FACTORS AFFECTING THE DEMAND FOR INPUTS OF SOFT DRINKS INDUSTRIES: A CASE STUDY OF CENTURY BOTTLING CO. LTD

ABSTRACT

The study was carried out at century bottling company with the purpose of determining the factors affecting the demand for inputs of soft drinks industries. The specific objectives included: to determine the factors influencing the demand of inputs, to examine the challenges faced by century bottling co. ltd in acquiring inputs for soft drinks and to assess the solutions to the challenges faced in acquiring inputs for soft drinks.

A descriptive study design was adopted for this study where both quantitative and qualitative methods of data collection were used. The study used questionnaire method and interview guide to collect data from 52 as the sample size having management/staff.

The study found out that the major factors influencing demand for inputs include; market share, changing societal concerns, attitudes, and lifestyles, prices of inputs, buyers demand for soft drinks and profitability in the soft drink industry.

Also, the challenges facing Century bottling company in acquiring inputs for soft drinks include; competition from other industries, increased customer complaints, inflation, high ordering costs, non availability of products and high transport costs.

Therefore, the study suggested that Century bottling Co. Ltd should forecast demand, strive to obtain higher brand loyalty in all other brands, purchasing planning, introduce more brands, meet consumer demands, increase the global market share and increase their marketing and advertising.

It was recommended that the organization should sustain or increase the global market share. This is very important to sustain because it is the source of the majority of their profits. If they lose global market share, their profits will decline dramatically.

CHAPTER ONE

INTRODUCTION

1.1. Background to the study

The beverage industry producing; carbonated, non-carbonated and nonalcoholic soft drinks, relies on retail businesses to provide end distribution points for customers, (Kyamutetera, April 2009; Ohairwe, 2008). These retailers, constituting over 80% of Uganda’s businesses, practice arm’s length vertical collaboration without optimizing information sharing, decision synchronization and incentive alignment, (Simatupang and Sridharan, 2004). This could explain their lucking performance in the Physical Distribution Service Quality (PDSQ) of their demand chains. Considering the necessity of soft drinks to the healthcare sector, the general community and the industry’s contribution to the economy as a source of revenue and employment, the manufacturers and distributors have failed to take advantage of their collaborations to ensure timely delivery, availability of products and development of a reliable physical distribution system ; Ntayi. et al (2009).

The demand chains are characterized with long delivery cycle times, non availability of products in certain parts of the country and increased customer complaints, (Durgavich, Nabirumbi and Ochaka, 2008; Rabinovich and Bailey, 2004). These indicators of inefficiency in the distribution system were also confirmed by the CEO – Century Bottling Ltd, Mr. Basil Gadios during an interview with the CEO Magazine, (Kyamutetera, April 2009) where he revealed that there was an actual need to improve the PDSQ of soft drinks to the far corners of the country.

Manufacturing is the use of equipments, tools and human resource to produce goods for sale and use purpose. Normally, the manufacturing industry can be divided into three classifications, high technology manufacturing which includes electronic equipments, communication machines and computers. Manufacturing industry includes clothing, metals processing, chemical, furniture, food and transportation equipments manufacturing.

In puts are resources such as people, raw materials, energy, information, or finance that are put into a system manufacturing plant to obtain a desired output. They are resources that a company requires in an attempt to generate an economic profit by producing goods and services.

Coca-Cola, the product that has given the world its best-known taste was born in Atlanta, Georgia, on May 8, 1886. Coca-Cola Company is the world’s leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 400 beverage brands. It sells beverage concentrates and syrups to bottling and canning operators, distributors, fountain retailers and fountain wholesalers. The Company’s beverage products comprises of bottled and canned soft drinks as well as concentrates, syrups and not-ready-to-drink powder products. In addition to this, it also produces and markets sports drinks, tea and coffee. The Coca- Cola Company began building its global network in the 1920s. Now operating in more than 200 countries and producing nearly 400 brands, the Coca-Cola system has successfully applied a simple formula on a global scale: “Provide a moment of refreshment for a small amount of money- a billion times a day.”

In order for soft drink companies to continue to grow and increase profits they will need to diversify their product offerings. So in order to compete with the substitutes industry, Coca-Cola has diversified from just carbonated drink industry to other substitute and so have other brands like Pepsi, Dr pepper/Snapple. Although processing is still considered low due to limited extraction of juice and packing, the positive strides witnessed in the last two years signal improvement as both juice production and farmers’ involvement has grown.

On the other hand, Century Bottling Company (CBC), manufacturers of Coca Cola products introduced Minute Maid juice brand after investing about Shs39 billion ($15 million) in a juice processing line at its Namanve plant. According to Mr Norton Kingwill, the CBC country manager, Minute maid was introduced as a result of a steady growth in fruit juice consumption and the need to widen the variety of soft drinks. “Coca Cola has been manufacturing Minute Maid in other countries.

1.2 Problem statement

Century bottling company is making huge investments in increasing manufacturing capacity while steadily increasing its marketing and advertising focus. Despite, the company registering an increase in profits over the years amidst challenges in various areas, the level of production in the industry has reduced which may be attributed to availability of inputs (Kyamutetera, 2009). Thus, the study sought to determine the factors affecting the demand for inputs of soft drinks industries.

1.3 Objective of the study

The overall objective was to determine the factors affecting the demand for inputs of soft drinks industries while the specific objectives include:

1. To determine the factors influencing the demand of inputs
2. To examine the challenges faced by century bottling co. ltd in acquiring inputs for soft drinks
3. To assess the solutions to the challenges faced in acquiring inputs for soft drinks

1.4 Research questions

1. What factors influence the demand of inputs in soft drinks industries?
2. What challenges are faced by century bottling co. ltd in acquiring inputs for soft drinks?
3. To assess the solutions to the challenges faced in acquiring inputs for soft drinks

1.5 Scope of the study

The study investigated the factors affecting the demand for inputs of soft drinks industries. More emphasis was put on identifying the factors that affect the demand for inputs and the challenges faced and solutions in acquiring inputs for soft drinks. The study was carried out at century bottling company. This is because it is a soft drink industry. The study was carried out for a period of three month in 2017. The study focused on factors that affect the demand for inputs for the past five years (2012-2016).

1.6 Significance of the study

To the government, the findings would help them identify areas that need improvement as regards to factors that affect the demand for inputs.  To policy makers; the study findings would be of great benefit in formulation and implementation of policies related to improving access to inputs for soft Drinks.  The outcome of this study is expected to benefit many manufacturing industries because it may highlight the problems manufacturing industries face due to limited access to inputs for production. The study would help other researchers carrying out the research on other related problems as references to factors that influence demand for inputs, challenges faced in acquiring inputs for soft drinks and the solutions to the challenges faced.