Industry Trends (DP IB Business Management): Revision Note

Improving corporate social responsibility

• In recent years, companies that produce soft drinks, bottled water, and snacks have been working to improve their corporate social responsibility (CSR)

• This means they are trying to act in ways that are good for society and the environment

• These efforts can affect their reputation, sales, and profits

Soft Drinks Manufacturers

• Coca-Cola

  • The company has pledged to replace all the water it uses in its beverages and production processes

  • This involves reducing water usage, recycling water safely back into the environment, and supporting local water projects

  • These efforts aim to improve the company's image and address environmental concerns

  • However, Coca-Cola has faced criticism for reducing its environmental targets related to recycling and reuse of bottles, which has led to negative feedback from environmental groups

Bottled Water Manufacturers

• Belu

  • This UK-based company donates all its profits to the charity WaterAid, supporting clean water projects

  • Belu also focuses on sustainability by using recycled materials for its bottles and investing in eco-friendly filtration systems

  • These actions have enhanced its reputation as an ethical brand

• Nestlé

  • The owner of brands like Perrier and San Pellegrino, Nestlé has faced legal issues in France for using unauthorized methods to treat bottled water and extracting water from unauthorized wells

  • In response, Nestlé agreed to pay €2 million to avoid trial and committed to investing over €1 million in environmental restoration

  • While these steps aim to address the violations, the company has received criticism for its practices, which may impact its public image

Snack Manufacturers

• Thankyou

  • An Australian social enterprise, Thankyou sells snack products and uses the profits to fund safe water, hygiene, and food security programs in various countries

  • This approach has built customer trust and loyalty, as consumers feel they are contributing to positive causes through their purchases

Impacts of CSR Initiatives

Making factories greener

• In recent years, companies that produce soft drinks, bottled water, and snacks have been working to make their factories more environmentally friendly, or "greener"

• These efforts aim to reduce harm to the environment and can affect the company's reputation, sales, and profits

Soft Drinks Manufacturers

• Coca-Cola

  • The company has launched the "World Without Waste" initiative, aiming to collect and recycle the equivalent of every bottle it sells globally by 2030

  • This involves improving recycling processes and encouraging consumers to recycle more

  • These actions are intended to reduce environmental impact and enhance the company's public image

  • However, Coca-Cola has faced criticism for reducing its environmental targets related to recycling and reuse of bottles, which has led to negative feedback from environmental groups

Bottled Water Manufacturers

• Nestlé

  • The company has committed to managing water resources responsibly

  • This includes treating water with care and working closely with local communities to protect water sources

  • These efforts aim to ensure the availability of water resources and improve the company's reputation

  • However, Nestlé has faced criticism for extracting large amounts of water from local sources, which has led to negative perceptions in some communities

Snack Manufacturers

• Grupo Bimbo

  • This large bakery company has taken several steps to make its factories greener

  • They have invested in renewable energy, such as wind farms, to power their operations and use solar panels on their buildings to generate electricity

  • Additionally, Grupo Bimbo has developed biodegradable and compostable packaging to reduce waste. These actions have likely improved their reputation and could lead to cost savings in the long term

• Shearer's Foods

  • This snack company has built a manufacturing plant that meets high environmental standards

  • They focus on reducing waste by recycling materials and converting used cooking oil into biodiesel fuel

  • These efforts help minimize their environmental footprint and can enhance their public image

Impacts of Greener Factories

Reducing sugar and caffeine

• Soft drink manufacturers have been reducing sugar and caffeine in their products to address health concerns and meet changing consumer preferences

• This shift aims to combat issues like obesity and diabetes, which have been linked to high sugar intake and to offer alternatives for those sensitive to caffeine

• These changes also help companies comply with government regulations and maintain competitiveness in the market

Reasons for Reducing Sugar and Caffeine

• Health Concerns

  • High sugar consumption is associated with obesity, diabetes, and other health problems. Reducing sugar content helps address these issues

• Consumer Demand

  • Many consumers are seeking healthier beverage options with less sugar and caffeine

• Regulatory Pressure

  • Governments are implementing taxes and regulations to encourage lower sugar content in beverages

Examples of Product Reformulations

• Coca-Cola

  • Introduced "Simply Pop," a prebiotic soda with no added sugar, sweetened with monk fruit, and containing 6 grams of fibre per can

• PepsiCo

  • In regions like Sweden, the Netherlands, and the UK, PepsiCo has reduced sugar in its standard Pepsi by replacing it with artificial sweeteners such as Acesulfame K and Sucralose

• Irn-Bru

  • In response to the UK's sugar tax, Irn-Bru reduced its sugar content to less than 5 grams per 100ml in 2018, making it exempt from the tax

Use of Artificial Sweeteners

• To maintain sweetness while reducing sugar, manufacturers often use artificial sweeteners like aspartame, sucralose, and saccharin

• These substitutes provide sweetness without the calories of sugar

• Recent studies have raised concerns about the potential health effects of artificial sweeteners

  • Cardiovascular Risks

    • A Swedish study found that aspartame might increase insulin levels, leading to the development of larger and more fatty plaques in arteries, which can contribute to heart disease

  • Metabolic Effects

    • The World Health Organisation (WHO) has indicated that long-term use of non-sugar sweeteners may not aid in weight control and could increase the risk of type 2 diabetes and cardiovascular diseases

  • Cancer Concerns

    • The WHO's International Agency for Research on Cancer (IARC) classified aspartame as "possibly carcinogenic to humans," based on limited evidence linking it to liver cancer

Impact on Competitiveness and Popularity

• Market Performance

  • Studies indicate that sugar-reduced products perform comparably to their original versions, suggesting that health-conscious consumers appreciate these options

• Taste Challenges

  • Reducing sugar can alter the taste of beverages, potentially affecting consumer satisfaction. Manufacturers must balance health benefits with flavor to maintain popularity

• Regulatory Compliance

  • Adjusting sugar and caffeine content helps companies avoid taxes and meet government standards, which can positively impact their financial performance and public image

Using avatars in promotional activities

• In recent years, soft drinks, bottled water, snacks, and coffee companies have started using computer-generated avatars (digital characters created by computers) in their advertising campaigns

• These avatars help attract younger audiences, make brands more fun and interactive and allow companies to connect with customers online in new ways

Examples

• Coca-Cola

  • In 2025 the "Real Connections" campaign is focused on bringing people together in real life

  • While the campaign emphasises real-life relationships, it also uses digital avatars and virtual experiences to make advertising more engaging

• KFC

  • In 2019, KFC introduced a virtual Colonel Sanders avatar called "V.I.C." (Virtual Influencer Colonel)

  • This modern, digital version of the brand’s founder appeared on Instagram and social media, interacting with fans

  • It was part of a campaign to make KFC feel more modern and exciting

• Smartwater (owned by Coca-Cola)

  • Smartwater used a virtual version of actress Gal Gadot in its 2023 advertising campaign

  • It combined real video with digital effects to create an eye-catching commercial

• McDonald’s

  • In 2025, McDonald's introduced the "Taste the Future" augmented reality (AR) experience

  • Customers could scan McDonald's packaging with a mobile app to see virtual characters, play digital games, and watch digital chefs cook their food in AR

  • This helped make eating at McDonald's more fun and interactive

• Oreo

  • Oreo has created interactive online content and partnered with digital influencers to promote new flavours and limited-edition cookies

  • Oreo’s marketing often includes playful, animated characters that act like avatars

• Starbucks

  • Starbucks has experimented with personalised digital experiences, where customers can create their own avatars in the Starbucks app

  • Though Starbucks has not used computer-generated influencers, it has embraced digital marketing techniques to make its brand more interactive and engaging

• Chamberlain Coffee

  • This coffee brand was founded by influencer Emma Chamberlain and has used her digital persona in advertising

  • The company often creates cartoon-style animated versions of Emma in marketing campaigns.

How much do these avatars cost?

• Creating computer-generated avatars can be expensive, depending on how realistic and advanced they are

  • A simple animated avatar for social media may cost around $10,000 to $50,000

  • A high-quality 3D avatar for big advertising campaigns can cost $100,000 to $500,000 or more

  • If a company wants the avatar to interact with customers online (like a chatbot), the cost can be even higher because it requires artificial intelligence

• For big brands, these costs are worth it because avatars help them connect with customers, make ads more fun, and keep up with digital trends.