Question

Before Pepsi and Coke's acquisitions of their respective bottlers, why was the concentrate producing segment of the industry so much more profitable than the bottling segment. (Hint: use Porter’s 5 forces and check your conclusion with the appendix numbers).

Answer 1

All the Coke, Pepsi and other bottling industries has to buy concentrate.

Step-by-step explanation:

Before Pepsi and Coke's acquisitions of their respective bottlers, the concentrate producing segment of the industry so much more profitable than the bottling segment because the Concentrate producing segment has multiple customers and they are the only suppliers there. Bottling Segment have perfect competition and they have threats of substitutes and competitors. They are not in a position to bargain to concentrate supplying companies.