Coca-Cola and Pepsi are both very profitable soft drinks. Coke and Pepsi have segmented the soft drink industry into two industries - production of soft drink syrup and manufacturing/distribution of the soft drinks at the retail level. Inputs for these products include corn syrup, bottles/cans and soft drink syrup. Coca-Cola and Pepsi produce the syrup themselves and purchase the other inputs. They then enter into exclusive contracts with independent bottlers to produce their products. Use the five forces framework and your knowledge of the soft drink industry to explain how Coca-Cola and Pepsi are able to retain most of the profits in this industry.

(Background information: A bottling company is a commercial enterprise whose output is the bottling of beverages for distribution. A bottler is a company which mixes drink ingredients and fills up cans and bottles with the drink. The bottler then distributes the final product to wholesale sellers in a geographic area. Large companies like The Coca-Cola Company sell their product to bottlers such as the Coca-Cola Bottling Co., who then bottle and distribute it.)