Sift Cupcake and Dessert Bar Case
Industry and Competitive Analysis
Exhibit 1: Dominant Economic Features
Market Size and Growth Rate
Nationwide cupcake sales projected to rise another 20% between 2009 and 2014
Retail bakery sales expected to grow 8.1% per year on average through 2014
106 cupcakeries in the bay area
Sift estimates net sales of around $961,000 in 2010
Number of Rivals
As of November 1, 2010, there were 106 cupcakeries in the bay area
Hundreds of additional bakeries, dessert bars, and other commercial venues also selling cupcakes
Grocery stores and big box in-store bakeries
Scope of Competitive Rivalry
Most companies compete locally and regionally
Few companies like Sprinkles compete nationally
Number of Buyers
In 2009, customers between 35-54 years old spent the most on bakery products
Largest percentage of Sift’s customers are ages 25-34
Largest percentage of Sift’s customers have total family income of over $100,000
Largest percentage of Sift’s customers are individuals with no children followed by parents with children under 10 years old
Shoppers buying cupcakes for themselves as dessert snacks
Parents buying for children
Shoppers buying for events such as birthday parties
Consumer Spending on Bakery Products by Age Group
Sift’s Customers by Parenting Group
Degree of Product Differentiation
Products are relatively undifferentiated among competitors
Rivals are making specialty cupcakes to differentiate
Product Innovation
Little new innovation in the baking industry
Small costs associated with R&D in the baking industry
Companies must research different recipes and the types of bakery products customers prefer
Demand-Supply Conditions
Industry is majority small businesses competing locally
Demand for bakery products increasing represented by the 8.1% that bakery sales are expected to grow per year through 2014
Cupcake sales projected to rise 20% between 2009 and 2014 in the U.S.
Pace
Exhibit 1: Dominant Economic Features
Market Size and Growth Rate
Nationwide cupcake sales projected to rise another 20% between 2009 and 2014
Retail bakery sales expected to grow 8.1% per year on average through 2014
106 cupcakeries in the bay area
Sift estimates net sales of around $961,000 in 2010
Number of Rivals
As of November 1, 2010, there were 106 cupcakeries in the bay area
Hundreds of additional bakeries, dessert bars, and other commercial venues also selling cupcakes
Grocery stores and big box in-store bakeries
Scope of Competitive Rivalry
Most companies compete locally and regionally
Few companies like Sprinkles compete nationally
Number of Buyers
In 2009, customers between 35-54 years old spent the most on bakery products
Largest percentage of Sift’s customers are ages 25-34
Largest percentage of Sift’s customers have total family income of over $100,000
Largest percentage of Sift’s customers are individuals with no children followed by parents with children under 10 years old
Shoppers buying cupcakes for themselves as dessert snacks
Parents buying for children
Shoppers buying for events such as birthday parties
Consumer Spending on Bakery Products by Age Group
Sift’s Customers by Parenting Group
Degree of Product Differentiation
Products are relatively undifferentiated among competitors
Rivals are making specialty cupcakes to differentiate
Product Innovation
Little new innovation in the baking industry
Small costs associated with R&D in the baking industry
Companies must research different recipes and the types of bakery products customers prefer
Demand-Supply Conditions
Industry is majority small businesses competing locally
Demand for bakery products increasing represented by the 8.1% that bakery sales are expected to grow per year through 2014
Cupcake sales projected to rise 20% between 2009 and 2014 in the U.S.
Pace