PESTLE analysis is a framework of six different factor used in the strategic management of a company. It include a wide range of factor which would affect innocent drinks.

 

Political:Trade laws and taxes policy make political influences to innocent drink. The Department of Health first recognised that smoothies can count towards your food and vegetable intake in 2006. Especially since Innocent smoothies provide two of your five a day per portion and meet government guidelines to keep people healthy. However in 2013 and 2014 news articles (Telegraph 2014) and other organisations as part of reducing peoples sugar levels have looked at the smoothie and fresh juice market. Action on Sugar, a campaign group called for the Department of Health and Food Standards Agencies to remove these products from your five a day due to the 'horrifying sugar levels’ they often contain. Other political troubles Innocent have faced in taxation. Innocent have argued that their drinks are 100% fruit therefore should not pay the full 20% VAT since fruit is not taxed in the UK. Companies like PepsiCo have also complained to advertising standards agency about innocent drinks advertisements as well as other competitors in 2011 regarding the false statements of their ingredients in juices and smoothies. So much so, that famously Innocent received a letter from the Trading Standards Officer , concerned about a comical joke within their labelling, advertising it contains ‘2 plump nuns’ to which the TSO replied ‘you must either remove the reference to ‘plump nuns’ on your labels or start adding them in your fruit juice’. (Germain 2009)

 

Economic:Innocent drinks also suffered greatly during the global recession on 2008 due to their premium product and price, it’s the first thing people cut out when budgets are tight. Sales of Innocent smoothies decreased by 29% in 2009. The recession force them to slow down their expansion of products and across the EU. During these years innocent were unprofitable, and decided in order to survive and expand they needed investment. This came from Coca Cola over a series of years they provided Innocent with more capital for a stake in the business. These investments have helped them to expand their product range as well as their distribution across the Europe. This has also reduced the pressure of price rises, which means they have been able to keep it the same for the past few years. Benefited by the economic growth in UK juice drink market, Innocent have made a turnover increase from 150m to 196 m million in the year of 2013. However, food price inflation has affected the cost of production and put pressure in the price of its product, decreasing the profit it each on each product year on year. Although the sales overall has increased, the smoothie sales are down 15.5% year on year to 94.8 million pounds. Therefore, in 2013, innocent drinks launched a new product which called super-smoothies. They believe that the new product could boost 30 million pounds sales in two year in order to recover from the sales decline.

 

Social:  Innocent have built an excellent philanthropic ethos within the business, giving 10% of its profits to their foundation every year in order to help the starving in third world countries and the elderly in this country. They also ensure a good working condition for fruit picker and help the people in their supply chain by offering them a fair wage and putting resources into getting the best out of their crops. Innocent have seen the rise in health awareness in the UK and abroad by the general public and governments alike and have been able to emphasis the health benefits of their products contributing to their daily fruit and vegetable intake. It’s due to this recognition of health awareness that Innocents consumers are willing to pay the a higher price for a premium product, containing a 100% fruit .Therefore they continue to provide more ranges in their product for consumer to choose from. It’s these factors which makes the brand image for innocent drinks which is healthy and natural.

 

Technological: Innocent is currently using the 100% recycled plastic bottle within their smoothies and juices. Their bottle labels are also made from 25% recycled paper. Innocent have increased supply chain efficiency though software-as-a-service system  which makes them more productive. The innovative idea such as the design of the recycled label making it look more natural is one of the key reasons of why the brand is so popular. 

 

Legal: Since Innocent have a fair amount of employees in the UK and abroad as well as in their supply chain, one legal factor that they need to be aware of is employment law, Innocent must ensure the working conditions and over time salary without breaking the law, as seen in the news by Apple recently, as a company gets bigger, and you outsource a lot of your work to third world countries, this can be increasingly difficult to maintain. Taxes, as denoted in the economic paragraph are also a legal concern. Lastly, due to competitive regulation, it is restricted to make more than a portion of market in order to ensure a fair trade environment and prevent oligopoly and monopolies of markets. With little competitors this could be increasingly difficult for Innocent to maintain.

 

Environmental: Innocent has introduced ways to reduce wastage and encourage recycling throughout their activities. Besides, due to the communication with customer, such as big knit campaign and blog.                       They build a friendly image to public and they can receive customer feedback and maintain                             customer values. On the other hand, Innocent drinks set a minimum standard of existing                           certification schemes; they deal with the Sustainable Agriculture Initiative and their 50 member               companies in order to create a common standard for sustainable farming systems. In 2013, they                          used the Sustainable Agriculture Initiative’s checklist as the basis for the new innocent minimum             standards throughout their supply chain. They also require their suppliers to offer at least minimum wage to their staff and of course no child employees. To the environment, there must be no land clearing and must protect the watercourses without pollution. In some case, when Innocent drink’s supplier cannot meet those requirements, they will operate with them to solve the problem.

 

Conclusion:

In conclusion, Innocent drinks have established a healthy, friendly and loved brand image to the consumer. It is hard to find a similar brand image product in the market which this image lead them to the success. The branding of their product and the label in the bottle is a kind of a revolution of healthy drinks or even drinks market. Other drinks product have now tried to replicate this idea into their products. The trend is not just the innovation for their innocent drinks but the whole drinks market. As outlined above, Innocent face many challenges in dealing with food, as it is an industry full of red tape, but they seem to be coping with a lot of the issues, and tend to avoid large news scandals. Their green and charitable efforts are noble and one that will see them in good stead as they continue to expand.