Threat of substitutes
Dried crusts can be replaced with yougurt, chips/crisps or with food from restaurants and cafés. Also home-prepared sandwiches or salads can substitute crusts.
Threat of new entrants and entry barriers
Snack market is easy to enter because there is common technology, little brand franchise, access to distribution channels and low-scale threshold. The most significant barrier is cultural habits and preferences in eating.
On the French snack market there are 2 serious players: PepsiCo and Intersnack. However, there are a lot of small companies that boost the competition with their brands. Market growth is rather high, so firms are not forced to fight for market share intensively. In general, rivalry on the market is high.
We have started with analyzing preferences in eating, lifestyles, traditions and habits in France. We have found deeply ingrained bread-eating habits. Bread is a key element in French cuisine: daily bread consumption is about 170g. People in France are used to have a snack with bakery. For example, kids traditionally eat for a gouter a chunk of baguette with a bar of chocolate. Alternatives include a cake from the local delicatessen or a biscuit. Moreover, French has a high pace of life, so the consumption of snacks is growing fast. Nine out of ten French consumers eat some sort of salty snack on a regular basis (at least two times per month). As a result French snack market is developed dynamically. Alone it is worth 24 billion Euros a year.
Consumer foodservice by type (Constant 2009 value: 2005-2009)
This sector has an annual growth rate of 13%. France is among TOP 5 countries consuming snacks.
In 2009 French consumers started to raise the environmental awareness. This trend has a negative impact on many fast-moving consumer sectors, such as packaged food and household care. The packaging is reduced and made more recyclable, ingredients lists are revised, the impact of manufacturing and transportation is reduced and environmentally toxic chemicals are excluded. Ethical concerns also is touched and many products are becoming labeling themselves “fair trade” while others are now being sourced from sustainable sources.
However, people are becoming more concerned about product ingredients: they tend to keep fit and prefer to eat healthy products. The level of obesity in France was reached almost epidemic proportions. In 2009, 15% of the French population was classified as obese and 32% overweight, compared to 9% and 30%, respectively, in 1997. This equates to approximately 6.5 million obese French adults. The most successful snack food products are those featuring new exotic flavors (olive oil, chili, sweet & sour) and with healthier content (reduced sodium, reduced fat, etc.).
One more trend is that the reduced purchasing power which is the result of the downturn made consumers eat more snacks because they found such meal convenient and fast.
After the initial analysis we highlighted 3 possible segments:
· Students and pupils
· Parents who prepare lunchboxes for their children
· Busy people who are concerned about health issues (On-The-Go segment)
Students & Pupils
Do not think a lot about health issues. Can eat in schools canteens
Would prefer to feed their children with conventional food (home-prepared sandwiches, salads, etc.)
ü Are more concerned about their health
ü Spend majority of the day working and moving from places to places
ü Regard snacks as substitutes for real meal
ü Expensive to eat each day in a restaurant
ü Longer work hours, and a high percentage of working women
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