Cola meets the maker movement?
Basically (and I'm being really basic) the CSD industry operates on a franchised bottling model. What we consider to be the company, let's just go with Coke, makes syrup which it then sells to bottlers. This "mothership" company also puts in a lot of marketing effort and deals with big national contracts. The bottlers add in carbonated water to the syrup sold by the mothership to make a finished product. The bottlers then sell and distribute the bottles within the territory they have exclusive rights for.
There's a lot of nuance, but this is basically it. There are a few other interesting facts about the CSD companies:
- Recently (in the past few years / decades) Coke and Pepsi have been buying up bottlers, but operating them as separate companies
- The companies have been expanding into emerging markets
- US beverage consumption per person (all beverages) has been flat for the past forty years...it's about 185 gallons per person, per year
- Bottlers have high operating costs and relatively low margins
- Retail consolidation has given larger retailers a lot of leverage when negotiating prices with bottlers / mothership companies
- CSDs have been trying to expand into non-CSD beverage (e.g., bottled water, juices, sports drinks
- Cut costs by eliminating a few steps in the value chain and punting those costs to consumers themselves
- Providing a value-add to consumers (coke whenever you want it!)
- Provide consumers the opportunity to customize their product experience (maybe you have a cartridge for three types of soda and two types of sweetener)
- Provide a direct-to-customer product, which probably has a better way of linking marketing and promotion to consumers, so you can probably develop a better relationship with those customers for upsell opportunities for product bundling (which becomes really useful as you diversity product mix beyond beverages or even just beyond CSDs)
- Maybe you could even create retail locations and turn the product into a lifestyle brand with accessories and add-on opportunities for enterprising soda enthusiasts