Honest Tea has acquired a number of business that assisted it in diversity and development of its item's profile. This is the thorough description of the Porter's model of 5 forces of Honest Tea Business, given in Exhibit B.
Competitiveness
Honest Tea is one of the top business in this competitive industry with a number of strong rivals like Unilever, Kraft foods and Group DANONE. Honest Tea is running well in this race for last 150 years. The competition of other companies with Honest Tea is rather high.
Threat of New Entrants
A variety of barriers are there for the new entrants to take place in the consumer food industry. Just a couple of entrants prosper in this market as there is a need to understand the customer need which needs time while recent rivals are aware and has advanced with the customer loyalty over their items with time. There is low danger of new entrants to Honest Tea as it has quite big network of distribution internationally dominating with well-reputed image.
Bargaining Power of Suppliers
In the food and drink industry, Honest Tea owes the largest share of market requiring higher number of supply chains. This causes it to be a picturesque purchaser for the providers. Any of the supplier has actually never ever revealed any complain about rate and the bargaining power is also low. In response, Honest Tea has also been concerned for its providers as it thinks in long-term relations.
Bargaining Power of Buyers
Thus, Honest Tea makes sure to keep its clients satisfied. This has led Honest Tea to be one of the devoted business in eyes of its buyers.
Threat of Substitutes
There has actually been a great hazard of replacements as there are alternatives of some of the Nestlé's products such as boiled water and pasteurized milk. There has likewise been a claim that some of its items are not safe to utilize leading to the reduced sale. Hence, Honest Tea started highlighting the health benefits of its products to cope up with the replacements.
Competitor Analysis
It has become the second biggest food and beverage market in the West Europe with a market share of about 8.6% with only a difference of 0.3 points with Honest Tea. Honest Tea attracts regional costumers by its low cost of the product with the regional taste of the items preserving its first place in the worldwide market. Honest Tea company has about 280,000 staff members and functions in more than 197 countries edging its rivals in many areas.
Note: A quick contrast of Honest Tea with its close rivals is given in Display C.
Exhibit B: Porter’s Five Forces Model
