Fentimans plan to launch their botanically brewed soft drinks into

the Japanese market

I. Introduction company
Fentimans is a small company based in the North of England that has been making
natural botanical drinks for over 110 years, using a traditional process and fine
ingredients.
From September 2019, Fentimans is launching a range of new light soft drinks. After
they catch eyes oversea for opportunities and get succeed in Europe, now they are
looking forward in developing in Japan.
1. Overview market
- Japan, the world's third largest economy, is highly exposed to external impacts due to
its heavy reliance on exports. The populations approximately 126.3 million.
- The growing middle-class with increased per capita spending power combined with
the large ageing population have transformed this society into very health conscious
consumers. As a result, the Japanese consumers are very inclined to splurge on
products that claim to have added health.

II. Pestel of Japan

Political environment in Japan
Japan is a constitutional monarchy with the emperor being the head of state. Like many other
monarchs in the world, Japanese monarch has very limited say concerning the political
affairs of the country. However, the people and the constitution of the country regard the
emperor as ‘the symbol of the State and of the unity of people’. The prime minister and the
cabinet have the executive power to administer the state affairs.
A major economic power, Japan has the world's third-largest economy by nominal GDP and
the world's fourth-largest economy by purchasing power parity. It is also the world's fourth-
largest exporter and fourth-largest importer. Although Japan has officially renounced its right
to declare war, it maintains a modern military with the fifth largest military budget, used for
self-defense and peacekeeping roles. According to Japan's health ministry, Japanese women
have the second highest life expectancy of any country in the world. According to the United
Nations, Japan also has the third lowest infant mortality rate. 
Japan maintains a very close relationship with the United States. This relationship is part and
parcel of Japan’s foreign and security policy. Japan has also been putting a lot of efforts to
build and maintain relationship with other world powers such as India, the UK, France, and
Australia.

EconomicoenvironmentoinoJapan
TheonextoelementotooaddressoinotheoPESTELoanalysisoofoJapanoisotheocountry’soeconomicoenvir
onment.oJapanoisotheo3rdolargestoeconomyoinotheoworldowithoaototaloGDPoofoaroundo$4.9otrillion
.oItoisoalsootheo2ndolargestoeconomyoinoAsia.oItoisoaomemberoofotheoG7,oG20,oAPEC,oandoASEA
N.oItohasoaomixedoeconomicosystem,oalbeitotheogovernmentocloselyoworksowithoindustries.oMot
orovehicles,oelectronicoequipment,omachineotools,osteel,oships,ochemicals,otextiles,oandoprocess
edofoodsoareosomeoofotheomajoroindustriesoinoJapan.oJapanohasoaoworld-
renownedoautomobileoindustryoandoisohomeotoosomeoofotheolargestovehicleomanufacturersoinoth
eoworldoe.g.oToyota,oHonda,oSuzuki,oMazda,oNissan,oMitsubishi,oandoYamaha.
Japanoheavilyoreliesoonoimportsoofooil,ogas,ocoal,oironoore,ocopper,oaluminium,owoodoandorawo
materialsoforoindustrialoproduction.oItoimportsomostoofotheseoresourcesofromocountriesosuchoaso
China,otheoUSA,oSouthoKorea,oGermany,oandoAustralia.oJapaneseocompaniesoneedotoopayocorp
orateotaxoonotheoincomeotheyogenerateoinoJapanoandoabroad.oOnotheootherohand,oforeignocompa
niesooperatingoinoJapanopayotaxoonlyoonotheoincomeotheyogenerateowithinoJapan.oThereoareofour
otypesoofocorporateotaxoinoJapanoi.e.ocorporateotax,ocorporateoinhabitantotax,oenterpriseotax,oand

ospecialolocalocorporateotax.oTheocurrentocorporateotaxorateoinoJapanoiso23.2%;ohowever,otheogo

vernmentohasorecentlyoapprovedoaoplanotooreduceotheotaxorateotoo20%oforocompaniesothatoraiseo
wagesoaggressivelyoandoboostodomesticocapitalospending.

SocialoenvironmentoinoJapan
Japanoisorankedoasotheo10thomostopopulatedocountryoinotheoworld.oHowever,oaccordingotoosomeo
otherosources,oitoisonoto10th,orathero11thoinotheoworld.oItsocurrentopopulationoiso126.2omilliono(W
orldometer,o2021).oShintoismoandoBuddhismoareotwoomajororeligionsowhileotheomajorolanguag
eoisoJapaneseowhichoisospokenobyoaroundo99%oofotheocountry’sopopulation.
Japanofacesoaonumberoofosocialochallenges.oAgeingopopulationoandosinkingobirthorateoareotwooo
fotheobiggestochallengesoJapanofacesotoday.oTheolifeoexpectancyoforomenoiso81oyears,owhileo87o
yearsoforowomen.oManyosourcesoforecastothatotheoJapaneseopopulationoisolikelyotoofallobelowo1
00omillionoino2048oandoabouto87omillionobyo2060.oThisowilloseverelyoimpactoonoJapanoandoitow
illoloseooutotooregionalopowers,oparticularlyoChina.oTherefore,omanyoJapaneseopoliticiansoareon
owohighlightingoano‘integrated’oimmigrationopolicyotoodrawovitaloforeignoworkersotooJapanotoor
educeotheoskill-gapsocreatedobyoshrinkingobirthorateoandoageingopopulation.

TechnologicaloenvironmentoinoJapan
TechnologyoisotheonextotopicotoodiscussoinotheoPESTELoanalysisoofoJapan.oJapanoisooneoofotheo
mostotechnologicallyoadvancedocountriesoinoworld.oItohasobeenopushingotechnologicaloinnovati
onoandocreativityoinosuchoaowayothatomanyocountriesowillostruggleotooemulate.oTheoJapaneseoar
eowell-
knownoasoextremelyocreativeoinosearchingooutoandolearningotoouseomodernotechnologies.

EnvironmentalofactorsoinoJapan
Japanoisoaorelativelyocleanoandoenvironmentallyoresponsibleonation.oJapanoisooneoofotheocountri
es,omostoaffectedobyocalamitiesoandonaturalodisasters.oTsunamis,ofloods,oearthquakes,omudslid
es,ocyclones,oandovolcanicoeruptionsohitoJapanofromotime-to-
 time.oTheseodisastersocostoJapanobillionsoofodollarsofororeformsoandorebuilding.oInofact,oJapanoi
soaolessopopularotouristodestinationobecauseoofonaturalodisasters,ohigh-
cost,oandolanguageobarriers.

LegaloenvironmentoinoJapan
LegaloenvironmentoisotheolastoelementotoodiscussoinotheoPESTELoanalysisoofoJapan.oPeopleocanowo
rkoinoJapanoasoemployees,odispatchedoworkers,oindependentocontractors,oandodirectors.oAlloemplo
yeesoenjoyoemploymentorightsoandobenefitsosuchoasomaximumoworkohours,oworkobreaks,oholidays,
oandomaternity oleave.oCompaniesoneedotooregisteroemployeesoforomandatoryopensionoinsurance,ohe

althoinsurance,ounemploymentoinsurance,oandoworkers’oaccidentocompensationoinsurance.oAlloofot
heseoapplyotooemploymentorelationshipsoregardlessoofotheocitizenshipoofoemployeeso(Ohta,o2021).

III. Industrialoanalysis
- AnalysisotheoentranceointooJapan’somarketorelyoono5oforcesoofoMichealoPorter:
1. Marketocompetitors
JapanohasomanyofamousobrandsosoftodrinkolikeoFentimans.oHowever,othisocomponentoofotheoFiveoF
orcesoanalysisoshowsothatothereoareootherofactorsothatodetermineotheoinfluenceoofocompetitiveorivalr
y.oTheofollowingoareotheomostonotableoexternalofactorsothatocreateotheostrongoforceoofocompetitiono
againstoFentimans:

● Highoaggressivenessoofofirmso
● Lowoswitchingocostso
● Highonumberoofofirmso

Mostofirmsoinotheofoodoandobeverageoindustryoareoaggressive,osuchoasoinoproductoinnovationoando
marketing,otherebyoexertingoaostrongoforceoonoFentimans.oCompetitiveorivalryoisoalsoostrengthened
obecauseoconsumersocanoeasilyoshiftofromooneoproviderotooanothero(lowoswitchingocosts).oInoadditi

on,oFentimansocompetesowithomanyootherofirms,oincludingobigoonesolikeotheoAmazakeoCompanyoa
ndoaomultitudeoofosmalloandomediumoones.oThisocomponentoofotheoFiveoForcesoanalysisoshowsotha
toFentimansofacesostrongocompetitiveorivalryoasooneoofoitsomostopressingoconcerns.

2. Bargainingopoweroofobuyerso

ConsumersoareoamongotheotopoprioritiesoinoFentimans’somissionostatement.oTheoeffectsoofocustom
ersoonotheofirm’soindustryoenvironmentoareodeterminedoinothisocomponentoofotheoFiveoForcesoanaly
sis.oTheoexternalofactorsothatoleadotootheostrongobargainingopoweroofoFentimans’soconsumers/buye
rsoareoasofollows:

● Lowoswitchingocostso
● Highoaccessotooproductoinformationoo
Asonoted,oconsumersocanoeasilyoshiftofromooneofirmotooanother.oThisoconditionostrengthensocusto
mers’oabilityotooinfluenceoFentimans.oInoaddition,oconsumersohaveoextensiveoinformationoforothem
otooeasilyomakeochoicesobetweenoFentimansoproductsoandocompetingoproducts.oAlso,osubstitutesogi
veobuyersoevenomoreoreasonsotoostayoawayofromoFentimansoproducts.oBasedoonothisocomponentoof
otheoFiveoForcesoanalysis,oFentimansomustoensureocustomerosatisfaction otoomaximizeoitsorevenues.

3. BargainingoPoweroofoFentimans’soSupplierso

Fentimansomustomaintainoprofitableorelationshipsowithosuppliers.oThisocomponentoofotheoFiveoFor
cesoanalysisocoversotheoimpactoofosuppliersoonotheocompany’soindustryoenvironment.

TheohighooverallosupplyoincreasesoFentimans’sooptionsoinoacquiringorawomaterials,otherebyoreduci
ngotheobargainingopoweroofosuppliers.oThisopoweroisoalsooweakenedobecauseoofotheolowoforwardoin
tegration,owhicholimitsosuppliers’ocontroloofoFentimans’sosupplyochain.oThisocomponentoofotheoFiv
eoForcesoanalysisoindicatesothatosuppliers’obargainingopoweroareoaolowopriorityoforoFentimans.

4. ThreatoofoSubstitutesooroSubstitutiono(StrongoForce)

Fentimans’soproductsocouldobeosubstituted,obasedoonoconsumeropreferencesoandootherovariables.oT
heoinfluenceoofosubstitutionoonotheofirm’sobusinessoandoindustryoenvironmentoareoexaminedoinothis
ocomponentoofotheoFiveoForcesoanalysis.oTheofollowingoexternalofactorsocontributeotootheostrongoth

reatoofosubstitutesoagainstoFentimans:

● Highoperformanceoofosubstitute
● Highoavailabilityoofosubstitutes

MostosubstitutesotooFentimans’soproductsoareosatisfactory.Inoaddition,oFentimansoconsumersocanoe
asilyoshiftotootheseosubstitutes,owhichoareogenerallyoaffordable.oAlso,omostoofotheseosubstitutesoareo
widelyoavailableoinogroceryostoresoandootheroproviders.oBasedoonothisocomponentoofotheoFiveoForc
esoanalysis,otheoexternalofactorsomakeotheostrongothreatoofosubstitutionoaopriorityoissueofacingoFenti
mans.

5. Threat ofoNewoEntrantsooroNewoEntryo(ModerateoForce)

Fentimansomustoremainostrongodespiteotheopossibilityoofonewofirmsocompetingoagainstoit.oThisoco
mponentoofotheoFiveoForcesoanalysisocoversotheoinfluenceoofonewoentrantsooronewofirmsoonotheofoo
doandobeverageoindustryoenvironment.o

IV. Comparative advantage and SWOT analysis

1. Comparative advantage
 - Founded in 1905, Fentimans is the only brand that cooks Tonic by hand in the rest of
the world. At Fentimans, we use a unique process to create drinks: vegetative
fermentation is a long-standing technique to create high-quality drinks using infusion,
skillful blending. skillful and fermented natural ingredients. All drinks will contain a
predominantly fermented plant that will provide a depth to the taste and feel in the
palate in three dimensions.
- Fentimans sells across more than 10 countries. It is a global brand with global sales
and distribution network. Its headquarters are located in Hexham, United Kingdom.
The brand also has production, distribution and warehousing facilities in UK.
Fentimasn also their owns the beverage distribution system. Its distribution system
includes the company owned or controlled bottling and distribution operations,
bottling partners, distributors, wholesalers and retailers. Around 1.9 million servings
of its beverages are consumed around the world annualy.
- Fentimans is the only one of the top 3 largest companies in the world producing
Tonic water. They have been making natural botanical drinks over 100 years.
Therefore, when entering the Japanese market, Fentimans are exclusive products in
this market. In addition, the Japanese are very attentive to natural foods, health
supplements, so Fentimans can capture a large market share here without fear of other
competitors competing on price.
In addition, the 35-40 age group is also quite fond of this drink. They are mostly women and
have high income to be able to pay for this product. On the other hand, Japan's population is
aging to ensure the consumption potential of Fentimans products.

2. SWOT Analysis
Strength
- The drink is handmade so it is beneficial for health
The Japanese people are very concerned about health and towards products made directly from
nature. Fentimans can easily approach the target customers in here.
- Exclusive product
Currently, for the Japanese market, tonic water products are not available. Therefore, when
entering the soft drink market, Fentimans products will gain a monopoly position. The customer
will not need to choose too much between the products and the suit their requirements.
Weakness
- Low awareness of tonic water
Fentimans is on the list of the top 3 largest companies in the world producing Tonic water. So,
don’t have much people comprehend clearly about tonic water. This can lead to hesitation in
choosing products in the market.
- Dispersion of focus
Japan is a country where people always give priority to health. Therefore, there are many healthy
drinks in the Japanese market. It is also a point to note for Fentimans when they want to include
their products. Customers will have many choices for products according to their requirements.
Opportunities
- Growing oppotunities in Emerging Markets
Emerging markets hold the key for long term success. They have shown notable results even
during tough economic times. Consumers from the emerging countries will quickly grow to
dominate the global economy.
- Increasing product launches by key players in the market
New products have a poor success rate. Only about one in five survives longer than a year, and
new product launches are six times more expensive than line extension launches.
Threatened
- Intense competiton
Fentimans must remain strong despite the possibility of new firms competing against it. This
component of the Five Forces analysis covers the influence of new entrants or new firms on the
food and beverage industry environment.
3. Value chain
- Inbound logistics
The company became a door-to-door ginger beer company that used horses and trolleys for
transportation. His ginger beer is stored in handcrafted stone jars known as 'gray hens', all of
which are stamped with the Fentimans mascot based on Thomas's German shepherd dog
'Fearless', who twice won. won in Crufts compliance class in 1933 and 1934. Plant-brewed
ginger beer quickly gained popularity and business flourished, with several brewing and brewing
facilities opening in the North of England
The company fell into a difficult time when supermarkets entered the soft drink market. As a
result, the sales of Gray Hens (stone jars selling ginger beer) declined and the company closed in
the mid-1960s. But by 1988, the great-grandson of Thomas Fentiman re-established the business
with the mission of making Drink the original way, using traditional ginger beer recipe and
100% natural ingredients. Since then, with old fashioned products and vintage goods becoming
more popular, the Fentimans have received a wave of popularity.
- Operation
The botanical base is made from ground ginger root that is ground, ground and fermented. After
fermentation, the liquid is mixed with natural flavors and other selected plants. The process takes
a total of seven days and results in a rich and luxurious flavor that the Fentimans are known for.
Fentimans products are made from plants in nature. After that, it is fermented manually and
through technical processing stages before bottling.
- Outbound logistics
Fentimans has maintained international presence through its multichannel distribution network.
The company brings its products to the market to its customers through a mix of various sales
and distribution channels. Fentimans primarily uses direct-store-delivery (DSD), customer
warehouse, and distributor networks to bring its products to the market. However, the kind of
channel used depends on the needs of the customers, characteristics of the product as well as the
local trade practices.
- Product and services
The product portfolio of Fentiamans includes beverages, low calories beverages as well as a
large range of healthy others products. A highly diversified product portfolio has also helped the
company find faster growth in terms of overall sales and revenue.
- Marketing
Apart from digital channels of promotions including social media, the company also uses
outdoor promotions to advertise its products and for customer engagement. Video marketing has
also played a key role in growing the popularity of Fentimans brands and products throughout
the world.
Entry mode
Fentimans enters Japan market:
Based on market conditions, products, Fentimans want to enter the Japanese market should be
based on direct export to this country. Because this is an exclusive product, bringing directly will
save the average costs like retailers and agents. In addition, Japan is a country interested in
natural-derived beverages, so when exporting directly, it will attract a large number of
customers. Japan's per capita GDP is also relatively high in the region that qualifies for this
product purchase by the Fentimans.
In addition, the tax rate on Japanese imports of 22% is not too high compared to other countries
in the region.
Recommend
Under all conditions, statistics, risks, it can be concluded that Japan is a potential market for the
Fentimans to grow.
 REFERENCES
Porter's 5 Forces Definition (investopedia.com)

The Five Forces - Institute For Strategy And Competitiveness - Harvard Business School (hbs.edu)

www.coursehero.com

Fentimans | Home of botanically brewed beverages

Fentimans: how popular are premium soft drinks? (morningadvertiser.co.uk)

PESTLE Analysis of Japan