The beverage industry is a staple for consumers. It includes soft drink, sports drink, energy drink, bottled water, tea, coffee, and ice manufacturers. The defensive industry serves homes and businesses around the world.
Daily operations for beverage companies include making the drinks, bottling, and shipping. Their production facilities tend to locate in the countries where their products are sold to cut transportation costs.1 Companies keep up with prices for materials such as corn, sugar, aluminum, plastic, and glass.
Technology within the industry is pushing toward automated production and distribution, including efficient bottling, improved quality control, and sustainable packaging. It also helps introduce more flavors and reduce labor costs. Similarly, coffee brewers provide dependable revenue streams to the industry with whole bean, ground, instant, and single-serve pods by using automated machinery.
Large beverage companies gain a competitive edge partially with effective, lively marketing. Following current consumer trends and tastes, soft drink manufacturers compete with healthier and plant-based alternatives that tend to use fewer artificial ingredients, less sugar, and no high fructose corn syrup. A few beverage companies, such as Coca-Cola and SunnyD, also expand into alcoholic markets. PepsiCo, which owns Frito-Lay, launched a hard Mountain Dew in 2022, and Coca-Cola partnered with Jack Daniels to produce pre-mixed cocktails.
First State holds a significant position in beverage companies PepsiCo (PEP) and Coca-Cola (KO), which are in SPDR Consumer Staples (XLP). Our professional wealth managers customize each portfolio to client goals. For a free consultation, contact us at (918) 492-1361.
Sources
1First Research Industry Profile: Nonalcoholic Beverage Manufacturing
This overview is for informational purposes only and is not a recommendation. It should not be the sole deciding factor in making an investment. Investing is a risk and, as with all risks, a positive return is not guaranteed. Past performance does not indicate future results.