This wide market. As a company, Britvic UK

This report provides an evaluation of the current situation of Britvic PLC from both external and internal perspectives, focusing on the overall strategy, competition and macroenvironmental analysis of the company. Method of analysis was based on the information obtained previously and the findings proved Britvic’s competitive advantage in UK’s soft drink industry.

The report also identifies major areas for improvement such as its current marketing strategy and new product development and further investigation would be required for addressing these issues.

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Introduction:

Britvic PLC is one of the leading soft drink manufacturers operating in Great Britain, Ireland, France and Brazil. Across these markets Britvic has developed a strong range of brands, of which Robinsons, Tango, J2O, drench and MiWadi are widely loved and consumed around the world. As the company is growing fast and expanding to new territories outside Europe, particularly India and United States, it is impossible to cover all the aspects affecting such a wide market. As a company, Britvic UK is the largest supplier of still soft drinks and second largest of branded carbonated beverages in Great Britain, therefore, this market would be of particular interest of the report.

The story of Britvic started in 1930s as British Vitamin Products Company with a purpose to bring affordable source of vitamins to people through soft drinks. The company’s initial purpose was driven by the fact that the great Depression era had a negative effect on the overall health of UK population and there was an emerging need for Vitamin C fortified drinks. Over years, with a change of political and economic environment, the company acquired a new purpose of “making life’s everyday moments more enjoyable” and helping customers to make healthier choices.

Britvic acquired the first 20 years of bottling licence of PepsiCo’s famous brands in 1987 and became an exclusive supplier of Pepsi, 7UP, SoBe and Mountain Dew within the UK. Not only has this 30-year partnership allowed Britvic to expand its brand portfolio and increase sales but more importantly, it has become a stronger competitor to the most dominant carbonated drinks supplier in UK – Coca-Cola.

In 2004 Britvic got listed on London Stock Exchange and underwent an initial public offering in December of the following year. Becoming a public limited company and allowing individuals to freely buy and trade shares could have had several implications on the company. On one hand, involving new shareholders dramatically increases funds for growth and frees resources for research, expansion to new markets, new product development and contributes to the overall success of the business. Nevertheless, this decision must have placed a few restrictions on management team. To begin with, presence of shareholders puts a lot of pressure on company’s social responsibility. Secondly, management loses some control over business as there is a need of board approval and approval of a majority of shareholders for certain decisions. As most shareholders tend to assess business by its profitability, they tend to make their decisions based on short-term strategies rather than long-term goals. Although Britvic does not provide information about their shareholders’ rights, assuming that most PLC companies operate by these rules, the above information could be applied to Britvic.

Analysis of the current situation – External Perspective:

Strategy:

Britvic UK follows a clear strategy to become the most dynamic, creative and admired soft drinks company in the world. In order to bring this ambition into reality, the company is focusing on developing its existing markets as well as targeting new market segments. Recently, the company identified an increased need in water segment and took actions to bring their existing product – Ballygowan water to UK market. At the same time, Britvic is using product development strategy and through innovation, is bringing new product ranges to their existing kids and family market segments. Kids’ market segment in particular requires products to be highly differentiated in order for Britvic to remain competitive, therefore, the company is working on making selective acquisitions of new brands for this segment.

Key products

 

Britvic’s 17,600 drinks are sold every minute within the UK, most of which are Robinsons, Robinsons Fruit Shoots, J2O, Tango, Pepsi, 7UP, Mountain Dew and Lipton. Britvic mostly markets its brands as healthy alternatives, supported by the fact that most of the products are natural, added sugar-free and preservative-free. Britvic’s approach to marketing is putting consumers and their health first by offering reformulated drinks and educating population on healthy lifestyle.

According to the company’s decision in 2014, Britvic stopped manufacturing Robinsons drinks with added sugar, therefore, they are marketed as 100% natural beverages with no artificial colours or preservatives. This marketing campaign is particularly important as Robinson’s brand is targeting younger segment.

It can be assumed that Britvic favours and encourages campaigns for brands that offer healthier drinks over the ones that contain added sugar. As an example, the latest marketing campaign – “It’s my thing” features real kids doing what they are passionate about. Britvic is also known for sponsoring sporting events and championships such as Wimbledon. This approach makes Britvic stand out and position its brands as healthy and sustainable business.

Customers

Britvic targets a wide range of customers starting from kids, families and adults, to segmenting by lifestyle choices, occupation and nature. But their customer range goes beyond individuals, as the company is also supplying schools and restaurants. Britvic does not target one specific segment, instead, through franchising and partnerships, it adapts its marketing strategy by developing and acquiring new products.

Understanding customers changing needs and responding immediately plays a significant role on company’s success. The original problem the company was solving for customers was supplying people with affordable sources of Vitamin C. Today, however, as there no longer is a need for Vitamin C fortified drinks and consumers are getting more health-conscious, Britvic took up the responsibility to tackle global obesity issue by formulating drinks that are labelled as healthy. Furthermore, the current problem the company is trying to solve is providing tasty, high quality soft drinks for every occasion.

Britvic is not one of the companies that operates with a selling approach, instead, it focuses on building profitable customer relationships and changes with the dynamic customer environment. Whether it is bringing new products to the market or changing packaging, the company follows design thinking path and observes and engages with customers.  

Britvic raises awareness about its value proposition through advertising, social media and sponsorships. By sponsoring Wimbledon Championships, Britvic is sending a clear message that sports, and healthy lifestyle are associated with the company. Social media, on the other hand, enables Britvic to interact with the customers directly and deliver information about promotions in the fastest way.

Competitors

Britvic is the leading brand in soft still drinks within the UK and second in carbonated drinks. Main competitors of Britvic are CCEP (Coca-Cola European Partners) and Nichols PLC, out of which, Britvic and CCEP capture the biggest market share in UK’s soft drinks segment. As the industry is growing fast and there are a lot of differentiated products available on the market, there is less rivalry between these companies. Nevertheless, Coca-Cola, which is one of the most efficient and profitable manufacturer of soft drinks, is the leading supplier of carbonated soft drinks on the market.

Coca-Cola GB offers more than 80 drinks across 20 different brands and competes with Britvic in almost all segments. Coca-Cola’s product range includes sparkling and still drinks, waters, herbal drinks and sports drinks, some of which are sugar-free and low-calorie. In addition, CCEP makes 97% of their products in GB. Coca-Cola is a global company, however, CCEP markets itself as a local company in order for it to be appealing to the local market and takes sustainability very seriously. Like Britvic, CCEP focuses on customer needs and requirements and operates by putting marketing approach over selling approach. Therefore, CCEP is a very strong competitor.

Nichols PLC is a British company which also offers a wide variety of products, offering sugar-free and healthier alternatives to provide choice and accessibility to their customers. Their Panda range in particular targets kids and is labelled as natural and artificial-colour free. Just like Britvic, Nichols PLC puts social responsibility first and succesfully builds long-term relationships with suppliers and customer. The company operates an outsourced production model and manufacturing is undertaken by well-established and trusted partners.

These two major competitors put a lot of pressure on Britvic, however, the company has persevered and is keeping up through continuous innovation and new product development. One main source of its competitive advantage is the brand’s overall image. As the company started with the original intention to develop products with affordable sources of Vitamin C and helped customers through the Depression era, Britvic is viewed as a health-conscious business, which has a main focus – their customers wellbeing. Whereas Coca-Cola is usually associated with indulgence and often gets bad publicity due to health concerns associated with the range of carbonated drinks. Moreover, Britvic is a British company and local customers tend to favour local brands over international ones.

Another source of competitive advantage that Britvic has over Nichols PLC is breadth of portfolio. By partnering with PepsiCo, Britvic has gained a range of brands that are loved and consumed around the world.

Moreover, threat of new entrants in the UK market is low and it can be ignored. First of all, due to economies of scale, new entrants would initially suffer to compete against these three companies. In addition, legal barriers placed by FSA (Food Standard Agency), such as removal of several colouring additives and added sugar level reduction in drinks would make it difficult for new companies to keep up with competitors.

 

Strengths and Weaknesses – Analysis

Strengths:

Britvic’s brand portfolio is one of the most important factors that puts the company in advantage compared to other businesses. Other factors include trustworthy relationships with suppliers and distribution chain which the company has built over years. Britvic is also investing resources in training and motivation of their employees and building profitable relationships with customers to achieve high levels of customer satisfaction. Finally, the company is not driven solely by generating profit, but it puts a great importance on social responsibilities such as obesity and global warming issues. Thus, Britvic builds attracts loyal customers and captures customer lifetime value.

Weaknesses:

One of the weakest points of Britvic is its marketing strategy. The company is not taking enough measures to promote its strong brand portfolio, which could lead to its competitors taking over the market. In addition, more investment in research and development is required in order to compete with the leading player in the market – Coca-Cola. The only way to keep up with CCEP would be through product differentiation, as CCEP and Britvic both offer products in similar segments. Therefore, Britvic has to acquire differentiation focus strategy and stand out from its competitors.

PESTEL analysis

There are a number of external factors that may affect the way Britvic operates. To begin with, the upcoming sugar tax on soft drinks placed by the UK Government will have a major impact on Britvic’s product and brand range, even though most of the drinks produced by the company are low-sugar. Fluctuations in currency rate also has a great influence on company’s revenues.

Social environment and new trends, such as consuming less sugar can possibly lead to elimination of Britvic’s several brands that are still manufactured using added sugar. As for technological environment, Britvic could strongly benefit by interacting with its customers on more personalised levels.

Legal issues include FSA’s decision to remove a number of colouring additives. Similar rules might apply to artificial sweeteners, in which case Britvic would be required to reformulate some products.

In terms of environmental factors, Britvic is already reducing carbon emissions, and packaging waste in order to minimise operating impact on the environment.

 

Analysis of the current situation – Internal perspective:

Culture

Overall culture of Britvic can be described as sustainable and ethical. The company is known for raising awareness about healthy lifestyle and greenhouse gas emissions. Furthermore, the firm encourages employees to support local communities by offering three days of paid volunteering work in addition to drinks donations scheme.

From the internal perspective, Britvic highly values employee wellbeing and is committed to treating them fairly, regardless of their age, gender, race, disability and sexual orientation. Britvic is placing its leadership emphasis on the “staff” part of McKinsey’s 7S model. It always seeks employees with a wide range of skills and has made 40% female involvement in the business as their 2020 goal and addressed the issue on gender pay gap. For these reasons, Britvic has been named as a Great Place to Work with a trust index score of 72%.

Mechanisms

Britvic’s value proposition of “making life’s everyday moments more enjoyable” would have been impossible to deliver without strong supply and distribution chains. The company has a base of reliable suppliers of raw materials that help Britvic overcome supply shortages. Distribution networks which took years to build are also dependable and efficient, as they cover most of the market. In return, Britvic ensures to work closely with the supply and distribution chains and by employing audits and constant training, the company is dedicated to have a sustainable and responsible sourcing programme in order to monitor and manage the environmental and ethical risks along the supply chain.

Customer satisfaction

Britvic measures its ability to satisfy and exceed customer expectations by tracking customer opinions on Gfk, which is an independent market research institution. Gfk is also carries out a thorough shopper research covering all sub-conscious and conscious behaviors and informs Britvic about areas the company has to make improvements on. Based on the latest research, Britvic changed its strategy for in-store promotions.

Although there is not enough information about other tactics for measuring customer satisfaction, online surveys and social media can be assumed to be good ways for obtaining feedback on particular brands and the overall progress of the company. Every unsatisfied customer can contact Britvic using Twitter’s platform and get direct response from their customer service team. The company values both positive and negative feedback as it enables Britvic to keep up high standards.