Breakfast Cereals in Uk 07

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Breakfast Cereals in United Kingdom 2007

Introduction:
Aim:
The aim of this report is to discuss whether
The change of macroeconomic situation is an opportunity or threat for United Kingdom’s breakfast cereal industry. Compare the external microenvironment that affects firms in which breakfast cereal industry operates with the help of PEST analysis. To evaluate the operational strategy that affects the level of competitive environment in an industry using Porter’s five force model.

Why I chose this industry:
Cereals are a great start to the day.
“Breakfast like a king, lunch like a prince and dine like a pauper." By Adelle Davis Like most proverb says, this one hold more than a gram of truth. Breakfast cereals are certainly the most important meal of the day. It is a time when we ‘Break the Fast’ of the night, which can be anything up to 10 or 12 hours. The nutritional benefits of breakfast, facts suggest that this important meal provide a number of other benefits to give us the best start of the day. Breakfast cereals industry is diverse and has come up with new exciting flavors. There is an increase in the market with consumption of oats, muesli and high- fiber cereals, since 2002. Without doubt, health is the key factor that drives the expansion of the industry and consumption. This is one of the most growing industries despite the market is saturated and that cereals have been facing increasingly fierce pressure from alternatives, such as cereals bars and croissants.

The breakfast cereal in United Kingdom has also grown in value terms increasing by an estimated 9.5% between 2002 and 2006, to £1.23bn at retail selling prices (RSP) reflecting the growth in volume and the shift towards premium – price products. There has been offset to some extent by aggressive price discounting by the major multiples. Some cereals have also come under fierce attack for their allegedly high sugar, fats and salt contents. In addition, they have placed more emphasis on their brands' health credentials, and new product development (NPD) has followed this trend. The market appears to be very strong, and has healthy image, are convenient to use and are already a well-established item in most people's kitchens. However, they should continue to be beneficiaries of the two major trends influencing food and drinks markets, not just in the UK but around the world — namely demand for healthy and convenient products.

Boundaries:
As the topic of this easy is analyzing the breakfast cereals industry in United Kingdom, emphasis is on the source related to United Kingdom’s environment during the process of collecting materials. The data statistics reports given was collected were one or two years before. There was no much reports available for reference. Moreover, the materials collected in this research are secondary data. To analyse the market efficiently primary report has to be used.

Industry Sector:
Sector introduction:
The cereal market has managed a strong level of growth in the market volume and values in United Kingdom since 2000. The breakfast cereals market has grown over £1,090 million (2002) to £1,280 million (2007) with over 95% of house stock breakfast cereals [23,24]. There is a strong growth of 17% in the size of household penetration over last five years [23]. The volume of consumption of the cereals has been 432,000 tonnes in 2007 with a growth of just 7% over this period [23,1,2,3,4]. Over 87% of the household consume breakfast cereals twice every weekday. There are reports, which say that United Kingdom is the second highest global consumer of Breakfast cereals, [24]. This has occurred due to strong permiumisation in the market, as there is higher value of products launched. There is always demand for products that delivery high taste and quality with health as superior, [23].

The revolution towards healthy eating has been used by the breakfast cereal manufacturers, who make use of their intrinsic...
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