Vithit is an Irish, privately owned, vitamin drinks company, founded in 2000 by Gary Lavin. Ian O’Rourke is in current position as the company’s co-director and Lavin’s business partner. Vithit is categorized in the health food and drinks industry. “It is now officially the fastest growing soft drink in Ireland and the 15th biggest selling soft drink nationally. They are currently employing twenty people across sixteen markets and now sell over 17 million bottles per year in eight countries. In the UK, it is the market leader in health drinks in both Boots and Tesco” (Independent.ie, 2018). A PESTEL analysis will be used to identify the industry in which VITHIT competes and the significant influences in the general environment that impact on this industry. Porter’s 5 Forces will assess the forces driving competition in the industry, and VITHIT’s strategy to internationalization will be discussed in the later part of this paper.
A PESTEL analysis is a tool which investigate the extrinsic marketing factors that impact on an industry. “The essence of strategy formulation is coping with competition.” (Porter, M, 1979). There are five main forces which illustrate that rivalry is present in an industry.
The first factor of the PESTEL analysis are the Political Factors of the health food and drinks industry. This looks at the degree at which the government intervenes within the industry. Gary Lavin, managing director and founder of Vithit, mission was to “create healthy sports drinks that tasted good, if not better than their sugary counterparts.” (Blair White, 2017). VITHIT drinks contain “100% of a persons Recommended Daily Allowance of 8 vitamins plus health giving teas and herbs for overall wellbeing” (Vithit.com, 2018). These drinks have four core ingredients: Vitamins, Juice, Aqua, and Teas. In 2010, a health trend began to take off in Ireland and the UK. This craze was launched as “people don’t want extra unnecessary sugar in their diets, they want clean, low calorie food and drinks” (Blair White, 2017). A fight against obesity all over the world has encouraged the government to introduce a sugar tax. This tax will commence throughout Ireland and the UK in April 2018 on all food and drinks that contain more than the Required daily allowance of sugar. “As the selling price of competitor’s sugary offerings are likely to increase to levels comparable with Vithit’s, sales for Vithit are expected to rise.” (Blair White, 2017) This will be a positive result for the company, with sales forecasted to double year on year, for the fore coming years.
As well as this, due to the fact that Vithit is an Irish company, this means there is free trade between Ireland and the 28 countries which are members of the European Union.
Economic factors have a significant impact on how industries do business and how profitable they are. In the early days of Vithit, in order for the company to expand, Gary Lavin hired three sales representatives and had delivery vans transporting the drinks to the many shops around the country. These extra costs proved very costly, which “forced Lavin to rely on property investments to fund the company throughout the Celtic Tiger years.” (Blair White, 2017). However, when an economic downturn hit in 2007, the company was plagued. The company became insolvent as the property returns which were supporting the business during the era of the Celtic Tiger vanished. Vithit had to deal with a closure of its doors, when the company had a “negative balance sheet figure of €1.2 million.” (Blair White, 2017). Lavin then realised the company needed a complete reconstruction in order to save it.
Today, despite its international successes, and although Vithit is having trouble receiving lending from traditional financial institutions, they managed to seek a “€50,000 peer-to-peer loan from Linked Financing” (Blair White, 2017) which has since allowed the company to further progress with its market presence.
Social factors are the attitudes of the population towards the health food and drink industries and also industries in general. These elements greatly influence Vithit, as nowadays people are a lot more health conscious. Gary Lavin, who previously pursued a career as a professional rugby player, was drawn to the high sugar levels in sports drinks. He noticed that when people consume these sports drinks, they are “essentially regaining all the calories they had lost while working out.” (Blair White, 2017). Sports drinks contain 20-28g of sugar, however, the recommended daily total sugar intake per person is only 25g. Lavin and Ian O’Rourke, the company’s co-director, are aware that they have a direct effect on how marketers understand customers and what drives them. When society began to become aware of this, the sales and demand for Vithit drinks increased. Many people started to turn away from drinks with high sugar content, and move to drinks like Vithit which are much healthier.
Technological factors have had a great impact on Vithit’s success. O’Rourke noticed that consumers had a preference for wider bottles rather than the previous skinny bottle design. White labels allow “the colourful drink flavours stand out on the shelves among competitors, adding to the ‘rainbow effect’ of the drinks.” (Blair White, 2017). This current design has succeeded in catching the eye of consumers. They have ensured customers realise that each Vithit drink is “a young, vibrant, youthful drink not some boring, deadbeat prune juice drink!” (Blair White, 2017)
In pursuance of prosperity when competing with other firms, the company have used “witty advertising slogans and self-deprecating humour” (Blair White, 2017) on all their bottles to guarantee their products emerge from the rest.
With the establishment of the new age in technology, companies have completely integrated themselves in the recent trend of Social Media. The social media explosion has allowed for increasingly interactive engagement with the consumers with real time results so Vithit can stay ahead of all the developments that take place, particularly among the youth of today. They use websites such as Facebook, Instagram and Twitter to keep increasing brand recall and brand engagement.
Key environmental issues affect corporations because “laws require businesses to change equipment and procedures to meet imposed standards, which costs businesses money.” (Smallbusiness.chron.com, 2018). The drinks are produced in Shannon Minerals in Limerick, as they specialise in aseptic filling. This is a process in which cool temperatures are used to sterilise the drinks in order to ensure the added vitamins and benefits of Vithit survive. This has environmental benefits, and also means a thinner plastic can be used when bottling.
Since Vithit trades globally this becomes a very tricky as each country has its own set of rules and regulations. However, to differentiate their products from competitors in the industry and attract more customers in America, Vithit launched four new flavours and removed L-carnitine, “which is not permitted in liquid products in the US.” (Blair White, 2017)