The beverage industry is a competitive one. Hence, soda manufacturers must be on their toes with regard to research on consumer tastes and nutritional trends. Profit in this industry is controlled by demand which results from consumption, increase in population, consumer tastes, and disposable income.
So, population growth and an increase in disposable income will lead to a rise in demand for soft drinks. Also, when consumers consume more and vary their tastes, it boosts the demand for soda.
Technological improvements, regulatory standards, changing consumer behaviors, complex supply chains, and a fiercely competitive industry are essential factors that require soda companies to adjust and innovate faster just to stay in business.
But to stay at the top of the chain, soda manufacturing companies must develop ways to quickly understand and provide solutions to obstacles and challenges in the beverage industry.
Consumers have become more health and environmentally conscious, and this affects their choice of soda. They also expect a wider array of premium-quality products from beverage companies while expecting lower prices. This can be challenging waters for soda manufacturing companies to navigate.
So, how do these companies satisfy consumers’ endless demands and keep them wanting more?
How Do Soda Manufacturing Companies Stay In Demand?
With consumers wanting higher quality and demanding authenticity from manufacturers, even as the beverage industry is becoming increasingly regulated, companies have to run highly efficient operations to stay relevant.
Some ways they remain in demand are:
- Improving Quality: Lax quality management is often costly and can lead to the company’s closure in the end, so manufacturers must appreciate the value of quality in the beverage business. Consumers now require quality assurance to remain loyal to a soda brand. Hence, for companies to stay in demand, they need to integrate high-quality processes into production.
- Staying Updated With Market Trends: Consumer tastes and demands change quickly and sometimes in the opposite direction. Manufacturing companies must be innovators of trends and be able to differentiate between a movement and a fad. It’s dangerous to be left behind; however, manufacturers should do enough research before following trends so as not to develop a new line of products and later discover it was just a fad.
- Supply Chain Management: Better supply chain management is one way soda manufacturing companies stay in demand. This is because it fast-tracks access to raw materials and improves the customer-brand relationship, among other reasons. Integrating software into supply chain management is essential for performance analysis and effective supply monitoring.
- Reducing Waste: Waste is a significant challenge associated with many industries, including the beverage industry. Soda manufacturers must employ strategies to reduce waste at every stage of production, from water usage during production to recycling bottles. Reducing waste saves money that can be diverted elsewhere to improve output.
- Forecasting Consumer Behaviour: Forecasting demand through tracking sales data enables soda manufacturers to keep in line with today’s environment. To stay in the market, companies must understand consumers’ future demands to be prepared and avoid unnecessary production. Using advanced software for this purpose provides more accurate data than spreadsheets.
- DIscontinuing Unsuccessful Products: Sometimes, some products do not do as well as anticipated, and some even lead to losses for the company, as in the case of surge soda. It is crucial for manufacturing companies to discontinue such product lines and look for better opportunities. There is an option for a limited-time run of those products to see how well they will do in the market before the final releases, like Mountain Dew’s Baja Blast.
What Factors Determine the Demand For Soda?
Economically, demand is defined as the willingness or desire of a consumer to purchase a particular product. Determinants of demand allow the accurate interpretation of how much consumers want to buy a product.
Although price is most associated with demand because as price rises, demand tends to fall, other important factors influence the demand for soda. They include consumers’ income, prices of substitute and complementary goods, consumers’ expectations, and the total number of buyers in the market.
The reason for buying the product and the product quality also plays a significant part in determining the demand for soda, and these factors should also be considered. Below is an explanation of some of these factors.
Similar to other goods, the demand for soda varies with price. The higher the price, the less the demand, and with lower prices, there is an increase in demand.
When there is a spike in prices of ingredients or other factors of production, increasing the cost of production, manufacturers may boost prices to maintain their profit margin. Consumers are pushed to reduce their purchase frequency because of the high prices.
Changing Consumer Preference
Many factors can cause a change in the average consumer preference, including economic variations, popular trends, the average age of the population, and seasonal cycles, among others.
Top soda manufacturing companies such as Coca-cola or PepsiCo have the ability to forecast consumer trends and shape their operations accordingly. Companies without the ability to adjust to changing preferences may soon have to drop out of the competitive beverage industry.
Health-related issues affect the demand for soda as consumers become more conscious of the health problems associated with excess sugar intakes, such as weight gain, tooth decay, diabetes, and high blood pressure.
For this reason, manufacturers produce sugar-free, caffeine-free, and zero-calorie soft drinks that provide healthier options for people who want to abstain from sugar and caffeine or people on a calorie diet. This also allows the manufacturers to grow their profit while meeting consumers’ demands.
Other factors that were not explained but greatly influence the demand for soda include the income of consumers, the price of related products, future taste preferences, and willingness to consume.
How Do Consumer Lifestyles and Tastes Also Affect the Demand For Soft Drinks?
The demand for soft drinks is greatly influenced by the income and changing tastes of consumers. With higher disposable income, consumers want and buy more soda because they can afford to. Still, when the economic situation takes a downturn, there is a decrease in the demand for soda.
Also, the tastes and preferences of consumers are constantly changing, hence, if consumers have followed a soda trend for a couple of months or years, there is a probability this will change soon. So, soda manufacturers must be up-to-date with what’s trending in the consumer space to know what and what not to produce.
How Are Health Issues Being Considered?
Many people now look for sugar-free and caffeine-free drinks due to the greater awareness and education on the ingredients of soda. Groups, such as the anti-sugar movement in Australia, have sprung up to educate people on the adverse effects of consuming excess sugar from soda.
While this may affect the demand for soda in many ways, proactive players in the beverage industry are introducing more soft drinks with low, no, or reduced sugar content to cater to people without an interest in sugar.
Soda manufacturing companies maintain relevance by continuously checking and improving their product quality, reducing waste, ensuring effective supply chain management, correctly forecasting consumer behavior, and discontinuing unsuccessful product lines.
The increase or reduction in the demand for soda depends on product price, consumer preferences, and the health issues attached to drinking soda. So, for analysis purposes, these factors should be considered before predicting the future demand for soda.