In fact, one could characterize the soft drink market as an
oligopoly, or even a duopoly between Coke and Pepsi, resulting in positive economic profits. To be sure, there
was tough competition between Coke and Pepsi for market share, and this occasionally hampered profitability.
For example, price wars resulted in weak brand loyalty and eroded margins for both companies in the 1980s... displayed 300 characters
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Coke and Pepsi responded by expanding their offerings, through alliances (e.g. Coke and Nestea),
acquisitions (e.g. Coke and Minute Maid), and internal product innovation (e.g. Pepsi creating Orange Slice),
capturing the value of increasingly popular substitutes internally. Proliferation in the number of brands did
threaten the profitability of bottlers through 1986, as they more frequent line set-ups, increased capital
investment, and development of special management skills for more complex manufacturing operations and
distribution... displayed next 300 characters
So suppliers of sweeteners do not have much bargaining power against Coke, Pepsi, or their bottlers. Also, Coke and Pepsi effectively decreased the number of can maker suppliers by negotiating on behalf of their bottlers, thereby reducing the number of major contracts available...
The suppliers of these products have little influence on these ingredients due to them being common. It would be easy for a new soft drink company to find a supplier willing to sell these ingredients to them...
"That's the reason for the change, plain and simple."
The Burger King spokesman admitted that although the issue of segment competition factored into the company's decision, it was not the sole reason for the switch...
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