US consumption spending accounts for over two-thirds of the country’s gross domestic product. A favorable trend in consumer spending on non-durable goods is a positive indicator for the non-alcoholic beverage industry.
Coca-Cola and PepsiCo’s wide distribution network gives them significant pricing power. Carbonated soft drinks have similar prices due to the intense competition in the industry.
Soft drinks contain considerable amounts of sugar, which is a form of carbohydrate. Consumption of excess sugar releases a hormone called dopamine, which induces pleasure in the brain. Caffeine, another key ingredient, stimulates the nervous system.
The non-alcoholic beverage industry broadly includes soft drinks and hot drinks. In the US, soft drinks, or liquid refreshment beverages, lead food and beverage retail sales. In this series, we’ll focus on the soft drinks market.
Qualcomm’s (QCOM) stock performed poorly compared to the company’s peers in the semiconductor industry. As the chart below shows, Qualcomm’s stock has increased by only 2% year-to-date.
These devices include connected home devices such as air conditioners, washers, and refrigerators, security systems such as alarms and cameras, and energy devices such as thermostats.
Qualcomm (QCOM) recently acquired Wilocity to boost its portfolio of mobile chipsets. Wilocity operates high-speed wireless technology WiGig, which works at a higher frequency and promises faster data speeds.
Qualcomm expects it to further decline between 3% to 5% in fiscal 2015. So why is Qualcomm expecting its chipsets average pricing to continue to decline? Let’s find out.
Earlier in this series, we’ve been discussing Qualcomm’s (QCOM) dominance in the mobile chipset business. Such is Qualcomm’s dominance that Texas Instruments (TXN) had to exit this business in 2012, while Broadcom (BRCM) exited earlier this year.
In the previous part of this series, we discussed the potential growth prospects of high-speed LTE technology. Qualcomm (QCOM) is set to benefit the most from this transition simply because it dominates the LTE chipset market.