IB Business Management HLTopic 8 — Pre-Released Statement 2025Paper 1Industry context~12 min read
Trends Shaping the Industry
Three things are changing how drinks companies operate: what goes in the bottle, how the bottle gets made, and who appears in the advert. Myt is doing all three at once. Each one costs money now and pays off later, which is exactly the tension a 10-mark question wants you to argue about.
📚 What you need to know
Sugar and caffeine reduction is driven by health concerns, consumer demand and government taxes.
Replacing sugar with artificial sweeteners solves one problem and creates another, since sweeteners face their own health criticism.
Greener factories mean renewable energy, less waste and recyclable or biodegradable packaging — with heavy upfront cost.
CSR must be genuine. Firms that announce targets and miss them face public backlash.
Computer-generated avatars are being used in advertising to reach younger, digital audiences.
Avatars are expensive: roughly $10,000 to $50,000 for a simple one, and $100,000 to $500,000 or more for a high-quality 3D campaign character.
The three trends side by side
Useful exam move: rank them. Sugar reduction is forced by regulation, so it comes first. Avatars are optional, so they come last.
Trend 1: reducing sugar and caffeine
Drinks companies across the world have been cutting sugar and caffeine, for three reasons that stack on top of each other: health evidence linking high sugar intake to obesity and diabetes, consumers actively looking for lower-sugar options, and governments introducing sugar taxes.
The industry response has been reformulation. In the UK, Irn-Bru cut its sugar content below the tax threshold in 2018. PepsiCo has reduced sugar in standard Pepsi in several European markets by using sweeteners such as acesulfame K and sucralose. Coca-Cola has launched prebiotic sodas with no added sugar, sweetened with monk fruit.
But sweeteners are not a clean escape
Research has raised questions about the long-term effects of artificial sweeteners. The World Health Organisation has indicated that long-term use of non-sugar sweeteners may not help with weight control and could carry other risks, and its cancer research agency has classified aspartame as possibly carcinogenic based on limited evidence. Whether or not consumers follow the science closely, the headlines affect what they buy.
The trap in this trend. Myt is being pushed away from sugar and towards sweeteners, and criticised at both ends. The genuinely strong answer is that reformulation is necessary but insufficient — Myt also needs products that were never built on sugar in the first place, which is exactly what Honest Water and the healthy snacks idea are.
Trend 2: greener factories and honest CSR
Drinks and snack makers are investing in renewable energy, waste reduction and better packaging. Some have gone a long way: bakery and snack producers have installed wind and solar generation, developed compostable packaging, and converted used cooking oil into fuel. Others have set high-profile recycling targets.
The pattern to notice is what happens when the promise and the delivery come apart.
What firms gain
What can go wrong
A better public image, attracting customers who care about the environment.
Green technology needs significant upfront investment, which hits short-term profits.
Lower running costs over time, since renewable energy and less waste reduce bills.
New processes can slow production down or require special materials, raising costs.
Easier compliance as environmental regulation tightens.
Missing announced targets invites criticism from environmental groups and damages trust.
Support from governments and investors focused on sustainability.
Buying a bottled water business while promising less plastic looks inconsistent.
🤔 Why a missed target is worse than no target
A company that says nothing about the environment is judged on its behaviour. A company that announces ambitious recycling goals and then misses them has handed campaigners a measurable failure and a quotation to use against it. That is why CSR credibility depends on whether the commitment is specific, verifiable and actually delivered. For Myt, whose green factories are still only a plan, this is the sharpest risk in the whole case.
Trend 3: avatars and digital marketing
Drinks, snack and coffee companies have been experimenting with computer-generated characters in advertising. Some have created virtual versions of a brand’s founder to appear on social media. Others have used digital versions of celebrities, or built augmented reality experiences customers can unlock by scanning packaging. Coffee brands founded by influencers have turned the founder’s own image into an animated character.
The appeal is real: avatars reach younger, digital audiences, they work in every market at once, they never age, and they cannot cause a personal scandal.
What it costs
A simple animated avatar for social media: roughly $10,000 to $50,000.
A high-quality 3D character for a major campaign: $100,000 to $500,000 or more.
An avatar that interacts with customers like a chatbot: higher still, because it needs artificial intelligence behind it.
Put those numbers next to Myt’s other plans. Modernising factories on six continents costs vastly more than the most expensive avatar. If a question asks about spending priorities, the avatar is the cheap experiment and the factories are the real decision.
Worked examples
WORKED EXAMPLE
Explain one advantage and one disadvantage of Myt PLC investing in computer-generated avatars for advertising. [4]
Advantage
An avatar can be used in every market at once and never behaves badly in public, so it removes the reputational risk that comes with hiring real influencers. [1] For a multinational operating on six continents, one consistent digital character is far easier to manage than dozens of separate influencer deals. [1]Disadvantage
High-quality avatars can cost well over $100,000 to create, and audiences may find them less trustworthy than a real person. [1] Since Myt is trying to rebuild credibility on health and sustainability, an obviously artificial spokesperson could work against the honest image it needs. [1]4 / 4The disadvantage links marketing back to the CSR theme. Connecting two themes is what strong application looks like.
WORKED EXAMPLE
Discuss whether Myt PLC’s decision to modernise its factories is a good long-term strategy. [10]
Define and frame
Modernisation means upgrading factories or equipment to improve efficiency, quality or environmental impact. The question is whether the long-term gains justify a very large short-term cost.
Argue for
Energy-efficient equipment lowers electricity and water bills, so unit costs fall permanently. Regulation on emissions and packaging is tightening, so upgrading now avoids being forced into it later at higher cost. It also supports Myt’s CSR position, which matters to governments, investors and increasingly to customers.
Argue againstMyt has factories on six continents, so doing this everywhere is enormously expensive. As a publicly held company it must justify falling short-term profits to shareholders, and it has just spent heavily on two acquisitions. New processes can also slow production or need special materials, pushing costs up rather than down.
Judge
Modernisation is the right long-term strategy, because regulation is moving in one direction only and the savings are permanent rather than one-off. But it should be phased, factory by factory, starting where energy costs are highest. The real risk is not the strategy itself — it is announcing it loudly and delivering it slowly, which turns a genuine investment into a greenwashing story.
Both sides, applied, decided, and conditional“Phased rather than all at once” is a practical recommendation. Examiners reward realistic judgement.
💡 Exam tip
Rank the trends. Regulation-driven changes are urgent; optional marketing experiments are not.
Use the avatar cost range. Real numbers make the answer concrete and cost you one sentence.
Say “short-term cost, long-term saving”. It fits sugar reduction, factories and avatars alike.
Bring in the shareholders. A PLC has to defend every drop in short-term profit.
Watch the contradictions. Green promises plus plastic bottles, and honest branding plus artificial spokespeople.
Name real examples sparingly. One or two industry examples show awareness; a list looks like padding.
⚠ Common mix-up
Less sugar is not automatically healthier in consumers’ eyes, because sweeteners carry their own doubts.
Greener does not mean cheaper straight away. The savings come after the investment.
Recyclable is not biodegradable. Different processes, different claims.
An avatar is not free after it is built. Campaigns, updates and AI features all cost more.
CSR is not a marketing campaign. If it is only a campaign, that is the definition of greenwashing.
A trend is not a strategy. Myt still has to decide how far and how fast to follow it.
Up next: Practice Questions to Try — a full bank of Myt PLC questions across every command word.
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