Political · Ireland and the United Kingdom, currently

Political

·            
Ireland
and the United Kingdom, currently the market making up the majority of VITHIT’s
sales, are both introducing a sugar tax. This tax will apply to soft drinks
with more than 5 grams of sugar per 100 milliliters (extra 20 cent or 18 pence
per litre), or a higher tax band for soft drinks with more than 8 grams of
sugar per 100 milliliters (extra 30 cent or 24 pence per litre). VITHIT
currently have a maximum of 1.3 grams of sugar per 100 milliliters in their
products. This offers VITHIT a great competitive advantage as many of their
competitors will be effected with this incoming tax, due to be implemented in
April of 2018. This will either decrease their competitor’s sales or squash
their profit margins, with the former being more likely. Many competitors have
already suffered increased research and development costs to develop products
that avoid this tax.

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·            
The
political scenario of the countries they are importing into also matter greatly
as there can be some civil unrest in certain markets or sales of the product
may fall due to inflation or recession. VITHIT supplies 2,000 stores in South
Africa, a country which has recently experienced political unrest with South
Africa’s highest court ordering the parliament to consider the impeachment of
president Jacob Zuma. Also, South Africa have just exited from a technical
recession last quarter but their economy is still highly reliant on their
agricultural sector and have an extremely high unemployment rate of nearly 28
percent.

 

Economic

·            
The
state of the economies in which VITHIT operate within is a massive factor for
the profitability of the firm. VITHIT uses a premium pricing strategy which
they can command due to the health benefits associated with drinking their
beverage. However, in the situation of an economic downturn, many people will
switch to cheaper alternatives, with VITHIT being a highly elastic good for
most consumers, in order to keep their necessities.

·            
Taxes
play a large part with regards to the after-tax profit margin of the firm. With
VITHIT being registered within Ireland they are at a competitive advantage as
Ireland have a low corporation tax rate of 12.5%. Discuss other taxes that businesses have to pay and
whether they positively or negatively impact the company. The government may also implement
taxes that positively impact the business by giving it a competitive advantage
against their competitors, such as the impending implementation of the sugar
tax in Ireland and the United Kingdom.

·            
On
the 23rd of June 2016 a referendum was held to decide whether the United
Kingdom should leave or remain within the European Union. With 51.9% of the
referendum turnout voting for the United Kingdom to leave the European Union,
they are currently in a transition period and plan to exit the trading bloc on
the 29th of March 2019. This is a massive blow to VITHIT as United Kingdom are one of it’s main markets it exports to. As the United Kingdom exit the trading
bloc there will no longer be free trade and thus exports to the country and
imports from the country are subject to World Trade Organization. This will
either decrease VITHIT’s sales from the United Kingdom due to their increased
price making them less competitive to substitute goods or squash their profit
margins, with the former being more likely. Luckily VITHIT’s $20 million
distribution deal in the United States which reduces their dependency on sales
from Ireland and the United Kingdom. As a result of this distribution deal they
expect sales to more than double from over 17 million bottles to 36 million
bottles. Co-owner, Ian O’Rourke has said they are aiming to secure the entire
east coast market by mid 2018 and then gradually expand to the west coast
market. With a well diversified selling
market, I expect VITHIT to cope with the impending Brexit implications quite
comfortably.

 

Social

·            
We
have experienced a global upsurge in obesity with worldwide obesity having
nearly tripled since 1975. Warnings from
health professionals has made people more aware of the importance of being
healthy. As a result,
we’re currently experiencing a health trend where people are hitting the gym
and looking for food and beverages to keep them extra health benefits. VITHIT
was set up for this very reason with founder Garry Lavin stating he wanted to
make a drink with added goodness that wouldn’t compromise one’s weight loss
progress unlike a sports drinks that can contain a lot of calories and sugar. Co-owner
Ian O’Rourke has recently come out and said that the sugary carbonate market is
stagnating and consumers are looking for something different and VITHIT fits
right into that.

·            
A
product being fashionable and on-trend is important for many young adults and
teenagers. Talk about VITHIT’s advertising
(Instagram and other social media sites – celebrities endorsing the product
also (Georgia Salpa)

Technological

·            
What
might seem like an overnight success took founder Garry Lavin 12 years before ‘the
market caught up with VITHIT’ in his words. VITHIT went through many phases of
branding before the hit the nail on the
head. Lavin’s original
brand and package design hadn’t reach the target audiences he had hoped for
therefore he took action and hired a graphic design and communications studio
to adjust his branding. This has undoubtedly helped VITHIT reach it’s success
of selling over 17 million bottles last year with this quantity expected to
more than double this year. (see Social)

·            
Talk about social
media (see Social)

 

Environmental

 

Legal

·            
With
VITHIT beverages being sold in 16 countries, most recently securing a $20
million distribution deal in the United States, they must ensure they comply
with all food and beverage regulations of the countries they are importing
into.