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History of Pokka Corporation

A company with a history of over 50 years, Pokka Corporation was established in the year 1977 and has grown to be Singapore’s No.1 RTD Tea brand. The company which was formerly called as Pokka Corporation Japan was procured by Sapporo food and beverage limited forming Pokka Sapporo Food and Beverage Limited. Currently sold in over 60 countries the company is known for its ready-to-drink beverages that represent freshness, health and vitality. The company also operates its own restaurant chain serving a buffet of cuisines. With over 40 quality products and over 5 awards for their quality, the company’s prime focus is customer satisfaction

According to the annual report of 2015 Sapporo Ltd, the parent company of Pokka Sapporo has been doing considerable well post the procurement of Pokka.  

The results have also mentioned the Pokka Lemon 100 as on their main products that has done tremendous sales. It has maintained its strong position in the market even after an increase of 4% in its price. The brand has also retained significant share in the non-chilled fruit juice category. This has made the tea and juice products the two main business pillars. The same has reflected in the results as well. The Food & Soft Drinks segment recorded net sales of ¥135.7 billion, up ¥2.2 billion, or 1.7%, year on year, and posted segment operating income of ¥0.4 billion, up ¥0.3 billion, or 258.5%. The R&D of the company has also received significant praise for its high electric field alternating current sterilization method for juice products which was honoured with a JSBBA Award for Achievement in Technological Research. The company has shown a 4% increase in the net sales when compared to the year before (Sapporo, 2015). Pokka Sapporo stands to be a leading contributor to these sales and hence there are plans of expanding the products offered by the same.

  • Well established in Asia Pacific and Singapore
  • Has over 50 years’ experience in the food and beverage Ltd
  • High brand quality
  • Significant presence and well know branding
  • Significant investment in research and development of products
  • Strong market domination with popular products such as Lemon 100 and Jasmine Tea
  • The company has a very little investment in Corporate Social responsibility
  • There a couple of products that the company is known for, making its other products unknown thereby decreasing sales of other products
  • Restricted to non-alcoholic beverages and limited cuisines
  • The company has a picture of selling only ready to drink beverages while that is not the actual case
  • Penetrating potential markets such as chilled juices
  • New products can be introduced, such as ice-creams as they already have the infrastructure in place
  • Helping customers identify their other existing products through proper branding and marketing
  • Highly competitive market
  • New competitors
  • Introduction of new products by fellow competitors
  • Price war
  • Inflation and taxation
  • Changing customer taste due to multiple options in the market

The Pestle analysis of the business environment in Singapore helps in understanding the external analysis of the company.

Singapore is easily one of the best countries to do business in given the support and stability of the government present (World Bank Group, 2015). With PAP being the main political party, the country is politically sustained (Visit Singapore, n.d.). Singapore has a pro-business environment, given that the country has tremendous organizations working in IT, logistics, Food and beverages and fashion. The tax rates when compared to countries worldwide is low, hence enabling new budding business to grow as well (Economic Development Board, 2015). The corruption in the country is also significantly low thereby making it efficient in administrative operations and a simpler government to company liaison (Fiona, 2014).

Products and Recognition

The economy of the country is trade oriented and has majorly benefited through the FDI (Foreign Direct Investment) policy. With a population of 5.5 million and a GDP of $471.9 billion the country has seen a growth of 2% and a 4% of 5 year compound annual growth (Ministry of Communication and Information, 2014). The FDI flow alone has contributed to $65.3 billion according to the 2017 index of economic freedom. The tax rates in the country is very competitive with the worldwide countries. The individual tax rate is 22% while that for corporate is 17% thereby making overall tax burden on domestic income to 13.4% (Janice, 2014). The country also values imports and exports that are 326 percent of the GDP. This growth is also observed in the sales of Pokka Sapporo which has seen a 4% increase in their overall sales (Joanne, 2014).

The Asia-Pacific culture and society is known for its discipline, values and loyalty (Iwabuchi, 2005). As mentioned earlier, the country has a significant population, however the growth rate is significantly low when compared to the increasing population of the world. (National Population and Talent Division, 2015). However, due to the same reasons the working age citizens of Singapore are likely to decrease in the coming years. Hence the country strives to maintain a better work life balance of all the employees in the country. Social life in Singapore is generally restricted to cafes and bars with family, friends and colleagues (Euro monitor International, 2015). The country has immense expectations from its young population and they strive to achieve cash, car, credit, country club and condominium at a very young age itself making them ambitious and hardworking (Hawks ford, n.d.). The work ethics in Singapore are remarkable for the very same reasons (Poh, 2008).

Singapore is one of the most technology embracing countries being home for several IT and innovative organizations. The country has an efficient telecommunications network with most of Asia-pacific making it a lucrative business center. The infrastructure, government rules and regulations and the readily available market is another key factor (Economic Development Board, 2015). The arena of technology is continuously supported by organizations with significant investments in research and development, and an effort to continuously improve the quality of the products that are delivered. The same is seen in case of Pokka Sapporo as well in their effort to design better and efficient systems for their juice production. Significant investments are continuously made to encourage innovation and cost efficient systems by the company (Enzing, 2011).

Pestle Analysis of Singapore

Trade is extremely important in Singapore’s economy and hence the need to make regulatory, import, export and other trade laws feasible is a prime requirement (EnterpriseOne, 2015). A major part of the GDP comes from the same and hence laws and regulations are designed in a way so that the changing business environment and startups have the opportunity to grow. Property rights and other related rights are in place. Given that the country was ruled by only one party since its independence, the passing of new laws is much smoother. The commercial courts of Singapore are known for their successful track record of settling cases. The World Bank has also rated Singapore as the first in enforcement of contracts. Hence the liaison of Pokka Sapporo has been an efficient run since inception.

Singapore being a small country has a considerable CSR activities given their contribution for sustainable ecology. The world issue of degrading environment is being acknowledged by the country. Pokka Sapporo being an international brand has taking the same seriously and are in the effort to make all their operations eco-friendly. Paperless transactions are already in place. The company is also investing in finding ways to improve their supply chain management through waste reducing and recycling machines to ensure that the by products in the process of production do no effect the ecological conditions.

To enter into a well-established industry such as food and beverages and compete with giants like Pokka Sapporo, new competitors would need considerable investments in their working capital, branding, marketing and advertising. It takes significant time to grow and be a serious competition to such companies as the new brand usually lack financing and experience. Also, even when a new product gains significant publicity, it is not enough to overthrow the existing brands and hence the threat of new entry is significantly low.

The world today is under a fitness fad and population is continuously growing conscious of the products they consume and use. Given that the company excels in packaged products that usually have preservatives and sugar, the chances of customers going for substitutes is high. Even in the non-alcoholic beverage section there is a significant increase in the competitors’ products especially Yeo’s, coca cola, marigold and hence the constant threat of substitutes is present

This is usually proportional to the number of products available in a particular section and it is needless to say the food and beverages is a highly competitive market, making the price war a tough stand. The quality of the product and the price has to be optimized and suited to the customers taste, else the chances of purchasing something else that is cheaper is present. This increases the customer bargaining power, given that the options available are numerous and the needs of the customer are ever changing.

Impact of Industry and Competitors on Pokka Sapporo

Bargaining power of supplier is significantly low on Pokka as they have their own manufacturing plant. The only vendors used are for raw materials as Pokka Sapporo also have their own logistics division. Since financing is not an issue and there are abundant number of suppliers in the market, the bargaining power of supplier does not make a great effect on Pokka Sapporo.

Rivalry amongst existing competitors: High

Pokka Sapporo is one the highly valued market brand in the food and beverage industry. It holds 51% of the market share (Euro monitor, 2015). Yet, it faces immense competition. The need to be the maximum shareholder drives other companies to introduce new products

It is not enough to understand our strengths and weaknesses alone. Understanding the same of the competition would help in determining better strategies and efficient methods to overthrow the competition.

Brand

Strengths

Weakness

Threats to Pokka

Yeo’s

v  Leader in the current market

v  Diversified products including Asian food products and sauces

v  Has over 30 types of beverages alone (Essays, 2015)

v  High product diversity

v  Very little focus on a single product

v  Price cheaper than that of Pokka

v  Conveniently available in several stores

v   High Global presence

v  Biggest competitor for Green Tea

F&N

v   Diversified products

v  Very low marketing activities

v  Products not as strong as Pokka’s

v  Their Ice cream line is quite famous and has received appreciation and may be a threat to the new chain of Pokka’s ice cream

Coca – Cola

v  World leader in non-alcoholic beverages

v  High investments in marketing branding and advertising

v  Global presence

v  Drop in sales despite hype

v  Healthier and non-soda products emergence

v  Customers being conscious about food and beverage intake

v  Global presence is a threat

v  Their Green Tea Ayataka in Singapore has the potential to substitute that of Pokka’s due to health factors

Marigold

v  Local market presence

v  Made in Singapore

v  VITAGEN with less sugar is their prime product that is healthy and nutritious (Kotler, 2015)

v  They have products such as low-fat milk, yoghurt, condensed and evaporated milk

v  Very low investment in advertising

v  Very little recognition in terms of quality

v  Cheap and easy available

v  Their healthier products may substitute the products of Pokka

Pokka Sapporo has been in the industry for over 50 years, thereby helping it form a steady chain of vendors and suppliers of the various raw materials in use. The wide variety of channels available and the vendor array with Pokka makes procurement pretty simple. Forming such a network takes significant time and effort and it is difficult for competitors to duplicate. The company also has its very own manufacturing unit, making the dependency on the vendors a bare minimum (Markets Bounce Back, n.d).

The manufacturing plant of Pokka Sapporo is semi-automated and has reduced human intervention. Forecasting, planning, budgeting and logistics are all prepared well in advance to ensure smooth operations. Pokka also makes significant investments in reduce the cost of sales good through proper scheduling and a well-integrated planning and manufacturing unit.

Pokka Sapporo has its own logistics chain, making the process of distribution simpler. Also operating in about 60 countries makes the reach of Pokka strong. With over 300,000 square feet of storage, the company has imports and exports done constantly. The logistics wing of Pokka makes the distribution un-imitable as there are almost no rivals that have their own distribution wing. This reduces the price of Pokka products drastically (Georgetown University, n.d.).

Pokka activity participates in several award nominations and has a won several for their quality and innovation. Marketing is taken seriously at Pokka and their effort to diversify their distribution channels into vending machines and restaurant chains prove the same. Though these can be easily imitated by competitors, the Pokka brand has been around for several years now and has a loyal customer base.

Focus on Sustainability and Innovation

The prime objective of Pokka now has to be to make sure that they sustain the existing customers. Recent research as shown that existing customers in the industry tend to spend around three times of what new customers spend (Kotler, Brown, Adam, Burton, Armstrong, 2007). Hence, the market gained through the existing customers is much more compared to what would come off new customers. Also, through marketing and relationship building customer satisfaction can be improved.  Loyalty programs and efforts to identify existing customers would be beneficial to Pokka.

The market today is also seeing a shift from carbonated drinks to ready-to-drink preferably healthier options. Pokka does have a good product base but does not cash on this opportunity. Though the motto of vitality and health is embedded in Pokka, the current strategies do not take in to account the nutritional value of Pokka’s products. Using this factor through the right marketing trend can make customers see the potential in Pokka’s products there by increasing the sales.

Pokka café has already been a part of the Pokka Sapporo family through its business in Hong Kong. Adopting to the bottom-of-pyramid strategy, this concept should now be adopted to Singapore as well since the company has significant presence in the market. The stores can initially be opened in the areas such as Orchard, Bugis and Dempsey and later move to places such as Heartland Malls, once the business is completely stabilized and easily scalable.

The café trend is currently seeing an incline in the Singapore market, especially amongst young adults, café fest and café hopping that are being witnessed by thousands of people around the island (Boh, 2014). Being a regular spot for breaks and catch-ups the trend of café is a prominent money minting idea when implemented correctly. The country in 2015 alone has seen the opening of about 200 new cafes as an indication to the growing business (Daniel’s Food Diary, 2015).

Pokka already holds a significant share when compared to its competitors in the food and beverage industry with efficient, cheap and high quality products. Introducing Pokka Café would be a boost to increase the existing market share and also adding younger customers to their current customer base.

Though the strongest market of Pokka is the beverage industry with its ready-to-drink beverages, the company already has significant presence in the food industry through its restaurant chains namely Tonkichi, Rive Gauche and Domani. Since the company does not have a dominant presence in this industry it would be beneficial to add on to the same through establishment of Pokka Café in the country of Singapore. The company with its quality products can make a stand in the food industry as the brand value would be under the Pokka’s name and not covered under the name of other restaurant chains (Ray, 2010).  

The Pokka cafes would be selling all the Pokka beverages such as their fruit teas and juices. Any new products being introduced by Pokka can be tested at these cafes. Samples can be given out as an understanding to how well the product would be do in the market. For example, their new ice-cream chain can be given out and put on the menu of these cafes. Cakes and other products from the existing restaurant chains can also be served, making the café a lucrative place.

The idea behind the cafes is to provide space to the teenage trends and make room for the new generation customers (PUB Singapore, 2011). It is pretty obvious that the generation gap between the existing customer and the budding new customers has to be acknowledge and Pokka cafes can be the right investment (Hongjun, 2006). This would also help the company get a foot hold of the food industry thereby increasing their market share.

Organic expansion would be the prime driving vehicle for Pokka’s new strategy. New products being created form the scratch in their manufacturing plant and distributing through their logistics is already cost efficient. If the distribution center is also that of Pokka, the company can significantly save on the cost of goods sold. This would allow Pokka to have complete control on the supply chain from production to sales adding to the current strengths of the company, making it a much stronger competitor in the market (Christian, 2014). The vending machines in place are contributing to this idea but a Pokka café would help the company grow in both food and beverage industry.

Pokka’s available resources

Resources that could be used for Pokka’s Cafe

v  Its own Research and development section.

v  History and experience since 1977

v  Grade 'A' certification under BRC Global Standard Food (Pokka Singapore, 2013).

v  With its own R&D the company can create its own variety of ice creams using its present recipes of ready to drink, thereby creating a new trend

v  Given their quality accreditation the ice creams can also be of highly quality and a varied taste from what is available in the today’s market

Its own manufacturing base and production line

The company has its own production line and space in place for introduction of new items. Hence the worry of manufacturing plant an inventory is not an issue, there by adding products to the Pokka café

Existing Restaurants

The present cuisines can be introduced into Pokka café or they can be taken as an inspiration to create more teenage friendly dishes especially finger food. Also, the experience in food industry is an added strength (Pokka Singapore, 2013).

Existing Pokka Café in Hong Kong

The strategies used can be tweaked to the Singaporean environment and the base issues that need to be handled when setting up the same already have solutions

Minimizing costs and Maximizing profits the concept of Pokka cafes in Singapore can be a helping hand to the company’s existing sales adding new customers.

The strategy of Pokka Sapporo should be to inculcate a cost efficient approach. The entire idea of any business is to increase the overall sales of the company and maximize profits. The same can be done by reducing costs of production and manufacturing. This would not only increase the profits but will also give the company a chance to play better at the price war, making their products cheaper and easier to purchase (Borneo, 2015). The possibility of keeping the cost of products low especially with new products heavily depend on the customer responses. The ideal way of gathering the same would be through feedback. Feedback from customers and their suggestions can be taken into consideration when working on new products and the same can be tailor made to meet the preferences of the customers (Rahimah, 2015). Following this method would leave the company out of the questions of whether or not the product would be a hot in the market as the company will have a fair idea of what the customer likes and does not like. This therefore reduces the chances of producing products that the market does not need (Suttle, 2015).

To increase the cost saving the company can make use of their existing value chain and adopt the same for the new products. Making use of the current quality control system in place, the chances of rejected batches even for the new products is low. The process of producing the goods can be changed to include the manufacturing of the new products. The current production line can be tweaked to incorporate the requirements for producing the new product thereby decreasing the investment required in the initial setup. Cost management and marketing strategies have always been a key factor in several succeeding companies and the same can be a guiding factor to make Pokka’s a brand in the industry.

Customizing would be the key factor here for Pokka’s success. Customers are always of varying tastes and it is necessary to cater to as many as possible. The motto being to establish relation with the younger crowds, the cafes of Pokka would be more teenage oriented, with hip ambience, networking capabilities and modern cuisine with Pokka’s original touch (Alex, 2012). This would be the differentiating factor for Pokka.

The existing products of Pokka are pretty famous but the company misses to use the new skills of marketing and technology in its agenda. The company can make use of three main strategies to increase its sales in the current market with its existing products itself. The key drivers here would be to make use of social media to promote existing products to consumer, introduction of loyalty and rewards programs to highlight and appreciate existing customers and taking up CSR activities as an integral part of the company’s operations to help consumers understand the care the company takes with its products (Cecilia, 2014).

The current market trend is into supporting companies that do something for the society in return. Though the Pokka brand has fairly little to do with CSR activities it is crucial at this point that they adopt the same as such companies have a better picture in the current market. The trends of social media marketing through various online applications has been increasing exponentially since the advent of smart phones and internet. With excellent telecommunication system in place, Pokka Sapporo can make use of the same to brand and reach the customers in much cost efficient ways. Several companies are now coming up with loyalty programs that appreciate and recognize customers that have been with the company for a long time. This makes the customers feel special and hence incorporating the same would be beneficial to Pokka Sapporo

Marketing: Marketing through social media is the new fad in the world, given the extensive connectivity and the cost reduced pricing of both smart phones and network providers. Today, almost all leading companies have flash sales, advertising and branding done through social media. Even the social media applications are facilitating the same by providing the option of advertising the products and services of various organizations on their platforms. Facebook has been doing this for quite some time now through their advertising options. The newer apps such as Instagram had very recently adopted the feature by publishing sponsored ads on the application through simple videos or images. YouTube, the new TV has adopted the same quite some time back by playing ads before highly viewed videos, thereby reaching to customers of all ages and trends. Making use of the same can be a highly efficient marketing strategy. For example, since people are becoming more conscious about healthy habits, the company can create a 5 second video of their green tea and play it before all highly viewed fitness channels in YouTube. This would target exactly the right kind of customers. On Instagram the company can tie up with several models who have millions of followers and post images related to health, fitness and diet to promote Pokka’s products on the application.

CSR activities are currently extremely low in Pokka Sapporo’s arena. They company’s website does not talk anything about the same. CSR can be an efficient tool if you used correctly in gaining sales. Procuring from only fair Trade suppliers can be one of the most cost efficient and marketing strategy the company can apply. As today, the need for fair trade is continuously growing Pokka could become a front runner in doing the same, there by being a leader in CSR activities at least in the ready to drink beverage industry (Robins, 2015).

The appreciation of customers can be done through loyalty programs where the customers can collect points and redeem the same on purchase of products. Providing better loyalty programs for customers who procure in bulk can be an additional benefit provided by Pokka. This ensures that the exiting customers keep buying the products there by decreasing the chances of loss of customer base.

CSR activities cost tremendously less when compared to the gains they bring into the company. Adopting Fair Trade would also increase the market value of the company. The traditional billboards and Television ads reach a mere amount of people when compared to the reach of social media. A single post gone viral can tremendously increase the sales of the company and the amount of investment required in posting ads is not much when compared to the traditional ways. Again the number of people the ads reach is high.

Pokka Sapporo has been around for years and hence the brand would be easily identified on social media than upcoming companies. The loyalty program would be easily adopted given the huge customer base of the company. The initial implementation may take time, but identify existing bulk orders and appreciating these customers would make the loyalty program a hit. There are very few beverage companies that work on CSR activities and Pokka Sapporo could be the one leading such programs.

Conclusion

Pokka Sapporo has been the market leader for quite some time now and to improve its sales and gain new customer base it would be required that the company adapts the new technologies, market trends, networking capabilities and effective supply chain into the daily operations. The company also needs to concentrate on their restaurant business as they barely have presence in the food industry when compared to other forerunners. Making use of the heavy investments that the company can afford, the programs and strategies suggested such as CSR activities, loyalty programs, Pokka Cafes and social marketing can be easily and efficiently implemented into Pokka’s business helping it sustain its current position in the market

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