How to Start a Soft-Drink Business

by Catherine Capozzi; Updated September 26, 2017
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The beverage industry is one of the most competitive due to the low startup costs and the few barriers to entry -- anyone can start a soft-drink business, but few can do well. Walk into any grocery store and you will be inundated with choices. Sometimes the beverages vary in flavor, like root beer and orange soda. Other times, the drinks seem to be different only in packaging, like Coke and Pepsi. How well your business will fare in this industry depends on how well you plan your business model.

Step 1

Select your niche. Some drinks wish to stand out as a fun, trendy treat, while other drinks claim improved immunity and overall health. Decide on your beverage’s angle.

Step 2

Identify competitors. Research the brands that have a beverage similar to your own. Will you be fighting for a market share from Fanta’s fruity flavors? Or will your root beer flavor be competing against IBC and Barq’s? Identifying competitors allows you to analyze and learn from their strengths -- and avoid their weaknesses.

Step 3

Crunch the numbers. Before placing any orders for production, you must know how much each unit will cost and, consequently, the profit margins that derive from the per-unit cost. If your manufacturing will be on a small scale, you may have to pay more (and therefore ask your customers to pay more) for the beverage. On the other hand, if you manufacture more units for less money but do not know how many you will sell, you may be left with excess soda.

Additional figures to know are the cost of overhead (such as rent and salaries) and equipment.

Step 4

Target your audience. How you package your product will depend on your demographics. A younger audience, for example, will want bold fonts and colors (like Monster Energy Drinks), while an older demographic will want a basic palate with a classic font (like Schweppes Ginger Ale). According to Seattle Business Monthly, Jones Soda owes its initial success in part due to its marketing efforts, like labeling “slice of life” images submitted by customers.

Step 5

Get all necessary patents and copyrights. If your beverage is widely successful, imitators will naturally follow suit. Protect your business by getting proprietary rights to your recipe, design, and slogans.

Step 6

Test the product. Though you may think acai berries will sell well as a soda flavor, the beverage may taste terrible to most consumers. Before ordering large quantities of your drink, test your product first. If you plan on going international, test in those markets as well. This is critical to brand-name recognition as well.

As Michael D. White explains in "A Short Course in International Marketing Blunders," Snapple’s attempt to penetrate the Japanese market is one example of a business venture that went awry due to lack of testing. The Japanese thought the beverage was too syrupy and its colors were “dirty.”

Step 7

Pitch to distributors. Stores must be given a compelling reason to add your product to their shelf -- especially in the prime shelving area right at the consumer’s eye level. Meet with store executives and convince them to place your product. Send sampling teams and coupons to customers to entice them to try your drink.

About the Author

Since 2008 Catherine Capozzi has been writing business, finance and economics-related articles from her home in the sunny state of Arizona. She is pursuing a Bachelor of Science in economics from the W.P. Carey School of Business at Arizona State University, which has given her a love of spreadsheets and corporate life.

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