Ocean Spray Cranberries Inc Company SWOT Analysis Report-Soft Drinks Industry Report

Ocean Spray Cranberries Inc

· PepsiCo Partnership – the recent announcement of a strategic alliance with PepsiCo will boost Ocean Spray’s market reach in North America to take advantage of the single-serve trends in the beverages market and also provide the opportunity for new product development.

· Core Product Focus – the company’s focus on cranberry juice-based products ensures that its brand name is best associated in consumer minds when thinking of cranberries and this focus also translates into market strength.

· Management Structure – after a reorganisation in 2004, the company seems to have regained internal stability which is reflected in the recent strategic alliance with PepsiCo.

· Responsiveness – Ocean Spray has a history of addressing consumer trends head on, already offering diet variations, variety of flavour and organic product lines.

Weaknesses

· Single Product Reliance – by focusing only on cranberry-based product offerings, the company is more susceptible to changing consumer tastes and trends.

· Raw materials – Ocean Spray is weakened by and susceptible to seasonal trends and weather patterns which could result in over or under supply of cranberries.

· Company Structure – the company’s structure as a co-operative means that commercial focus has suffered during some periods but seems to be improving after the 2004 reorganisation. However, it remains to be seen if this management and ownership structure is suitable for advancing the company’s position in the market.

Opportunities

· Partnerships - the company is actively seeking strategic alliances in addition to PepsiCo and SPC Ardmona. The next step could be an alliance within the alcoholic drinks market given the application of cranberry juice in many of today’s cocktails and its status as a mixer with spirits.

· Market Growth – the recent alliance with PepsiCo could be used to leverage and increase the Ocean Spray brand into emerging markets such as functional drinks and RTD tea.

· Emerging Trends – such as single-serve, juice smoothies and hybrid categories present growth opportunities.

· Carbonates – despite the company’s focus on the juice market, the recent alliance with PepsiCo may create opportunities in carbonated soft drinks, in particular the growth in carbonated juice and carbonated flavoured water.

· International Markets – growth into other strong markets such as South America, Asia-Pacific and Western Europe provide expansion opportunities.

Threats

· Increased Competition – as the popularity of cranberry juice grew both as a juice for consumption and as a mixer in spirits and cocktails, other global soft drinks manufacturers have entered the market with cranberry juice offerings.

· Private Label – as the popularity of cranberry juice grew, private label manufacturers have entered the market, hurting sales of Ocean Spray, particularly in the UK.

Prospects for the Soft Drinks Business

· Ocean Spray is focused on the fruit and vegetable juice market and as such, any prospects that the company is in a position to take advantage of directly relate to this market. Up until this point, whether the result of internal management instability or the ownership status as a co-operative, Ocean Spray has been conservative in developing product categories. While the recently announced strategic alliance with PepsiCo could expand prospects in new directions and markets, at this stage it is still unclear what they may be.

· Health and wellness trends are driving changes to the juice market with some brands now including fortification such as calcium, iron and additional vitamins and minerals. This trend will continue to grow as consumers demand more from their beverages.

· Over more recent years, local brands have been popping up that offer single-serve smoothies and premium juice blends, such as strawberry and banana. Brands include the Nudie brand in the UK and Odwalla in the US. These brands are making quick inroads into the market and carving out a niche. While the fruit/vegetable juice markets in the US and Australia are likely to experience a negative off-trade volume compound annual growth rate (CAGR) over the forecast period, Ocean Spray could leverage its brand value to include premium line extensions in these markets to stimulate growth. The Asia-Pacific region represents a good opportunity with a predicted CAGR of 8%, whilst the CAGR is also expected to be strong in Latin America and Mexico.

· As juice consumption grows as a result of health trends and consumers seek alternatives to carbonated soft drinks, the need for single-serve packaging has increased. The company has aggressively addressed this consumer trend through its strategic alliance with PepsiCo.

· In the soft drinks industry in general, consumers are seeking variety in flavour. Ocean Spray already has a line of blended juices that combine cranberry juice with other fruit juices. This line of products could be further developed to increase variety.

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Thursday 1 May 2014