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“Pseudo-variety”: Soft Drink Industry Structure

Posted By Barry Ritholtz On August 21, 2010 @ 8:40 am In Consumer Spending,Retail | Comments Disabled

Rather fascinating discussion [1] of the beverage industry from Professor Philip H. Howard of Michigan State University. He concludes there is an oligolpoly, with 3 firms controlling nearly 90% of the beverage options. This lack of competition in this industry is obscured by the apparent variety of choices. Professor Howard calls it pseudovariety – variations on themes:

“Three firms control 89% of US soft drink sales. This dominance is obscured from us by the appearance of numerous choices on retailer shelves. Steve Hannaford refers to this as “pseudovariety,” or the illusion of diversity, concealing a lack of real choice. To visualize the extent of pseudovariety in this industry we developed a cluster diagram to represent the number of soft drink brands and varieties found in the refrigerator cases of 94 Michigan retailers, along with their ownership connections.”

That 89% is broken down as follows:

- 42.8%: Coca-Cola’s 25 brands and 139 varieties;
- 31.1%: Pepsi’s 18 brands and 163 varieties;
- 15%: Dr. Pepper Snapple Group’s 20 brands and 109 varieties;

I am curious as to what % of these are junk drinks using the same cheap, unhealthy corn syrup as their sweetener, versus how many use actual cane sugar.

I find the prof’s graphic (below) bizarrely intriguing chart porn (full version here [2]). There is also a fairly robust discussion at Hacker News [3].

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[2]
chart via Philip H. Howard, Michigan State University

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Thanks to Mike Panzner [4] for recognizing my love of chart porn . . .


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2010/08/pseudovariety-soft-drink-industry-structure/

URLs in this post:

[1] discussion: https://www.msu.edu/~howardp/softdrinks.html

[2] version here: https://www.msu.edu/~howardp/softdrinkszoom.html

[3] Hacker News: http://news.ycombinator.com/item?id=1620520

[4] Mike Panzner: http://www.financialarmageddon.com/

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