsiCo each
have an extensive bottling and distribution network and huge economies of scale. For example, CocaCola has about 250 bottling partners and 900 plants worldwide. It would be difficult for a new entity to
make the substantial capital investments required to compete with these firms. Dr. Pepper Snapple
Group, Inc. (DPS) has seen impressive growth in the US CSD market, yet it lacks the international
presence of these giants.
Significant investments
Coca-Cola and PepsiCo spend enormous amounts of money on innovation, advertising and marketing,
and on strengthening their distribution network. Since 2010, Coca-Cola and its bottling partners have
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invested more than $50 billion in new facilities, distribution infrastructure, equipment, and retail
customer activations. PepsiCo spent 5.9% of 2013 net revenue on advertising and marketing.
Other companies in the non-alcoholic beverage industry include Cott Corporation (COT) and Mondelez
International Inc. (MDLZ). You can also invest in the non-alcoholic beverage sector through the
Consumer Staples Select Sector SPDR ETF (XLP) that has notable holdings in Coca-Cola and PepsiCo.
In the next part of this series, we’ll look at the reasons for disappointing growth in the non-alcoholic
beverage industry.
Why growth is sluggish in the non-alcoholic beverage industry
By Sharon Bailey • Nov 20, 2014 12:09 pm EST
Falling demand
The non-alcoholic beverage industry is facing challenges. Carbonated beverage volumes are falling,
primarily in developed markets. Beverage Digest indicates a 3% fall in 2013 overall carbonated soft
drink (or CSD) volumes in the US, making it the ninth straight year in which demand has declined.
Previously, US CSD volumes declined by 1.2% and 1% in 2012 and 2011, respectively.
Key indicator—per capita consumption
The per capita CSD consumption in the US fell to about 675 8-ounce servings per person in 2013,
from 701 8-ounce servings in 2012. Reduced consumption reflects the declining volumes and
a slower rate of US population growth.
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One of the reasons for the continued decline in soft drink volumes over the past few years is weak
consumer spending, caused by adverse macroeconomic conditions, especially in the US and Europe.
Health concerns
Another major reason is the shift in consumer preferences toward healthier products. Carbonated soft
drink makers have faced severe criticism from health officials, governments, and communities alike for
the ill-effects of high sugar content, artificial sweeteners, and other harmful ingredients in their products,
including those in diet soda variants. Consumers are also more conscious of the health risks associated
with soft drinks such as obesity and nutritional deficiencies, especially in youth. As a result, they’re
opting for other beverages that are non-carbonated and have fewer calories.
The World Health Organization suggests that sugar should account for only 5% of total energy intake
per day. That’s around 25 grams of sugar per day for an adult of normal body mass index. Health
officials feel that this percentage should be even lower for a better quality of life. A single soda can
contains around 40 grams of sugar.
The soda tax
Mexico, which has the highest rates of obesity in the world, has imposed a 10% tax on sugary beverages
to discourage the consumption of these drinks. There is a strong possibility that many other countries
will introduce a soda tax to reduce sugar consumption through carbonated drinks.
In the next part of this series, we’ll discuss how soft drink makers including The Coca-Cola Company
(KO), PepsiCo, Inc. (PEP), Dr Pepper Snapple Group, Inc. (DPS), and Monster Beverage Corporation
(MNST) are sustaining business under such challenging conditions. Coca-Cola and PepsiCo are part of
the Consumer Staples Select Sector SPDR ETF (XLP).
In challenging times, soft drinks makers optimize and thrive
By Sharon Bailey • Nov 20, 2014 12:09 pm EST
Productivity measures
Companies in the soft drink industry are taking several initiatives to streamline operations and cut costs.
These measures are needed to offset declining volumes in the carbonated drinks category and the
challenging business conditions apparent in Europe, North America, and other key markets.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Cost-cutting initiatives
Significant optimization measures allow soft drink companies to make it through challenging times. The
Coca-Cola Company (KO) is streamlining its operations and restructuring its global supply chain. In
North America, the company’s optimizing its manufacturing footprint. It recently announced plans to
expand its productivity program, through which it aims to save $1 billion by 2016, $2 billion by
2017, and $3 billion by 2019. The company intends to reinvest these savings in brand-building
initiatives, mainly media spending.
PepsiCo, Inc. (PEP) is on track to achieve $1 billion in savings globally in 2014. It’s cutting costs across
procurement, research and development, and other functions. The company recently extended its $1
billion annual productivity savings target through 2019. PepsiCo is focusing on enhancing its operations
through automation, including automated packaging, case picking, and forklift transportation.
Another major US soft drink maker, Dr Pepper Snapple Group, Inc. (DPS), commenced its rapid
continuous improvement program in 2011 and achieved $169 million in cash productivity over the 2011
to 2013 period.
These measures are helping companies protect margins in adverse market conditions. The soft drink
industry also includes Monster Beverage Corporation (MNST) and Mondelez International, Inc.
(MDLZ). You can also invest in this industry through the Consumer Staples Select Sector SPDR ETF
(XLP).
Soft drink industry now looking to still beverages to boost sales
By Sharon Bailey • Nov 20, 2014 12:09 pm EST
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Social pressures forcing change
The carbonated soft drinks (or CSD) category of the soft drink industry has witnessed declining volumes
in the past few years. Mainly, this is due to challenging conditions in developed markets and increased
health awareness among consumers about the side-effects of sugar and other ingredients present in
carbonated drinks.
Soft drink makers are facing severe pressure from civil society groups and governments to reduce the
calories in soft drinks. In the September 2014 Clinton Global Initiative, the three largest US soda
companies—The Coca-Cola Company (KO), PepsiCo, Inc. (PEP), and the Dr Pepper Snapple Group,
Inc. (DPS)—pledged to reduce the number of sugary drink calories that Americans consume by 20%
over the next decade. To achieve this target, the three big players plan to expand low-calorie product
portfolios, introduce smaller portion containers, and educate consumers about healthier alternatives.
The change in consumer preferences has provided a new opportunity for CSD manufacturers to grow
into the still beverages, or the non-carbonated category of the ready-to-drink market.
Ready-to-drink beverages
The non-alcoholic, ready-to-drink (or NARTD) market is projected to grow at a compounded annual
growth rate of 5% between 2014 and 2017. A large proportion of this growth will come from emerging
economies. Since 2010, NARTD retail value has increased by $135 billion and Euromonitor
International estimates this category will grow by more than $200 billion by 2020.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
In the first half of 2014, ready-to-drink tea and coffee, sports and energy drinks, and bottled water
recorded strong growth. Coca-Cola and PepsiCo have a strong presence across these categories and are
investing heavily for further portfolio expansion. Other companies including Dr Pepper Snapple and
Monster Beverage Corporation (MNST) are also investing in product development in these categories in
an attempt to cater to changing consumer tastes.
This new focus on healthier and nutritious products based on changing consumer preferences and
increasing health consciousness will be a key growth driver for the non-alcoholic beverage industry.
The Consumer Staples Select Sector SPDR ETF (XLP) provides an attractive avenue to invest in soft
drink companies.
International growth opportunities for the soft drink industry
By Sharon Bailey • Nov 20, 2014 12:09 pm EST
Beyond borders
The soft drink industry is looking for growth beyond developed markets like the US, where the reach of
carbonated soft drinks has reached a saturation point. The Coca-Cola Company (KO) derived 58% of its
2013 revenues internationally. PepsiCo, Inc. (PEP), which is a leading food and beverage company,
generated 49% of its revenues outside the US.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Growth prospects
The per capita consumption in a region measures the average number of 8-ounce servings consumed
each year. For Coca-Cola, per capita consumption in 2012 was 745 in Mexico and 401 in the US, as the
chart above shows. But per capita consumption was comparatively low in countries such as China and
India, indicating that in many countries, soft drinks are not consumed as widely as in the domestic
market.
Companies including PepsiCo and Coca-Cola are focusing on these growth regions to increase per capita
consumption by investing in manufacturing and distribution networks, as well as advertising.
Positive trends
Growing populations and better standards of living in emerging markets will drive demand for
beverages. Rising health awareness among consumers across the globe is moving them toward better
options including ready-to-drink tea, bottled water, and low-calorie products.
The long-term prospects for growth in emerging economies are promising. In the short-term, however,
there might be certain impediments such as lower-than-expected consumer spending growth in countries
such as China.
Competition outside the domestic market
Coca-Cola and PepsiCo compete with local niche players and private labels in developing markets. For
instance, in China, Hangzhou Wahaha Group Co., Ltd., Hebei Yangyuan Zhihui Beverage Co., Ltd., and
Guangdong Jiaduobao Beverage & Food Co., Ltd. are some of the key players in the soft drink market.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Other soft drink manufacturers such as Monster Beverage Corporation (MNST) and Mondelez
International, Inc. (MDLZ) are also looking for international growth opportunities.
An alternative way to invest in the soft drink industry is through the Consumer Staples Select Sector
SPDR ETF (XLP).
Strategic deals in the soft drink industry
By Sharon Bailey • Nov 20, 2014 12:10 pm EST
Industry alliances
Major companies in the soft drink industry are looking for strategic deals to expand product portfolios or
to strengthen distribution networks. These alliances will help companies offset declining demand for
carbonated soft drinks.
Recent Pepsi and Coca-Cola deals
In 2014, The Coca-Cola Company (KO) announced a long-term partnership with Keurig Green
Mountain, Inc. (GMCR). The deal will allow people to enjoy ice-cold Coca-Cola beverages at home
with the soon-to-be-released Keurig Cold machine.
In August 2014, Coca-Cola announced the purchase of a 16.7% stake in Monster Beverage Corporation
(MNST). The $2.15 billion deal will help both companies leverage their respective strengths—CocaCola’s bottling system and Monster Beverage’s position as a global energy player.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Under the terms of the partnership, Coca-Cola will transfer ownership of its energy business, including
drinks such as Full Throttle, Burn, and Relentless, to Monster Beverage. Monster Beverage will transfer
its non-energy business, including drinks such as Hansen’s Natural Sodas, Peace Tea, Hubert’s
Lemonade, and Hansen’s Juice Products, to Coca-Cola.
In October 2014, PepsiCo, Inc. (PEP) and home carbonation maker Sodastream International entered
into a short-term agreement to test a limited number of PepsiCo flavors for SodaStream machines.
Other deal-making in the sector
In 2014, Dr Pepper Snapple Group, Inc. (DPS) acquired Davis Beverage Group and Davis Bottling Co.
to enhance its distribution network.
In November 2014, Cott Corporation (COT) announced the $1.5 billion acquisition of DSS Group, Inc.,
parent company of DS Services of America, Inc., a leading water and coffee direct-to-consumer services
provider in the US. With this acquisition, Cott, a leading producer of private-label soft drinks, juices,
sparkling water, and energy drinks, will expand into growing markets. Examples of growing markets
include water and coffee home-and-office delivery services, water filtration services, and retail services.
The soft drink industry is part of the consumer staples sector. You can invest in the soft drink industry
with the Consumer Staples Select Sector SPDR ETF (XLP), which has notable holdings in Coca-Cola
and PepsiCo.
Investing in soft drink companies with ETFs
By Sharon Bailey • Nov 20, 2014 12:10 pm EST
Packaged investing
Exchange-traded funds (or ETFs) are capital market instruments that are designed to track an index, a
commodity, or a basket of assets. Soft drink companies come under the consumer staples sector. There
are many consumer staples sector ETFs that help investors access stocks in the soft drink industry.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Consumer staple ETFs
Consumer staple ETFs provide exposure to companies that produce essentials, including food,
beverages, tobacco, and household items. The above chart shows the exposure of some of the consumer
staples ETFs to beverage companies, both alcoholic and non-alcoholic.
The Consumer Staples Select Sector SPDR Fund (XLP) tracks the S&P Consumer Staples Select Sector
Index. The Vanguard Consumer Staples ETF (VDC) tracks the MSCI US Investable Market Consumer
Staples 25/50 Index. Assets under management of the XLP and the VDC are $9.64 billion and $2.35
billion, respectively, as of November 17, 2014. The expense ratios for the XLP and the VDC are 0.16%
and 0.14%, respectively.
Both the XLP and the VDC have The Coca-Cola Company (KO) and PepsiCo, Inc. (PEP) in their top ten
holdings. Coca-Cola and PepsiCo are the dominant companies in the soft drink industry and together,
hold 70% of the US carbonated soft drink market share.
The First Trust Consumer Staples AlphaDEX Fund (FXG), using the StrataQuant Consumer Staples
Index as its benchmark, selects stocks from the Russell 1000 Index. The FXG has $2.11 billion in assets
under management and has an expense ratio of 0.70%. Monster Beverage Corporation (MNST), a
leading energy drinks maker, features in the top ten holdings of the FXG.
Dr Pepper Snapple Group, Inc. (DPS), the third-largest soft drink company in the US, is also a part of the
XLP, the VDC, and the FXG ETFs.
ETFs are an efficient way to gain diversified exposure to various sectors and broad markets. To
learn more, you can read Market Realists Macro ETF analysis (http://marketrealist.com/analysis/etfanalysis/) page.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Note # 6 (History & Industry Data/Forecasting & Technology)
The non-alcoholic beverage industry plays an important role in the U.S. economy. Our industry has a direct
economic impact of more than $169 billion, provides nearly 240,000 jobs and helps to support hundreds of
thousands more that depend, in part, on beverage sales for their livelihoods. Beverage companies and their
employees, and the firms and employees indirectly employed by the industry, provide significant tax revenues $13.6 billion at the state level and $22.9 billion at the federal level. In addition, the beverage companies that
produce and distribute non-alcoholic beverages in the U.S. and those they directly employ contribute nearly $1.6
billion to charitable causes in communities across the nation.
The American Beverage Association (ABA) is the trade association that represents America's non-alcoholic
beverage industry. ABA was founded in 1919 as the American Bottlers of Carbonated Beverages, and renamed
the National Soft Drink Association in 1966. Today the ABA represents hundreds of beverage producers,
distributors, franchise companies and support industries. Together, they bring to market hundreds of brands,
flavors and packages, including regular and diet soft drinks, bottled water and water beverages, 100 percent
juice and juice drinks, sports drinks, energy drinks and ready-to-drink teas.
ABA provides a neutral forum in which members convene to discuss common issues while maintaining their
tradition of spirited competition in the American marketplace. The Association also serves as liaison between the
industry, government and the public, and provides a unified voice in legislative and regulatory matters. As the
national voice for the non-alcoholic refreshment beverage industry, the American Beverage Association staff of
legislative, scientific, technical, regulatory, legal and communications experts effectively represent members'
interests.
Cognitive health appeals to all demographics
Omega-3s popular ingredient for brain health
By Jamie Popp (Feb 2015)
An estimated 5.2 million Americans suffer from Alzheimer’s disease, and although the majority are
older than 65, younger-onset Alzheimer’s impacted 200,000 people last year, according to the
Alzheimer’s Association, Chicago. Furthermore, total payments in 2014 for all individuals with
Alzheimer’s disease and other dementias were estimated at $214 billion, the association adds.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
Increasingly, attention is being put on brain health and preventative measures such as diet and exercise in
line with consumers, particularly baby boomers, expressing concerns about memory loss and dementia.
However, ingredients that help consumers maintain their cognitive abilities are emerging to help all age
groups to support brain development, focus and more.
“Cognitive health applies to all ages, as newborns and children develop cognition early, [middle-aged
people] count on it for their careers, and the older generation strives for maintenance for as long as
possible,” says Volker Berl, founder and chief executive officer at Oceans Omega, Montvale, N.J.
“Consumers are naturally interested in maximizing intake of the right ingredients to maintain cognition
for a lifetime, supporting memory, alertness, attention, mood and focus.”
Many ingredients are associated with cognitive health, but omega-3 DHA has the strongest body of
scientific support, according to Berl. But vitamin D; coenzyme Q10; phosphatidylserine; magnesium;
resveratrol; pycnogenol; vitamin E; and botanicals such as ashwagandha, ginkgo biloba, vinpocetine,
ginseng and curcumin also are considerations, he adds.
Oceans Omega offers a range of stable omega-3 ingredients that are water soluble and clear because of
its stabilization technology and sustainable sources of omega-3s from ingredient partners such as DSM
Nutritional Products, Kaiseraugst, Switzerland, and Nutegrity, Irvine, Calif. OTEC 300LDHA delivers
life’sDHA from DSM, a fish free, vegetarian and sustainable source of DHA from algae, the company
says. OTEC 250CL-K delivers OmegaActiv from Nutegrity, a pure, sustainable, vertically integrated
source of omega-3s from menhaden that contains a balanced level of omega-3s DHA, EPA and DPA,
according to the company.
Used in clear beverages and liquid nutritionals, OTEC ingredients increase shelf life for finished
products at ambient temperatures, the company says. They also are compatible with most beverage
processing conditions such as hot fill, cold fill, carbonation and pasteurization, according to the
company.
Mental energy
Nutegrity closely follows the advent of brain health and the focus of today’s consumers on products that
provide a memory boost or afternoon edge.
“The [brain health] category is interesting to us because of aging baby boomers and challenges from
cognitive function, but millennials and their brains are hardwired to go fast, and they are looking for
some type of edge,” says Matt Phillips, chief commercial officer at Nutegrity.
The focus is not only on memory and improved cognitive function, but also on general brain health as
well as antioxidants and anti-inflammation specific to brain inflammation in relation to diseases, he says.
Nutegrity, a division of Omega Protein Corp., Houston, focuses its primary business in fishing and
omega-3s, Phillips says. From a beverage standpoint, milk companies can use omega-3s in their
formulations, but the company also produces dairy protein as well as a line of nutraceuticals.
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NON-ALCOHOLOIC BEVERAGE COMPANY PORTFOLIO
“Most of the work we’re doing is focused on antioxidants and higher concentrations of omega-3s,”
Phillips says. ”At one time, most companies were doing product development and spending time on
ingredients, and now they are looking to ingredient suppliers to … come to the table with a turnkey
solution.”
Focus formulas and energy drinks openly tout the cognitive benefits of the ingredients to appeal to a
wide audience, but the claims have to be backed by scientific evidence or beverages risk being pulled
from store shelves. As a result, many companies dedicate considerable time substantiating new and
existing claims and discovering ways to use their ingredients based on findings in clinical trials.
Oceans Omega closely follows studies related to adolescents and brain health. For example, to determine
the effects of algal DHA supplementation on reading and behavior in healthy school-aged children,
researchers conducted the Docosahexaenoic Acid Oxford Learning and Behavior (DOLAB) Trial and
reported that supplementation with 600 mg each day with algal DHA for 16 weeks improved reading and
behavior in healthy school-aged children, aged 7 to 9 years old, with low reading scores.
“We work on educating the end producer,” says Karen Todd, director of global brand marketing at New
York City-based Kyowa Hakko U.S.A. Inc. The company’s Cognizin product features citicoline, which
increases cellular synthesis and energy, she says. Ingredients such as Cognizin are associated with
boosting brain energy, supporting mitochondrial health, and boosting levels of ATP, according to the
company’s research. This ingredient also is associated with increased focus and concentration as well as
memory storage and recall.
“We do clinical studies on raw materials [with healthy subjects], and results of that help us identify what
levels are appropriate to make claims,” Todd says. “The producer and finished product company do their
pre-market test, but they’re looking at the science behind it to support their claims from the start.”
Kyowa Hakko is replicating clinical trials done with millennials, pre-menopausal women and baby
boomers with more targeted groups including adolescents and athletes.
Futureceuticals, Momence, Ill., also sees the value of clinical trials and is in the midst of several that
involve its ingredients including CoffeeBerry coffee fruit, a line of powders and concentrates of the fruit
of the coffee plant, including the bean.
“We consider demographics when we’re choosing outcomes to focus on for our claims,” says Brad
Evers, vice president of business development. “In the case of CoffeeBerry coffee fruit extract, we
discovered that it has a unique capacity to increase serum levels of brain-derived neurotropic factor
(BDNF), which is a key neuro-protein involved in cognition, mood and other key neuro-processes. We
chose to focus on cognition and mood, given the enormous public interest in cognitive and mental health
at all age levels. Baby boomers frequently cite cognitive health as their No. 1 concern, and younger
people are motivated to take action now to help ensure a higher quality of life as they age.”
Major research facilities around the globe are focusing on BDNF, and Futureceuticals has two studies
that indicate that coffee fruit stimulates the body to produce BDNF, which is something brewed coffee
does not do, according to the company.
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“Our research on our coffee fruit products is at the forefront of new discoveries for cognitive health,”
Evers says. “CoffeeBerry m...
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