Soft Drink Business Overview

The soft drink business focuses on the production and sale of non-alcoholic beverages, including carbonated sodas, flavored waters, energy drinks, and juices. These beverages are popular across all age groups, making them a staple in the global beverage market. Soft drink businesses range from small, independent operations producing craft sodas to large-scale companies dominating international markets with widely recognized brands.

Related: Checklist To Start A Business

How Do Soft Drink Businesses Make Money?

Soft drink businesses make money by manufacturing and selling beverages to consumers, distributors, and retailers. Revenue primarily comes from selling carbonated and non-carbonated drinks, which are marketed as refreshing, flavorful, and widely appealing.

Many businesses sell directly to retailers such as grocery stores, convenience stores, and restaurants, securing large-scale orders that provide stable income. For smaller operations, direct-to-consumer sales through local markets, vending machines, or e-commerce platforms are common ways to generate revenue.

Industry Statistics

The soft drink manufacturing industry, identified under NAICS code 312111 – Soft Drink Manufacturing, involves businesses that produce carbonated beverages, energy drinks, and sparkling waters. Here are some statistics that show what’s happening in the industry.

Soft Drink Industry Size & Growth: The industry generated $42 billion in revenue last year. Over the past five years, the industry experienced a 1.5% annual decline in revenue. Future projections suggest continued decreases in revenue as consumer preferences shift away from traditional carbonated beverages toward healthier alternatives. (IBISWorld)

Number of Soft Drink Businesses: There are 402 soft drink manufacturing businesses operating across various scales of production. The industry has three major players dominating the market: PepsiCo generates $18 billion in revenue, Keurig Dr Pepper produces $8.9 billion, and Monster Beverage Corporation contributes $2.7 billion. These companies control a substantial portion of the market share through their established brands and distribution networks. (IBISWorld)

Soft Drink Profit Margin: Net profit margins in the industry average around 20%, though they can vary significantly based on the scale of operations. Monster Beverage Corporation achieves the highest profit margin at 26.6%, while PepsiCo operates at 13.9%, and Keurig Dr Pepper maintains a 22.2% margin. (IBISWorld)

Costs To Start a Soft Drink Business

Starting a soda business offers two main production approaches – in-house production or working with a contract manufacturer (co-packer). Depending on your production method, initial costs could range from $8,000 to $75,000. In-house small-batch production typically costs between $15,000 to $75,000, while outsourced production through co-packers ranges from $8,000 to $35,000.

Here are some of the main costs to consider when starting a soda business:

In-House Production Equipment: Basic carbonation systems, filling equipment, and storage tanks for small-batch production can range from $8,000 to $25,000. This setup would allow you to produce several hundred bottles per day.

Production Space Setup: For in-house production, securing and preparing a space requires the first and last month’s rent, security deposit, and necessary modifications to meet health requirements. Initial costs typically fall between $5,000 and $20,000.

Initial Ingredients and Supplies: Whether producing in-house or outsourcing, you’ll need flavor extracts, sweeteners, bottles, caps, and labels. An initial stock could range from $3,000 to $8,000 for in-house production or $3,000 to $15,000 for a minimum co-packer order.

Recipe Development and Testing: Developing your formula, working with flavor houses, and conducting laboratory tests for shelf stability and nutritional analysis could cost between $2,000 and $6,000.

Co-Packer Production Run: If outsourcing, your first production run with a contract manufacturer, including ingredients, bottles, labels, and manufacturing costs, could range from $3,000 to $15,000, typically requiring minimum orders of 100-200 cases per flavor.

Food Safety Certification: Both approaches require proper certifications and product liability insurance. Depending on your production method and location, these could cost between $1,000 and $6,000.

These figures represent rough estimates, and actual costs will vary.