The Production Process of Beverage and Soft Drink Industry

Beverage and soft drink industry is one of the fastest growing sector as a result of the increasing number of customers who are willing to consume its products. This company is involved mostly in the production of ready to drink products. According to the information from the research study conducted by Alkaya & Demirer (2015), the production process of these drinks have been determined to vary greatly depending on the company and the products under production. With reference to the fact that the industry has been previously faced with a lot of criticisms regarding its inability to control the consumption rate of its vital raw materials such as water, most of the companies that operate in it have resorted to apply innovative approaches in their production process (Garg, 2018). This industry is majorly composed of liquid refreshment beverages such as the bottled water, energy drinks, ready to drink coffee and tea, fruit beverages, carbonated soft drinks, sports beverages and value-added water. This paper will discuss the historical background of the beverage and soft drink industry, its present and future status and the sustainability approaches being employed by Coca-Cola, Pepsi and Red Bull companies, as the key players in this industry.

Background

The development of the fruit-flavored drinks led to the establishment of the soft drink industry. With reference to the information from the research study conducted by Demartini, Pinna, Aliakbarian, Tonelli & Terzi (2018), large percentage of people living in the medieval Middle East were involved in the drinking of the soft drink production products. Some of the most important examples of such drinks include sherbets and were made to become sweet through the addition of different ingredients such as syrup, sugar and honey. Alkaya & Demirer (2015) further stated that the other commonly used ingredients in the production of early types of soft drinks included apple, musk, mint, lemon, pomegranate, jujube and ice. In other parts of the world such as Tudor England, there was small scale production of the water imperial products which were widely used by significantly large number of people within that region (Pinna, Demartini, Tonelli & Terzi, 2018). This involved the sweetening of water through the addition of lemon flavor which contained the cream of tartar.

A major breakthrough in the soft drink and beverage industry was recorded in the 18th

century when a group of scientists made an important progress that involved the replication of the naturally carbonated mineral waters in order to produce the carbonated drinks (Alkaya & Demirer, 2015). According to the information from the research study conducted by Garg (2018), Joseph Priestley who was a great scientist from England was able to discover the process of infusing water together with carbon dioxide in order to help in the production cobranded water. This innovation led to the production of the soda water, a key component of most of the soft drinks that are currently being produced by different companies around the world. Another important innovation was made by John Mervin Nooth who was able to improve on the quality of the apparatus previously used by Joseph Priestley in the production of soda water and sold the out for commercial purposes (Demartini, Pinna, Aliakbarian, Tonelli & Terzi, 2018). Despite the fact that most of the beverage products are used as refreshment drinks, Alkaya & Demirer (2015) indicated that the first drinks of this type was produced by Thomas Henry in 1770s for medicinal use only.

The introduction of the world’s first cola flavored beverages in 1781 made a significant contribution in the development and production of the modern soft drinks. Alkaya & Demirer (2015) explained that these drinks are called soft drinks in order to help in separating them from the hard alcoholic drinks. The beverage drinks do not contain alcoholic contents. Based on the fact that the demands of the soft drinks, for the mon-medicinal purposes, was increasing around the world, there was an urgent need to enhance mass production of these products. By 1840s, Demartini, Pinna, Aliakbarian, Tonelli & Terzi (2018) indicated that there were more than fifty manufacturers of these products leading to the scrambling of the promising market. Based on the fact that the production of these products were regional based before the emergence of key players in the industry, every region was able to use specific type of beverage drink. A good example can be based on the fact that the use of soda fountains was majorly registered in the United States of American markets.

Pinna, Demartini, Tonelli & Terzi (2018) further indicated that there was a significant increase in the volumes of soft drinks being released into the market by 20th century. During this period, most of the companies were involved in the production of canned bottles. Despite the fact that most of the people were able to show their increasing love for these drinks, a lot of research studies were conducted on the soft drink products in order to determined their potential contribution to the current health problems. According to Demartini, Pinna, Aliakbarian, Tonelli & Terzi (2018), it was determined that the carbonated drinks played an important role in the development of different types of health problems such as obesity and overweight, dental decay and even hypokalemia. For that matter, the key players in the industry, led by Coca-Cola and Pepsi companies were involved in the production of healthier and effective products that can be used by customers with different health histories without exposing their lives to additional dangers.

Present Status

The current trends in the beverage industry is mainly characterized by increased competition among the key players in the market. The industry is currently dominated by two companies – Coca Cola and Pepsi companies. According to the information from the research study conducted by Garg (2018), there are increasing number of companies in the beverage and soft drink industry based on the fact that there is a significantly ready market. Nevertheless, most of the customers in the industry are drinking on the go and hence are in search of quick and convenient beverages in the single portion of packages which have the ability of being quickly consumed and stored discreetly. The introduction of new products and companies into the beverage industry has the market situation to significantly change.

According to the information from the research study conducted by Pinna, Demartini, Tonelli & Terzi (2018), the industry has got approximate market of $412.9 billion in 2018 and that there are projections that this value might increase by around 15% by 2030. This is linked to the fact that the market values of the companies in this industry have been registering significant increase after every financial year. On the other hand, Garg (2018) noted that the positive market growth that has been recorded in 2018 has been fueled by the increasingly changing food habits which are coupled by the increase in the population of young people who are considered to be the main customers in the industry. As a result of competition, every company is currently involved in the production of unique products that can meet the expectations of the growing number of customers. Pinna, Demartini, Tonelli & Terzi (2018) explained that this has been achieved through the application of innovative approaches. It has been previously determined that most of the products of the companies from this industry are involved in the development of different types of health problems. This perception is increasing changing in 2018 as a result of most of the companies, more so the key players, being involved in the production of healthy food products.

Garg (2018) indicated that the creation of the value chain which is able to effectively display the environmental awareness as well as the ability to address the complex and fundamental issues is one of the major initiatives that the beverage companies in 2018 have been adequately striving to realize. Just like in other parts of the world, the British Soft Drink Association has been able to identify different types of sustainability approaches, more so in the effective use of water as a key raw material for their production process as well as proper mechanisms of waste management. With reference to the information presented in the research study conducted by Demartini, Pinna, Aliakbarian, Tonelli & Terzi (2018), the companies in this industry are currently taking part in the direct and indirect release of 5.84 trillion plastic bottles into the environment as wastes. This has made them to introduce the use of reusable packaging containers or resort to recycle the already released waste plastic bottles. The ability of the health lobbyists demand for the improvements on the health aspects of the drinks as well as the increased state of competition are some of the most important challenges that can be experienced in this industry. 

Company/Organization Profiles

The Coca-Cola Company

The Coca-Cola Company is a multinational corporation that is involved in the manufacturing, retailing and marketing of the nonalcoholic beverages. This company was founded on 29th

January 1892 and it was later incorporated in 1919 with its headquarters are located in Atlanta, Georgian in the United States of America (Coca-Cola Co., 2018). Through the application of innovative and strategies management techniques, the company has grown to be one of the most important player in the beverage industry. Additionally, the Coca-Cola Company is involved in the production of beverage products which are being consumed by customers around the world through the application of its well-established company-owned networks or controlled bottling and distribution operators, wholesalers, distributors and retailers (Coca-Cola Co., 2018). According to the information for the company’s website, the Coca-Cola Company is involved in the production of a variety of products such as Coca-Cola, diet coke, Coca-Cola zero sugar, Fanta, Sprite, Dasani, Mello Yellow, Surge, PowerAde, Gold Peak, Zico, Minute Maid, Diel Valle among others.

Because of the increasing competition in the beverage market, the company has chosen to employ diversification in its product development. The company is currently under the leadership of James Quincey, who is the chief executive officer of the Coca-Cola Company (Coca-Cola Co., 2018). Other key members of the executive include Jay Moye who is the Editor-in-Chief, Emily Bucherati who is the Digital Communication Manager, James Booker who is the current Reporting Manager and Justine Fletcher who is the current Director of Heritage Communication at the Coca-Cola Company.  According to the financial report compiled at the end of 2017, it was determined that the Coca-Cola Company has about $4.32 billion outstanding shares, with a share price valuing $43.50 per share hence making the capitalization market of the company to be valued at $118 billion (Coca-Cola Co., 2018). This is a 3% increase as compared to the 2016 financial report.

Sustainability Approaches of the Coca-Cola Company

The Coca-Cola Company has shown increased commitment to promote sustainability in all of its operations. This can be linked to the fact that the company is always issuing sustainability report in an annual basis. One of the most important areas that the company has employed the sustainability approaches is the packaging process (Coca-Cola Co., 2018). This is linked to the fact that there is an increasing number of people who are willing to consume the company’s products leading to the increased production as well as introduction of additional products. The company recognizes that packaging process plays an important role in the protection of its products during distribution and use. This has made the company to introduce the use of recyclable packaging materials. This is why the company has been involved in the innovative approaches that has enabled it to prevent turning the packaging materials into wastes and to make them more valuable resources for the economic development (Coca-Cola Co., 2018). Additionally, it can be noted that water is a very resource for the production of its products. For that matter, the company has recognized that distribution of fresh and safe water to the community is one of its most important roles in the community.

Jones & Comfort (2018) indicated that the company has been able to replenish 100% of the water volumes it used in the production of its beverages back to the communities and nature. This has been achieved through the application of community and watershed projects which were implemented in 2015. Another area that the Coca-Cola Company has a lot of investments in order to promote sustainability is the formulation and implementation of programs which are focused on empowering women (Jones & Comfort, 2018). This is linked to the fact that the company has been able to employ significantly large number of women, more so in the sales and marketing departments. This is based on the fact that the company believes that an effective economic development can be achieved by making women to be economically productive and independent.

According to the research study conducted by Jones & Comfort (2018), the Coca-Cola Company is currently producing healthy products, such as the Coke Zero, that can be used by people with different health conditions. The Coke Zero is mainly produced for the diabetic customers. Furthermore, the company recognizes that its customers are the key players in its development. For that matter, the company has been involved in different corporate social responsibility programs which are meant to make the lives of the people living in the community within which the company operates become different. The company has been able to build schools and hospitals as well as offer both academic and social activity scholarship programs to the needy members of the community.

PepsiCo, Inc.

The PepsiCo, Inc. was incorporated in 1996 and it is one of the most important players in the global food and beverage industry. Some of the most important brands that belong to PepsiCo, Inc. include Frito-Lay, Gatorade, Pepsi-Cola, Tropicana and Quaker (PepsiCo., 2018). At the end of 2016, the company was able to successfully produce, distribute and markets its products in more than 200 countries around the world. In order to maximize on its operations, the company is current operating under six different segments such as the Frito-Lay North America (FLNA), North America Beverages (NAB), Quaker Foods North America (QFNA), Latin America, Europe and Sub Saharan Africa (ESSA) as well as the Asia, Middle East and North Africa (AMENA). Through the application of these segments, the PepsiCo, Inc. has effectively diversified into different products. For example, the FLNA segment is mainly involved in the production of food and snack businesses in countries such as the United States of America and Canada (PepsiCo., 2018). On the other hand, the QFNA segment is involved in the production of products made from cereals, rice, and pasta with the products mainly being sold in the United States of America and Canadian markets (PepsiCo., 2018). In order to promote its products, the company has been involved in the application of strategies that include a combination of sales incentives, advertisements, discounts as well as other types of marketing activities.

The major customers of the PepsiCo, Inc. products include membership stores, grocery and convenience stores, authorized independent bottlers, mass merchandisers and food service distributors. PepsiCo, Inc. has been able to record a flat revenue income for the past three years. This is it recorded a net sale of $66.7 billion in 2014 (PepsiCo., 2018). At the end of 2017, the company registered net sales of $63.5 billion as compared to $62.8 billion that was registered in 2016. Despite the increase in sale volumes, it was determined that the North American Beverage was able to record a 2% reduction in its annual sales in the same year with on the other hand the same percentage was recorded as an increase in sales in the Frito-Lay North America segment of the company (PepsiCo., 2018). PepsiCo, Inc. is currently focused in the production of sustainable and environmentally friendly products to its customers around the world.

Sustainability Approaches of the PepsiCo, Inc.

One of the most important goals of PepsiCo, Inc. is to create healthier relationship between people and food products that it produces. The company has achieved through the protection of the environment as well as development most effective strategies that can be used in the promotion of sustainable food production. Based on the fact that the company depends on the availability of natural resources for its production, PepsiCo, Inc. has been able to develop and implement strategies focused on the protection of these resources (PepsiCo., 2018). For example, the company has shown continued interest on improving the water-use efficiency within its manufacturing facilities as well as the progress against the company’s goal of to realize 25% improvement in water-use efficiency in direct operations, with much focus being placed on the manufacturing operations within the high water risk areas (Meinrenken, Sauerhaft, Garvan & Lackner, 2014). This initiative is categorized under the water stewardship program of the company.

The information from the research study conducted by Meinrenken, Sauerhaft, Garvan & Lackner (2014) determined that the PepsiCo, Inc. is also involved in the implantation of programs which are focused on preventing the occurrence of climate change. This is with reference to the fact that the company has been determined to have strong interest in reducing the emissions of the greenhouse gases. PepsiCo, Inc. believes that the occurrence of climate change will have as much adverse effects on its business just like the other parts of the world will be affected. Some of the most important strategies that the PepsiCo, Inc. has employed in order to prevent climatic change is through the use of cleaner transportation channels, focusing on the utilization of the renewable energy and effectively offering quality educational programs to its employees on the mechanisms and importance of promoting the development of green economy.

Through the implementation of the recyclable and biodegradable packaging materials, the company has been able to significantly reduce the amount of wastes associated with its operations (Meinrenken, Sauerhaft, Garvan & Lackner, 2014)). Furthermore, the company has got a Performance with Purpose (PwP) goal that is focused on making sure it achieves zero waste to the landfill in its direct operations through efficient and responsible waste management by 2025. In addition to the company’s goal of reducing the amount of greenhouses gases emissions by 20 percent by the end of 2030, PepsiCo, Inc. is currently shifting its operations towards the use of renewable energy. A good example can be derived from the fact that by the end of 2016, the company was able to source 73% of its power used for the operations from its wind power energy production firm (PepsiCo., 2018). Furthermore, the company has successfully joined the Business Renewables Center located at the Rocky Mountain Institute and went ahead to sign to the Renewable Energy Buyers Principles, a program which is focused on encouraging the companies to use clean energy sources in their operations.

Red Bull GmbH

Red Bull GmbH is a multinational, Australian based company that was created in 1987 and it involved in the production of different types of non-alcoholic drinks with the main product being the Red Bull energy drink. Since its establishment, the company has been operating for at least 31 years. The company is still under the leadership of its founder, Dietrich Mateschitz. As at the end of 2017, the company had a total of 11886 employees derived from 171 countries, a number which is much higher than that registered in 2016 where the company had a total of 11865 employees (Red Bull Co., 2018). The information from the company’s website indicated that a total of 6.302 billion cans of Red Bull energy drinks were sold in 2017. This is a representation of 4.0% increase compared to the number registered in 2016.

With reference to the fact that the beverage and soft drink energy has been recording a fluctuation in prices in the last ten years, it can be noted that the Red Bull GmbH’s turnover also witnessed a 4.2 percent increase from the EUR 6.029 billion registered in 2016 to EUR 6.282 billion recorded from the 2017 sales (Red Bull Co., 2018). Despite the fact that the Red Bull GmbH recognizes that all of its customers from different parts of the world have played an important role in its financial development, the company admits that its markets located in different regions such as Turkey, India, Netherlands, Northern Europe and the United Kingdom have played more central role (Red Bull Co., 2018). Recognizing that there is stiff competition in the beverage and soft drink market, Red Bull GmbH has made sure that it implements different strategies that will make its products to become unique in the market. This has been achieved with the help of its highly effective research and development department.

Sustainability Approaches of Red Bull GmbH

One of the most important philosophies that guides that operation at Red Bull GmbH is the belief that recycling the packaging materials, such as cans, takes less energy than producing a new one.  For that matter, the company has made sure that all of its cans are recyclable in order to reduce the amount of waste materials being released into the environment (Red Bull Co., 2018). The company management was able to make a decision that was focused in making sure that the cans used in the packaging of its products being made of 100% aluminum. Furthermore, the weights of the cans have been significantly reduced in order to help in economizing on the amount of materials used in the production of the cans (Red Bull Co., 2018). This initiative has been determined to be important in the protection of the environment as well as in reducing the amount of finances being invested on the sourcing on the materials.

According to the information from the research study conducted by Asiedu (2016), the Red Bull GmbH cans are often being recollected and reused without losing their initial qualities. Furthermore, the company is currently using renewable energy to fuel 80% of its operations. This has helped in reducing the emission of the greenhouse gases into the atmosphere that are directly linked to the occurrence of climate change (Red Bull Co., 2018). Another important suitability approach that the Red Bull GmbH is currently using is the wall-to-wall production which has the ability of saving on resources. The technique means that that the company’s cans are manufactured and filled in the same site hence leading to the elimination of the energy that might have been used in the transportation of these materials into the company for filling them to the market.

Asiedu (2016) also determined that the Red Bull GmbH has been able to promote efficient cooling through the application of the ecofriendly coolers. The company has developed environmentally friendly Red Bull ECO-Coolers that have the ability of consuming 45% less energy as compared to the conventional refrigerators. One of the most important concerns that have been raised by the environmentalists is the increased emission of carbon dioxide into the atmosphere. The Red Bull GmbH has listen to their concerns and hence has resolved to use smart transportation channels (Red Bull Co., 2018). This is based on the fact that the company is mainly using train and ship for the transportation of its products from the company into the respective markets and the use of trucks is initiated when there is need. 

Recommendations

Protection of the environment is one of the most important approaches that can be used by the beverage companies to develop an effective sustainable production. For that matter, these companies must be focused on promoting the recycling of water in order to avoid wastage. According to the information from the research study conducted by Pinna, Demartini, Tonelli & Terzi (2018), water is not only used as an important ingredient in the soft drink production but also as an important part of the production process. Based on the fact water is increasingly becoming scarce, these companies must ensure that they develop their own water recycling plants in order to avoid continuous consumption of the naturally available water.

Production of the soft drink and beverage products has been determined to consume a lot of energy. Therefore, there is need to make sure that the same amount of energy is not used in the distribution of the already finished products. For that matter, the companies in this industry must ensure that they promote the use of bulk transportation through the channels that do not consume a lot of energy such as railway lines. Garg (2018) determined that most of the companies involved in the production of beverage products are multinationals. For that matter, there is need to promote sustainability through fair sourcing of the raw materials and well as by encouraging ethical hiring and treatment of every member of the workforce. Additionally, there is need for the beverage companies to promote the practice of transparency by providing the general public with the vital information regarding the sourcing process of the raw materials as well as the origin of these ingredients. This will help in evaluating the ethical point of view of the operations of different companies operating in this industry.

Summary

Even though there is an increasing competition in the beverage industry, the companies in this sector must make sure that they develop sustainable approaches for facilitating their operations. In other words, they should not only focus on increasing their sales and not taking part in the protection of the environment. Coca-Cola, PepsiCo and Red Bull are some of the most important players in the beverage and soft drink industry. These companies have employed different strategies to promote their sustainable production. Some of the areas where they have focused on include using recyclable packaging materials, conservation water and other natural materials they use in their production process as well as moving towards the use of renewable energy for fuel their operations. Based on the fact that these companies are all multinationals, they have been able to promote diversity in their workforces hence making the local communities to feel being part of their operations. Nevertheless, the companies operating in this industry still need to implement additional strategies that will help them in the reduction of the solid associated with their companies that are being released into the environment as well as minimizing the use of naturally available water in their production processes.

References

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Asiedu, E. (2016). How to Create and Sustain a Strategic Marketing Plan Through The 4p’s of Innovation: With Reference to Red Bull Energy Drink Company.

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Jones, P., & Comfort, D. (2018). The Coca Cola Brand and Sustainability. Indonesian Journal of Applied Business and Economic Research, 1(1), 34-46.

Meinrenken, C. J., Sauerhaft, B. C., Garvan, A. N., & Lackner, K. S. (2014). Combining Life Cycle Assessment with Data Science to Inform Portfolio‐Level Value‐Chain Engineering: A Case Study at Pepsico Inc. Journal of Industrial Ecology, 18(5), 641-651.

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Pinna, C., Demartini, M., Tonelli, F., & Terzi, S. (2018). How Soft Drink Supply Chains Drive Sustainability: Key Performance Indicators (Kpis) Identification. In 51st CIRP Conference On Manufacturing Systems, CIRP CMS 2018 (Vol. 72, Pp. 862-867). Elsevier BV.

Red Bull Co. (2018). The Official Website for The Red Bull Company. Retrieved From: https://energydrink.redbull.com/