1. The soft drink beverage industry in the U.S. incorporates all the manufacturing of carbonated beverages, sweetened and unsweetened, fruit juices, bottled water, ready-to-drink coffee, and other non-alcoholic drinks. Letâs do a little industry analysis; the numbers here a generally reflective of market conditions in recent years, with minor adjustments, but this exercise should still be considered âhypotheticalâ (recent mergers and other market changes may also have had an impact on industry structure).
Suppose annual industry sales are $84 billion. In this industry there are three leading companies, a couple of smaller competitors, and a number of even smaller niche firms. The top five companies and their revenue data are:
Company
Revenue
Coca-Cola Company
$ 35.7 billion
PepsiCo
$ 22.7 billion
Dr Pepper/Snapple Group
$ 14.5 billion
Cott Corporation
$ 3.4 billion
National Beverage
$ 2.5 billion
Others (in total)
$ 5.2 billion
Industry Total
$ 84.0 billion
Calculate an accurate estimate of the Herfindahl-Hirschman Index for this industry. (You should be able to establish an âupper boundâ even though you donât know the individual market shares of the smallest firms, which wonât have much effect in any case.)
HHI =
1. The soft drink beverage industry in the U.S. incorporates all the manufacturing of carbonated beverages, sweetened and unsweetened, fruit juices, bottled water, ready-to-drink coffee, and other non-alcoholic drinks. Letâs do a little industry analysis; the numbers here a generally reflective of market conditions in recent years, with minor adjustments, but this exercise should still be considered âhypotheticalâ (recent mergers and other market changes may also have had an impact on industry structure).
Suppose annual industry sales are $84 billion. In this industry there are three leading companies, a couple of smaller competitors, and a number of even smaller niche firms. The top five companies and their revenue data are:
| Company | Revenue |
| Coca-Cola Company | $ 35.7 billion |
| PepsiCo | $ 22.7 billion |
| Dr Pepper/Snapple Group | $ 14.5 billion |
| Cott Corporation | $ 3.4 billion |
| National Beverage | $ 2.5 billion |
| Others (in total) | $ 5.2 billion |
| Industry Total | $ 84.0 billion |
Calculate an accurate estimate of the Herfindahl-Hirschman Index for this industry. (You should be able to establish an âupper boundâ even though you donât know the individual market shares of the smallest firms, which wonât have much effect in any case.)
| HHI = |
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2. The soft drink beverage industry in the U.S. incorporates all the manufacturing of carbonated beverages, sweetened and unsweetened, fruit juices, bottled water, ready-to-drink coffee, and other non-alcoholic drinks. Letâs do a little industry analysis; the numbers here a generally reflective of market conditions in recent years, with minor adjustments, but this exercise should still be considered âhypotheticalâ (recent mergers and other market changes may also have had an impact on industry structure).
Suppose annual industry sales are $84 billion. In this industry there are three leading companies, a couple of smaller competitors, and a number of even smaller niche firms. The top five companies and their revenue data are:
| Company | Revenue |
| Coca-Cola Company | $ 35.7 billion |
| PepsiCo | $ 22.7 billion |
| Dr Pepper/Snapple Group | $ 14.5 billion |
| Cott Corporation | $ 3.4 billion |
| National Beverage | $ 2.5 billion |
| Others (in total) | $ 5.2 billion |
| Industry Total | $ 84.0 billion |
In the guidance given by the Department of Justiceâs Antitrust Division (DOJ) and the Federal Trade Commission (FTC) in their âHorizontal Merger Guidelines,â would this industry be considered highly concentrated, moderately concentrated, or unconcentrated?