Biscuits Market Analysis

Biscuits Market Deep Dive – PESTLE, Porter, SWOT

The biscuits market is a dynamic and evolving sector, where there is a wide range of products, which meet the different tastes and dietary needs of consumers. As life becomes ever more hectic, the demand for convenient snacks has risen, which has made biscuits a popular choice with all ages. In addition, innovations in flavours, textures and healthy formulations have stoked growth, as manufacturers have developed gluten-free, organic and low-sugar biscuits to meet consumers’ growing health consciousness. Furthermore, the influence of social media and digital marketing has changed the way brands engage with their audiences, resulting in a more personalised shopping experience. In this ever-changing market, it is essential for industry players to understand the underlying trends and the competitive environment, in order to capitalise on the opportunities that lie ahead.

PESTLE Analysis

• Political:
  The biscuit market in 2024 will be affected by several political factors, including regulations and trade policies. In the European Union, for example, a new customs tariff has been introduced, which imposes a levy of 5 per cent on all imported biscuits from non-EU countries. This has an effect on the pricing policy of companies such as Mondelez and Nestlé. Also, the UK government has introduced a new labelling law, which requires manufacturers to state the sugar content of their products. This is expected to affect 1,200 brands.
• Economic:
  The biscuits market is also influenced by the general state of the economy, and by the rate of inflation and the level of expenditure. In 2024 the rate of inflation in the United States is expected to be around 3.2 per cent, which may lead to a rise in the price of raw materials such as flour and sugar. The price rise will affect the cost of production for the biscuits manufacturers. The estimated cost of producing a standard biscuit is now expected to be around 15 cents, up from 12 cents in 2023. However, the estimated expenditure on snacks, including biscuits, in the United States alone is expected to reach $US100 billion, indicating that demand will remain strong despite the economic difficulties.
• Social:
  The biscuit market is being increasingly influenced by social trends, particularly by a growing concern for the health of consumers. In 2024, it is estimated that 65% of consumers will be looking for healthier snacks, which will drive the demand for gluten-free and low-sugar biscuits. This change in demand will lead manufacturers to reformulate their products, with an estimated 30% of new biscuit launches in 2024 being marketed as ‘healthy’. In addition, the rise of the vegan trend will see a rise of 20% in the production of vegan biscuits, in order to cater for the UK’s estimated 500,000 vegans.
• Technological:
  TECHNOLOGY – In the biscuit industry, the technological revolution plays a crucial role in improving the efficiency of production and the quality of the product. In 2024, automation in the biscuit industry will increase by 25%, and companies are expected to invest $ 500 million in new equipment and technology to increase their production capacity. Artificial intelligence is increasingly being used in product development, and about 40% of manufacturers are using it to analyze consumer preferences and optimize recipes, thereby achieving more individualized products.
• Legal:
  The biscuits market is also influenced by the legal system, particularly by the regulations relating to food hygiene. In 2024, the Food and Drugs Administration (FDA) decided that all biscuits must bear a new label, with a list of the most common food allergens. The number of biscuit brands in the US market is around two thousand. It is therefore in the interests of the manufacturers to test and label them with great care. The fine for a single infringement can reach up to ten thousand dollars. Also, the introduction of a stricter advertising code for children will have an effect on the marketing of biscuits aimed at a younger audience.
• Environmental:
  In the biscuits market, the question of the environment is becoming ever more important, especially in terms of the responsible production of biscuits. It is estimated that by 2024, 50% of the biscuits industry will be using eco-friendly packaging, with a target to reduce plastics by 30% in the next five years. Furthermore, the carbon footprint of the biscuits industry is being investigated, with companies like Unilever pledging to reduce their greenhouse gas emissions by 20% by 2025. This trend towards a more sustainable industry is a response to the needs of consumers, with 70% of consumers preferring to buy from companies that have a reputation for being environmentally friendly.

Porters Five Forces

• Threat of New Entrants:
  The threat of new entrants to the biscuit market in 2024 is medium. The biscuit industry has established players with strong brand loyalty and distribution networks, but the relatively low capital required to start a biscuit manufacturing business makes it attractive to new competitors. However, regulatory requirements and the need for quality control limit the number of new entrants.
• Bargaining Power of Suppliers:
  Suppliers in the biscuit market generally have low bargaining power. There are many suppliers of raw materials such as flour, sugar and flavorings. The ease with which the biscuit industry can change suppliers, therefore, reduces the bargaining power of suppliers. The large biscuit manufacturers can also negotiate favorable terms of trade due to their purchasing power.
• Bargaining Power of Buyers:
  In 2024, buyers in the biscuit market will have considerable bargaining power. The large number of brands and products available will enable them to easily switch from one biscuit to another, depending on price, quality, and taste. Competition will force manufacturers to keep prices down and to continue developing new products to meet changing tastes, thus enabling buyers to influence the dynamic of the market.
• Threat of Substitutes:
  The threat of substitutes on the biscuit market is moderate. Biscuits are a popular snack, but there are many alternatives, such as cakes, pastries, and healthier snacks like energy bars. As consumers become more health-conscious, they may opt for these alternatives, and biscuit sales may fall. However, the unique taste and convenience of biscuits will help them maintain their position in the market.
• Competitive Rivalry:
  Competition in the biscuit market was intense in 2024. Brands were well established and competed for market share. Product differentiation and aggressive marketing strategies were commonplace. Companies were constantly introducing new flavours, packaging and health-related products to lure consumers. Intense competition in turn led to price wars and increased advertising expenditure, intensifying the competition still further.

SWOT Analysis

• Strengths:
  • Strong brand loyalty among consumers for established biscuit brands.
  • Various product ranges, including gluten-free and organic products.
  • Robust distribution networks ensuring wide availability in retail and online channels.
• Weaknesses:
  • High competition leading to price wars and reduced profit margins.
  • Perception of biscuits as unhealthy snacks may deter health-conscious consumers.
  • Dependence on raw materials that can be subject to price volatility.
• Opportunities:
  • Growing demand for healthier snack alternatives presents opportunities for innovation.
  • Expansion into emerging markets with increasing disposable incomes.
  • Leveraging e-commerce platforms for direct-to-consumer sales and marketing.
• Threats:
  • Intense competition from alternative snack products, such as protein bars and fruit snacks.
  • Regulatory changes regarding food labeling and health claims.
  • Economic downturns affecting consumer spending on non-essential items.

The biscuits market in 2024 is characterized by a strong brand loyalty and a wide variety of products, both of which are strong points. However, the market faces challenges, such as high competition and negative health perceptions. Opportunities for growth are based on the demand for healthier biscuits and the expansion of the market to new countries. Threats include competition from alternative snacks and the risk of a regulatory change. The companies should focus on innovation and strategic marketing in order to exploit the opportunities and address the weaknesses and threats.