Soft Drinks Company Report

 

 

 

Innocent Drinks Report

(1) Describe the organisational structure, ownership, and growth of ‘Innocent Drinks’ from its beginning to the present day

Innocent Drink is a large company based in the UK. The objective of the company is to provide natural raw fruit drinks to the public. The high-quality fruit content is 100% fruit, unlike most juice companies who do not sell 100% fruit juices. It is best known for its range of smoothies: the company has a 75% share of the UK smoothie market. Founded in 1999, Innocent now employs around 250 people and has yearly revenues of nearly £130 million. One in four UK houses bought an Innocent product in 2011.

They target children, adults, and senior citizens with their wide variety of natural drinks. The older people are being marketed by Innocent Drinks because they normally do not get marketed by juice companies. Innocent Drinks prides in targeting the older citizens as they do not get marketed by Tropicana for example. [1]

o   The Innocent Drinks company was found in 1999 by three Cambridge students who wanted to market natural drinks to the public

o   The co-owners are Adam Balon, Jon Wright, and Richard Reed

o   The first investor they got was Maurice Pinto, who was the only person who invested in Innocent Smoothies. Other investors and business moguls were not interested in their marketing ideas

o   Ever since its creation, Innocent Drinks to a nationally leading industry fighting off competition which were there before such as Tropicana

o   In 2009, Innocent Drinks were largely owned by Coca Cola, and later in today’s age, 2013, 91% of the company is owned by Coca Cola

o   One of the most notable founders, Richard Reed created a company which now has a £100 million turnover. He started from nothing earned many awards due to his business mind. He became ‘most renowned public speaker in business. He won Ernest and Young Entrepreneur of the Year. He also has directorship in Department of Energy and Climate change. Along with having a place in Oxfam’s development board

o   There was a competition between P&J and Innocent Drinks since the 1990’s. P&J being the company that produced smoothies before Innocent Drinks was beaten in the competition by its rival. Despite Pepsi took over P&J in 2004 causing it to have more sales in 2004 than Innocent Drinks, Innocent after being taken over by Coca Cola caused the P&J company to call it quits

PESTEL Analysis

PESTEL is an acronym for political, economic, social, technological, legal and environmental pressure that affect a firm’s operations. The external environment is critical in choosing the strategy top be adopted in given market.

Political Analysis

Political pressures cannot be ignored in the marketing of Coca Cola products. The government sets fines for a company that does not adhere to regulations under the FDA. Accounting Standards, taxation requirements, as well as environmental laws must be taken into account. Coca Cola continuously monitors the political trends to avoid fines of non-compliance with statutory requirements of each country (Lowe & Doole, 2005).

Economic Analysis

This encapsulates the local, national, and the world economy as a whole. Recession and inflation rates affect purchasing power of consumers. In economies that are doing well such as China, Brazil, the non-alcoholic beverages are doing well. In some other parts, the growth is somehow stagnant (Lowe & Doole, 2005).

Sociological Analysis

Changing lifestyles and attitudes in a market influences how Coca Cola operates in any market (Hawkins, 2010). Consumers above the age of 35 years are more conscious of what they eat. Baby boomers have entered into this category. Indeed, the non-alcoholic beverages industry is influenced by the choices that consumers make concerning their nutrition (Lowe & Doole, 2008). The demand for carbonated drinks suffers when people become more concerned about what they eat and drink.

Technological Analysis

Technological advancements continue to play a key role in the marketing of Coca Cola products. Technology has seen the advent of new products such as Diet Coke and Cherry Coke. However, many consumers continue to prefer the traditional taste of Coke. Despite this, the company continue to embrace technology as a way of boosting its marketing, production, as well as new product development initiatives (Lowe & Doole, 2008).

Legal Analysis

This explores the effects of the national and world legislation. Coca Cola reserves all the rights that reflect their business operations and product developments are patented (Lowe & Doole, 2008).

Environmental Analysis

Environmental laws must be adhered to by Coca Cola in its operations. All facilities are checked for compliance with government rues and regulations (Lowe & Doole, 2008).

SWOT Analysis (Innocent Drinks)

Innocent Drinks is strong brand. It has extensive brands that appeal to kids and the old alike. However, the products have a low customer base, when compared to other brands that have a global presence. To overcome this challenge, the company can expand to other markets while at the same time exploiting its present market fully. This strategy will put competitors like PepsiCo at bay (Lowe & Doole, 2005).

Strengths

Strong reputation

Extensive product range

High quality Brand

 

Weaknesses

Negative publicity

Low customer base

High cost

 

Opportunities

Availability of market

Health foods market

Market expansion

Threats

Competition from other player (PepsiCo)

 

Types of growth (organic or inorganic):

The growth of Innocent Company is attributed to the entrepreneurship spirit of three friends, the founders of the company and innovators of the brand. Innovative measures made the company stand better chances of communicating with customers. The fast recognition made the company develop a strong tie and loyalty of customers on their product; Innocent drinks products. One of the things so much interesting with innocent is that it was presented at the right time at the correct place, the UK despite the customers’ unfamiliarity with packed smoothies, but later developed a strong liking of Innocent drinks. The mode of growth of Innocent Drink Company can be said to be more organic than inorganic. The company started as a virgin company and grew from almost nowhere. The three friends combined efforts of producing and marketing their products (Chua, 2009). The consumers were emotionally moved by the brand and soon its expansion grew beyond the borders. The growth of Innocent Company is basically from its products despite the fact that Coca Cola, a multinational company, has of late acquired some greater percentage of shares with it. Since its establishment, Innocent has maintained a sustainable growth in terms of satisfaction to the customers’ needs. This is the reason as to why there has been a strong tie between the company and its customers (Sherman, 2010.). Companies, which are so new, and young have always faced the danger of failure in their initial years of establishment. This has proved the opposite with Innocent since it developed a drink brand which had the image of health and green unlike its competitors like McDonald which had unhealthy and inexpensive image. Innocent did not fail since it developed the strategy of market position which was distinct to differentiate its products from those offered by its competitors.

(2) List reasons for its growth up to 2005

Growth has in the innocent smoothie company has been supported by decent branding branding.  Visitors who have access to the website will see, Innocent has a unique and informal way of presenting itself and its eccentricity (which extends to woolly hats for smoothie bottles) (John Williams 2012) and has got the hearts and wallets of the British public. This branding has made it a popular drink product around the world, although marketing and communications are localised. “We always hire local people from the host nations, and we do adapt the branding in each country,” (John Williams 2012)

o   One of the reasons that Innocent Drinks is such a success can be seen in the case study. The fact that Coca Cola owns Innocent Drinks shows this. Coca Cola is arguably the largest and most popular soft drink industry, completely being a Monopoly in its market with only Pepsi being its realistic rival despite not being the same league as Coca Cola. Therefore, Innocent Drink can be marketed greatly by Coca Cola’s experience in advertising, marketing and strategies. This would make Innocent Drinks expand more as a company, and this can be seen by the fact that Innocent Drinks was the sponsor in the Olympics, mainly due to Coca Cola

o   Innocent Drinks was not the only natural smoothie related company. In fact, there was a similar company out before Innocent Drinks. Therefore, we need to know why Innocent Drinks grew better as a company and rid P&J (Pete and Johnny’s) as their competitor [2]

 

o   P&J were the first smoothies available in the UK. They were there in 1994, about four or five years older than Innocent Drinks. P&J was extremely popular before Innocent Smoothies. The company had multi millions in their budget for advertising, and used it accordingly. P&J created their advertising in a way, which made Innocent Smoothies seem like it stole some ideas from it. P&J sponsored many TV shows such as Survivor and spent more on advertising than Innocent spend. However, Innocent was becoming stronger than P&J. This is because P&J switched to juice from concentrate. This was one of their reasons of slacking in the juice market because this would now mean that Innocent Drinks is of better quality than P&J. Although Innocent Smoothies are more expensive, people would go for the real fruit drink as it is worth the economic leap. Not to mention the fact that P&J were not real people, the owners name were Smith and Milton. In addition, Innocent Drinks are known to give 10% of their profits to a cause, a charity. Which shows the human side of the company, so the public will think Innocent Drinks care about the world, not just profits. So the reason to Innocent Drink’s success and growth is due to its unique and outspoken way of delivering its entirety to the public in the most simple and humane way. P&J was however the dominant smoothie in 2004 which shows that Innocent Drinks grew a lot since teaming with Coca Cola. Pepsi took over P&J, which explains its success in 2004. This later encouraged Coca Cola to take over Innocent Smoothies and create a big competition in the juice market. However as soon as Coca Cola took over in 2009, P&J and was dismissed by Pepsi and was gone as an industry allowing Coca cola and Innocent Smoothies to take over

o   In 2004 the Innocent Drinks company introduced their charity in which they work with non-governmental organisations in order to rid poor countries off poverty. They did this by working with the farmers who produce their fruit and finding out what countries need help the most according to a chart made by the United Nations. Doing this caused the Innocent Drinks company to be a great industry in the eyes of the consumer as they care about the conditions of the people around the world.

(3) Explain the business strategy of the company from 2006

 

o   As soon as it reached 2006 onwards, Innocent Drinks began rising. Before, Pepsi and P&J were the smoothies’ leader in the market (2004) however, Innocent Smoothies began to grow and grow. The general public was mesmerised by the raw fruits and natural goodness within the drinks. Their advertising campaign was very simple and straight to the point which most viewers love

o   They produced large size packaging to market families, which come at a cheaper price than buying the bottles separately. This is because many families on low wages, or students cannot afford the drinks as they are substantially cheaper than most juice drinks, if not all. Although the quality defeats the price problems, the company had to market itself to families as they are the most valuable market

o   Its market success in 2009 was the main reason Innocent Drinks got to where it is at right now. After Coca Cola bought majority stake of the company, its success became more. Large scale advertising and even sponsoring the Olympics happened due to this. Although many customers of Innocent Drinks did want this to happen, the co-founders believed the company would rise to an even higher level than it was before.

o   In the case study we can see that from March the 1st 2013 Coca Cola owns 91% of the Innocent Drinks company. This would have a lot of negative comments because Coca Cola completely slowly taking over everything in the drinks market is nothing new. Coca Cola also took over Vitamin Water and Herbal Tea, which are American drinks. This shows that Coca Cola has a mission to work with healthy companies in order to get rid of its stereotype as an unhealthy industry in the drinks market. According to the three co-founders Innocent Drinks are still to be seen as a separate company to Coca Cola, which makes it hard to believe as they sold all their stakes and rights to determine what to say about the company.

 

 

References

Chua, M. E. 2009. Maximizing human capital in Asia: from inside out. John Wiley & Sons, New York

Hawkins, I. D. 2010.Consumer Behaviour, 11th Edition. Tata McGraw-Hill, New Delhi.

John Williams, 2012. Smoothie Growth[Online] Available at  <http://www.dailymail.co.uk/femail/article-2055681/Smoothie-sales-theyre-expensive-credit-crunch-Brits.html> Accessed  15th March 2012

Lowe, R. & Doole, I. 2008. International marketing strategy: analysis, development and implementation. Cengage Learning, New York.

Lowe, R. & Doole, I. 2005. Strategic marketing:decisions in global markets, Cengage Learning, New York.

 

Phil Hudson, 2012. Innocent Smoothie Report[Online] Available at <http://www.phil-hudson.com/example-business-report-innocent-smoothies>Accessed 20th March 2012

Sherman, A. J. 2010. Merger and acquisitions from A to Z. AMACON, New York.

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