Kellogg Competition
Now Viewing Kellogg's competition in: Beverage Manufacture and Bottling
Call Preparation Questions
Customers, Marketing, Pricing, Competition
Which customer groups does the company mainly sell to? - Food stores, convenience stores, vending machines, and restaurants are the major retail outlets.
How large a geographic area does the company cover? - Bottlers and wholesalers typically have exclusive territories for a manufacturer.
What brands does the company sell? - Companies typically make or sell multiple brands.
Does the company produce private-label products? - Many food stores contract for private-label products. Cott is the largest private-label beverage manufacturer in the US.
Does the company depend on a few large customers? - Consolidation in the grocery industry has produced several large national and regional customers. Small local producers may depend heavily on a local grocery chain.
How does the company price its products relative to national brands like Coke and Pepsi? - While competing sodas usually are priced lower, other drinks may be priced higher.
Does the company believe that alternative "healthy" drinks will shrink the soda market? - The bottled water market has grown especially rapidly in recent years, sometimes 20 percent per year. And drinks fortified with vitamins or fluoride are being produced.
If a bottler or wholesaler, does the company get marketing and promotional support from the manufacturer? - While manufacturers usually have no obligation to provide financial support, they often do.
If a bottler or wholesaler, does the company have rights to distribute new products from the manufacturer? - Bottler and distributor contracts usually require the manufacturer to distribute new products through existing channels.
Can the manufacturer/bottler easily pass price increases to customers? - Bottlers have a tougher time passing price increases to consumers than do drink manufacturers to bottlers.
Competitive Landscape
Demand for nonalcoholic beverages is driven by consumer tastes and demographics. The profitability of individual companies depends on effective marketing. Large companies have economies of scale in production and distribution Small companies can compete by producing new products, catering to local tastes, or selling at lower prices. The industry is capital-intensive: average annual revenue per production worker is about $1 million.
Full Industry Overview For Beverage Manufacture and Bottling
Business Challenges
CRITICAL ISSUES
Dependence on National Manufacturers - To retain valuable relationships with national manufacturers, local bottlers and wholesalers have to meet certain financial and operating tests that restrict their ability to diversify, and force them to spend money on advertising and promotion. The consolidation of beverage brands into just a few national companies gives bottlers and wholesalers little option but to agree to whatever restrictions national companies place on them.
Soda Health Concerns - The large amounts of sugar in many sodas are believed to contribute strongly to the obesity epidemic in US children. Sodas typically contain 150 calories per can, entirely from sugar, and have no other nutritional value. Also criticized are the relatively high levels of caffeine in diet sodas, like Pepsi One, that are heavily consumed by teenage girls. In response, many soda makers are creating new diet or decaffeinated product versions.
Industries Where Kellogg Competes
- Food
- Grains
- Pastas & Cereals(primary)
- Canned & Frozen Foods
- Grains
- Beverages
- Nonalcoholic Beverages
