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    Dec 2009

    Default The illusion of diversity: visualizing ownership in the soft drink industry

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    Three firms control 89% of US soft drink sales [1]. This dominance is obscured from us by the appearance of numerous choices on retailer shelves. Steve Hannaford refers to this as "pseudovariety," or the illusion of diversity, concealing a lack of real choice [2]. To visualize the extent of pseudovariety in this industry we developed a cluster diagram to represent the number of soft drink brands and varieties found in the refrigerator cases of 94 Michigan retailers, along with their ownership and/or licensing connections.

    We recorded 987 varieties of soft drinks. These were sold under 195 brands, and 102 parent companies. Coca-Cola, Pepsi, and the Dr. Pepper Snapple Group offer 407 of these varieties (41.2%). The top 50 varieties were found in more than half of all stores, and were owned by just the top 8 firms. In contrast, over 300 varieties were found in only one store each.

    Less dominant companies tend to fill two different niches: 1) they sell inexpensive brands, often available only at specific retail chains, or 2) they compete in newer categories such as energy drinks, teas and flavored waters, rather than the more established soda category.

    The most successful competitors in these new categories may eventually be bought out. Glaceau/Vitamin Water, for example, was acquired by Coca-Cola for $4.1 billion in 2007.

    A key strength of this study is the more complete picture it provides of the ownership structure of an industry, as our previous work has excluded smaller firms [3,4].

    Coca-Colaís 25 brands and 133 varieties

    Pepsiís 17 brands and 161 varieties

    Dr. Pepper Snapple Groupís 21 brands and 113 varieties

    The illusion of diversity in the soft drink industry extends beyond obscuring ownership, as its products are primarily water and sweeteners. More research is needed on the links between pseudovariety and the consumption of energy-dense, nutrient-poor substances.
    ...being a human...



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