Porter’s Five Forces Analysis of Bakery

The bakery business deals with flour-based baked food and edible items like pies, pastries, bagels, doughnuts, cakes, cookies, and bread. Some bakeries also serve tea, coffee, and other beverages to the customers. Today, we’ll discuss Porter’s five forces analysis of bakery business; bargaining power of suppliers and buyers, threat of new entrants and substitute products and brands; and competitive rivalry of the Bakery business Porter’s five forces analysis food industry.

The bakery business’ main products and services are as follows;

• Kalakukko
• Combread
• Pandesal
• Pumpkin bread
• Biscotti
• Buns
• Pastries
• Pies
• Crumpets
• Tarts
• Brownies
• Cakes

The statistical facts and figures about the bakery business are as follows;

• Approximately 3000 commercial and 6000 retail bakeries are operating in the US
• The bakery and food business generates annual revenue of over 423 billion USD
• Commercial bakeries earn annual revenue of 31 billion USD and retail bakeries earn 3 billion USD

Bakery business’s companies and brands are as follows;

• Grupo Bimbo, Mexico
• Finsbury Food Group, UK
• McKee, USA
• Aryzta, Switzerland
• George Weston
• Hillshire Brands

Porter’s five forces analysis of bakery business would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitute products; and competitive rivalry. Here’s Bakery Porter’s five forces analysis food industry as follows;

Porter’s Five Forces Analysis of Bakery Business 

Let’s discuss Porter’s five forces analysis bakery business as follows;

Bargaining Power of Suppliers of Bakery Business

The bargaining power of suppliers is lower in the bakery business and baking food industry. Some of the main factors impacting the bargaining power of suppliers in the bakery Porter’s five forces analysis food industry as follows;

I-Suppliers Availability

There are various suppliers available in the food industry offering raw supplies used in the cooking of bakery items like sugar, flour, oil, ghee, milk, eggs, and other items. Such bakery and food suppliers are available in almost every market and region; their easy availability has decreased their bargaining power.

II-Raw Supplies & Material

The food and bakery raw supplies and materials aren’t rare items. Farmers produce bakery and food raw supplies and offer them to bakeries, hotels, and restaurants. Easy availability and no differentiation further decrease the bargaining power of suppliers.

Bargaining Power of Buyers of Bakery Business

The bargaining power of buyers and customers is higher in the bakery business and baking food industry. Some of the main factors impacting the bargaining power of buyers and customers in the bakery Porter’s five forces analysis food industry are as follows;

I-Self Cooking Option

Cooking sweet dishes and cakes isn’t difficult; there are various cooking tutorials available on YouTube from various people across the world. They offer step-by-step to the learners in various languages; just name the bakery item, and it recipe and tutorial will be available.

II-Availability of Raw Supplies

The food and baking raw supplies and materials are easily and readily available to the customers. Many quality and diet-conscious people prefer to cook food and bakery items at home based on their dietary needs and requirements.

III-Price Familiarity

Since food and bakery items aren’t rare items, customers are familiar with their prices and conscious about them because they are regular routine items. That’s why their prices remain stable often.

IV-Low Switching Cost

There are various local and recognized brand bakeries available in almost every region and market. Customers have got a lot of options when buying bakery and food items. They can find the bakery items relevant to their budget, needs, size, and packaging; and switch from one bakery to another without incurring a lot of resources.

Threat of New Entrants to Bakery Business

The threat of new entrants is moderate in the bakery business and baking food industry. Some of the main factors impacting the threat of entrants in the bakery five forces analysis of the food industry are as follows;

I-Recognized Brands

There are various bakery brands operating their business in various countries across the world. They invest a significant amount of capital resources in marketing and advertisement. It has allowed them to establish a very large database of loyal customers. Their presence poses a tough competition to other local and regional bakeries and sweet shops.

II-No Product Uniqueness

The food and bakery items aren’t unique; there isn’t any differentiation in the taste of the baked goods. Any expert baker could open up a baking shop and offer a similar type of bakery items to the customers.

III-Easy Entry & Exit

Opening a bakery shop or bakery business isn’t difficult. It doesn’t require a lot of capital requirement or regulatory measures and procedures either opening or closing the bakery shop. Easy entry and exit would make the threat of new entry higher.

Threat of Substitute to Bakery Business

The threat of substitute products is moderate and higher in the bakery business and baking food industry. Some of the main factors impacting the threat of substitute products and brands in the bakery five forces analysis of the food industry are as follows;

I-Local & Branded Bakeries

There are various local and branded bakeries operating their business in the food and baking goods industry. They offer similar types of cakes, cookies, pastries, and other baking goods to customers across the world. Easy availability, branded bakeries, and no differentiation would amplify the threat of substitution to product and business.

Competitive Rivalry to Bakery Business

The competitive rivalry is very high in the bakery business and baking food industry. Some of the main factors impacting the competitive rivalry in the food industry Porter’s five forces bakery business as follows;

I-High Competitive Brands

The competition is very high in the food and bakery business industry at the local, national, and international levels. There are various local and global brands operating their business in the food and bakery industry. Some of them have a lot of resources available at their disposal; they invest in marketing and promotion to gain a competitive edge in the market.

Conclusion: Bakery Porter’s Five Forces Analysis |Food Industry Five Forces Analysis 

After an in-depth study of Porter’s five forces analysis of bakery business; we have realized that the bakery and food industry is a highly growth business. If you are learning about the bakery five force analysis of food industry; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; the threat of new entrants and substitute products; and competitive rivalry.