UMKD6Q- 15-3

Global Marketing Management

Fentimans: Plan to Launch Their Botanically Brewed Soft Drinks into
the Japanese Market

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Table of Contents
Introduction.................................................................................................................................................3
MACRO Analysis: PESTLE Analysis of Japan..........................................................................................3
Soft Drink Analysis: Japan..........................................................................................................................4
Major players in Japanese Soft Drink Market..............................................................................................5
Fentimans Competitive Advantage: Porter’s Value Chain Analysis............................................................5
Fentimans Technology and Development....................................................................................................7
Recommendations and Conclusions............................................................................................................8
References...................................................................................................................................................9

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Introduction
Fentimans is an organization which is situated in the north of England and is currently owned by
the grandson of the founder Thomas Fentiman. The company has been producing its natural
botanical drinks for over 110 years, using its traditional process and using the premium
ingredients. The premium quality and the flavor of the drinks stay unchanged even though
processes have been updated by the company.

MACRO Analysis: PESTLE Analysis of Japan

Political: Japan is said to be a monarchy. However country’s present Emperor, Akihito, have
some involvement in the country’s political development (BBC, 2018). The country is associated
with ASEAN, G8 and the G7. The country does not have good relations with countries such as
China, Taiwan, Russia, and South Korea, in terms of oils, gas, and marine resources (BBC,
2018). Japan has a close relationship with United States which is considered a vital part of
Japan’s security and foreign policies. Additionally, Japan is trying to maintain a good
relationship with the world economies such as UK, the India, Australia, and France. On the other
hand, there is a concern about an attempt to improve Japan’s post war pacifist legal constitution
which said to be controversial and might have an effect on trade and foreign direct investment.

Economical: Japanese economy is considered to be powerful. Therefore, Japan is the 5th largest
economies in the world (BBC, 2018). Japan aims to follow mixed economic system even though
government maintains close relations with industries. The major industries in Japan consist of
automobiles, processed foods, textiles, chemicals and machinery & equipments.

Social: A number of social challenges are faced by Japan. Main challenges currently faced by
Japan are its ageing population and sinking birth rates. Thus, politicians in Japan are currently is
working on an ‘integrated’ immigration strategy depicting workers from abroad to Japan to
minimize the skill-gaps formed by ageing population along with shrinking birth rate.

According to research by (BBC, 2012) citizens in Japan have a preference for Japanese
companies over foreign companies making difficult for MNCs to trade in Japanese market. In
fact, it is said to be the core reason that MNCS fail to succeed in the markets of Japan. For
example, after operating for more than 9 years, an UK based company i.e. TESCO was not able
to do well in the market of Japan in 2012 (BBC, 2012). Similarly, other multinational companies
like Wendy’s, Pret A Manger’s, were not able to succeed in Japan.  As a result, understanding
and analyzing the Japanese market and consumer needs is very important for foreign companies
prior to enter in Japan.

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Technological: Japan, being the most innovative country in world, Japanese are recognized as
incredibly innovative in exploring and very keen to learn to use advance/modern technologies.
Creativity and technological innovation in Japan is pushed in such a unique technique which
makes it hard for many counties to imitate. Innovations by Japan can be found in multiple
fields. For instance, Japan usually uses its automation systems mainly in airports, restaurants,
and in airports. Likewise, the country is also recognized for its robotic development. Also, the
country owns over half of the industrial robots in the world (BBC, 2018). Furthermore, the
country was able to develop the contactless payment system, before any other countries even
thought regarding this innovative idea. Japan, in addition, is able to do extremely well in other
fields like; chemicals, space research and development, semi-conductors and railways, offering
immense opportunities mutually to Japanese companies, MNCs along with the citizens of Japan.

Legal: Across Japan, people work as directors, employees, contractors, etc. Every employee has
the right to gain benefit of employment right act which includes work leave, maternity leaves,
maximum work hours, work breaks, etc. Also, it is mandatory for companies to provide other
benefits to its employees such as insurance related to employee pension & health, and workers’
accident compensation insurance which are applicable to employment relations irrespective of
the nationality of workers.

Environmental: Japan is known as an environmentally responsible and country. But, some

environmental challenges are still faced by the country.  Likewise, Japan’s main concern is the
waste management i.e. waste produced by the industries, societies and agriculture contributes to
a significant amount of producing waste. Currently, country is under pressure to minimize waste
and manage the country’s pollution (Denyer, 2019).

In addition, Japan is the country which is most affected by natural disasters. Japan faces
calamities, for example earthquakes, tsunami, volcanic eruptions and cyclones time-to-time.
Japan has to spend billions of dollars for rebuilding and reforms due to these disasters. As a
result, this makes Natural disasters, high-cost and language barriers make Japan a less popular
destination for tourists.

Soft Drink Analysis: Japan

Japanese people respond very promptly to new trends and are very keen to try new things. Japan
is well-known for its futuristic way of thinking balanced by rich cultural traditions along with
innovation followed by Japanese style (“kaizen”) that encourages organizations and citizens to
initiate new products with a sense of both urgency along with thoroughness (Hays, 2009). 

Drinks with added health benefits tend to be the current trends in the beverage market of Japan.
“Fat control, blood sugar regulation, gut regulation—Japanese are looking for those drinks
helping them to control the body that is getting a little bit older,” (Hays, 2009) While looking at
the Japanese culture of consumption, it is clear that some of the biggest sellers in beverages

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market in Japan are brand of bottled water, tea, coffee and sports drink. "Near water" drinks i.e.
fruit flavored drinks with chemically enhanced fizz, are popular in Japan as these drinks are said
to contain less or no sugar and fewer calories than carbonated soft drinks.

Furthermore, according to research it is found that vinegar drinks are popular in Japan. People
prefer these drinks as a wine. These drinks are especially consumed by women as health tonics in
a belief that they help reduce fatigue, improve circulation and induce weight loss. In Japanese
market, there are such shakes, soft drinks, and dessert drinks which are produced using vinegar.
“Transparency reminds people of water, symbol of natureness”. Therefore, the Japanese consider
their drinks to be more natural and have invited renowned brands to offer them these clear drinks
(Roberts, 2018). Company such as Coca-Cola has dedicated more than a year to the development
of the colorless version: “Coca-Cola Clear”. A Coke without calories that has a surprising taste,
but what actually matters is its transparency (Younes, 2017).

Major players in Japanese Soft Drink Market (Robert, 2018)

 Ramune
 Calpis
 Pocari Sweat
 Mitsuya Cider
 Qoo
 Mugicha

Fentimans Competitive Advantage: Porter’s Value Chain Analysis

Source: (Porter, 1985)

Value chain is also acknowledged as Porter’s Value Chain Analysis, is related with business
management and was initiated by Michael Porter. Michael Porter introduced his book i.e.
“Competitive Advantage (1985), Value Chain Analysis” stated that value chain is simply a
collection of actions performed by organizations to develop values for their customers and helps
organizations to achieve competitive advantage and moreover helps the organizations to achieve

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higher profits than its competitors. Therefore, Porter’s value chain consists of following
dimensions:

1. Inbound Logistics: Fentimans, being an UK based company manufactures natural

botanical drinks using its traditional procedure and premium ingredients. The business
values itself for not only using the natural ingredients but also for producing their own
flavors such as: mandarin and Seville orange jigger, curiosity cola, traditional ginger beer
dandelion and burdock, cherry cola, lime flower, jasmine, rose lemonade, etc. The
company moreover possesses an exceptional mechanical brewing process which makes
Fentimans to stand out from the numerous numbers of copycats as well as provide them a
competitive advantage (Fentimans case study, 2019-20).

2. Production: Fentimans has recently entered into new markets and as a result, the
company has the ability to produce 40 times the flavors that it might produce earlier and
the increase in the number of workforce to 50 and is estimated to increase to 70 within
the next 5 years (Fentimans case study, 2019-20). Since, September 2019, Fentimans has
introduced a collection of new light soft drinks which consist of a lower-calorie version
of the brand’s rose lemonade, sparkling elderflower and sparkling raspberry flavors.
According to the company, the drinks are sold in 25cl bottles each containing fewer than
60 calories with sugar content reduced to 4.8g per 10cl, i.e. lower than the UK sugar tax
threshold (Fentimans case study, 2019-20).
3. Outbound Logistics: Fentimans have found demand for their drinks overseas. The
company currently exports its drinks in about 70 countries with around one- third of
revenue coming from the sales abroad (Fentimans case study, 2019-20). The company is
able to enter in almost all European markets and has succeed in establishing base for firm
for distribution in markets further away together with Japan, Korea , Australia and USA.
Many drinks produced by Fentimans are produced under license in North America and
Fentimans is currently planning to maintain its long-term relations with the BRIC
markets (Fentimans case study, 2019-20). Moreover, the company is currently focusing
on the German market with a belief that they could become more successful in
comparison to the UK market. In terms of consumer demographics, it tends to be the
sophisticated buyers who prefer Fentimans. The company is currently looking further
afield and believes that the Asian and South American markets will offer them with great
opportunities. Fentimans has decided to set up its manufacturing plant in Europe if trade
barriers are introduced as a result of Brexit agenda. In addition, they have outsourced
their manufacturing in USA - Pennsylvania helping them to reduce export transport costs.
In 2010, Fentimans had set up a team to look after its export and had tied up with NECC
(North East England Chamber of Commerce) to maintain their export activities. This
provides company a legislative advice helping them to enter into new markets (Fentimans
case study, 2019-20).

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 4. Marketing & Sales: In terms of marketing, the brand put on a botanical pop-up bar so
that people can visit them during the food, drink, regional and music festivals happening
all over the UK usually during the spring. Fentimans plans to provide its customers a very
British feel with a summer garden party theme where customers can relax in deck chairs
under huge umbrellas to shield the sun (or more likely shelter them from showers). The
rise in the number social influencers has presented the company with an opportunity.
Furthermore, Fentimans has realized the power of using the social media marketing as
their marketing strategy. One of the social media used by the company is Instagram. The
company intends to create ‘instagrammable’ moments for its customers. Moreover, the
company took its pink Landrover to London’s Covent Garden in May 2019 moreover
formed a surprising floral installation. It was so insta-genic that it received over 1000
pieces of free tagged content within a week, likely reach of more than 10 million people
(Fentimans case study, 2019-20).
5. Service: According to the statement by the senior customer marketing manager of
Fentimans, Claire Tyson: “Driven by innovation and customer demand, the company
continues to grow its diverse range of tonics and mixers. When users are mixing our
drinks, we need to ensure that it consist the ultimate flavor experience. Our Spirits
Pairing Guide is often used as an inspiration to try new and exciting flavor combinations”
(Hook, 2018). The launch follows actions prior in 2018 where £1.2m was invested by the
producer on a rebrand for the fill portfolio (Hook, 2018). 

Fentimans Technology and Development

Fentimans believes to invest heavily in innovation as well as consists of small team of workers
working on developing new flavors. Additionally, company has invested £250,000 on a new IT
system to make sure that the systems of company are constantly up to date (Fentimans case
study, 2019-20).
According to the research by British Soft Drinks Association, the soft drinks market in UK is
very crowded and is estimated to be worth £15.6 billion. The premium soft drinks market is
growing at 33.1% per year and is now worth £517 million (Stone, 2019). Premium soft drinks
are evidencing a strong performance in the on-trade sector with almost 12 pence in every £1
spent on soft drinks and mixers going on a premium option. Growth in this category has also
been fuelled by the move towards lesser / no consumption of alcohol. 12% of consumers state
that they do not consume alcohol which is a rise of 4% points in 2 years. The number is yet
higher amongst the younger generations. These consumers are looking for exciting and premium
non-alcoholic drinks both in UK and as well as in Japan (Fentimans case study, 2019-20), which
can be a source of competitive advantage for Fentimans.

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Recommendations and Conclusion
Therefore, it is easier for Fentimans to enter the markets of Japan as Japan is also of interest to
the company as some of the company’s’ products are imported into high-end premises locations
by the small companies. Therefore, Fentimans must opt for Greenfield Venture which is a form
of market entry approach by establishing a new wholly owned subsidiary in a foreign country.
Through Greenfield Venture, Fentimans can enter to the Japanese market on its own without
being in partnership with the other businesses or companies already present in Japan (Hook,
2018). Therefore, as UK and Japan, both are members of G8, which is an inter-governmental
political forum from 1997. The Group of Eight (G-8) is believed to be an assembly of the world's
largest developed economies which have created a position as pacesetters for
the industrialized world (Gov.UK, 2018). Moreover, in 2019, a new trade agreement with Japan
was approved by European Parliament and therefore, the EU- Japan Economic Partnership
Agreement (EPA) creating the world’s largest free trade area, will eliminate over 97% of export
duties that is currently situated (Gov.UK, 2018) which will make easier for Fentimans to enter in
the market like Japan as well as set up the price of its botanically brewed drink according to its
competitors in Japanese market. Hence, Fentimans can penetrate its strategy through producing
the product according to needs of Japanese market.

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References

2020. Fentimans: Plan To Launch Their Botanically Brewed Soft Drinks in Japan. 1st ed. United
Kingdom, pp. 1-3.

BBC News. 2018. Japan Country Profile. [online] Available at: <https://www.bbc.com/news/world-asia-

pacific-14918801> [Accessed 18 March 2020].

Denyer, S., 2019. [online] Available at: <https://www.washingtonpost.com/world/asia_pacific/japan-

wraps-everything-in-plastic-now-it-wants-to-fight-against-plastic-pollution/2019/06/18/463fa73c-7298-
11e9-9331-30bc5836f48e_story.html> [Accessed 18 March 2020].

GOV.UK. 2018. UK Welcomes Approval Of New Trade Agreement With Japan. [online] Available at:
<https://www.gov.uk/government/news/uk-welcomes-approval-of-new-trade-agreement-with-japan>
[Accessed 17 March 2020].

Hays, J., 2009. TEA, COFFEE AND SOFT DRINKS IN JAPAN: DIFFERENT TYPES AND HEALTH |
Facts And Details. [online] Factsanddetails.com. Available at:
<http://factsanddetails.com/japan/cat19/sub124/item659.html> [Accessed 18 March 2020].

Hook, S., 2018. Fentimans Reveals Spirits Pairing Guide - Drinks Retailing News - The Voice Of Drinks
Retailing. [online] Drinksretailingnews.co.uk. Available at:
<http://drinksretailingnews.co.uk/news/fullstory.php/aid/18230/Fentimans_reveals_Spirits_Pairing_Guide
.html> [Accessed 17 March 2020].

Ifm.eng.cam.ac.uk. n.d. Porter's Value Chain. [online] Available at:

<https://www.ifm.eng.cam.ac.uk/research/dstools/value-chain-/> [Accessed 18 March 2020].
Roberts, M., 2018. [online] Available at: <https://www.culture-nutrition.com/2018/10/17/clear-drinks-
japan/?lang=en> [Accessed 16 March 2020].

Stat.go.jp. 2019. 2019 By Statistics Bureau Ministry Of Internal Affairs And Communications Japan.
[online] Available at: <https://www.stat.go.jp/english/data/handbook/pdf/2019all.pdf> [Accessed 14
March 2020].

Stone, S., 2019. Premium Soft Drinks Market Worth More Than Half-A-Billion Pounds. [online]
morningadvertiser.co.uk. Available at:
<https://www.morningadvertiser.co.uk/Article/2019/07/02/Fentimans-how-popular-are-premium-soft-
drinks> [Accessed 18 March 2020].

Younes, K., 2017. How Coca-Cola Japan Stays Ahead In One Of The Most Innovative Beverage Markets
In The World. [online] Coca-colacompany.com. Available at: <https://www.coca-
colacompany.com/au/news/making-a-yearly--splash-how-coca-cola-japan-stays-ahead> [Accessed 15
March 2020].