General Environment The baking mix and prepared food production industry has revenue of $26.6 billion, annual growth of 3.1%, and is made up of 1,180 businesses. The industry consists of 44.5% perishable prepared foods sold in bulk or packages, 32.9% other food preparations, 14.6% liquid, dried, and frozen eggs, and 8% flavoring powders, tablets, and pastes. The key external drivers are demand from food manufacturing, agricultural price index, per capita disposable income, healthy eating index, and trade-weighted index. This industry is broken down into five different markets: food manufacturers, grocery retailers, exports, grocery wholesalers, and foodservice providers. Food manufacturers make up 35% of the industry and are in charge of a variety of different food ingredients sold to downstream food manufacturers. Cereal, bread, and pasta companies rely on this market. Over the past five
…show more content…
Buyers are looking for quality products that meet the wants and needs of consumers with the lowest price. Buyers purchase a large amount of the industry’s total output and the seller’s annual revenues. If necessary, the buyer could switch products with low costs. The buyer would also be a threat if they were to go back to the seller’s industry. This, plus the technology advances such as using the Internet as a form of shopping, has increased the bargaining power of buyers.
Threat of Substitute Products
High
There are high amounts of substitutes within the baking mixes and prepared food production industry. There are multiple companies who produce the same, or similar, products that can be used as a substitute. More than one brand sells chocolate flavored cereal. More than one brand sells cake mix. These are all examples of substitutes within the industry. There are also substitutes outside the industry such as restaurants and homemade meals or desserts.
Intensity of Rivalry Among Competitors
Buyers are looking for quality products that meet the wants and needs of consumers with the lowest price. Buyers purchase a large amount of the industry’s total output and the seller’s annual revenues. If necessary, the buyer could switch products with low costs. The buyer would also be a threat if they were to go back to the seller’s industry. This, plus the technology advances such as using the Internet as a form of shopping, has increased the bargaining power of buyers.
Threat of Substitute Products
High
There are high amounts of substitutes within the baking mixes and prepared food production industry. There are multiple companies who produce the same, or similar, products that can be used as a substitute. More than one brand sells chocolate flavored cereal. More than one brand sells cake mix. These are all examples of substitutes within the industry. There are also substitutes outside the industry such as restaurants and homemade meals or desserts.
Intensity of Rivalry Among Competitors