7UP PESTLE Analysis

Published in Companies category by MBA Skool Team, Last Updated: March 07, 2021

Here is a detailed PESTLE analysis of 7UP which examines political, economic, social, technological, legal & environmental factors.

Political Factors:

The political factors in the 7UP PESTLE Analysis can be explained as follows:

7Up is a popular non-aerated soft drink globally. Dr Pepper Snapple owns branding rights of the beverage in the US and PepsiCo owns the branding rights internationally. The brand is subject to national, state and local laws in the country where it operates. These laws span various aspects of the value chain and include production, storage, distribution, sales, advertisements, marketing, labelling, quality, safety, packaging, disposal, recycling and laws related to employment and workplace health and safety rules. Any non-compliance with these laws may invite penalties or fines.

For instance, the European Union has passed a law, making it compulsory for beverage bottles to have tethered caps by 2024, PET bottles must have recycled content of 25% by 2025 and plastic bottles must have 30% by 2030. Also, the brand has to comply with any changes in the tax regulations in the countries it does business in. For example, Saudi Arabia mandated that the tax rate of 50% on retail price of carbonated soft drinks will include sweetened beverages also. Such measures increase the cost of manufacturing 7Up, and even lead to fall in demand.

Image: Wikimedia

Economic Factors:

Below are the economic factors in the PESTLE Analysis of 7UP:

The spread of Covid-19 has had a negative impact on the operations and financial performance of the brand. National lockdowns were imposed to control the spread of the virus, which also resulted in reduced sales of soft drinks like 7Up.

Also, another factor has been an increase in demand from e-commerce channels, which could further affect the sales of the brand through brick-and-mortar stores. There are new, related costs to be incurred with respect to employee safety costs like personal protective equipment (PPE), credit loss allowance, write-off of inventory, etc. Also, the new norm of work-from-home has brought an increased focus and cost of information technology set-up. The continued uncertainty due to the pandemic could also make it difficult or costlier than before, access to credit. Additionally, the economic impact of the pandemic includes slowdown/recession and unemployment in different countries. This could again lead to reduced demand, and negatively affect the sales and profitability of the brand.

Social Factors:

Following are the social factors impacting 7UP PESTLE Analysis:

There are many changes taking place in the retail industry, with a major shift towards e-commerce channels. If the company is not able to maintain and grow good relations with e-commerce businesses, its financial performance could be impacted. Also, 7Up needs to maintain its offline presence in customer segments. There is also the risk that e-commerce channels and hard discounters take away the market share of the brand. Moreover, the retail landscape is changing in Europe, Latin American countries as large retailers are consolidating to sell more in the marketplace. At the same time, in recent decades, consumers have become very conscious about health risks associated with soft drinks. There is also growing body of research which states that overconsumption of beverages contributes to obesity. Thus, even governments are considering imposing taxes on sugar-based beverages. Such negative perception of the brand due to health risks, could affect the sales and profitability of the brand.

Technological Factors:

The technological factors in the PESTLE Analysis of 7UP are mentioned below:

The company is reliant on its information systems, that includes public websites, cloud services, etc. These systems are in place to for important functions such as creating an interface with customers and consumers, managing flow of orders from inventory, maintaining confidentiality of the 7Up brand and customer information, maintaining financial records, etc. Any shutdowns in company’s internal systems, security issues, etc. could hamper its operational functioning. Apart from the online security risks, the company also depends on certain third-parties for availing cloud-based services, payroll processing, health and benefit administration, accounts and finance-related activities, etc. Any breach of information or hacking of data of third-part providers, can be detrimental to the company image also.

This could also invite litigations, loss of goodwill amongst customers and reduced sales in future.

Following are the legal factors in the 7UP PESTLE Analysis:

7Up has to comply with various laws related to personal data protection and privacy in various countries it operates in. In recent years, governments have turned their attention towards the need to protect citizens’ personal data and pass related legislations in this area. Any violation of these laws could invite strict penalty, litigation, investigations, legal proceedings and even hurt the company image in this process. Also, the company needs to protect its intellectual property rights. However, different countries have different laws related to the protection of intellectual property rights, which may or may not be rigorously enforced. This is especially important for the 7Up brand that needs to protect its ingredient formulas to maintain its competitive advantage. Any infringement of intellectual property rights could affect the goodwill of the brand and lead to reduction in sales.

Environmental Factors:

In the 7UP PESTLE Analysis, the environmental elements affecting its business are as below:

In recent decades, there has been a growing body of research pointing to ill-effects due to climate change. Climate change can have an adverse impact on the productivity of agriculture. This could lead to less availability and costlier production of crops such as potatoes, sugar cane, corn, wheat, rice, fruit-derived oils, etc. This could increase the cost of raw materials sourced by 7Up in its production process. Also, climate change can also cause more natural disasters like floods, cyclones, earthquakes, bushfires, etc. Consequently, this could impact the supply chain and timely supply of the beverage to consumers. Covid-19 is a prime example of the crisis brought about due to lack of control of infectious diseases. The pandemic has had both supply-side and demand-side constraints in the economy.

Lockdowns have affected supply of raw materials to company facilities. Also, consumers’ incomes have fallen, leading to loss in discretionary spending. The sales of the brand have been impacted negatively due to the uncertainty brought about by this pandemic.

To conclude, the above 7UP PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.

This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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