Porter’s Five Forces Analysis of Dairy Industry 

Dairy industry deals with gathering and storing milk and producing milk-based products; butter, cheese, milk, cheese, ghee, and others. Dairy farms and mixed farms are synonymous terms that focus on dairy products. Today, we’ll discuss Porter’s five forces analysis of Dairy industry; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.

Porter’s five forces analysis of Dairy industry would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management. Here’s Dairy industry Porter’s five forces analysis of dairy shop business as follows;

Porter’s Five Forces Analysis of Dairy Industry

Let’s discuss Porter’s five forces analysis of Dairy Industry as competitive forces in strategic management and they’re as follows;

Bargaining Power of Suppliers in Dairy Industry

The bargaining of suppliers is low in the Dairy Industry as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the Dairy Industry Porter’s five forces analysis of dairy shop business are as follows;

I-Multiple Live Stock Farmers

There are many small and big livestock farmers running their farms in various regions and countries across the globe. Some of them run their milk retailing business locally, and the others collaborate with the world’s leading dairy brands and they manage packaging, distribution, and retailing. Usually, the brand requires a mass volume of milk, and only the big farmers work with them. Since there are many farmers, it decreases their bargaining power.

II-Expiration & Stale

Customers would prefer to buy and use dairy products milk, yogurt, cheese, and ghee if they are fresh. The dairy farmers and dairy brands can’t keep the dairy products for a long time; they would become expired and stale. The sensitive nature of dairy products further decreases the bargaining power of dairy suppliers.

Bargaining Power of Buyers in Dairy Industry

The bargaining of Buyers is Higher in the Dairy business as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the Dairy Industry five forces analysis of the dairy shop business are as follows;

I-Alternative Brands

While shopping for milk, yogurt, cheese, butter, and other dairy supplies; customers have got multiple options of either from local dairy sellers or the dairy brands. They all offer the same dairy products to the customers at the market competitive pricing. It gives significant bargaining power to the customers.

II-Price Conscious Customers

Dairy products like milk, butter, and cheese fall under the category of regular items that customers use in their daily routine life. Since they use it regularly, it makes them highly cautious about the market’s competitive pricing. A small change in price would make them buy milk from other dairy brands or local dairy suppliers.

Threat of New Entrants in Dairy Industry

The threat of new entrants is Moderate in dairy shop business and Dairy industry as competitive forces in strategic management. Some of the main factors impacting the threat of new entrants in dairy industry Porter’s five forces analysis of dairy shop business are as follows;

I-Branding & Marketing

Starting the dairy shop business is very easy, you can buy milk, cheese, and butter from the local dairy suppliers and set up your own shop. Along with the initial cost, the main expense would be marketing and branding. Multinational brands like Amul, Nestle, and others invest billions of dollars in marketing and promotion of their dairy products and services. They have established a worldwide distribution network and a loyal database of customers. The new entrants can’t win the market share, but they can run their retail shop successfully at the local level.

II-Live Stock Safety Regulations

It is highly difficult to run the livestock business in the developed countries. Dairy farmers and dairy brands need to comply with animal protection regulations to ensure that the farmers aren’t exploiting the animals along with health and safety regulations. However, complying with regulations and getting the approval from Food and Safety Department would increase the initial cost to a great extent. Without complying with their safety standards, you can’t run the business.

Threat of Substitutes to Dairy Industry

The threat of substitute products and brands is higher in the Dairy industry as competitive forces in strategic management. Some of the main factors impacting the threat of new substitutes in the dairy industry five forces analysis of dairy shop business are as follows;

I-Alternative Brands

There are many dairy brands operating their business in the dairy industry. They all offer the same quality of dairy products to the customers at almost the same price to the customers. For instance, if customers couldn’t find the cheese, butter, or milk of one brand; they would easily switch to another brand that is available. If one brand increases the price, they would switch to another brand without incurring a lot of costs.

Competitive Rivalry in Dairy Industry

The competitive rivalry among Dairy brands is very high in the Dairy industry as competitive force in strategic management. Some of the main factors impacting competitive rivalry in the Dairy Industry Porter’s 5 forces analysis of dairy shop business are as follows;

I-Tough Competition

The dairy industry has become highly competitive with various dairy brands offering similar products. The dairy market has reached the market saturation stage where there are multiple brands both local and global; they all have earned a significant portion of customer market share. Some of the leading brands in the dairy industry with the highest market share are as follows;

• Unilever PLC
• Nestle
• Inner Mongolia Yili Industrial Group
• Danone SA
• China Mengniu Dairy Company Ltd

Conclusion: Dairy Industry Porter’s Five Forces Analysis |5 Forces Analysis of Dairy Industry

After an in-depth study of the Porter’s five forces analysis of dairy industry; we have realized that dairy industry is the world’s leading business. If you are learning about the Dairy industry Porter’s 5 forces analysis of dairy shop business; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.