Let’s introduce the biscuits market and its characteristics for you to fully understand how Michel et Augustin and Bonne
Maman are taking part of this whole, huge and let’s say tasteful industry!
 |
| Revenues from Biscuits Companies – source : Xerfi 700 stud |
One figure that matters and shows the good health of this market is that the global biscuit market revenues grew by 5% in 2013 (source: Xerfi tables).More specifically, the French biscuit market grew by 1.8% in 2011 to reach a value of $1,858.5 million.
(Source: Marketline)
The market for biscuit is one of the most promising sectors in terms ofgrowth for the near future. Indeed this sector is led by innovative packaging, continuously research for new tastes, shapes and rising health consciousness by consumers.
It is also relying on strong habits in everyday consumption among
families with children,
pleasure and
impulse purchases.
Moreover, we have different segments in this market:
- Chocolate and fruits biscuits (13.4%)
- Cookies (10.1%)
- In-store bakery biscuits (9.2%)
- Snacks (8.3%)
- Breakfast biscuits (2.7%)
Indeed, sales of chocolate cookies account for 21.2% of the global biscuit market’s value. In comparison, sales of butter-based cookies generate 18.9% of the market’s revenues.
What is also striking is that Europe is the largest biscuits market, accounting for 43.2% of the global market’s value! Among the European countries, France accounts for 10.5% of the European biscuits market value. And the USA generates a further 22.9% of the global market's revenues.
The biscuit market is also a competitive where almost 600
corporations are competing but still, it remains a concentrated market: indeed 4 companies are generating more than half of the global revenues of this industry, among them are the American Mondelez and the French Pasquier. We also have to notice the importance of the store brands. In France, Kraft Foods, Inc. is the leading player in the biscuits market, generating a 38% share of the market's value.
The main distribution channels for biscuits in the worldwide market are represented by supermarkets and hypermarkets: they actually account for 78% of the market’s value. Meanwhile, the distribution of biscuits by independent retailers accounts for a further 8.3% of the global biscuits market by value.
Furthermore in order to fully apprehend the world of biscuits industry,its core components and variables, let’s analyse it though a PESTEL:
Political:
Stable environment that doesn’t impact this industry.
Economical:
Strong progression in terms of growth in 2013:+ 5% due to:
- Even with a global economic situation that suffers from strong upheavals that led to a diminishing purchasing power among
the households, the demand in biscuits keeps rising!(+2% in volume and +5% in value in 2012)
- Rise in the imports and exports of biscuits
(between 2008 and 2012: + 13.3% in value)
Moreover as mentioned above, this is a highly competitive sector and product differentiation is one of the elements of the marketing strategy!
Socio-cultural:
The habits of households to buy biscuits and to consume at several times of the day are really strong and persistent.Consumers‘interest in bio and healthy, homemade products is rising and consumers are willing to pay the price for it.
Technological:
Strong investment in new technologies to fasten the production line and
the entire product life cycle
Ecological:
Two ecological variables have to be taken into account:
- The over-intensive agriculture
Legal:
This sector is highly restricted on the legal stage. Indeed, to protect consumers, the biscuits industrials have to abide by many laws and regulations. Among them you have:
- Compulsory traceability of the origin of the
products
- Identified suppliers and customers
- Quality and hygienic standards to respect
- Restricted use of food additives
- Since 2007, in every advertising (TV, radio,newspapers) related to biscuits needs to be mention the health risks of bad
nutrition.
Finally, we will analyse the French biscuit industry with a Fives Forces Analysis:
In this analysis, we will consider that in the biscuits market, the manufacturers of biscuits represent the players, the key buyers will be the retailers and the key suppliers will be the producers of raw materials.
Supplier power: 3/5
The power of supplier can be considered as moderate as on one side they are dependant on the manufacturers and there is a lot of competition. However, when a manufacturer is contractually committed to a supplier, it can suffer severe switching costs if it want to change of supplier. So both supplier and manufacturer have equal
power.
Buyer power: 3.5/5
Retailers are able to negotiate good deals because of their financial strengths and because they can switch from one product to another if it doesn’t sell as there are lowswitching costs. But as there are so many different ways to distribute a product for a manufacturer, the power of retailers is limited to some extent.
New entrants: 3/5
The biscuit market can be attractive with its high growth for new entrants but there are some obstacles to enter it such as strong brands and therefore brand loyalty. But niche products are possible for small scale or independent players!
Degree of Rivalry: 4,5/5
There is a high number of competitors in the biscuit market with broad range of products and differentiated characteristics. This is a highly concentrated market.
Substitutes: 4/5
Consumers often buy biscuits as snack food. So fruits, potato chips can replace biscuits whenconsumers are looking for something to eat for the break. But these products have their own drawbacks for consumers (perishable for fruits for example) and are more considered as options rather than substitutes and that’s why thethreat of substitutes has to be taken into account.
So after this analyse of the environment, we have a better perspective
regarding the biscuits industry.
By
Fraise
Sources:
Marketline – Biscuits in France – March 2013
Xerfi 700
Photo :
http://food.uk.msn.com/food/best-biscuits-to-dunk-in-your-tea?page=4
.jpg){kind=link}
