The global plant-based beverages market is extremely competitive due to the presence of several regional and global market players. The key industry players have adopted strategies such as mergers & acquisitions, product launches, expansions, and joint ventures to strengthen their presence in the global market. A majority of the market players is focusing on launching new products to cater to the changing consumer demands.
This graph indicates the percentage share of developments undertaken by key manufacturers in the global plant-based beverages market. Danone SA accounted for the highest development share of 20.3%. The major development strategy adopted by the company is the launch of new products to attain a major customer base. For instance, in May 2018, Danone SA launched three ranges of organic beverages including white, rooibos, and hibiscus tea as part of its Volvic brand. Moreover, the company is focusing on expanding its production capacity to cater to the rising demand for natural plant-based beverages. In October 2017, it expanded its plant-based beverage production facility and warehouse in Mt Crawford, Virginia, US, with an investment of USD 60 million. Acquisitions and joint ventures are also among the other growth strategies adopted by the company to gain an edge in the competitive market.
The Coca-Cola Company accounted for 16.5% of the total development share. The company is investing in R&D to launch innovative products. Coca-Cola European Partners launched Adez, a dairy-free smoothie containing seeds, fruit juices, and vitamins in the UK in February 2018. In May 2018, the company opened two production lines at Kyje, Prague, to produce plant-based drinks.
Another prominent player is PepsiCo, Inc. with a focus on product launches and expansion. The company accounted for 15.2% of the total development share. In November 2018, it launched a plant-based drink, Quaker Oat Beverage, in the US as part of its Quaker brand.
Product launches accounted for the largest share of 50% of the key developments adopted by market players. Vendors in the global plant-based beverages market are focusing on innovation and launching products to cater to the rising consumer demand for convenient ready-to-serve plant-based beverages. For instance, in March 2018, Danone SA launched Caaya, a RTD tea, in Indonesia. Mergers & acquisitions was also a prominent strategy accounting for a share of 21.9%. Market players used this strategy to widen their product portfolios and expand their presence in the global market. For instance, in December 2017, Campbell Soup Company acquired Pacific Foods of Oregon, LLC for USD 700 million.
The other key development strategies adopted by the prominent players were joint ventures and expansions, which accounted for 6.3% and 3.1%, respectively.
Threat of New Entrants
Raw materials for plant-based beverages are dependent on the type of end-product to be produced. However, the raw materials such as fruits, vegetables, and nuts are available in abundance, across the globe. Therefore, the cost of production is low. Moreover, there is scope for high revenues due to increasing consumption of plant-based beverages, which relaxes the entry of players in the market.
However, plant-based beverages market is dominated by established players and to enter the market, new players need to invest enormously in creating their brand identity through strategies such as high R&D investments and by producing quality products with the help of advanced technology. Also, plant-based beverages market is highly competitive. Major players have their presence across the globe. Existing players, to survive in the market, must focus on product development, and improved strategic product formulations, considering the changing trends to create distinct identities of their brands.
The threat of new entrants to the market is moderate.
Bargaining Power of Suppliers
There are numerous suppliers in the market, who supply the ingredients required for plant-based beverages. In plant-based beverages there are different categories of beverages, depending on the ingredients used. Thus, the manufacturers of plant-based beverages have the liberty to shift between suppliers as they are not dependent on a single supplier, which reduces their operational risks. Moreover, the suppliers are not only concentrated in one region but also have cross-regional presence, which reduces the switching cost among the manufacturers. These factors result to overall low bargaining power of the suppliers.
Therefore, the bargaining power of suppliers is low.
Threat of Substitutes
Plant-based beverages have no close substitutes available. However, the market is highly fragmented and faces intense internal competition at ingredient level from variants such as fruits, nuts, and dairy substitutes. The consumers might substitute plant-based beverages internally based on their preference for the ingredients used in preparation of the particular beverage. Consumers are allergic to certain ingredients, which play a significant role in their product selection. Analyzing these various factors, it is identified that there are chances of product substitutes at internal level due to multiple plant-based beverages available but there is no close substitute to the plant-based beverages in general in the market.
The threat of substitutes in plant-based beverages market, is low.
Bargaining Power of Buyers
The presence of large industrial players in the plant-based beverages products market has attracted a huge consumer base. Due to a large number of existing manufacturers in the market, the switching cost of consumer falls. Moreover, the consumers are well-informed about the product, and their brand loyalty is low. Additionally, the cross-contamination of the products during manufacturing process and nutrient loss due to microbial activity make consumers switch to other preferred brands. Moreover, the demand for plant-based beverages products is high owing to a number of health benefits. Buyers of plant-based beverages are health-conscious consumers, including athletes, and exercise enthusiasts, who prefer health products irrespective of their prices.
The bargaining power of buyers is moderate in the plant-based beverages market.
Rivalry
The plant-based beverages market is marked by high intensity of rivalry. The established players are targeting its competitors in terms of quality and price, making the industry competitive, reducing profit margins for all the existing firms. Additionally, the players operating in the market are competing based on new products, flavors, and quality of the products.
Market players in the plant-based beverages industry have high production capacity and focus on strategic investments in research and development. Players in this market consider improving the supply of quality products to increase the longevity of the products. They invest in product development with changing consumer preferences. Key companies are identified to have strong relationships with the retailers.
The intensity of competitive rivalry in the plant-based beverages market is high.
