About Kirks Soft Drink Manufacturer

A brief introduction of the company

Kirks is a manufacturer of soft drinks, headquartered in Queensland, Australia. The company started manufacturing in 1959 with only two basic flavours. However presently the company manufactures soft drinks of a variety of flavours including lemonade, sarsaparilla, and creamsoda and so on. The range of products are now distributed under the banner of Coca-Cola Amatil in 2000. The agency started operations under the unified brand of Queensland Bottlers. The company have recently entered the market of beverages. They have developed a genre of flavoured beverages and started sales of brewed beer of various flavours in Australia, among which the brewed ginger beer is a market favourite. Backed by the utilities of the Coca-Cola Amatil, the company into the direct mainstream market in the 2000s.  However, the company received direct market confrontation from Coles in Australia. Nevertheless the company have been able to attract customers and have been able to maintain a successful market acquisition rate of more than 3% annually since 2005 (Coca-colajourney.com.au, 2018).

At present, after attaining a market size of 86% of the Australian beverage market, the company has started exporting their products under franchised distributorship in potential markets outside Asia like United Kingdom and also Malaysia within Asia. The company is going to have approximately 40%. The franchises would have market share in the manufacturing and share their sales dividend with the international distribution partner Coca Cola Amatil. One of themajor reasons the company have selectedto promotetheir products in these two countries is that the distributorship of Coca Cola in these two countries comprises of the market proportions of 85% approximately (Coca-colajourney.com.au, 2018).  

For each country provide a detailed analysis of

The current macro-environmental and geo-political forces impacting that country.

i) United Kingdom

Political Factors:

The UK government have imposed new regulations regarding the nutritive values of the edibles and the labelling laws. In case if there is a possibility of any negative impact that any beverage can cause, that should be specified on the labelling of the product. The Brexit rules are also applicable on the Kirks products in UK. This is why the Coca Cola franchise should enter into partnership with local agencies to set up retail distribution network. Besides, business franchise should also be given to the local manufacturing companies. The layout of the business should be framed in such a way that the UK limited business of Kirks have a partnership rate of over 30% from the end of the local companies of UK (Buchmann, 2016). As such, the trade tariffs would be applicable by 2.5% less (Coca-colajourney.com.au, 2018). Again, the market opportunities and the strategic aid that the local entrepreneur companies get from the EU, would get the company to gain market entry easier.

Market Overview

Economic Factors

The distribution of the business infrastructure among the local franchises would hamper the sales return rate. However, this would help in the alignment to the Brexit regulations and the trade tariff and the taxation rate that the company would offer is supposed to be less by 3% or above. However, as per Zurutuza and Marinelli(2014), in the UK market there have been an uncertainty regarding the implication of the Brexit laws. As an impact the prices of the Raw materials would be more and as such the production price can vary. The reduction of the market value of Pound is the reason for this ambiguity in the market.  

Socio-Cultural factors

The use of natural ingredients in beverage products is one of the recent trends among the UK customers. The customers of UK are becoming health conscious and they are even willing to pay premium prices for such authentic products. As per Srai et al. (2015), this is why the products of Kirks like Frutia and Portello have been in vogue andthe choice of ingredients and the naturalflavours are supposed to make the brand popular among the customers of UK.

Environmental Factors

The company also needs to consider the commitment of UK towards sustainability of nature.  UK is one of the consignees of the Paris Agreement.  This requires that the company have to adapt proactive policies for monitoring of carbon footprint. As opined by Hollender, Zapkau and Schwens(2017), a carbon footprint of more than 2.0 can have adverseimpact on fruit and vegetable harvest of the country.

Legal Factors

The company have to comply by the regulatory framework of the UK.  The stringent food manufacturing laws of UK have to be abided by. The teaming up with potential organisation like Coca Cola requires the company to abide by the UK competition laws. They  would enjoy the status  of being the  major  market competitor  in  UK  and requires to hold back from  adapting  any kind  of unethical means to prevent the smaller  and indigenous organisations from entering in to the market  competition. However at present the market condition of UK is turbulent.  The abolition of the few EU regulations means that the company have to relate and align with the employment rights of UK also. The same is with the health and safety regulations of the country also. As opined by Eriksson et al. (2015), the employment rights require the major market occupants of the potential industries like Food and beverage to employ more than 25% domestic’s staff (Cain, Moore & Haran, 2015). Furthermore, the use of natural sugars in the products should be at par with the permissible limit of the UK regulations. This is going to be a new challenge for the company n to keep the taste of their products intact alongside maintaining the permissible sugar level in their products (Coca-colajourney.com.au, 2018).  

Analysis of the Macro-Environmental and Geo-Political Forces for the UK Market

ii) Malaysia

Political Factors

The weakening of the Ringgit against the US Dollar owing to the political turbulence and the decisions of implementation of 0.5% higher GST in the country, have led  to the weakening of the operations of the big multinational companies into the beverage sector of the country (Broocks& Van Biesebroeck, 2017).  However Coca Cola being an established brand, they are aware of the marketing channels in Malaysia, and this is why the distributorship of Kirks’ products under Coca Cola is safe. The Malaysian government have decided to promote the organisations that have anindigenous workforce and supply chain. The taxation rebates that are going to be given to such companies would be about 50% higher than that enjoyed by foreign franchised companies (Bourreau, Sun &Verboven, 2016). The company also needs to build consolidated infrastructure in the country including warehouse and supply inventories, since the government has declared that with the falling value of the Ringgit, the import of raw materials is going to be costlier for the company. This is why, it seems that they have to bring slight deviations in the product line. The supply of products like “Snow-Drop” and “Pasito” have to be ceased in the Malaysian market, since these products are largely dependent on local Australian ingredients.

Economic Factors

Recent inflation and imposition of higher level of GST in Malaysia have led to a decrement in the business growth of foreign multinational Beverage companies like Kirks. However market analysis shows that the products of the local brands have received the backup of the government. Compared to local retail market of Malaysia, the business of the organised sectors that includes the 155 biggest shopping malls of the country (Ang, Benischke&Doh, 2015). Information gathered from the Managing director of the Savills Mall of Malaysia reveals that the corporate tax imposed on the products sold through the shopping malls incur lesser corporate tax and the accumulative GST returns. This is why the company have decided that local sub brands would be created for the sales purpose in the Malaysian market. Like other major brands like PepsiCo, the company is also planning to launch the products in the malls and bigger departmental shopping complexes only.  

Socio-Cultural Factors

The statistics of the Malaysian market of Food and beverage shows that the purchasing rate of beverages by the Malaysian women is more than that of the women. That is why, Coca Cola, the distributing partner of the company would adapt a gender biased marketing policy for the occupation of the Malaysian market, in favour of the Kirks products. Hence products like brewed Ginger beer or The Kole beer of Kirks would be projected as essentially masculine products in Malaysia. On the contrary, the women are more conscious about health and proper lifestyle. They generally prefer to keep the children under 12 years of age away from the beverages (Laufs&Schwens, 2014). This is why the company have to adapt an alternative sales strategy for selling the Kirks drinks in Malaysia. They have to project the products in such a way so that it reflects that can be helpful in providing energy to the children. Such advertisements would be helpful inenticing the customer to buy the products of Kirks.

Analysis of the Macro-Environmental and Geo-Political Forces for the Malaysia Market

Environmental Factors

The turbulence in the weather conditions would hamper the harvest of various ingredients that are required for the finished products of Kirks. As an outcome, the company is planning to release seasonal flavours of the products in the country.

Legal Factors

The consumer law in Malaysia is very strict.  The ingredients that have been used in the products in original needs clear specification on the labels and the covers. Other facts like Drug Laws are also applicable (Lojacono,Misani& Tallman, 2017). This requires that any product that any product that is consumable by people of all age groups, and is containing any chemical that are  above Schedule B level drugs, should have proper mention on the label graphics. This means the labelling and printing costs are going to be higher for the company.

An assessment of the potential dangers, risks and opportunities in the current of short term policies of each country

The UK market

The beverages that are being sold by the company are listed among the premium range of products. In this context, it requires mention that the consumer spending strength of the UK market is 110 billion GBP (Crowley, Song &Meng, 2018).  This statistics are certainly attractive for any international organisation who are trying to enter the UK market afresh. However, in the UK market, approximately 8500 new products pertaining to the FMCG industry are added. This would make the market competition of the new entrants tougher. About 80% of the foreign products entering the market are coming from the Asia-Oceania sector (Zhao &Priporas, 2017).  This makes the competition tougher for the company. The most feasible as well as challenging aspect of operating in the UK market is that the strength of the customer market in UK is almost 743 million which is almost one third of the whole  of Europe (Åslund, Forslund&Liljeberg, 2017).  Therefore any new brand gets a big market exposure after entering the new market of UK. However, on the contrary, the demographic trends and the demands of such a big customer base is ambiguous and at times confronting. This would make it difficult for the company to frame a comprehensive marketing and sales strategy. This is why the company have to carry on repeated market survey for understanding the marketing trends and the consumption demands of the various demographic groups.

The Malaysian Market

The mass forecast of grocery retail shows that the market of soft beverage in the Malaysian market is going to be high by the end of 2019. The market demographics would favour the products like carbonated and non-carbonated beverages along with bottled and packaged milk and beer. This means that almost all genres of products that the company manufactures are estimated to receive hike in sales in the market.  However, as per Pallis,Notteboom and de Langen,(2015), the infrastructure of the sales structure shows that the products that would be featured more in the supermarkets and the hypermarkets would receive 25% more customer acquisition rate that those products that circulates in the convenience stores and the other unorganised physical retail stores.

Conclusion:

After analysing the market entry conditions of both markets, it seems that the UK market is going to offer better market opportunities for the Kirks Company. The major factors that outsteps the market possibilities of Malaysia are the large size of the customer market of UK. The knack and propensity of the UK customers towards buying premium products is high. The marketing and sales channels of the country are easy to access.  The marketing and distribution channels of the Coca Cola Company in UK are much more proficient than that in Malaysia.  Again, the number of local manufacturing company that have a premium presence in the indigenous market is higher than that of Malaysia. This is why local franchising is going to be easier in UK than in Malaysia. The market size of Malaysia is smaller and the demographic complications of the Malaysian market are also much more. In this context, even if the initial entry barriers of the UK market like the Brexit regulation are high, the post entry phase of the market operations are going to be smoother in UK. Finally, it can be said that being a high GDP country, the market possibilities in UK are greater in general  than Malaysia, particularly with some of the EU regulations still existing in the UK market.

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