PESTEL Analysis of Innocent Drinks
The PESTLE analysis (Political, Economic, Socio-Cultural, Technological, Legal, Environmental) will analyse the macro framework within which Innocent operates (Johnson et al 2014; Angwin et al 2011).
These factors include issues such as the rulings and guidelines from government bodies on nutritional information on food and drink (Food and Drink Innovation Network 2016). These regulations require food and drink manufacturers to meet the standards provided by the EU for food safety and labelling. Other political factors in the UK include Brexit, which may have both direct and indirect impacts on Innocent in areas such as trade agreements and the potential opportunities, such as access to new markets, and threats, such as trade tariffs, which may arise from these. This may include the increased cost of ingredients which may occur if UK fruit farmers are unable to access the cheaper EU labour for fruit picking (O’Carroll 2016).
Economic factors which impact on Innocent drinks include the level of taxation which may impact, either positively or negatively, on the level of its profits. The economic situation in the UK can impact on the sales of Innocent smoothies and juices due to their premium price and the availability of cheaper substitutes. The uncertainty around Brexit has led to a weakening of the pound making raw ingredients more expensive to import and this may also impact on the cost of sales, if food prices increase. Europe is an important market for Innocent and it will be important that Innocent can continue to access this market (Burn-Callander 2015)
Socio-cultural factors which impact on Innocent includes changing consumer tastes, which helped Innocent become successful due to its ethos of natural ingredients and premium price (Britvic 2016). Innocent was also able to address a growing interest amongst consumers regarding health concerns and the willingness of consumers to pay a premium price for this (Britvic 2016). Consumers associate positively with Innocent’s brand and reputation due to the donation of 10% of its profits to charity and the knit a hat campaign which raises money for Age UK (Withers 2017).
Technological factors include new methods of production to include issues such as recycling. Innocent currently uses 100% recycled plastic in its bottles and is also further seeking to find new ways to reduce any negative impacts on the environment (Innocent 2017). This is particularly relevant with the current interest in the recycling of drinks bottles and the call for a deposit scheme to reduce the amount of plastic waste. Other technological factors include social media which links Innocent to its customers (Innocent 2017). Innocent has also helped develop an app to reduce the amount of water used by strawberry farmers in Spain (Leahy 2016).
Environmental factors are important due to the reliance of Innocent on natural ingredients and their commitment to sustainability. By reducing its carbon footprint, Innocent may assist in addressing the issue of climate change which may create adverse weather conditions and impact on harvests of fruit and vegetables. The UK has signed up to the Paris Agreement and this will impact on Innocent’s organisation in terms of how they address their impact on climate change in areas such as production. However, by continuing to improve its manufacturing processes and use of resources, Innocent can offset any potential costs by reducing areas such as wastage and water use. This can include research, collaboration and education along its supply chain (Leahy 2016).
Innocent must comply with the legal framework of the UK including taxation, health and safety and food manufacture laws (Food and Drink Innovation Network 2016). The partnership with Coca Cola in 2009 was subject to UK competition laws. The UK legal context may face substantial changes due to Brexit and this may include the amendment, abolition or retention of EU legislation relating to employment rights and health and safety. Further uncertainty has been created by the proposed soft drinks levy which may impact more on Coca Cola than Innocent, due to their use of sugar in their products (Britvic 2016). Further legal issues include areas such as financial reporting and corporate governance.
- Angwin, D, Cummings, S and Smith, C (2011) The Strategy Pathfinder: Core Concepts and Live Cases, (2nd ed), Chichester: John Wiley and Sons Ltd, Chichester
- Britvic (2016) ‘Britvic Annual Report’ [online] Available from http://www.britvic.com/~/media/Files/B/Britvic-V3/documents/pdf/presentation/2016/Britvic_AR_2016.pdf
- Burn-Callander, R. (2015) ‘Europe finally develops a taste for Innocent’ Telegraph. April 11 [online] Available from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11528922/Europe-finally-develops-a-taste-for-Innocent.html
- Food and Drink Innovation Network (2016) ‘Loyalty and values: a technically strong combination at innocent’ [online] Available from http://www.fdin.org.uk/2016/05/loyalty-and-values-a-technically-strong-combination-at-innocent/
- Innocent (2017) ‘Being sustainable’ [online] Available from http://www.innocentdrinks.co.uk/us/sustainability
- Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regnér, P. (2014) Exploring Strategy, Text and Cases (10th ed.) Harlow: Pearson Education Ltd
- Leahy, S. (2017) ‘Innocent Drinks app helps Spain’s strawberry farmers slash water use’ Guardian, May 27[online] Available from https://www.theguardian.com/sustainable-business/2016/may/27/innocent-drinks-app-helps-spain-strawberry-farmers-slash-water-use
- O’Carroll, L. (2016) ‘British strawberries could be wiped out by Brexit, farming leaders warn’ Guardian, July 20 [online] Available at https://www.theguardian.com/uk-news/2016/jul/20/brexit-farm-labour-shortages-fruit-vegetable-harvests-national-farmers-union
- O’Reilly, L. (2014) ‘How Innocent and Coke have influenced each other’ Marketing Week, February 12, [online] Available from https://www.marketingweek.com/2014/02/21/how-innocent-and-coke-have-influenced-each-other/
- Withers, I. (2017) ‘Innocent gets a health kick as sales top Tropicana’ Telegraph, July 2 [online] Available from http://www.telegraph.co.uk/business/2017/07/02/innocent-gets-health-kick-smoothie-sales-top-tropicana/