Uk Biscuit Market

Topics: Marketing, Pricing, Product management Pages: 9 (3233 words) Published: March 18, 2010
External Analysis of the UK Biscuit Market 1.1 Definition *and Growth *of the* UK Biscuit* Market Figure A:
{draw:frame} Source: Data Monitor (2008, (a))
Furthermore, Mintel (2009, (a)) states how sales within the industry grew by 12.4% between 2007 and 2009, with both sweet and non-sweet biscuits contributing to theses impressive figures. Indeed, they also point out that the UK biscuit market is worth around £2.1 billion, so there is continuing evidence to suggest that the industry is consistently growing. *1.2 – Key Drivers of* the UK Biscuit Market

Healthy eating is also an important issue for children because of the alarmingly high levels of obesity. Many schools have now banned vending machines and chocolate products in lunch boxes in an attempt to combat this problem, opening up opportunities for firms to develop healthier products. The Government has set targets to reduce the proportion of over-weight children, by introducing various schemes in schools to help parents and children develop a greater understanding of the risks associated with unhealthy eating (BBC, 2004). 1.3 – Competition in the UK Biscuit Market

There are many competitors in the UK biscuit market, with the main being Burtons food, Nestle, United Biscuits, Kellogg’s, Go Ahead and Weightwatchers. Burtons food supplies biscuits which include Maryland cookies, Jammie dodgers and Wagon Wheels. They have reported yearly sales of £227.6m and pre tax profits of £5.3m, which has actually seen a decline from the previous year. (Mintel, 2009, (b)) Nestlé is a widely based food group covering drinks, chocolate, biscuits and so on. Nestlé are currently looking into healthier options, by reducing calories and fats in their bars. (Nestlé, 2009) Unite Biscuits supplies the market leading biscuit brand Mcvities. United Biscuits is another company which is focusing on healthy eating, recently having cut the amount of saturated fat in there biscuits by up to 50%. (United biscuits, 2009) An overview of the competition in the UK biscuit market can be found in appendix 1, and a list of each competitor’s brands can be found in appendix 2. *1.3 – The UK Biscuit Market *Environment

1.3*.1 *Porter’s Five Forces
Buyer Power
Supplier Power
Appendix 4 reviews the suppliers’ power within the market. Data Monitor (2009) reports how suppliers possess power to a certain extent due to the switching costs involved for biscuit companies when changing supplier. However, the lack of differentiation in the raw materials and ingredients supplied means that their power is only “moderate” (Data Monitor, 2009). Threat of New Entrants

Appendix 5 presents an analysis of the threat of new entrants in the UK biscuit market. Data Monitor (2009) claims that there are aspects of the market which are attractive to new entrants, such as the fact that most styles and shapes of biscuits are easily replicable. However, the high fixed costs involved with production and the consumer brand loyalty which exists in the market both create significant barriers to entry for new entrants, meaning that their threat is only moderate (Data Monitor, 2009). Threat of Substitutes

Appendix 6 shows the factors which influence the threat substitutes pose to the UK biscuit market. Data Monitor (2009) states how there are many possible substitutes for consumers and retailers, such as fruit and crisps, but that these may be inferior to biscuits. For example, fruits have a shorter shelf life and so may be more costly to store, and other snacks may take up more space. Nevertheless, the threat of substitutes is still seen as moderate (Data Monitor, 2009). Rivalry

Appendix 7 looks at the different factors which influence how fierce the competition is in the UK biscuit market. There are high fixed costs within the industry, and “capacity increases are relatively easy to implement” (Data Monitor, 2009: 20), both of which increase the intensity of the competition between...
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