Analysts Suggest Parallels Between Soft Drink and Cigarette Companies

A March 27, 2012, “Great Speculations” column on Forbes.com draws parallels
between carbonated soft drink (CSD) companies and the tobacco industry,
claiming that a recent decline in CSD consumption in the United States has
created a competitive market environment similar to that faced by cigarette
manufacturers. Authored by contributors from Trefis.com, an investment and
market research tool, the article notes that decreased CSD sales volume has
prompted soft drink manufacturers to adopt strategies allegedly used by
tobacco companies, such as raising product prices, promoting alternatives like
energy drinks and juices, and arguing against taxation.

“Part of the reason why these industries attract high taxation is because the fiscal deficit of the government is in a mess and imposing taxes n hese industries ensures higher revenue collection in the name of political mileage,” concludes the article. “Cola companies won’t hesitate to ncrease the prices periodically (although certainly not as aggressively as cigarette companies) especially since the cost of sales continues to ise. Soft drink companies will also continue to innovate/launch new products to lure consumers to increase consumption.”