Soft Drink is a natural or artificially flavored water-based drink, and it is not usually carbonated and it includes sweeteners. The main ingredients of soft drinks are preservatives, coloring, caffeine, and other elements. Today, we’ll discuss the PESTLE analysis of Soft Drink Industry; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Soft Drink Industry
Some of the main political factors in the Soft Drink Industry PESTLE analysis are as follows;
I-Government Regulations
The government regulations for health and dietary products and beverages are very strict. Soft drink companies need to comply with the health and safety regulations of different countries to perform their operations smoothly. However, the regulations may deal with various areas; advertisement, health and safety standards, product ingredients disclosure, and labeling.
II-Taxes and Trade Policy
Countries keep on changing their trade policies depending on their national economic policy, political power in control, foreign relations, and international policy. For instance, if a nationalist party comes in and has conflicted relationships with various countries, They would either restrict trade or impose trade tariffs on particular countries.
III-Political Stability
A stable political environment is highly significant for the growth of businesses and companies. For instance, if the country’s internal environment comprises of riots, processions, roadblocks, and other violent activities. They negatively impact the supply chain, distribution, and flow of products and goods to the production facilities and the end consumer; ultimately jeopardizing the image of the Soft Drink Industry.
Economic Factors Affecting Soft Drink Industry
Some of the main economic factors in the Soft Drink Industry PESTLE analysis are as follows;
I-Disposable income
The disposable income and the purchasing power of the consumer market play a key role for the growth and business of Soft Drink Industry. For instance, if the consumer has lower purchasing power and limited disposable income, then it decreases the sales of businesses and companies. Soft Drink companies should carefully analyze the disposable income, purchasing power, and spending patterns of the consumer market before launching their business there.
II-Price Sensitivity
Usually, the consumer market is highly price-sensitive about soft drinks and beverages. It is because they consume soft drinks and beverages daily in their routine lives. A small change in the price of a soft drink beverage is easily noticeable and they would instantly switch to the other competitive brand.
III-Raw Material Cost
The cost of raw materials keeps on changing due to various factors like packaging cost, flavors, ingredients, sugar, corn, distribution, and others. The change in raw material cost would negatively impact the revenue and profitability of the soft drink brands. The Soft Drink companies can’t afford to regularly change their retail price, because it negatively impacts their sale.
Social Factors Impacting the Soft Drink Industry
Some of the main social factors in the Soft Drink Industry PESTEL analysis are as follows;
I-Healthy Diet Trends
The consumer market has become highly cautious about their health and diet and they prefer buying less sugary and not carbonated drinks and beverages. They are more aware of their body, diet, and physique and they say no to junk food, drinks, and beverages. Many research studies have proven the fact that high-sugar drinks lead to obesity and other weight issues.
II-Changing Demographic
The demographic plays a key role in the sale of the company’s products like soft drink beverages. For instance, Generation Z and millennials would prefer innovative, healthy, and smart products. The Soft Drink brands should target marketing and advertisement to precisely target the specific segments of the customer’s market.
III-Cultural Impact
The culture of different countries and regions plays a key role in the growth and sale of particular types of products and goods. Some cultures are very open and welcoming to all the new products and tastes. On the other hand, the other cultures resist any type of new product and good. The Soft Drink brands should keep in mind the cultural impact while launching its business in the particular country.
Technological Factors Affecting Soft Drink Industry
Some of the main technological factors in the Soft Drink Industry PESTEL analysis are as follows;
I-Automation Manufacturing Technology
The Soft Drink Industry is employing the latest automated and robotic technology in its production and manufacturing processes. It allows them to achieve efficiency with optimum utilization of resources, reduce labor costs, and limit wastage of material and resources. As a result, it amplifies the Soft Drink brands’ productivity and growth.
II-Smart Packaging Technology
Soft Drink companies are implementing smart packaging material and technology. It comprises employing eco-friendly packaging material that is environmentally sustainable. However, every packaging has a smart QR code, ingredient and product details, and expiration. It allows customers to an in-depth information about the product.
III-Supply Chain and Distribution
The Soft Drink brands also employ a smart and centralized supply chain and distribution management system. It allows them to ensure the smooth availability of raw materials and supplies for products by collaborating with various suppliers and vendors. A smart distribution system would help them to track the location of products and goods in real time.
Legal Factors Impacting the Soft Drink Industry
Some of the main legal factors in the Soft Drink Industry PESTEL analysis are as follows;
Regulatory Compliance
Soft Drink companies should comply with the government regulations of different countries. They comprise of health and safety regulations, labor laws, trade policies, import-export regulations, and other legal and regulatory requirements of different countries. Regulatory compliance would help the Soft Drink brands to smoothly perform their business operations worldwide without any delays and disruption.
Environmental Factors Affecting Soft Drink Industry
Some of the main environmental factors in the Soft Drink Industry PESTEL analysis are as follows;
Sustainability Initiative
The Soft Drink Industry consumes a significant amount of energy and oil for production and distribution. They need to take environmentally sustainable initiatives like smart production methods, renewable sources of energy, biodegradable packaging, efficient energy sources, and others. Eco-friendly initiatives would help them to attract the attention of the targeted customer market.
Conclusion: Soft Drink Industry PESTLE Analysis |PESTEL Analysis of Soft Drink Industry |External Environmental Analysis of Soft Drink Industry | Strategic Analysis of Soft Drink Industry
After an in-depth study of the pestle analysis of Soft Drink Industry; we have realized that the soft drink industry is the world’s top profiting business. If you are learning about the Soft Drink Industry PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
