Political and Legal Environment:
As government is the governing body in each country and their intervention is always there when companies are doing business, the objective of these regulations are to make the businesses in compliance with the country law and protect consumers. As consumers lifestyle is changed and outside eating and ready food item consumption has become popular culture and people are now consuming a lot of fast food and snacks and the huge consumption of these snacks resulted in critical health problems such as obesity, hearth diseases, cholesterol problems and others. government is imposing different restriction on the producer of crisps and snacks through different initiatives one of these initiative is campaigns is 5 A DAY or Health School Status to force the producers to launch healthier alternatives because in school children consume a lot of snacks and this result in obesity and other health concerns. Other restriction is on advertisement to children which has direct effect on children’s preferences and this restriction has direct negative impact on the demand for chips and snacks. Food labelling is another issue which has its effect on consumer choices. Food item labelling raises awareness of consumers about the nutrition contents of food items and this makes consumers more selective in their choices toward healthy eating. Crisps and Snacks - UK - May 2007 Broader Market Environment Mintel Database Economical Environment:
As economics is all about scarcity of resources and in economic environment of snack food businesses in UK face rise in cost of resources of business. increase in raw material price put a lot of pressure on the companies’ profit margins and these escalation of prices is a major challenge the producers of crisps as well as it affect the consumer confidence level. However the snacks and chips market has shown stable growth in last couple of years because of their nature which comes as indulgent , low involvement and impulsive product category with lower unit price. The key element in the growth of snack market in last few years is as a result of the fulfilment of customers needs and wants in spite of increase in the prices of business resources. Walker Chips Business Analysis and MarketingPlan Hot and healthy http://www.scribd.com/doc/47671432/Walkers-Final In January 2011 increase in world food prices happened and this increased the prices of oils such as sunflower and palm oil by over 50% which is one of the main commodities which is widely used in producing of chips . Crisps and Snacks - UK - May 2012 Broader Market Environment Mintel Database As the demand for larger shared bags of snacks increased by consumer the sales volume will increase by 3% in 2011 but meanwhile commodity price will raise by 5% . In 2011 the snack market was expected to grow 6% in term of value and 3% in terms of volume. In 2010 approximately 85% of population in UK eat chips and 11% eat chips daily. From these statistics of consumption we can understand that the demand for chips will be strong and will grow more and more however the main factors in short term for the growth of snacks and chips products are expected to change by consumer as their disposable income continues to grow, on the other hand the trend will go along with increase in demand for healthy alternatives SWEET AND SAVOURY SNACKS IN THE UNITED KINGDOM Euromonitor International December 2011-PASSPORT
From 2011-2016 the indulgent product categories are expected to grow by Compound Annual Growth Rate CAGR over 2% PASSPORT-PACKAGED FOOD IN THEUNITED KINGDOM Euromonitor International November 2011 PAGE 19
Why doesn’t the Government tax crisps and savoury snacks? It does - crisps are already subject to VAT at the standard rate of 20%. 5 | Page
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