Overview of Innocent Drinks’ growth

Table of Contents

Overview of Innocent Drinks3

Analysis on the business3

2.1 Competitive intensity of Soft Drink Industry3

2.2 Sustained competitive advantage of Innocent Drinks6

Reflection on team work8

Presentation experience10

Another example Green & Black’s with similar challenges11

Conclusion12

References13

Executive Summary

This report is an individual reflective report with the attempt to reflect on a personal gains and learning in a group assignment. This report will be divided into five major parts. The first part will give a brief overview on the target company called Innocent Drinks. The second part will utilize a set of relevant models, such as Porter’s Five Forces Model and VRIO framework to identify the challenges and opportunities faced by Innocent Drinks. The third part will briefly reflect on the team work and its influence in my future career development. The fourth part will reflect on my presentation experience and what I have learnt from this presentation experience. The last part will identify how another company called Green & Black’s deals with similar challenges in its growth.

Overview of Innocent Drinks’ growth

Innocent Drinks is a company which is mainly engaged in manufacturing and selling smoothies and juices. In 1998, it was initiated by Rich, Adam and Jon who were university schoolmates. They sold their first smoothies from a stall at a music festival. Since its inception, Innocent Drinks has gradually developed into a big worldwide corporation with a diversified product portfolio (Innocent Drinks, 2022). In 2009, Coca Cola began to invest Innocent Drinks. In 2013, Coca Cola increased its shares in Innocent Drinks to more than 90 percent (Innocent Drinks, 2022). At present, Innocent Drinks has already grown into a giant enterprise with dominant position in European juice market, which can be manifested in the following statistics.

In its financial performance, as shown in Appendix 1 taken from its 2019 annual report, its group net revenue has rapidly risen from only 0.4 million in 2000 to as high as 431.8 million in 2019 (Innocent Drinks, 2019). In addition, Innocent Drinks also gradually increases its market share in European chilled juice market. As shown in Appendix 2, the proportion of Innocent Drinks in European chilled juice market increased from 19.6 percent in 2018 to 21.4 percent in 2020 (Innocent Drinks, 2020).

In its sustainability, since its inception in 1998, especially after becoming a B corporation member in 2018, it has striven to improve its sustainability performance. In community, as shown in Appendix 3, its funds donated for charity purpose maintained approximate ￡1.6 million in 2018 and in 2020 and its products donated to good causes sharply rose from 520,070 in 2018 to 1,134,501 in 2020 (Innocent Drinks, 2020). In environmental emissions, Innocent Drinks also takes some effective measures to reduce its carbon footprint. As shown in Appendix 4, its direct green house gas (GHG) emissions decreased from 1,947 el in 2019 to 474 el in 2020 and its indirect GHG emissions also reduced from 226,611 el in 2019 to 222,716 el in 2020. It increases recycled content from 27% in 2018 to 31 % in 2020 (Innocent Drinks, 2020). All of these statistics indicates that Innocent Drinks has already achieved excellent and significant performance in sustainability since its inception.

Analysis on the opportunities and challenges faced by Innocent Drinks

This part will utilize Porter’s Five Forces Model, PESTEL model and SWOT model to identify the opportunities and challenges faced by Innocent Drinks and investigate its internal strengths and weaknesses under such circumstance.

Porter’s Five Forces Model

Porter’s Five Forces Model hypothesizes an industry competitive intensity can be measured by five variables: bargaining power of buyers, bargaining power of suppliers, threat of substitutes, threat of new entries and industry rivalry. The industry competitive intensity will eventually affect the profitability of an industry. The higher the industry competitiveness is, the lower the profitability of an industry is (Grundy, 2006).

Innocent Drinks is an England-based enterprise which is mainly engaged in manufacturing and selling smoothies and juices. As a consequence, it can be classified into the soft drink industry. The competitive intensity in British soft drink industry is high which can be manifested based on the following analysis through Porter’s Five Forces Model.

Bargaining power of buyers:

As shown in Appendix 5, irrespective of the dominance of Innocent Drinks in British ready-to-drink fruit and vegetable juice and smoothies market, there are still many other brands for consumers to choose, such as Tropicana Juices, Tesco and Sainsbury’s which also have high brand awareness and wide range of users (Statista, 2018). In addition, consumers can have other soft drinks choices, such as bottled water and carbonized drinks. From this perspective, the bargaining power of consumers is big.

Threat of substitutes:

In accordance with British Soft Drinks Association, there are a lot of soft drink substitutes, such as bottled water, carbonates, dilutables and sports & energy drinks. In addition, with the increase of the awareness in health, people pay more attention to the sugar intake from the drinks and tend to choose some healthy drinks, such as water. This undoubtedly becomes a significant barrier to the development and growth of 100% juice (including smoothies and coconut water). As shown in Appendix 6, the market share of 100% juice in total soft drinks market gradually declined from 7.5 percent in 2014 to 6.5 percent in 2019. The volume also decreased from 1,012 M Litres in 2014 to 891 M Litres in 2019 and its value M GBP decreased from 1,828 in 2014 to 1,591 in 2019 as well (The British Soft Drinks Association, 2020).

However, by contrast, the market share of bottled water has increased rapidly. As shown in Appendix 7, the market share of bottled water in total soft drinks market has rapidly risen from 16.9 percent in 2014 to 20.6 percent in 2019. Its volume has also increased from 2,263 M Litres in 2014 to 2,811 M Litres in 2019 and its value M GBP has risen from 1,319 in 2014 to 1,635 in 2019 as well (The British Soft Drinks Association, 2020). Such comparison between 100% juice and bottled water can clearly indicate that the threat of substitutes is high.

Bargaining power of suppliers:

Suppliers have little power as Innocent Drinks is a giant enterprise with large volume of need. From this perspective, it has high bargaining power over the suppliers.

Industry rivalry:

The strong competitor of Innocent Drinks is PepsiCo which also has many competitive capabilities and resources and high brand awareness.

The abovementioned analysis can be concluded in Table 1:

Table 1: Porter’s Five Forces Model Analysis of Innocent Drinks

PESTEL model

PESTEL model constituted by six variables: political, economic, social, technological, environment and legal (Ulubeyli et al, 2019). In the case of Innocent Drinks, social and economic environment will be mainly stressed.

Social environment:

At present, with the rise in the awareness in sustainability, those stakeholders in business operations begin to pay more attention to whether enterprises can perform in an ethical and sustainable manner. As for those sustainable enterprises, these stakeholders will present more supports and preferences. Under such social circumstance, corporate sustainability will have direct and significant impacts in organizational performance (Eccles et al, 2014). Eccles et al (2014) also stress that high sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information. In light of this, those high sustainability companies significantly outperform their counterparts over the long term no matter in terms of stock market or in accounting performance.

Such social environment is consistent with the organizational strategy established by Innocent Drinks to become a sustainable enterprise. Innocent Drinks is recognized as a Certified B Corporation which is named for Best For The World. A B Corporation is assessed by B Lab in terms of the performance of each corporation in its contribution to five aspects: community, customer, environment, governance, and workers. Only those global top 5 percent in their corresponding size group can be perceived as a Certified B Corporation (B Lab, 2021). As shown in Appendix 8, Innocent Drinks get a better performance in five aspects: governance, environment, community, customers and workers. Its score rose from 14.6 in 2018 to 15.1 in 2019 in the variable of governance, from 19.9 in 2018 to 23.2 in 2019 in the variable of environment, from 22.7 in 2018 to 25.3 in the variable of workers and slightly decreased from 35.1 in 2018 to 34.2 in 2019 (Innocent Drinks, 2019). This statistics indicates that Innocent Drinks obtains a good performance in all of these variables and establishes positive relationship with the stakeholders. For instance, since 2003, Innocent Drinks has been committed to using recycled plastic with attempt to reduce its carbon footprint. So far, it has already reduced the use of plastic by up to 2500 tonnes (Innocent Drinks, 2019). The consistency of Innocent Drinks’ sustainability strategy to the social environment will undoubtedly contribute to Innocent Drinks’ financial performance. As highlighted by Rodriguez et al (2002), from the resource-based perspective, the strategy of sustainable development will contribute to the businesses’ ability to create value and become a vital source of sustained competitive advantage.

Economic environment:

Since FYE 2013, median income has increased by 2.1 percent annually as of FYE 2020. In 2020, the average household disposable income (after taxes and benefits) increased by 2.3 percent to ￡30,800 compared to FYE 2019 (Office for National Statistics, 2020). With the rise in the economic capability of the consumers, they begin to pursue those products with high quality with less price sensitivity. Such trend is also consistent with the strategy adopted by Innocent Drinks. Innocent Drinks puts large investment to increase its product value. For instance, as mentioned in its 2019 annual report, Innocent Drinks realizes the importance of its product nutrition, health and quality in its sustainable development. As a consequence, it strives to shape its product as healthy drinks with lower calories, lower sugar and more fibre. In addition, it is also committed to using natural source of fibre (Innocent Drinks, 2019).

Environment:

Green house gases and water pollution arising from soft drink production and consumption exert negative influences in environment. Under such circumstance, the public and the government begin to pay more attention to the environment sustainability.

Legal environment:

The Food and Drink Federation’s Ambition 2025 outlines the target of the soft drink industry to encompass environmental sustainability as its core and major issue through a set of transformational changes. The British Soft Drinks Association also develops the Waste and Resource Action Programme (WRAP)’s Courtauld Commitment 2025 to reduce water usage by 20% and reduce carbon emissions (Mullan, 2020). Such legal environment increases the obstacle for some new entries and is beneficial to the growth of sustainable enterprises like Innocent Drinks.

The abovementioned analysis can be concluded in Table 2:

Table 2: PESTEL model analysis of Innocent Drinks

SWOT Model Analysis

The abovementioned analysis can manifest the opportunities, Threats, weaknesses and strengths of Innocent Drinks as shown in Table 3.

Table 3: SWOT model analysis of Innocent Drinks

3. Team Work

Our team was made up of five members, each explicitly assigned a different task, all fulfilling the requirements of preparing for the presentation. We followed the Belbin Model in an effort to create balanced roles, where a well-balanced team was created based on nine team roles: creating ideas, exploring opportunities, clarity of goals and decision making, driving the team forward, support and cooperation, discerning judgment, implementation, attentiveness to detail, and technical skills and knowledge (Aritzeta, Swailes, & Senior, 2007). Belbin believes that teams must be formed in such a way that they have a healthy mix of team duties (Smith, Polglase, & Parry, 2012). Nonetheless, we faced complications in terms of assigning roles and ensuring that these roles were not only fair but also balanced. We used a criterion based on individual choice for tasks and roles and adjoined some complex tasks together for easier completion.

The team forming process was fairly regular and in line with Tuckman’s five-stages of developing a team (Cresswell-Yeager, 2021). Our team went through forming, storming, norming, performing, and adjourning. The forming stage was preceded by a phase of introduction and try to get to know one another. During this period, there was a great deal of uncertainty, and people were yearning for direction and guidance. To make it through the storming phase was perhaps the most challenging and important step of the process. The period was characterized by competitiveness as distinct personalities began to take shape. The team’s performance suffered at this stage as a result of the energy used on useless tasks. Subgroups and cliques evolved surrounding strong characters or sections of consensus as a result of the disagreements over team objectives and aims. During the norming stage, agreement was reached on the identity of the leader or leaders, as well as the duties of individual members. Interpersonal conflicts were beginning to also be addressed, and a feeling of coherence and togetherness was beginning to emerge. Team performance improved as members learnt to work together. When it came to the performing stage, agreement and collaboration were extremely well-established, and the team had reached a high level of maturity, organization, and efficiency. There had been a clear and steady framework in place, and all of the team members were dedicated to the task. Problems and disagreements continued to arise, but they were resolved in a productive manner. The majority of the team’s objectives were met during the adjournment stage, and the key objectives were the completion of last tasks and the documentation of the team’s efforts and accomplishments.

This group work experience is beneficial to my future career development as I intend to be a part of a well-functioning team. My aspirations are to work for a company in order to gather efficient skills and knowledge and later go into private business. The present group work experience will help me develop a better understanding of what I should pay attention to in team collaboration. Team collaboration, as I have found out from the Tuckman and Belbin models, requires a well-functioning structure, one that has clear presentation of goals and roles. In order to perform well with others, I will have to know what is required of me as a part of a team.

4. Presentation Experience

Working in a team meant a lot of learning, compromising, problem-solving, and altogether working towards a common goal. It was a steep learning curve seeing that we all desired to get a high score and also gain something out of the entire experience. I learnt a lot from this presentation experience. I learnt how to make a better preparation for the presentation and how to express myself better in public. For instance, prior to the group presentation, in order to have a better presentation, I had a full discussion with my group members on what models need to be employed to present the opportunities and challenges faced by Innocent Drinks. After deep discussion, we eventually decided to utilize as much as figures and statistics to present the opportunities and challenges faced by Innocent Drinks in a vivid and direct manner. This could enable the audiences to develop a deeper and better understanding of the situation. In addition, we also decided to add some pictures about Innocent Drinks, such as its logo, its sustainable trucks, into the presentation slides. The use of such visual pictures is proved to be successful to make presentation vivid and easier to understand and attractive. The presentation feedbacks from the teacher confirmed this point. In addition, I also learnt that good team cooperation and collaboration also contributed to better results and faster attainment of set goals. We modified the presentation drafts several times based on the suggestions from the group members, being considerate of every suggestion made. Factoring in the suggestions of every group member was an arduous task, one that meant delayed decision making and slower implementation. However, we were able to trust the opinions and skills of each member based on their allotted task, providing a lesson on delegation and team effort and contribution.

As for the presentation, I learnt that confidence and how to express our ideas in a clear and organized manner were the key contributors to a good presentation. Originally, as a result of nervousness and lack of confidence, I was afraid to look directly into the eyes of the audiences and failed to deliver the presentation in a smooth and clear manner. As a consequence, the presentation result was not good as the audiences could not understand what I wanted to stress and what I wanted to deliver through the presentation. However, in this group presentation, we mainly presented our reports through Microsoft Team. Without facing the audiences face to face, I became more confident. In addition, I also made some practices prior to the presentation. As a consequence, I made use of some stresses and pauses to deliver important information. Irrespective of some weaknesses in pronunciations and some stresses, I perceived that I delivered my best performance.

In our group, we used Gibbs’ Reflective Cycle to provide a framework to learning from the experience. The Gibbs’ Reflective Cycle that provides a framework for assessing events, and because of its cyclic character, it adapts itself exceptionally well with repeated encounters, enabling one to identify the most important tasks that went well or poorly (Markkanen et al., 2020). As defined by Gibbs, there are six distinct stages in the reflective process, each of which necessitates the completion of multiple questions in order to delve as deeply as possible within the stages of reflection including: description, feelings, assessment, analysis, conclusions and action plan. For me, this presentation preparation was by far more effective than any other team exercise I have been a part of before. I learnt to consider the opinion of others, leadership, responsibility, problem solving, and accountability.

5. Common Themes

In reality, business enterprises face a host of obstacles and problems along the road as they embark on their entrepreneurial journeys. Businesses nowadays must learn to collaborate with a plethora of brand-new marketing platforms. They must keep up with the most recent technological developments, whether it’s social media, search engines, or website design and development. Furthermore, because digital media has no territorial boundaries, firms must compete with enterprises from all over the world on a global scale (Vanani & Jalali, 2018). There might be a range of supply chain and logistical issues as a result of these challenges, as well as the stoppage of internal activity.

The challenges identified for Innocent Drinks present common themes across the soft drinks industry. Green & Black’s also faces similar challenges. It also faces significant challenges like fierce competition from other strong rivals and changeable tastes of consumers. Mordor Intelligence (2021) highlights that the UK chocolate market is mainly dominated by some large enterprises, such as Cargill Incorporation, Barry Callebaut Group and Puratos Group and those small-scale compound chocolate makers are gradually merged by these large enterprises. All of these statistics indicate that Green & Black’s faces challenges of high competitive intensity, which will undoubtedly undermine its profit margin if it fails to take some effective measures. Another common theme is the need to keep up with technological advancements. For example, Innocent Drinks is required to think green in terms of environmental sustainability and adding value to the ecological system. This is also a problem that other companies like Green & Black face today. Because technology is changing at a quick pace, keeping up with technological advancements has become increasingly difficult for businesses. Furthermore, if a firm fails to innovate, its competitors will quickly seize control of the market share that was previously held by the company. As a result, technological improvements are forcing many businesses to shut down, and in order to prevent this, every enterprise needs to incorporate technology into its operations.

The reason for the common theme in terms of challenges and opportunities is because of the growth stages that a firm is currently experiencing. In the five stages of business growth, common themes appear because the challenges and opportunities faced also come with the phase a business is currently in. in the fist stage, existence, the main issues include obtaining customers as well as the delivery of product and services. Lewis and Churchill (1983) term the organization as very small leading to an owner doing everything themselves. In the second stage, survival, the enterprise has shown that it can work as a business entity and has enough customers and product to sustain them. The problems and challenges shift from just existence to include the connection between expenses and revenues. In the third stage, success, the company faces an issue on decision making regarding whether to exploit its success and keep expanding, or conform to profitability and stability (Lewis and Churchill, 1983). Take-off, the fourth stage, problems include how to grow fast and means to support the growth. Finally, resource maturity, the last stage, brings a problem of managing success through control and consolidation of financial gain and ways to retain the advantages achieved.

6.Conclusion

I have significantly improved my skills from this group assignment in team work and confident presentation. In addition, through the investigation in the challenges and opportunities faced by Innocent Drinks based on different models, I develop deeper and better understanding of what influential factors in the process of an enterprise’s growth and what strategies can be adopted to increase product value and gain competitive advantage.

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Appendix 1 Group Net Revenue (Turnover, GBP millions)

(Source: Innocent Drinks, 2019)

Appendix 2 Innocent Drinks’ market share in European chilled juice market

(Source: Innocent Drinks, 2020)

Appendix 3 Innocent Drinks’ performance in community

(Source: Innocent Drinks, 2020)

Appendix 4 Innocent Drinks’ performance in environment protection

(Source: Innocent Drinks, 2020)

Appendix 5 Brands of ready-to-drink fruit and vegetable juice and smoothies ranked by number of users in Great Britain in 2018

(Source: Statista, 2018)

Appendix 6 Six-year comparison in 100% juice from 2014 to 2019

(Source: The British Soft Drinks Association, 2020)

Appendix 7 Six-year comparison in bottled water from 2014 to 2019

(Source: The British Soft Drinks Association, 2020)

Appendix 8 B Impact Assessment Score of Innocent Drinks

(Source: Innocent Drinks, 2019)