Soft Drink Manufacturing Research

The market leaders are Coca-Cola, PepsiCo, and Nestle among others. The industry is in its maturity stage. This is because growth in the industry has remained stagnant over the past years. In addition, the leading companies have establishments globally. The paper analyzes the market structure, notable microeconomic relationships, and government impact. The products are also differentiated because new entrants cannot compete with existing firms on the core products. Therefore, they differentiate their products in order to attract customers. Another characteristic feature of the market is the fact that all firms maximize profits. In addition, the industry has notable microeconomic relationships. The relationship between the industry and consumers is significant. This is because people have become more conscious about soft drinks. The increase in health related diseases such as obesity has led to a change in consumption patterns.

This dictates a new trend in the industry where firms will change their production strategy. Companies will have to adopt production of healthy drinks. This is evident whereby the demand for healthy drinks has increased. Government intervention could affect the industry’s market prices, output, and market structure. The government could affect market prices through either price floors or ceilings. A price floor refers to the minimum prices that firms can charge for products. On the other hand, a price ceiling is the highest price set by governments and imposed on firms on the maximum price to charge for products. Government intervention using these techniques could affect the market price. However, in future the industry is poised for decline. The forces that will drive future trends include switching to healthy drinks as well as targeting new market segments such as young children.