Impact of Carbonated Soft Drinks -CSDs- in DACH

Research by Ema Montfajon, Filippo Trifone, Greta Zocchi, Jula Gekle and Maya Ben Abdelkader | Bachelor Students from ESCP Business School | Edited by Komoneed

Environmental Impact of CSDs on the DACH Market

The largest manufacturers of carbonated soft drinks are multinational giants and as such have an impact on the environment.

This research aims to investigate the environmental impact by examining the value chains of some of the largest manufacturers in the carbonated soft drink market on the DACH market.

This research analysed the environmental impact of the major CSDs brands mentioned before by measuring it along their value chains. From raw materials to sales, the stages of the production process were examined, based on Michael Porter’s Value Chain framework.

Students from ESCP Business School -BSc Programme- have conducted the study of the value chains of Coca-Cola, Pepsi, Orangina, and Dr Pepper, analysing their various production stages such as resource acquisition, material sourcing, and other processes involved. Through this analysis we have gained a comprehensive insight into these companies’ operations.

How Do Major CSD Brands Impact the Environment?

The research is split into four relevant articles to introduce the different examined companies, explaining the general value chain used for these brands, and finally present the research results for each company along that model.

The CSD market for sweet, non-alcoholic, effervescent beverages has compounded a positive CAGR since 2015, with an estimated market value of $12.38b in 2020, which is expected to rise to $16.46b by 2025.

• Coca-Cola and PepsiCo alongside with Dr Pepper, relevantly contribute to these figures as they are the biggest players in the region. Hence, this report will explore these three companies.
• Additionally, Orangina will be investigated, being a popular soft drink in Germany (Rønneberg, 2023).

In the DACH market, CSDs are popular and widely consumed, particularly in Germany, which is the largest market for soft drinks in Europe.

The aim of the research was to highlight the measures these firms have taken to promote environmental protection and sustainability within their operations. Notwithstanding the above, the study critically analysed each company’s value chain to identify areas where they can improve their approach to environmental issues such as minimising their carbon footprint or supporting sustainable development.

Coca-Cola

Coca-Cola was founded in Atlanta, USA in 1886 and is by far the most consumed soft drink over the world. The brand is successful worldwide and there are only two countries where it is not available in: Cuba and North Korea, both due to political situations. The Company’s net worth is $282b today, with a projected net revenue of $11.1b -October 2022.

Its product line counts more than 2,800 different SKUs split in more than 500 brands reaching a global audience and adapting to each market need. In the DACH carbonated soft drinks market it’s estimated to generate $14.81b in 2023.

Coca-Cola in detail

Pepsi

Pepsi is a carbonated soft drink that is owned by PepsiCo, Inc., one of the largest food and beverage companies in the world. The brand was first created in 1893 by Caleb Bradham -trademarked in 1903.

The original formula for Pepsi-Cola included kola nuts, vanilla, and rare oils, among other ingredients. Today, the brand offers a wide range of products, including Pepsi, Diet Pepsi, and Pepsi Max, as well as flavours like Cherry, Lime, and Wild Cherry.

The brand is known for its iconic logo, advertising campaigns, and sponsorships of major events and sports teams. It is estimated to be worth $166b in November 2021. The company has a strong marketing strategy in place to promote its products in the DACH market.

Pepsi in detail

Orangina

Orangina was developed in 1933 by a Spanish chemist named Augustin Trigo, originally called Naranjina. It was then marketed in Europe, but due to World War II, was unsuccessful. It was only in 1951 that Jean-Claude Beton introduced Orangina’s signature bottle to Europe which became the brand’s symbol.

In 2000, the brand was acquired by Cadbury Schweppes, and since 2009 Orangina is owned by the Suntory Group.

Orangina has significantly less influence and revenue than the Coca-Cola group. However, Orangina is very popular in Germany, France, and Switzerland. Orangina is considered a leader among the fruit soft drink companies with 20.2% of the Swiss market share in 2019 (Orangina, 2022).

Orangina in detail

Dr Pepper

Dr Pepper is the name of the carbonated soft drink first made in Texas (1985) by the pharmacist Charles Alderton. Marketed only in the USA since the early 20^th century, today Dr Pepper is available worldwide. As with many soft drinks, Dr Pepper was advertised as an energizer and can now be found in a variety of versions including diet, caffeine free, cherry, cream soda, and several more. The exact ingredients are unknown and considered a “secret recipe”. However, Dr Pepper’s known ingredients include high-fructose corn syrup, caramel colour, caffeine, and others.

To examine the value chain, one must first understand the history and ownership of the company. The Artesian Mfg. & Bottling Company -later Dr Pepper company- was established in 1891.

Dr Pepper is now owned by Keurig Dr Pepper -KDP, a beverage company formed by the merger of Keurig Green Mountain and Dr Pepper Snapple Group in 2018. (“Biggest Coffee Companies in the World – Brewed to Perfection”) KDP is a publicly traded company, with shares listed on the New York Stock Exchange. The company is headquartered in Burlington, Massachusetts and has operations in North America, Europe, and Asia.

Dr Pepper in detail

Overall Considerations

Carbonated Soft Drink manufacturers have an impact on the environment. While the companies have the largest impact on the USA, the production and distribution in the DACH market shares many of the same processes and therefore, aspects to be considered.

The companies share similar issues in respect to their value chains when manufacturing and distributing CSDs:

• Packaging waste
• Water use
• Carbon emissions

Due to the recent growing importance of eco-friendliness companies across the globe, all major companies have been fighting the battle of a public green image.

The researched companies share the goals of improving recycling rates, reducing their CO₂ footprint, and reducing water use. Partnerships with environmentally considered ‘green’ companies is another common initiative.

Whether all the promises will be fulfilled is hard to tell, as many of their own deadlines lie in the far future and are worded vaguely.

It is important to note that the environmental impact remains a significant concern. Moreover, it is common for these companies to resort to ‘greenwashing,’ the practice of hiding their impact behind initiatives that appear to be environmentally responsible.

For example, some companies may use biodegradable or recycled packaging materials, but they continue to produce many plastic bottles that end up in landfills. While such initiatives may appear to be environmentally friendly, they may not have a significant impact on the overall sustainability of the company’s operations.

Therefore, we can see that there is a need for CSD companies to take more vigorous and effective measures towards sustainability. They should be sincere about their environmental impact and adopt genuine sustainable practices that minimize their impact.

Only if they take tangible and effective steps towards sustainability will they be considered “green”.

Everyone matters. Being environmentally friendly in our globalized world may be difficult for many individuals, however, everyone has an impact.

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Images

• Ron Lach in Pexels