Вы находитесь на странице: 1из 17

1

Introduction

Due to lifestyle changing as people stay at home alone or women start


working, people have to save their time and their money. As stated by
Brown (2010), consumers are eating more at home and eating out less. In
other words, they get going to consume and use products which is
convenient for them such as frozen foods or ready meals more because
buying prepared meals to cook at home is cheaper than going out to the
restaurant and easier than cooking by themselves. This brings an increase
in sales of convenience foods nowadays. Moreover, another point is
peoples’ attitude about prepared meals are changed since the
manufacturers noticed that quality of ready meals have been improved
more than the past.

A meal can be home cooked, by the consumer or others, but it can also
be produced outside the homre. For instance, hotels, restaurants and
cafes, institutional kitchens or takeaway and retail outlets according to
Ahlgren(2004).

There was a minimal growth of ready meals market value in the


amount of 3.1%, rising from £2.70bn in 2008 to £2.79bn in 2009,
representing CAGR of 3.8% in the period 2005-2009. (see appendix I)

This report begin with the structure of ready meal industry in the UK,
focuses on the players in this industry market. In order to know general
information and understand clearly about prepared foods industry, this
report displays the analysis by using PESTEL for macro environment and
follows by Porter’s five forces model which analyse micro environment,
including the prospect development.

The Structure Of Ready Meal Industry


2

Considering and understanding some major firms who are the leading
players in the ready meal market is greatly necessary. According to ready
meal industry profile (Datamonitor 2009), Northern Foods plc is the leader
of ready meal market share in the UK, follow by Premier Foods plc and
Kerry Group plc.

United Kingdom ready meals market share: % share, by value, 2009(e)

Northern Foods provides ready meal products to several food retailers

such as Marks & Spencer, Sainsbury’s, Tesco, and Asda. There was a raise
of turnover from £975.2m in 2009 to £977m one year later but a profit
before taxation decreased to £7.4m, compared with £12.1m in 2009 (see
appendix ll). Additionally, the powerful production of the products such as
salads and sandwiches cause an increase in revenues segment. The next
manufacturer is Premier Foods who supplies the products which are
manufacturers-branded and own-label products. The company’s revenues
in 2009 dropped to £1.52bn from £1.6bn in a previous year. In contrast, a
pre-tax profit in 2009 saw a further sharp rise to £100m, which was 5
times higher than the figure in 2008. The reason for this is in early 2009,
the company extended the range of side dishes of Indian ready meals in
microwavable packages(see appendix lll). The other company is Kerry
Foods who owned by an Irish firm and selling retailer-branded and private-
label ready meals to markets in the UK and Ireland made a turnover of
£477m and £524m in 2008 and 2009, but the pre-tax profit fall to £14m in
2009 from £16m a year before (see appendix llll).
Macro Environment Analysis
3

According to Kew and Stredwick (2008), The macro environment is


more complex than the micro environment and the internal environment
because it is an uncontrolled factors. The company should list the
environmental factors which can have an impact on the company in the
first step. Recession, inflation, unemployment, and policy changing of
government are all instance of macro changes. We can classify by using
analysis tool ‘PESTEL’

PESTEL

Political and Legal Factors

Government and other polities’ events always effect on the firms and
industries directly (Sloman and Sutcliffe 2004 p6). All businesses will be
conducted by the authority via using regulations, a role of legislation,
standards, and a mass of laws. For example, Keynote (2010) reports that
the Food Safety Act 1990 is one of the major legislation overspreading the
food industry in the UK in two main areas-Food standards and Food
hygiene and Food Labelling Regulation 1996 which are governed for
labelling the specific food products, applying in the UK.

Moreover, there are several trade associations who play the role in
food industry such as Chilled Foods Association who advertise and look
after the interest of the frozen food industry and British Frozen Food
Federation who develops common standard of quality in chilled prepare
food products. However, one of the key organisation that control the
quality and safety of food in UK is “Food Standards Agency”.

Economic Factor
GDP Quarterly Growth (%)
4

Source: Office for


National Statistics

According to Keynote (2010), the booming


economic of the UK started in 1992 and met an end sixteen
years later. In the second quarter of 2008, the UK entered to the recession
and plummeted in the next quarter, and continued the fall to the third
quarter of 2009. Consequently, the economy met the recession for six
months which was the longest period of recession that the UK have met.
However, in the last period of 2009, the UK economy started to recovered
from the recession to the same level before as the Officer for National
Statistics said that due to an increase in productions and services, GDP
has a growth of 0.1 %, compared with a fall of 0.2 % in the previous
quarter.

Furthermore, in the figure above, the office for National Statistics


(2010) reports there was a slight growth in Gross Domestic Product (GDP)
by 0.8 % in the third period of 2010 and it rose by 2.8 %, compared with
the same quarter in the previous year. Thus, the trends of the UK economy
is going up slightly.
Inflation
5

Source: Office for


National Statistics

Refer to Kew &


Stredwick (2008 p109-110),
inflation is an increase in the level of retail and consumer prices. If the
inflation in the UK get higher at a fast rate, it will be a devaluation of the
UK currency. As a result, during 2009, the recession has helped the
inflation fell rapidly. However, the inflation rocketed at the end of the year.
As The Office for National Statistics has indicated, there was a sharp
increase in the Consumer Price Index (CPI), rising from 1.9% to 2.9%
between November and December in 2009.

The factors that influence on the change in CPI inflation in upward


trend came from food, drinks, clothing, household equipment while fuels
and air transport are the largest downward pressures. These factors have
an affect on the RPI as well. As the latest figure from National Statistics
shows the CPI annual inflation and RPI annual inflation were 3.3% and
4.7% , respectively.

Unemployment
6

Source: Office for


National Statistics

A study by
Keynote (2009a) indicates due to the booming of the UK economy since
1992, there was a low level of unemployment rate during 2004 to 2007,
but the number of people out of work went up significantly to 7.9% or
approximately 2.5 million in September 2009 because of the recession
that the UK met in summer of 2008.

Next, there was a slow growth in unemployment rate compared with


previous quarters, indicating that the economy may be beginning a very
gradual recovery.

Social Factor

According to Keynote (2009a), Over the past 50 years, The growth of


number of working women and single-person resident has reflected to the
7

Demand for easy-to-prepare food products. Moreover, freezers and


microwaves are ubiquitous at the present so this led the cooking is easier
and faster. In addition, since the home-entertainment market invested
heavily on home-entertainment channel and equipment such as high-
definition television and game consoles, people in the UK prefer staying at
home to going out somewhere with their family and friends. what is more,
as the consumers’ disposable incomes and number of hiring people fall,
meaning that they should save their money more. In doing so, the
convenience food products is becoming more popular than the past and
the word ‘staying in is the new going out’ is occurred.

The awareness on nutrition in convenience products is one of the key


factor that influences on customer decision. Hence, the makers try to
persuade customer that their brands contain healthy aspects by using
product labelling schemes showing how the product is on the label of
packages. For example, the organic food sign or low fat sign on the
products.

Technological Factors

Refer to Kew & Stredwick (2008), there are various new technologies
have an impact on humankind such as information technology,
communication technology, transportation technology and the Internet.
These technologies are changed and developed constantly to be an
invention and innovation. Nowadays, it is an absolutely acceptable fact
that the Internet has a great affect on everybody even though on the
retailers. This leads to many large retailers offering e-shopping to the
customers. So that the number of e-customer has risen quickly. As the
report of Keynote(2010) shows there was a dramatic increase by 20% in
online sales of Tesco in 2009. In the UK, the internet access home rate has
grown every years, the number of Internet access increase from 69% in
2006 to 90% three years later. However, there are some parts of rural area
where are far away from a telephone line and cannot access to the
Internet.(Keynote 2010)
8

Environmental Factors

Due to changing of climate, the issue of Global warming is becoming a


more and more controversial topic in the media nowadays. This leads to
modification of manufacturing and delivery process. The company have to
concern and care about their processes which can damage the
environment and based on altruism. However, Benett & Welch (2010)
argue that overuse and misuse devalue the meaning of green. The
companies should understand their aims of their green businesses clearly
and know the position they will be in next five or ten years. The clear
example for this is Marks & Spencer company. They claims that on 15
January 2007, Marks & Spencer launched the green project called Plan A,
they pledged to change 100 things in 5 years and now they have made
progress on over 80 things. There are some obvious highlights such as
over 20% of the business has now moved to renewable electricity, electric
truck runs on zero emissions, fully recyclable packaging. (Mark & Spencer
2010)

Micro Environment Analysis

As stated by Kew and Stredwick (2008), in fact there are more


complexity and difficulty in the reality of industrial world so the company
should choose the right analysis tools which match to this complex
9

situation. In this stage, Michael Porter’s Five Forces Model is suitable for
analysing the near environment. As stated by Datamonitor (2010)

Threat of new entrants

This threat depends on the level of the barriers of each industry which
the new company entrance to. In this stage, establishing new ready meal
factory and promotion to the market require high capital investment
expenditures. A result for this it would be too risk for small business to
succeed in the global market level. What is more, persuading the retailer
to place new ready meal brand on the shelf in their stores is quite hard
because there is a limit space for the products from numerous brands and
the shops would not like to lose the sales of existing brand product which
familiar to customers. For this reason, the accessing to the market by this
distribution channel is a barrier for the new entrants. Overall, the threat
for the new firms to entry is evaluated as strong.

Bargaining Power of Buyers

In this process the buyers means many retailer such as supermarkets


and hypermarkets which are the main distribution channels for ready
meals product in the UK and the market value of this channel is
approximately 80%. Because of this, these retailers buy a large volume of
products and have a power to make a bargain to the factory owners.
Overall, it could be suggest that power of purchasers is strong.

Bargaining Power of Suppliers

There are a large number of primary suppliers which frequently include


not only agriculturists but also graziers. Nevertheless, numerous food
manufacturers do not buy their materials from these direct suppliers,
whereas they buy from a few large companies that trade in commodities
on a worldwide scale which usually offer some pre-factory processing such
10

as conversion of oilseed to oil (OEM). Besides, from the ready meal


manufacturing companies’ perspective, this organization increases
supplier power. In other word, suppliers have more bargaining power from
this structure. If Outstanding manufacturers want to keep their brand
equity in the ongoing term, they have to retain a quality of product. Apart
from this, they need to source raw materials which are appropriate for
quality, this lead to the suppliers who can produce required products being
more powerful.However, lack of a variety of commodity material
debilitates supplier power. What is more, substitutive materials are
important for raw materials; for example, if the price of pork increases, a
manufacturer could reduce the volume of buying it and buy a cheaper
substitute instead such as chicken and beef. All thing considered above, it
is clearly that supplier power is evaluated as powerful. Commodities are
key factor of power of suppliers, if price of raw the materials increase
there would be an effect to M&S directly.

Threat of Substitutes

There are a variety of substitutes for ready meals such as delicatessen,


canned food, instant noodles or processed food. However, the quality of
frozen food is better. It is too complicated to evaluate the price because
the retailer will pay for these products on a different consideration. If the
performance is similar to the products with near prices, the threat will be
strong.

The intensity of rivalry among existing Firms

There are three manufacturing leaders of ready meal market in the UK


who having 23.2% of the whole market share which can show the
competitive level is high. In fact, it is very easy for retailers to change the
products between different manufacturers. However, brand loyalty of
customer is an obstacle for this situation. Because of the ready meals
11

products are identical, the competition is strengthen and it is very hard to


retain existing customer.

Conclusion

A few year ago, the UK has faced to the recession. The result for this is
the British had to spend less money and the number of unemployed
people had increased. In the fact that the price of ready meals products is
cheaper than the meals at the restaurant, people buy these kinds of
product more. Moreover, the perception of convenience foods have been
changed more in a positive way, as the quality of the product was
improved and better design packaging. Additionally, there is a wide variety
of products such as Thai food, Indian food, Chinese food, Italian food or
Japanese food, so the consumers have a large number of alternatives for
their meals by buying from the supermarket or hypermarket.

The high demand of ready meals from 1990s caused high level of
competition, many producers invested their money to construct and
enlarge the factories. However, the products are undifferentiated therefore
it is quite hard to retain the customers especially price sensitive
customers.

To sum up, economic cycle is not an important factor that can have an
impact on food expenditure as other sectors such as furniture, clothing,
electric tools and extravagant goods the reason for this is food
expenditure is a vital shopping for every households.

Mission Vision Values(Goals)

M&S outlines its core business as clothing and Food. Its financial objectives is 

to deliver shareholder value in terms of increase returns, but also in terms of 

increase sales and market share in retailing. It beliefs and values are outlined 
12

as “Our customers continue to see Marks & Spencer as the place to shop for 

special food, produced to exacting standards”. M&S also sees its workforce as 

an important part of its plan and also considers modernising its stores as a 

key corporate objective.

Vision: The standard against which all others are measured

Mission: Making aspirational quality accessible to all

Values: Quality, value, service, innovation and trust

Globalisation strategy

Marks and Spencer Plc is an international retailer with 718 locations across 34
countries. The group sells clothing, footwear, gifts, home furnishings and foods under
the St. Michael trademark in its chain of 294 stores in the United Kingdom. It is listed
in the FTSE 100 index and employs over 75,000 staff. Approximately half of the
group's overseas stores are franchised to local partners.

References

Benett, A. & Welch, G. (2010) ‘Why green companies should go clear


instead: now that just about every brand out there claims to be green, it's
time to make a more meaningful set of claims’ [Online]
<http://find.galegroup.com.
ezproxy.brighton.ac.uk/itx/start.do?prodId=EAIM>[accessed 19th
November 2010]

Brown, H (2010) Dinner will be served in a minute, Food Manufacture. Vol


85, No 2, pp61-62
13

Datamonitor (2010) ‘Ready meal in the United Kingdom’ [Online]


<http://web.ebscohost.com.ezproxy.brighton.ac.uk/ehost/detail?
hid=104&sid=03e4
f31f-fcef-484e-8ba6-5690633dc6b0%40sessionmgr112&vid=1&bdata
=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=buh&AN=52479567>
[accessed 20th December 2010]

Fame, (2010) ‘Premier Foods Group Limited’ [Online]


<https://fame2.bvdep.com/version-2010126/Report.serv?
seqnr=0&context=CAT560
NXK6CR1KD&_cid=612>[accessed 20th December 2010]

Fame, (2010) ‘Northern Foods PLC’ [Online]


<https://fame2.bvdep.com/version-2010126/Report.serv?
context=CAT560NXK6CR1KD&_cid=630&Seq
Nr=1&HideTab=true> [accessed 20th December 2010]

Fame, (2010) ‘Kerry Foods Limited’ [Online]


<https://fame2.bvdep.com/version-2010126/Report.serv?
context=CAT560NXK6CR1KD&_cid=666&Seq
Nr=2&HideTab=true> [accessed 20th December 2010]

Kerry Group plc, (2010) Structure [Online]


<http://www.kerrygroup.com/page.asp?pid=108> [accessed 20th
December 2010]

Kew, J. & Stredwick, J. (2008) Business environment : Managing in a


strategic context. 2nd ed, London: Chartered Institute of Personnel and
Development

Key Note, (2009a) ‘Ready Meals 2009’ [Online] <http://www.keynote.co.uk.


ezproxy.brighton.ac.uk/market-intelligence/view/product/10337/ready-
meals?highlight=read+meal&utm_source=kn.reports.search> [accessed
20th December 2010]
14

Key Note, (2009b) ‘Frozen Foods 2009’ [Online]


<http://www.keynote.co.uk.
ezproxy.brighton.ac.uk/market-intelligence/view/product/2270/frozen-
foods?highlight=ready+meal&utm_source=kn.reports.search> [accessed
20th December 2010]

Key Note, (2010) ‘Food Industry 2010’ [Online] <http://www.keynote.co.uk.


ezproxy.brighton.ac.uk/market-intelligence/view/product/2360/food-
industry?highlight=ready+meal&utm_source=kn.reports.search>
[accessed 20th December 2010]

Marks&Spencer, (2010) ‘Plan A’. [Online] <http://plana.marksandspencer.


com/about> [accessed 20th December 2010]

National Statistics, (2010) ‘GDP Growth’. [Online] <https://studentcentral.


brighton.ac.uk/webapps/portal/frameset.jsp?tab_tab_group_id=_2_1>
[accessed 20th December 2010]

National Statistics, (2010) ‘Inflation’. [Online] < https://studentcentral.


brighton.ac.uk/webapps/portal/frameset.jsp?tab_tab_group_id=_2_1>
[accessed 20th December 2010]

National Statistics, (2010) ‘Labour market’. [Online]


<https://studentcentral.
brighton.ac.uk/webapps/portal/frameset.jsp?tab_tab_group_id=_2_1>
[accessed 20th December 2010]
Sloman, J. & Hinde, K. (2007) Economics for business. 4th ed, Harlow:
Financial Times Prentice Hall

Sloman, J. & Sutcliffe, M. (2004) Economics for Business. 3rd ed, Harlow:
Pearson Education Limited
15

Appendix

I. The value of ready meals market in the UK between 2005 and 2009
16

Source: Datamonitor

II. Key Financial and Employees of Northern Foods.

Source: Fame

III. Key Financial and Employees of Premier Foods.


17

Source: Fame

IV. Key Financial and Employees of Kerry Foods.

Source: Fame