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A market share model of the beverage container industry
Abstract
The U.S. beverage container industry is a highly competitive industry in which firms compete for market share. This study has two purposes. The first purpose of this study is to show the relationship between beverage container market share and container-specific variables, which affect beverage container demand. The second purpose of this study is to show the nature of beverage container competition in terms of the container-specific variables. To show the relationship between market share and container-specific variables, this study developed a model of the beverage container industry. This model was a multiplicative competitive interaction (MCI) attraction model. The theoretical basis of the model is the attraction of beverage container "consumers," consisting of beverage companies and end consumers, toward competing containers. The model was applied to the two principal markets of the beverage container industry: the beer market, and the soft drink market. The competitors in each market were aluminum cans, steel cans, one-way glass bottles, returnable glass bottles, and plastic bottles (soft drink market only). The explanatory variables used in each model were raw material prices, primary product prices, aluminum can recycling rate, and scrap prices. The models were estimated using ordinary least squares, applied separately to each container equation. To show the nature of beverage container competition, this study used market share elasticities. These elasticities were calculated from the parameter estimates of the beer and soft drink market models, and from average market shares. This study found that beverage container competition is different in the beer and soft drink markets. In the beer market, the market share responses of aluminum cans and glass bottles are similar. In the soft drink market, the market share responses of aluminum cans and plastic bottles are similar. Also, the market share responses of steel cans and glass bottles are similar. Of the models' variables, steel sheet prices and aluminum ingot prices have the largest impact on beer container market share. In the soft drink market, steel sheet prices and aluminum can recycling have the largest impact.
Subject Area
Management|Marketing|Business administration
Recommended Citation
McGill, John Joseph, "A market share model of the beverage container industry" (1992). Doctoral Dissertations Available from Proquest. AAI9219466.
https://scholarworks.umass.edu/dissertations/AAI9219466