ABC FOODS: GLOBAL MARKETING AND INTERNATION EXSPANSION STRATEGY REPORT
By
Abdulalim Bachani 07079419Word Count: 3190
Tutor: David P Evans
1
Rationale:
ABC Foods are UK market leaders of food intolerance products
specialized in developing and producing diabetic friendly food such as
gluten free bread, cakes, biscuits, chocolate, bagels, muffins, white and
brown rice and diabetic friendly drinks range. They have well recognised
brands in the UK such as G-F Essentials, G-F Delights and D-F Juices
occupying majority shares in the home market and are known for
developing nutrient rich and good quality products. ABC Foods have a
high level of quality controls and all products are approved by the
Department of Health. Since establishment in 2005 ABC foods have
shown strong profitability over the years and now show competence to
expand abroad into foreign markets.
According to the International Diabetes Foundation
There are 285 million people worldwide with diabetes and these
figures are likely to increase 54% by 2030 in major regions of the
world.
Global Estimates of the prevalence of diabetes for 2010 and 2030 - J.E. Shaw *,
R.A. Sicree, P.Z. Zimmet
According to World wide outlook for Food speciality products,
The World wide market potential for food speciality retailers is 54.4
billion.
INSEAD, 2005-10 www.icongrouponline.com
The statistic clearly outlines the expected major increase in diabetes over
the next two decades and the market potential defining a need for
products by ABC Foods and a potential global market for ABC foods and
its range of products.
According to Euromonitor Global competition in the overall health and
wellness global market is occupied by 6 major corporations, Weight
Watchers, PepsiCo, Nestle, Coca-Cola, Danone and Unilever who are all
yet to develop major equity in the global market for food intolerance
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products.
However the need for more research into potential markets is needed and
a carefully evaluated global marketing strategy needs to be defined. This
report intends to research potential countries and markets and provide a
critical evaluation and recommendations on strategic options available to
ABC foods based on their current competencies. Research into food
intolerance sectors in China, Canada and Sudan will outline any gaps or
opportunities in markets which are relevant to the organisations product
range.
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Sect ions Overview
1 . M a r k e t S e g m e n t a t i o n :
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2 . P o s i t i o n i n g S t r a t e g y
5
3 . R e l a t i o n s h i p S t r a t e g i e s
6
4 . D e c i s i o n M a k i n g P r o c e s s
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5 . M a r k e t S t r a t e g y
1 1
6 . R e c o m m e n d a t i o n s
1 2
7 . A p p e n d i x
1 5
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1. Market Segmentat ion
China
Primary consumers of food intolerance products in China will tend
to be part of the affluent middle class or wealthy segment of the
consumer base between the ages of 20 and 40 and over, single or
married with families.
Canada
Primary consumers of food intolerance products are likely to be
middle class to upper class consumers ages 20 to 70, highly
developed market means more niche segments to exploit.
Consumer’s high levels of tastes require ABC to enter into niches
that fit firm’s strengths.
Sudan
Due to the lack of market and consumer information available in
Sudan, it is difficult to locate a segment except for the statistics
from IDF state that 675,300 of people have diabetes.
(www.internationdiabetesfederation.com)
(See Appendix 1 for Reworked Swot Analysis)
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2. Posi t ioning Strategy
China
China requires high status quality foreign products, country of
origin more than likely to affect here in ABC’s favour as Chinese
consumers are developing a taste for high quality foreign products.
Upper end skimming pricing policy to back up status and quality of
product, advertising may be mainly print media, option is available
for digital and TV advertising but too expensive on entry.
Canada
Canada’s requires high brand image with status and quality,
country of origin effect may have implications. Higher levels of
customization and will require adopting upper end skimming
pricing policy that competes with competition prices. Advertising
options may be limited as promotional mix will need high levels of
investment and creativity to generate awareness and compete in
similar strategic groups with other companies.
Sudan
Sudan requires simplistic product positioning, basic needs few
alternatives drives basic positioning by introducing products with
limited features. Advertising methods also need to be basic, low
literacy levels means consumers require visuals to learn about new
product. In addition under developed infrastructure and media
broadcasting technology reduces marketing to print media.
(See Appendix 1 for Reworked Swot Analysis)
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3. Relat ionship Strategies: Cri t ical Evaluat ion
Relationships in life are there for the advantage and progression to
humanity; similarly, organisations have strong motives to progress
with their goals and ambitions through different relationships to
succeed in international business. Whether these are joint ventures
and collaborations with similar companies, agreements with
distributors or schemes to develop relations with customers, they
can all potentially be prone to disaster. Core factors that make
relationships with customers or suppliers great can easily funnel
into disagreements, exploitation, infidelity, abuse, suspicion or
eventually dissolution. While relationships can provide many
benefits, for example collaborations such as strategic alliances and
joint ventures help businesses to spread and reduce costs,
specialise in competencies and gain knowledge or technology
transfer, they also present opportunities for covert activities
designed to systematically cheat partners. Other major
collaborative arrangements such as franchising, licensing or FDI
also have their own pitfalls when working together with other
international businesses, organisations, customers, employees,
governments, distributors and suppliers. The point is they all
transport different advantages and problems for the management
to deal with, one of these problems is the level of control the
management has especially in non-equity relations like sales
contracts, licences and turnkey arrangements where control over
decision making is out of the franchisor’s hands.
The close relationships that a business develops all start with
intentions to benefit profitability for all party members.
Nonetheless these collaborative arrangements can open doors to
failure; exploitation can occur depending on the short-term and
long term orientation of the companies (Das and Teng: 2005),
tensions are expected in any relationships but if companies are
more short-term they are more attracted to exploiting each other
before the relationship is over. Long term orientated companies
may lack substantial gains from these long term relationships so it
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can be very difficult to stay dedicated and supportive. Building
strong interpersonal links and high levels of trust with suppliers is
another way to succeed; this keeps both companies flexible and
responsive to each other (Anderson & Jap: 2005). However this can
also set up relationships to fail as one can easily dominate another
to secure resources or component products at cheaper price, less
bargaining power for a smaller company means they can be played
off with other suppliers making it harder to opt out of painfully high
performance relationships at the risk of losing their contract. These
types of relationships can make or break a company. Furthermore
the strong trust and links that are built up in these relationships
give some managers the opportunity to use it and cheat a partner
on a regular basis. Unfaithfulness and infidelity can lead to
scandals that may ruin the reputation of an organisation and
impact on potential relationships in the future. An additional
method of expanding the benefits of successful relationships is the
unique processes and adaptations businesses apply to collaborative
arrangements (Anderson & Jap: 2005). Anything from product
enhancements, supply specifications that help businesses to
become more efficient and productive, this way both partners are
likely see gains in profitability. However the same adaptations that
increase productivity in the short term can have a disastrous effect
in the long run, arrangements like these tend to forget about
innovation and improvement to keep productivity up. Whether
firms involved in these relationships can stay relatively flexible is
the key feature to the life of the collaboration. If the alliances are
too rigid then associates can be subdued from achieving potential
benefits. (Das and Teng: 2005)
In the business world it is considered that the customer is king, so
logically a business should strive to have strong profitable life long
relationships with its customers. Sometimes however, relationships
may not always turn out to be profitable, customers who purchase
products and services at high prices may perhaps exploit
companies into giving them premium services and discounts. These
customers are smart enough to know their significance to the firm
therefore are a position to make demands; consequently the loyalty
clubs and schemes that were originally created to develop strong
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relationships and capitalize on the faithfulness of customers can
prospectively fail in the long term. (Anderson & Jap: 2005)
Collaborative arrangements of any kind are open to many
calamities; many factors can influence impending disasters on
relationships between partners in the long run. For instance
companies can have differing objectives, control issues,
contribution problems and differences in culture context in
international business. Nevertheless it’s not all doom and gloom for
relationship strategies, there are many protocols businesses should
regularly carry out in order to manage diverse relationships and
collaborative arrangements. The first step is to identify and
understand these issues in order to be capable of suppressing the
dark side of relationships. Whether companies are in long term or
short term arrangements it is necessary for them to constantly
evaluate the relationships, regular assessments helps to strengthen
links and foresee any crisis in the future. Adopting a rotational
system for personnel will also help to freshen up relations with new
faces. Establishing common goals and keeping profitability in mind
will also help firms to keep relationships strong; however the main
aspect to building a strong successful relationship is to avoid
suspicion, falling into a spiral of suspicion can have disastrous
affects if managers start questioning minor behaviours of their
partners. Once companies arrive at crisis situations, it should be
looked at as an opportunity to reinforce relations and improve on
what they started. A lot of the time however it isn’t possible for
companies to kiss and make up, they make carry on psychological
scars that suppress performance and as a result previous conflicts
could arise again, consequently for this reason a dissolution may be
necessary for the benefit of both parties. The nature of business
relations is such that they do not tend to carry on indefinitely but it
is better for a business to enter and exit networks a number over a
period of time, while constantly maintaining and investing into
these relationships (Anderson & Jap: 2005)
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3. Decis ion Making Process for Country Expansion
The decision making processes used to determine the first country
expansion was the interactive multi-criteria to identifying potential
foreign markets (Kumar et al: 1993) and Michael Porters extended
porters analysis for the overall global industry for food intolerance
products. The multi-criteria approach was used to more bring
together secondary research from the first two stages and then
apply that information with Porters 5 forces analysis to determine
the attractiveness of the industry. The aim of this was to gain a
better overall view of the global environment from analysis, in
addition using Harrell and Kiefer (1993) Business portfolio matrix
to plot each country’s attractiveness to the companies’
compatibility with the countries, which gives a better view of which
country is more attractive. This matrix was drawn up from the
secondary research conducted. (See appendix 3 and 4 for Business
portfolio matrix and porters 5 forces analysis).
Both processes used have their own advantages and disadvantages
on the implications for the overall decision making process,
according to Kumar et al the benefit of using this approach is that
it takes into account multi criteria objectives of the firm, reduces
sets of optimal solutions, cost affective, easy to adopt and flexible
enough to be applied to a wide variety of firms. Taking into account
qualitative and quantitative data the model also helps to aid
managerial decision making process, however the downfall to the
methodology is that it requires data on a particular variables across
all countries, the problem here is that data needs to be available
most importantly, this proves difficult when researching under
developed regions like Sudan since consumer markets and
infrastructure has not developed fully. Moreover data needs to be
reliable to make clear judgements and decisions while also being
comparable so to compare one market with another. For certain
information this can be difficult to attain (Kumar et al: 1993). The
model requires secondary information for the first two stages of
screening and identification; however in the third stage primary
data is vital to gain a better insight into the market as secondary
data is not enough to make sound judgement and decisions, at this
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stage managers would need to use local marketing expert to carry
out the necessary research and deploy the information back to HQ.
This part of the process can be lengthy and costly if dealing with a
high culture context market as collecting primary data in those
regions could be slowed down by language, literacy, access to
technology or other professional services. Calculating a desired
entry strategy and market depends on a repeated process of a cycle
of operations, in other words an iterative process. This method
helps to filter information in an “add and drop” function to arrive at
an appropriate method on entry and market. Porters 5 forces was
used to aid the decision making process however the model has
been heavily criticized over the last 30 years, some of the main
criticisms are as follows. The model assumes static market
structures as it does not take into account the environment that
affects complex industries and technological forces that are
capable of shifting structures, changing business models and entry
barriers (Lynch: 2009) Porter sees all forces as threats and the
need for competitive advantage over customers, suppliers and
markets, however it does not consider strategic alliances, closer
relationship with suppliers and higher level of customer
engagement with companies. According to Downes states that
porter should include 3 more forces to the model; these are
Deregulation, Digitalization and Globalization, macro-economic
forces drive changes in industries every day Porter does not
recognise this either. (Larry Downes: 1997)
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5. Market Entry Strategy: Direct Export ing employing independent agents and distr ibutors
Direct exporting has the long term benefit for companies who want
to oversee their operations in international markets; this helps to
influence costs, develop market and marketing channels in the long
term and control over marketing mix decisions in local markets.
(Johansson: 2009) However there are also many obstacles in the
way to achieving the fruits of exporting, according to (Rundh:
2001) one of the main problems to international export is the
economic distance to the market; SME’s limited resources can
affect production capacity and cause other financial problems.
Market structure and environment of markets also has a huge
influence on the international interest of SME’s, underdeveloped
environments and market structures can hinder product
distribution to meet demand. On the other hand other markets
which have intense local and global competition may also hold back
exporting interests, high levels of consumer tastes and preferences
would require SME’s to invest more resources into achieving high
levels of product customization and function in order to meet
demand well. The middle men who carry out activities in
international markets also need to be competent with local culture,
lifestyles and languages as these can prove to be obstacles for
SME’s.
Other factors increasing complexity of exporting is though
individual country import regulations, tariff and non tariff barriers
to entry, governmental, political and technology. According to
(Hollensen: 2003) mentions that direct exporting through agent or
distributors impacts control over market prices because of tariffs
and lack of distribution control, problems in communication may be
influenced by cultural differences in relaying information back to
HQ.
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6. Recommendations: Direct Export ing to China
A justified recommendation for your choice of one country, and one initial course of
action
International expansion is a long term process and certainly a long
term commitment, companies do not expand into overseas trade for
overnight returns but the original thought is for the long term
advantage a company gains from entering into this process. This is
why I have chosen China as the first country choice for expansion,
my justification is as follows; China recently became free from
governmental control in 1978 and since then the number of private
companies has shot up from a few hundred thousand to over 6
million (Tse: April 2010) indicating the potential companies see in
China. It’s clear that the country still has political and
governmental concerns that are causing unrest but China has made
clear efforts in improving its international relationships and ties
with western countries such as UK and agreements with
Association of South East Asian Nations (ASEAN) has opened up
markets into china. The China-Britain Business Council has also
been set up to increase and facilitate business relationships from
UK into China; these strong relationship links would aid ABC foods
expansion plans into China and also make exporting easier. The
required China Compulsory Certificate (CCC) for quality and safety
for foreign manufactured goods can be acquired for exporting
through the CBBC.
The legal landscape into China has improved, statistics from doing
businesses survey suggests efficient and hassle free business
environment (Datamonitor: China Country Factfile: 2010). This will
help in overcoming any legal problems when entering or during the
stay of the process.
China also offers resources to ABC’s advantage, low labour costs
and much agricultural potential offers the chance to cultivate raw
ingredients for manufacturing of products. This type of investment
would help reduce overseas logistics costs and at the same time
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build distribution channels in China.
A newly industrialised country like China is still in the growth
stages of development, this presents many opportunities for a
company like ABC because the food intolerance market has not
fully developed. Product variety of food intolerance products in
China are less compared to the Canadian food intolerance market
(See appendix Category data 5 and 6) it indicates that the
consumers have not developed preferences and tastes like the
Canadians therefore leaves the market open for a variety of niches
that ABC can utilize. In addition to this, 2009-2014 sales forecasts
for food intolerance sector in China is at 572 million compared to
198.7 million in Canada (See appendix 9 and 10 for Sales forecasts)
Forecasts are based across all intolerance products in the market
which China only has a third of compared to Canada yet annual
growth for China is predicted three times as much compared to
Canada in the same time span. This shows the level of growth and
potential expected in China in the future.
In addition to these statistics: the competition facing ABC in both
countries vary, in Canada the market is populated by many
companies including global players such as Heinz, Nestle and
Unilever compared to only a few local companies in China (See
appendix 7 and 8) According to Euromonitor the competitive
landscape in Canada has been influenced by the economic
downturn thus companies are increasing investment in marketing
and advertising as well as product innovation due to rising
competition (Euromonitor: Food Intolerance Canada: 2010) it
suggest the levels of investment ABC would need to sustain in
order to compete in such a competitive environment, a strategic
option that carries a lot of financial risk.
In contrast with the competitive landscape in China where all three
major players in the industry are domestic manufacturers with no
significant multinational presence to date (Euromonitor: Food
Intolerance China: 2010). By all means not suggesting that the
market in China is secure haven seeing that the threat of new
entrants is still high and entry barriers are low to global players so
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eventual entry is possible, however to ABC the market in China is
more attractive and achievable compared to Canada and less costly
to enter and to compete with competition, consequently the low
entry barriers make direct exporting easier for ABC as there will be
plenty of room for new product introductions, consumers will be
less biased towards purchasing high quality foreign brands as
tastes and preferences are still developing.
Academic research points out that for SMEs like ABC exporting is a
appropriate way of starting the internationalisation process,
(Rundh: 2000) research states that companies to a great extent
have been starting and developing their process of
internationalisation by direct or indirect export. The reason direct
exporting is an appropriate method of entry for ABC is because the
company can slowly learn and gain knowledge about the
internationalisation process to consequently transitionally increase
its activities in overseas trade through this incremental learning
process. The point is ABC are new to international trading and with
out taking on too much risk and commitment in the early stages,
direct exporting acts as a learning bridge to the international
market with out over stretching their competencies. Using overseas
agent also helps because they normally have an established set of
contacts in the market, something that ABC would need to do on
their own if entering alone. Research by (Crespi et al: 2008) backs
up the learning process firms go through when using exporting an
entry mode strategy, suggesting firms improve by learning from
exporting when interacting with different buyers, suppliers and
other firms innovating (Crespi et al: 2008).
The initial course of action to be taken is to conduct primary
research in the chosen market to further validate all the statements
that have been made in this report, further analysis of research will
help to clearly define strategic options available to ABC to help
facilitate the expansion into China.
“Yes, it’s a tough market. And yes, your competitors may have gotten there first. But the biggest mistake would be choosing not to invest in China”.
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By Edward Tse
Is it Too late to enter China? April 2010
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Appendix
1. Reworked Swot Analysis
Strengths
A can-do attitude
Quickly established a brand that is
highly regarded by stakeholders in
the home market
Good profits in the first 3 years
Marketing focused
Able employees
Weaknesses
Very limited knowledge outside the
home market
Profit slowed in 2010
Opportunities
Some, but limited, in the home
market for the foreseeable future
What overseas opportunities?
China; Sales in lactose and gluten
intolerance products expected to
grow, increase in demand for food
intolerance products due to the
diabetes epidemic.
Rapidly expanding affluent middle
class along side China’s economic
growth, substantial middle class
has increased the number of
products and brands available in
china, Chinese consumers like
foreign food products see
Threats
The usual! Competition......
Tianjin Alpha Health Production Co
Ltd leader in food intolerance
products with 30% share in China:
no multinational presence
Likely entrant of other competition,
Low barriers to entry
Levels of political and social unrest
in China from corruption, inequality
and poverty may lead to problems
in economic reform.
“IPR cases increase” identifies
copyright infringement, ABC would
need IPR protection when
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bibliography for news artilcles
“Imported Food Market Grows”
and “imported foods gain favour of
Chinese buyers”
Gap in Chinese markets for special
milk formulations, gluten free
bakery products, baby food and
pastas.
Chinese health care not doing
enough to accommodate diabetic
illness and gluten free food needs,
possible opportunity of alliance.
Britain and China business
association and trade agreements
make easier imports into China.
No recent acquisitions or mergers
in food intolerance market,
opportunity for ABC foods to form
alliances and networks.
Guan Xi networks useful in china to
develop relationships
Café bar report from GMID shows
huge increase in coffee culture and
forecasted huge growth, ABC can
target companies Starbucks and
Costa Coffee to stock their gluten
free product for Chinese
consumers. See “Starbucks to sell
gluten free pastry
Canada; Growing demand for food
intolerance products, sales
exporting
Canada:
Agropur Cooperative share 54%
and Saputo 26% within lactose-free
dairy products market,
Kinnikinnick Foods with 25% of
share, recognised for sandwich
bread, Bagel, donuts and cookie
products.
Heinz Canada own majority share
in gluten-free baby food of 91%
Increased levels of competition in
Canadian market lead companies to
invest more into marketing and
innovation of products. High
Barriers to entry
High marginal effective tax rates
Sudan; high political instability,
rising security threats
Weak economic performance
High unemployment rates
69% of population live in rural
areas under poor living condition
No country match for Sudan
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expected to reach $199million by
2014, growing demand for gluten
free bakery products as sales reach
$10million and supermarkets
increasing natural health and food
portfolios shows gap for more
gluten free pasta
Growing elderly population and
immigrants from other parts of the
world with food intolerance needs
fuel demand and growth expected
to increase over coming years.
Market substantially covered in all
areas by current companies
Low business taxes in Canada
Government effective and stable,
government preferential to small
businesses than large corporations
in terms of R&D
Sudan: very limited information
available to determine any
opportunities: Expansion to Sudan
very unlikely
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2. Culture Context Matrix – Geert Hofstede Cultural Dimensions
Countr
y
High
or low
context
culture
?
Individuali
st or
collectivist
?
High
or low
power
distanc
e?
Masculi
ne or
feminin
e?
Uncertai
nty
avoidanc
e: weak
or
strong?
Canada Low High
Individuali
stic
Low –
stable
cultura
l
enviro
nment
Masculi
ne
Medium
China High High
Collectivist
society –
from
communist
rule
High
power
distanc
e
countr
y –
high
levels
of
inequa
lity
Masculi
ne
Strong
Sudan High Collectivist High More
masculi
ne than
feminin
e
Strong
Hofstede, Geert. "Geert Hofstede Cultural Dimensions Resources."
Geert Hofstede Cultural Dimensions. Web. 25 Oct. 2010.
<http://www.geerthofstede.com/geert_hofstede_contrarian_position
.shtml>
20
Culture will play a major role in the international expansion of ABC, also taking into
account E.T Halls “Silent language in overseas business” there are lot of culture
related business practices that ABC would need to adapt to, from relationships with
suppliers, distributors, customers, employees and even right down to how they market
their products. Cultural context can not be ignored if ABC is aiming to develop a
sustainable competitive advantage on foreign soil.
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3. Business Portfolio Matrix Country Attractiveness
Harrell G D and Kiefer R O (1993) Multinational market portfolios in
global strategy development, International Marketing Review, Vol 1- No 1
The Business portfolio matrix was put together from the secondary
research conducted, plotting each countries attractiveness with the
compatibility. We can see that China is highest plotted, Canada is
in the middle and Sudan at the bottom. Sudan is a country that is
still very under developed and there are not many comparative
advantages between ABC and the country in order to develop a
sustainable competitive advantage, rather entry into this LDC
would be to help develop the nation further. Canada has many
benefits that are compatible with ABC, however the level and type
of competition would make it very difficult for entry and to develop
awareness among a very high developed consumer base therefore I
have plotted China at the top for the sheer opportunity, market size
and potential it offers to ABC. High quality products are what the
consumers want and that’s exactly what ABC has, the fact that ABC
have product ranges that are not even available in that market
shows the potential growth and niche markets, add that to the 57
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different ethnic groups, over 20 provinces and population of
1.3billion its hard to say that the country has no future prospect.
The main issue for ABC is to adapt to the hugely diverse
environment in China, it is an opportunity that can not be missed.
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4. Porters (1980) 5 forces analysis for Global Food Intolerance
market
Threat of buyers
Low concentration, high numbers, low bargaining power
Threat of Substitutes
High number of substitutes in mature market Canada, low levels of substitutes in emerging markets and new growth markets Sudan and China respectively
Threat of Suppliers
Raw materials expensive but suppliers have relatively low power, low concentration and higher number means lower bargaining power
Global Competitive Rivalry
Global market dominated by Unilever, Danone, Nestle and Heinz but competition is low in the food intolerance market
Domestic competition: domestic competition high in mature market Canada as there are many global players operating in the market, low levels of competition in new growth market china, only 2 major domestic players. Sudan low competition, emerging market has developed enough for companies to compete Foreign competitionAll markets open to foreign competition, China has more risk of being entered by foreign competition because of potential market and dominant players like Unilever, Nestle and Danone and Heinz have potential to enter market with ease and barriers to entry are lowStrategic Groups No strategic groups seem to show yet, global market still in growth stage of industry life cycle and more growth through the years will eventually reveal global competitors and strategic groups
Threat of New Entrants
Barriers to entry into market are low for existing global players such as Danone and Unilever, R&D and marketing related costs affordable to diversify product portfolio to match country environments. Higher barriers to entry for initial starter in terms of costs however not a major issue.
Summary: Threat of New Entrants MediumGlobal Competitive Rivalry LowThreat of Suppliers LowThreat of Substitutes Low-to-Medium depending on sub
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marketsThreat of buyers Low
Michael Porters 5 Forces analysis favours the global food intolerance industry; threats across all levels are low showing an attractive global industry
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5. Category Data: China
Table 1 Sales of Food Intolerance Products by Subsector: Value 2004-2009
RMB million
2004 2005 2006 2007 2008
2009
Diabetic Food 83.2 118.5 142.3 170.0 205.4
236.2
- Diabetic Bakery 82.8 118.0 141.6 168.9 203.8
234.3
Products
- Diabetic Confectionery 0.4 0.5 0.8 1.1 1.5 1.9
-- Diabetic Chocolate 0.2 0.2 0.3 0.4 0.5 0.6
Confectionery
-- Diabetic Sugar 0.2 0.3 0.5 0.7 1.0 1.4
Confectionery
- Diabetic Spreads - - - - - -
Gluten-Free Food - - - - - -
- Gluten-Free Bakery - - - - - -
Products
- Gluten-Free Baby Food - - - - - -
- Gluten-Free Pasta - - - - - -
- Other Gluten-Free Food - - - - - -
Lactose-Free Food - - - - - -
- Lactose-Free Dairy - - - - - -
Products
- Lactose-Free Ice Cream - - - - - -
- Lactose-Free Milk - - - - - -
Formula
Other Special Milk - - - - - -
Formula
Food Intolerance 83.2 118.5 142.3 170.0 205.4
236.2
Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimates
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Table 2 Sales of Food Intolerance Products by Subsector: % Value Growth 2004-2009
% current value growth
2008/09 2004-09 CAGR 2004/09
TOTAL
Diabetic Food 15.0 23.2 183.8
- Diabetic Bakery Products 14.9 23.1 182.8
- Diabetic Confectionery 26.1 36.9 381.1
-- Diabetic Chocolate Confectionery 15.9 29.7 267.2
-- Diabetic Sugar Confectionery 30.8 40.6 449.9
- Diabetic Spreads - - -
Gluten-Free Food - - -
- Gluten-Free Bakery Products - - -
- Gluten-Free Baby Food - - -
- Gluten-Free Pasta - - -
- Other Gluten-Free Food - - -
Lactose-Free Food - - -
- Lactose-Free Dairy Products - - -
- Lactose-Free Ice Cream - - -
- Lactose-Free Milk Formula - - -
Other Special Milk Formula - - -
Food Intolerance 15.0 23.2 183.8
Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimates
27
6. Category Data: Canada
Table 1 Sales of Food Intolerance Products by Subsector: Value 2004-2009
C$ million
2004 2005 2006 2007 2008
2009
Diabetic Food 8.6 8.9 9.2 9.6 9.9
10.1
- Diabetic Bakery 2.6 2.7 2.8 2.9 3.0 3.1
Products
- Diabetic Confectionery 3.8 3.9 4.1 4.3 4.4 4.5
-- Diabetic Chocolate 3.6 3.8 4.0 4.1 4.2 4.4
Confectionery
-- Diabetic Sugar 0.1 0.2 0.2 0.2 0.2 0.2
Confectionery
- Diabetic Spreads 2.2 2.3 2.3 2.4 2.4 2.4
Gluten-Free Food 14.3 15.3 17.6 20.0 22.3
24.4
- Gluten-Free Bakery 4.8 5.3 6.4 7.9 9.1
10.4
Products
- Gluten-Free Baby Food 0.5 0.6 0.6 0.7 0.7 0.8
- Gluten-Free Pasta 1.2 1.2 1.3 1.4 1.4 1.5
- Other Gluten-Free Food 7.8 8.3 9.3 10.1 11.0
11.8
Lactose-Free Food 67.5 71.7 76.4 81.7 85.7
90.3
- Lactose-Free Dairy 42.0 44.7 47.7 51.3 53.9
56.8
Products
- Lactose-Free Ice Cream 19.9 20.7 21.5 22.2 22.7
23.1
- Lactose-Free Milk 5.6 6.4 7.2 8.1 9.2
10.3
Formula
Other Special Milk 35.1 33.5 31.7 33.1 32.7
28
32.0
Formula
Food Intolerance 125.4 129.5 134.9 144.4 150.6
156.8
Source: Official statistics, trade associations, trade press, company research, store checks, trade
interviews, Euromonitor International estimates
Table 2 Sales of Food Intolerance Products by Subsector: % Value Growth
2004-2009
% current value growth
2008/09 2004-09 CAGR 2004/09
TOTAL
Diabetic Food 2.3 3.4 18.2
- Diabetic Bakery Products 2.8 3.9 20.8
- Diabetic Confectionery 2.7 3.8 20.3
-- Diabetic Chocolate Confectionery 2.6 3.7 19.7
-- Diabetic Sugar Confectionery 5.0 6.5 36.7
- Diabetic Spreads 0.8 2.2 11.6
Gluten-Free Food 9.4 11.3 71.0
- Gluten-Free Bakery Products 13.4 16.7 116.2
- Gluten-Free Baby Food 4.1 7.9 46.2
- Gluten-Free Pasta 3.2 5.0 27.5
- Other Gluten-Free Food 7.2 8.6 51.4
Lactose-Free Food 5.3 6.0 33.7
- Lactose-Free Dairy Products 5.5 6.2 35.3
- Lactose-Free Ice Cream 1.7 3.1 16.3
- Lactose-Free Milk Formula 12.9 12.9 83.8
Other Special Milk Formula -2.0 -1.8 -8.7
Food Intolerance 4.1 4.6 25.1
Source: Official statistics, trade associations, trade press, company research, store checks, trade
interviews, Euromonitor International estimates: EUROMONITOR
29
7. Market Share Analysis: China
Table 3 Food Intolerance Products Company Shares 2005-2009
% retail value rsp
Company 2005 2006 2007 2008
2009
Tianjin Alpha Health 26.5 27.9 28.4 28.9 29.6
Production Co Ltd
Beijing Lvde Food Co Ltd 35.2 37.1 37.8 38.2 19.2
Shanghai Meijing Food 0.1 0.1 0.2 0.2 0.2
Co Ltd
Others 38.2 34.8 33.6 32.7 51.0
Total 100.0 100.0 100.0 118.3
100.0
Source: Trade associations, Trade press, Company research, Trade interviews, Euromonitor International
estimates: EUROMONITOR
30
8. Market Share Analysis: Canada
Table 4 Food Intolerance Products Company Shares 2005-2009
% retail value rsp
Company 2005 2006 2007 2008
2009
Agropur Cooperative Ltd 20.3 20.9 21.0 19.3 19.4
David Chapman's Ice 11.6 12.1 12.1 12.5 12.9
Cream Ltd
Saputo Inc 2.8 2.8 2.8 9.1 9.3
Mead Johnson Nutritionals 5.5 5.1 8.4 7.9 7.7
Abbott Laboratories Inc 3.3 3.2 3.1 3.1 3.3
Gay Lea Foods Co- 3.0 3.1 3.1 2.7 2.7
Operative Ltd
Kinnikinnick Foods Inc 0.9 1.1 1.4 1.3 1.6
Parmalat Canada Ltd - - - 1.5 1.5
Glutino USA 0.8 1.1 1.4 1.4 1.4
Ross Chocolates 1.1 1.2 1.2 1.2 1.2
Distribution Co
Nestlé Canada Inc 1.0 1.2 1.2 1.2 1.0
Gourmet Distributors Ltd 0.9 0.9 0.8 0.9 0.9
Unilever Canada Inc 0.5 0.5 0.5 0.5 0.5
Heinz Co of Canada Ltd, 0.4 0.4 0.4 0.4 0.4
HJ
Boulangerie St-Methode, 0.3 0.3 0.3 0.3 0.3
La
El Peto Products Ltd 0.2 0.2 0.3 0.3 0.3
Neilson Dairy Ltd 5.2 5.3 5.4 - -
Artisanal 1.4 1.4 1.4 1.4 1.3
Private Label 0.2 0.2 0.2 0.2 0.2
Others 40.7 38.9 35.1 34.9 34.0
Total 100.0 100.0 100.0 99.1
100.0
Source: Trade associations, Trade press, Company research, Trade interviews,
Euromonitor International estimates.
31
9. Sales Forecast for Food intolerance Sector China
Table 5 Forecast Sales of Food Intolerance Products by Subsector: Value 2009-2014
RMB million
2009 2010 2011 2012 2013
2014
Diabetic Food 236.2 285.5 348.0 414.2 485.1
572.0
- Diabetic Bakery 234.3 282.9 344.4 409.4 478.8
564.0
Products
- Diabetic Confectionery 1.9 2.6 3.6 4.9 6.3 8.0
-- Diabetic Chocolate 0.6 0.7 0.8 0.9 1.1 1.3
Confectionery
-- Diabetic Sugar 1.4 1.9 2.8 3.9 5.2 6.8
Confectionery
- Diabetic Spreads - - - - - -
Gluten-Free Food - - - - - -
- Gluten-Free Bakery - - - - - -
Products
- Gluten-Free Baby Food - - - - - -
- Gluten-Free Pasta - - - - - -
- Other Gluten-Free Food - - - - - -
Lactose-Free Food - - - - - -
- Lactose-Free Dairy - - - - - -
Products
- Lactose-Free Ice Cream - - - - - -
- Lactose-Free Milk - - - - - -
Formula
Other Special Milk - - - - - -
Formula
Food Intolerance 236.2 285.5 348.0 414.2 485.1
572.0
Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimatesEUROMONITOR
32
10. Sales forecasts for Food Intolerance products for Canada
Table 6 Forecast Sales of Food Intolerance Products by Subsector: Value 2009-2014
C$ million
2009 2010 2011 2012 2013
2014
Diabetic Food 10.1 10.3 10.5 10.9 11.3 11.7
- Diabetic Bakery 3.1 3.2 3.3 3.4 3.6 3.7
Products
- Diabetic Confectionery 4.5 4.6 4.7 4.9 5.1 5.3
-- Diabetic Chocolate 4.4 4.4 4.5 4.7 4.8 5.0
Confectionery
-- Diabetic Sugar 0.2 0.2 0.2 0.2 0.2 0.2
Confectionery
- Diabetic Spreads 2.4 2.5 2.5 2.6 2.6 2.7
Gluten-Free Food 24.4 26.6 29.4 32.8 36.8 41.5
- Gluten-Free Bakery 10.4 11.7 13.3 15.2 17.5 20.3
Products
- Gluten-Free Baby Food 0.8 0.8 0.8 0.8 0.9 1.0
- Gluten-Free Pasta 1.5 1.5 1.6 1.7 1.7 1.8
- Other Gluten-Free Food 11.8 12.6 13.7 15.1 16.6 18.4
Lactose-Free Food 90.3 95.5 100.7 106.5 113.1
120.3
- Lactose-Free Dairy 56.8 59.9 62.8 66.2 70.0 74.3
Products
- Lactose-Free Ice Cream 23.1 23.6 24.2 24.8 25.6 26.4
- Lactose-Free Milk 10.3 12.0 13.7 15.5 17.6 19.7
Formula
Other Special Milk 32.0 31.0 29.8 28.4 26.8 25.1
Formula
Food Intolerance 156.8 163.4 170.4 178.6 188.0
198.7
Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimatesEUROMONITOR
33
11. Diabetes suffers statistics
SudanPercent with diabetes (20-79 years), 2010 (national) 3.3
Percent with diabetes (20-79 years), 2010 (comparative)4.2
Percent with diabetes (20-79 years), 2030 (comparative)5.2
Number of people with diabetes, 2010675,300
CanadaPercent with diabetes (20-79 years), 2010 (national)11.6
Percent with diabetes (20-79 years), 2010 (comparative)9.2
Percent with diabetes (20-79 years), 2030 (comparative)10.9
Number of people with diabetes, 20102,866,100
ChinaPercent with diabetes (20-79 years), 2010 (national) 4.5
Percent with diabetes (20-79 years), 2010 (comparative)4.2
Percent with diabetes (20-79 years), 2030 (comparative)5.0
Number of people with diabetes, 201043,157,200
http://www.diabetesatlas.org/map
These statistics show the numbers of food intolerance suffers in the chosen countries, as we can see China has a more than both Sudan and Canada put together, this give us an insight into how big the markets are across all countries. While reading this report it is essential to remember than demand for diabetic friendly products are driven by medical conditions. This makes segmenting targets
34
slightly difficult as anyone at any age can have diabetes, rather than segmenting by traditional methods we would need further breakdown of statistics to determine who the segment is and how many of them they are. For example if there was a high number of diabetes in children in a region of China, then ABC would need to develop products that are related to children and then market them to parents. Further research into these statistics would be needed to develop a clearer view of segments and target markets.
35
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44
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45