BAKERY PRODUCTS

FROM INDIA TO DUBAI,

UAE

(Source: Corpaidcs 2020)

Bakelite Food Processing Pvt Ltd

Rubina Jamadar-N0884100-Nottingham Business

School
Overview of the company:
Bakelite Food Processing Pvt Ltd. started with minuscule production in 1999 in the
downtown area of Pune, Maharashtra. Mr. Sachin Malpani and Mrs. Naina Malpani are the
visionaries behind the success of the company, with an intention to deliver excellent quality
products to the customers. The food products are produced through the best production
equipment, under the guidance of experienced supervisors and dedicated employees.
Business is not the only intention of running Bakelite Food Processing Pvt Ltd., it is running
for a larger purpose and that is to serve high quality, delicious and hygienically safe food
products to our consumers (Bakelite Food Processing Pvt Ltd 2020).

Vision and Mission:

It is a food production company with a strong value-based organization, believing in a set of
certain core values, strengthening their foundation and maintains their consumers trust that
it has built over the years. It believes in inclusive growth, which includes their employees, or
consumers, their suppliers/ consultants/ vendors, and finally the company itself.

They believe and promote vegetarian food which has been their principle from the very first
day of their business. The company is a strong supporter of vegetarian diet and strongly
believe in its sustainable nature leading to long-term. All employees are aligned with the
objectives of the organization. The company holds immense faith in their employees, every
individual employee works with dignity and maintain high standard, teamwork, and
harmony at every stage in the organization.

The main purpose is to serve customers with quality, delicious, hygienically processed food
products in an effective and innovative way. The company is not aiming towards gaining
popularity and keep on increasing the production capacity. It believes in quality more than
the quantum of production benefits (Bakelite Food Processing Pvt Ltd 2020).

(Source: Bakelite Food Processing Pvt Ltd 2020)

COMPETITIVE ADVANTAGE:
Generic Strategies:
The company is concentrated towards cost leadership strategy rather that cost
differentiation. It wants to serve the best quality products to the satisfy the consumers’
needs in a most innovative and effective way.

Cost Leadership Cost Differentiation

Products- Puneri Special Khari, Milk Toasted Products- Sugar Free Brown bread, Brown
bread, Bakelite bread. (wheat) Khari, Brown bread.
 Competitive pricing.  Premium price.
 A broad range of products targeting  Targeting customers who are
customers: kids and adults. looking for diet food.

Porter’s Five Forces:

The competitive advantage is analysed by using the Porter’s Five Forces framework. It helps
in analysing the system of suppliers, customers, competitors, products in which several
companies compete.

Threats of new entrants: Barriers to entry in this industry are low. Economies of scale
are beneficial but are not required for industry success. Due
to this, any small businesses can enter the industry with a
relatively small amount of capital. The new company can
success if it acquires sufficient distribution channels to cover
the operating cost and build brand recognition and loyalty.
The Bakelite Food Processing Pvt Ltd. has acquired brand
recognition which makes it difficult for the new entrants to
enter the market.
Threats of new Many substitutes are available for bakery products. Breads,
substitute: biscuits, toast are feasible alternatives and consumers can
also make all the baked goods they want at home. Bakeries
rely upon price and convenience to keep individuals
switching to a substitute or baking what they need at home.
Customers can switch to the substitute products because of
the similarity in the products or if there is an increase in the
price of products.
Bargaining power of the There are high number of substitutes available, so the
buyer: customers have variety of options to select a desired
product. Therefore, buyers can command low prices and
discounts. The competitors can also provide good quality
products for cheaper cost. There is high bargaining power of
the buyers which is a disadvantage for the company.
Bargaining power of the Suppliers do not have much negotiating power in the bakery
supplier: business due to the well-developed markets for their
products and the commoditized nature of what they are
selling. There is low switching cost for suppliers. The raw
materials required for production do not differ largely in
quality across the suppliers, restraining the power of
suppliers (Coursehero 2020).

Competitor’s rivalry: The Baking sector is the largest of all the segment of India's
food processing sector. The leading market research
company IMARC in March 2019 stated that the Indian Bakery
markets reach a value of USD 7.22 billion in 2018 (India
2020). There is intensive competition from brands like
Brittania Industries Ltd., Parle Products Ltd., Modern Food
Industries Ltd. and so on. The company is also facing
competition from the local brands and bakeries who are
selling variety of baked products. If the competition is high, it
gets difficult to generate profits.
MACROENVIRONMENTAL ANALYSIS:
A PEST analysis is a strategic business tool used by organizations to discover, evaluate,
organize, and track macro-economic factors which can impact on their business now and in
the future. The framework examines opportunities and threats due
to Political, Economic, Social, and Technological forces (GroupMap 2019).

PESTLE Analysis:
 Political:
The UAE is a constitutional federation of 7 Emirates. All the 7 Emirates each have their own
local governments and several municipalities and departments. There is specific amount of
flexibility in the distribution of authority (Bush 2020).

Dubai has a very stable economy and offers a very suitable environment to start a new
business. Annual bilateral trade between India and the UAE stood at about USD 60 billion
(Businesstoday 2020). UAE entities are expected to invest up to USD 7 billion in India’s food
sector in the next 3 years as part of the UAE-India food corridor project that aims to secure
the UAE’s food security (News of 2020).

Article 65 of the UAE Labour Law identifies the normal working hours for the private sector
as 8 hours per day or 48 hours per week and for the public sector. Employers should provide
their employees with suitable means of protection against injuries and against occupational
diseases which may be contacted during work (Uaelabourlaw 2020).

Indian exporter exporting food processed items to UAE must apply for the regulations and
provision of the food safety and standards prescribed by UAE such as label requirements
which should also be available in Arabic language on the packaging, Health Certificate, Halal
Certificate (Apeda.gov.in 2020).

 Economical:
The standard of living in the United Arab Emirates is one of the highest in the world. The
UAE has an exceptionally high GDP per capita. The UAE also has a very low unemployment
rate. In 2019, the unemployment rate in the UAE was at 2.64 o1

f the total labour force (Statista 2020). The UAE bakery market is valued at USD 683 million
and is set to grow by 4.2% annually as demand for all-natural baked goods continues to rise,
according to recent research from Euromonitor (Catering News ME 2020)..

In the UAE, the distribution of bakery products is done mainly through grocery retailers,
with 88.0% of total value sales coming from modern grocery retailers, followed by 60.5%
from hypermarkets and 24.7% from supermarkets (Euromonitor International 2014). A
substantial, business friendly and market-oriented growth strategy has reshaped the
economy. UAE also has one of the highest amounts of Foreign Direct Investment in Dubai
(Bush 2020).

 Social:
UAE is one of the most liberal country in the Gulf region. Dubai is a very dynamic Emirate
and a hub for international business. It is very modern and well-integrated with the rest of
the advanced world.

The total population of the UAE is approximately 9.8 million as of October 2019 (World
Meters 2019). Emirati nationals only constitute 20% of the total population. Most of the
immigrants living and working in the UAE are from India, Pakistan, Bangladesh etc. (Rahman
et al. 2020).

Emirati consumers have become more health-conscious over the years. Bakery products
saw a compound annual growth rate (CAGR) of 6.9% from 2010-14 and contributed to just
under 20% of total bakery values sales in 2014 (Euromonitor International 2014).

 Technological:
There have been no significant innovations in snacks and biscuits development in recent
years. Dubai is known for its continuous innovation and technological development. The
country also focuses on the use of eco-friendly technologies that can contribute to the
reduction of carbon emissions. Research and Development is needed for producing value
added products. The development of the internet provides effective tools to run advertising
and marketing campaigns.
INDUSTRY ANALYSIS:
The bread and rolls category led the bakery and cereals market in the UAE, accounting for a
share of 84.7%. Bread dominates the category within baked goods. Baked goods sector is
led by domestic player Modern Bakeries LLC and their brand of Modern Bakery. Three of the
top five baked goods companies are domestic players such as Modern Bakeries LLC, Golden
Loaf Est, and Al Arz Automatic Bakery LLC, but only make up 13.3% of the market combined.
The UAE baked goods market is highly fragmented which also further is indicated by the fact
that the top five companies only account for 22.6% of the total market (Fnbnews 2020).

Biscuits and breakfast cereals are the sub-categories of the bakery sectors. Three of the top
five UAE biscuit companies are international players; however, two are domestic players-
IFFCO Group with their brand of Tiffany's, and Strategic Food International Co LLC with their
brand of Nutri Digestive. Breakfast cereals have not traditionally been a part of the daily
routine in the typical Arab household; however, Western emigrants and foreign workers are
driving the category and slowly encouraging daily consumption among local (Fnbnews
2020).

(Source: Statista 2020)

Impact of Covid-19 on Baking Industry:
Bread and bakery aisles in supermarkets are emptying. Many retailers are limiting in-store
bakery offerings as well as products lacking ‘essential’ status. This, in turn, will have a
negative impact on the bakery products market growth during the COVID-19 pandemic.

The market is currently fragmented, and the degree of fragmentation will accelerate during
the forecast period. To make the most of the opportunities, market vendors and companies
should focus on the growth prospects in the fast-growing segments, while maintaining their
positions in the slow-growing segments.

Demand for gluten-free bakery products has been instrumental in driving the growth of the
market. Despite the current situation, bakery products including bread and cookies
witnessed an unprecedented spike in the first quarter of 2020 as consumers indulged in
panic buying and stockpiling in response to lockdowns and stay-at-home orders. The onset
of COVID-19 pandemic positioned baked products as a lasting and versatile snack or meal
solution available at retail stores, suddenly fostering the prospects of bread and other
bakery products. This increase in demand will prove to be beneficial for the company’s
export.

(Source: Future Market Insights 2020)

STRATEGIC RECOMMENDATION:
Core Strategy:
Organic products have been gaining popularity in the recent years. The company should
produce organic, gluten-free, nutritious products to satisfy the needs of customers with
dietary needs. Expand the company within the country and aim for global expansion. Also,
partnership with the local restaurants and cafes to make profit and to increase the number
of customers.

Partnership Network:
The company should form a strategic partnership with the local retailers like LuLu
hypermarket and take advantage of their existing relationships, distribution network and
online market. Integrate 3PL in the business to save costs and receive various other benefits.
Use media organization to advertise and promote the products and increase the sales.
Partnership with food hygiene organisation to produce quality and hygienic products for
consumers.

Market Entry:
Direct exporting is the apt strategy for Bakelite Food Processing Pvt Ltd. to enter the market
in Dubai, UAE. This strategy will provide direct control over export packaging, pricing,
advertising, promotion, after sales service and other marketing activities of the products.
Direct exporting will also provide first-hand information about the customers and market in
Dubai. It will help in providing the information about their needs and requirements and
therefore they can satisfy them effectively. Also, direct exporters can charge higher prices in
comparison to competitors as they are aware of the market conditions and can avail the
requirements of consumers effectively.
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