Industry Analysis : Nature 's Kandy

The premium chocolate industry is a large market in the United States and continues to grow around 10% annually. It is also populated with very strong

Hershey’s and Cadburys are moving towards the premium chocolate market through the acquisition or upmarket launches (Zietsma, 2007). The profit potential present in this sector supported by its 20% annual growth rate make it very attractive for large organizations to come forward and avail this opportunity. There is a low threat of new entrants prevailing in this chocolate industry because of the high capital requirements and expected retaliation by current manufacturers. Current players in the industry also possess some barriers to entry for new entrants by maintaining economies of scales with their large production capacity and keeping their product differentiation with their specialized and novelty chocolate products. Even though there are low switching costs and easy access to distribution channels, but still the brand loyalty of the customers including the Rogers’ Chocolate itself make it harder for new firms to come into the competition.

The Lancaster Caramel Company was so successful, Hershey built off of it to create the Hershey Chocolate Company.

Candy is not yet a “mature” industry in the United States. The compound annual growth rate for candy in the past ten years has been close to 6% a year, a very solid gain in an industry that is supposedly mature. In fact, within the chocolate confectionery subcategory, the United States ranks 11th in the world in per capita consumption and fifth in the world in growth since 1980. Based on current demographics, many analysts believe that there will be further growth for confectioneries. A “baby-boomlet” is on the way, significantly increasing the teenage population. By the time the population bulge peaks in the year 2010, it will top the baby boom in the 1960s in both size and duration. According to government statistics, the percentage of children between the age of 5 and 14 will rise during the 1990s, increasing from 14.2 percent of the population in the 1990 to 14.5 percent in the year 2000. This trend will serve as a strong foundation for increasing consumption of confectionery products through the end of the century. Nevertheless, spending for food and drink as a percentage of all personal consumption is declining in the United States, and most manufacturers recognize that future opportunities lie in using profits from domestic

The chocolate industry operates in an oligopoly market. An oligopoly is when a small number of firms dominate the market. While not a quite a monopoly, an oligopoly market is still controlled by a select number of companies and the market can be directly impacted by one or two major firms (Oligopoly Investopedia). Hershey’s has control of the largest market share, holding 44.4% (U.S Market Share). Mars Incorporated follows behind in second by holding 28.9%. While these two companies hold much of the control and power within the industry, LIndt/Ghirardelli and Nestlé maintain a combined share of 15.1% of the industry’s market. This means that four companies hold a combined 88.4% of the market, with two of them holding a combined 73.3%. The market was not always this way however. Up through the 1960s many candy suppliers were regional.

What is competition like in the premium chocolate industry? Which of the five competitive forces is strongest? Which is weakest? What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants?

The premium chocolate market has been growing at 20% annually, showing that buyers are willing to pay more for a better tasting and better quality chocolate. The declining growth of the overall chocolate market and rapid growth of the premium chocolate market is positive for current producers of premium chocolates in that the decline

Be Chocolaty with the Hershey’s Chocolate World: Have you ever seen a world which is full of chocolate? Hershey in Pennsylvania will show you that. The Chocolate World is one of the major tourist attractions of the world. You can take a guided tour in the world of chocolate. There is a movie, ‘Mystery of Chocolate’, which you can watch in 4D. To take a nice tour, ride on the chocolate trolley. You can create your own Chocolate bar too. You will come to know about the encouraging story of Milton Hershey. There is an on-site bakery and a nice food court there too. You will be able to create sundaes, cupcakes, and cookies yourself in the Dessert Creation Studio by

M&M’s biggest competitor is Hershey’s brand like M&M candies. The competition is fierce among the chocolate industry. Hershey and Mars are rivals and want the opportunity to gain more of the market share. In 1954, Hershey-ettes were introduced to compete against the similar M&M’s. However, they were not successful and are generally only available for consumers around the Holiday season. By the millennium, Hershey extended the popular Hershey Kisses brand in creating the Kissables. Hershey intended for direct competition to M&M small candy coated round tablet of chocolate in multitude of colors. The candy factories started in standard size packs and by the 70’s moved into standard size candy boxes. In the current year and season, you will find M&M’s in candy canes to small snack sizes and inside ornamental objects. The chocolate world becomes difficult to present as it becomes difficult to come up with new ideas in the candy business. As more companies release products similar to the M&M’s, it will become increasingly difficult for Mars to continue to command the level of market share in the chocolate candy industry and the product has a potential to get lost in the supermarket aisle.

In vertical analysis, it is easier to see elements as a percentage of Revenue. Between 2011-12, the portion that cost of sales takes in revenue has increased however, there is a bigger deterioration in distribution cost. In 2011, 9.21% of revenue remains as profit but in 2012 this figure decreases to 8.14%. Despite reduction in costs is one of the strategies of Ted Baker(part 1.4), analysis illustrates that costs increase each year.

For instance, there exists market for Novelty Candies and Private Label Candies. Equally, the availability of partnership, Franchising and Licensing can be of great help to The Cherry Lady Company which is still expanding

Businesses convert the Sappi produce into items or products which they trade to make a profit, examples of these items include household goods, textiles, magazines, books, tissues etc.

This report will cover the background understanding about the confectionery industry and do an in-depth analysis of the micro and macro environment. In addition, the market segmentation, market positioning and target market that Whittaker’s is concerned with is also discussed.

In our retail shop we offered product which is more perishable; like donuts which we make every day fresh and more which includes coffee, drinks, shakes, water and more.

Mondelez is one of the largest snack companies in the world. They offer snack food and beverages, including cookies, chocolate, gum, candy and coffee, as well as a few dairy products. It operates in over 80 countries worldwide, selling to approx. 165 countries. The products are sold to supermarket chains, wholesales, and all other comparable stores in the countries.