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Packaged Food Industry -MG 640

Packaged Food Industry -MG 640

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Published by: mbiradar85 on May 31, 2012
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Forces Shaping Packaged Food Industry

(The author of this article is Ravish Arora, Business Intern at Wipro Technologies Ltd. Ravish is an MBA from IIM Bangalore and currently serves the Food & Beverage Function of CPG Vertical at Wipro.) Packaged food industry has been lately drawing criticism from Industry pundits and experts, for it has shelved its status of being a recession proof Industry. It was only a few months back when the same pundits were going gung-ho about the opportunities lying galore ahead of players in this Industry. It almost seemed packaged food had evolved over the years from its status from a bare psychological need in Maslow’s hierarchy to aesthetic needs of health and well being. The only chant heard around was about the forces of consumerism, globalization and rising income levels in third world countries, which would be upholding the future of this Industry high. However, it didn’t take long for this recent recession to shed those claims and reject those profound theories. For those of us who do not know, Packaged Food consumption is estimated to be $1.8 trillion worldwide in 2008, with industry growing at a rapid pace of 7-8% over the last 3-4 years. It involves product categories of Bakery, Dairy Products, Frozen and Processed Foods, Confectionery, Snacks, Fats, Sauces, Ice Creams, Baby Foods, Pasta, Soup and many more. The matter of fact is that packaged food Industry, particularly its consumption is as susceptible to cyclical trends of economy as any other Industry today. It doesn’t take much for any consumer to trim his food budget in wake of credit crunch and move to alternate cheaper avenues like fresh foods. Hence, it becomes imperative for both, Incumbent players and New Entrants to estimate the very forces that will be deciding the fate of this industry over a period of next 2-3 years. And what better way to understand them than using the Porter’s Five Forces Model for understanding this industry’s attractiveness. The outcome of this exercise gives us an array of inputs which will find its way into action plan of any CXO serving this Industry.

Industry Attractiveness Using Porter’s Five Forces

Any characteristic deemed as favorable can be exploited to industry or company benefit and any characteristic deemed unfavorable needs to be addressed as a sustainability challenge. each of the five forces is analyzed based on certain parameters and market behaviors to determine if the force is acting to make the industry lucrative and profitable or working destructively by eroding away the profits. Competition & Rivalry .In this model.

Barriers to Entry . Supplier Power Threat of Substitutes Substitutes are specific to product categories in this industry and they may or may not pose the relevant threat. hence different set of forces are applicable to each of them.Buyer Power Buyers for packaged food industry players can be categorized into retailers and consumers. They can be a significant threat if the price performance value offered by substitute is better than products being offered. hence to be considered on a case by case basis.

we need to further determine how they affect our business. Today the trend is towards branded Products as consumers seek out branded reassurance and trade up to higher quality products. Ravish Arora Monday. Aviral holds a Masters degree in Business Administration from IIT Madras and has been an integral part in the solution ideation and development phase of Sub Daily Planning and Scheduling Composite. Dairy and Meat Products must be available for purchase in pure condition.) The Fresh Foods Industry has witnessed a stream of changing consumer trends. whilst retailers endeavour to maximize shelf life and avoid . Packaged Food. Keep checking this blog for our next post where we will provide insights into impact of these forces and how to address the challenges posed by these impacts… Posted by CPG Expert at 11:08 PM 1 comments Labels: Consumer Packaged Goods. Porter Five Forces. The end consumer expects that all fresh food goods such as Bakery products. Aviral has been responsible for bringing thought leadership and innovative solutions for Global CPG Companies and been actively involved in several CPG projects at Wipro. Fruits & Vegetables. June 1.Now that we have analyzed the forces characterizing the packaged food industry. 2009 Demand Management Solution for the Fresh Foods Industry (The author of this article is Aviral Gupta. a Business Analyst in CPG Vertical at Wipro Technologies Ltd.

place smaller orders and maintain faster order cycle times to meet consumer demands. its typical challenges. Finally. The outcome is that Food Manufacturers are increasing delivery frequencies. Below is the first of the three part series of the blog where we take you through the Fresh Foods Industry.wastage costs. . From a manufacturing perspective. in the third part we will describe how a technological tool such as the innovative Demand Planning solution helps to alleviate the bakery planner’s challenges with its simple to use functionalities. Then in the next edition we will explain using a segment of Fresh Foods Industry called the Bakery Industry and the challenges faced in a day of a bakery planner. their main concern areas are the ability to change production plan/schedule and visibility about the capacity and material to meet changed customer requirements.

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