Soft Drink Manufacturing
Description
Companies in this industry manufacture soft drinks and artificially carbonated beverages. Major companies include US-based global giants Coca-Cola, Keurig Dr Pepper, and PepsiCo, as well as Britvic (UK), Red Bull (Austria), and Suntory (Japan).
Global sales of carbonated drinks are expected to reach about $412 billion in 2025, according to Statista. Italy, France, Spain, and the UK, are among the major markets in terms of revenue.
The US soft drink manufacturing industry includes about 550 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $40 billion.
The soft drink manufacturing industry is part of the nonalcoholic beverage industry, which also includes ice and bottled water manufacturing and is covered in a separate industry profile. Companies primarily engaged in bottling and distributing soft drinks are not included in the industry.
COMPETITIVE LANDSCAPE
Demand for soft drinks is driven by consumer tastes and demographics. The profitability of individual companies depends on effective marketing. Large companies have economies of scale in production and distribution. Small companies can compete by introducing new products, catering to local tastes, or selling at lower prices. The US industry is highly concentrated: the top 50 companies account for about 90% of revenue.
Largely due to the high costs of shipping a heavy product, US imports and exports of soft drinks are relatively low. Imports of soft drinks account for about 7% of the US market; exports account for about 3% of US production. Austria, Switzerland, and Mexico are the largest importers of soft drinks to the US.
PRODUCTS, OPERATIONS & TECHNOLOGY
Carbonated soft drinks account for about 35% of the industry revenue, followed by bottled (glass) soft drinks that account for about 30%, combined. Non-carbonated drinks account for about 20%. Other revenue sources include the sales of iced tea and wholesale of other goods.
For most national soft drink brands, including Coke and Pepsi, a two-tiered process is used for manufacturing and distribution. The primary manufacturer produces a flavored syrup, or concentrate, that is sold to local bottlers who manufacture and distribute the finished product. This two-tiered structure is most efficient for national companies with large volume, because the manufacturing process is simple and because water, the main ingredient of sodas, is expensive to ship and is available locally. Smaller companies may combine the syrup production and bottling operations in one plant.
A typical bottling operation combines the flavored syrup, corn syrup (sugar), and filtered water in appropriate proportions, then carbon dioxide gas is injected, and the finished soda product is poured into bottles or cans, which are capped, labeled, and packaged. For soft drink bottlers, the major raw materials, aside from the flavored syrup, are corn syrup and containers — glass bottles, aluminum cans, or plastic bottles made from polyethylene terephthalate (PET).
Manufacturers and bottlers typically operate under contracts called bottler agreements, which specify the territory within which the bottler has an exclusive right to make, sell, and distribute the manufacturer's brand in bottles or cans. Fountain products are often sold separately through wholesalers, under distributor agreements. Bottle and fountain territories may overlap and bottlers may also be fountain distributors. Agreements often are perpetual and can be terminated only for breach of contract.
Bottlers frequently operate sizable distribution systems, including warehouses and fleets of specialized delivery trucks. Production and distribution volume is usually measured in unit cases of 192 ounces (24 eight-ounce servings), although actual cases of 12-ounce cans contain 288 ounces. In addition to producing canned and bottled soft drinks, large manufacturers sell sweetened syrups to restaurants and other retailers that produce the finished product at the point of sale by mixing the syrup with carbonated water to produce fountain products.
Global sales of carbonated drinks are expected to reach about $412 billion in 2025, according to Statista. Italy, France, Spain, and the UK, are among the major markets in terms of revenue.
The US soft drink manufacturing industry includes about 550 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $40 billion.
The soft drink manufacturing industry is part of the nonalcoholic beverage industry, which also includes ice and bottled water manufacturing and is covered in a separate industry profile. Companies primarily engaged in bottling and distributing soft drinks are not included in the industry.
COMPETITIVE LANDSCAPE
Demand for soft drinks is driven by consumer tastes and demographics. The profitability of individual companies depends on effective marketing. Large companies have economies of scale in production and distribution. Small companies can compete by introducing new products, catering to local tastes, or selling at lower prices. The US industry is highly concentrated: the top 50 companies account for about 90% of revenue.
Largely due to the high costs of shipping a heavy product, US imports and exports of soft drinks are relatively low. Imports of soft drinks account for about 7% of the US market; exports account for about 3% of US production. Austria, Switzerland, and Mexico are the largest importers of soft drinks to the US.
PRODUCTS, OPERATIONS & TECHNOLOGY
Carbonated soft drinks account for about 35% of the industry revenue, followed by bottled (glass) soft drinks that account for about 30%, combined. Non-carbonated drinks account for about 20%. Other revenue sources include the sales of iced tea and wholesale of other goods.
For most national soft drink brands, including Coke and Pepsi, a two-tiered process is used for manufacturing and distribution. The primary manufacturer produces a flavored syrup, or concentrate, that is sold to local bottlers who manufacture and distribute the finished product. This two-tiered structure is most efficient for national companies with large volume, because the manufacturing process is simple and because water, the main ingredient of sodas, is expensive to ship and is available locally. Smaller companies may combine the syrup production and bottling operations in one plant.
A typical bottling operation combines the flavored syrup, corn syrup (sugar), and filtered water in appropriate proportions, then carbon dioxide gas is injected, and the finished soda product is poured into bottles or cans, which are capped, labeled, and packaged. For soft drink bottlers, the major raw materials, aside from the flavored syrup, are corn syrup and containers — glass bottles, aluminum cans, or plastic bottles made from polyethylene terephthalate (PET).
Manufacturers and bottlers typically operate under contracts called bottler agreements, which specify the territory within which the bottler has an exclusive right to make, sell, and distribute the manufacturer's brand in bottles or cans. Fountain products are often sold separately through wholesalers, under distributor agreements. Bottle and fountain territories may overlap and bottlers may also be fountain distributors. Agreements often are perpetual and can be terminated only for breach of contract.
Bottlers frequently operate sizable distribution systems, including warehouses and fleets of specialized delivery trucks. Production and distribution volume is usually measured in unit cases of 192 ounces (24 eight-ounce servings), although actual cases of 12-ounce cans contain 288 ounces. In addition to producing canned and bottled soft drinks, large manufacturers sell sweetened syrups to restaurants and other retailers that produce the finished product at the point of sale by mixing the syrup with carbonated water to produce fountain products.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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