Instituto Tecnológico y de Estudios Superiores de Monterrey
Campus Santa Fe
M3 - A1: A Systematic Comparison of the Competitiveness of Two Firms
International Strategy Development for the XXI Century (Gpo 501)
Katherine Zazueta García A01029197
Karime Abuchard Lara A01366504
Ana Sofía Franco Mercado A01378453
Mariano Gómez De Orozco Barbabosa A01366424
Luis Alfredo Ontiveros Contreras A01379592
24/04/2023
Industry Introduction
As known from the former partner company we are developing the project with, for the
means of this report we are focusing on the savory snacks industry which is the one Barcel
falls into, but driving it into the chinese market.
The savoury snacks industry reported a slow down when the pandemic started, after the
vaccination in the Asian Pacific area this industry registered a quick return, due to this the
market size which was valued at $68.2 billion in 2021, and is expected to grow more than 5%
to 2026. (Global Data, 2022). It is important to notice that the largest savory snack market in
this area is China.
When it comes to China, in the industry of savoury snacks there are many categories of
products considered including the following: potato chips, traditional snacks, nuts and seeds,
processed snacks, etc., for the case of this region the category that is consumed the most are
nuts and seeds. (Global Data, 2022).
Likewise, as the following table shows, data from Euromonitor International, also
demonstrates the categories of savory snacks in China, again showing the nuts, seed and trail
mixes as the most demanded in terms of sales.
(Passport, 2022).
Other important aspects to consider about this industry are the distribution channels. The
main channels of distribution in China are hypermarkets & supermarkets, but the snacks are
also sold through other channels which include convenience stores, foods and drinks
specialists, and even e-retailers. In China these distribution channels are the main ones,
distributed as follows, 84.2% of the snacks are distributed through retail offline channels
which
include convenience
retail,
supermarkets, hypermarkets,
food/drink/tobacco
specialists, non-grocery retailers, health and beauty specialists, and small local grocers, on the
other hand retail e-commerce represent 15.8%. (Euromonitor International, 2023).
A last element that has to be taken into account for the savory snacks industry is the
packaging of the products, for this sector several types of packages are used such as flexible
packaging, which is considered the most used on: rigid plastics, paper & board, and also
glass. In China, the main type of package used is flexible packaging, approximately 17 billion
units of products used this type of packaging. (Euromonitor International, 2022). The savory
snacks industry, according to a study in Euromonitor, is going to grow significantly in the
next couple of years, this industry in China is expected to have a retail value of 382,097.00
CNY billion in 2026. Also, it is important to note that the consumption habits of healthy
snacks are increasing as well, as Chinese people are trying to have better habits to improve
their health. According to Passport, approximately 45% of the Chinese consumers look for
healthy ingredients in food and beverages. (Euromonitor International, 2022).
To have a better understanding of the industry a Porter's 5 Forces Analysis will be presented
in this report. To find a deeper analysis look for Appendix Figure 1.
Competitors of Barcel in this country
When it comes to the competitors landscape of savory snacks in China, according to Passport
2023, we found out the following companies:
Company & Market Share
Pepsico
Anhui Three
Squirrels
Electronic
Commerce
Want Want
Holdings
Luohe Pingping
Food Co
Bestore Food
Co Ltd
5.3%
3.3%
3.2%
2.7%
2.5%
Furthermore after going deeper into the research of the market, we decided to center our
project in the nuts and seeds snacks as it is the most consumer category of these types of
products.
Selection of the product for the market.
For entering the Chinese market the products that have chosen are the peanuts of Barcel,
specifically the brand Golden Nuts SELECT.
The main reason why these types of snacks have been selected as the main product for
Chinese consumers is not only because of its increasing demand but also because of relevant
attributes over consumption behaviors on the Chinese market that we can see over the
presented following survey data. As we can see in the following table, this one, shows the
preference over Premium/Gourmet and organic products of Chinese consumers over the
global average, as well as the preference for snacks based on nutritional properties, meaning
that they are seeking for a natural and healthy product to adapt to their diet. This, of course,
represents a big opportunity for Barcel, because even though they have a big portofolio of
snack products, the Golden Nuts SELECT can be the perfect choice for Barcel to enter the
Chinese market, with a different direction and distribution.
(Passport, 2022).
Why peanuts?
Knowing that peanuts are considered a type of nut, it was decided to take a closer look at the
nuts industry in our designated country China.
According to Passport, the Retail Value of these snacks is of 36, 286.7 CNY million, and it is
expected to grow until 2027. And looking at the performance of each of the categories of
nuts, as we can see in the following table, peanuts are the most sold in volume. (Euromonitor
International, 2022).
(Passport, 2022)
Following that, since 2017, there’s a trend on consuming peanuts in the millennial generation
in China, as a survey made on 2017 by Stephanie Grunenfelder, senior vice president of the
American Peanut Council discovered that 95% of the Chinese peanut consumers, consider
them as healthy for their diets, where 86% of them eat them either once a week, or even more
times a week. The peanut buyers are mainly 26-45 years old, nevertheless for more specific
data, we found out that consumers from 26-35 years old accounts for 56.3%. Also, it is
important to mention that most nuts that are sold in China are imported from the United
States, India, among other countries. Finally, according to Montel’s survey and research, 4 of
10 Chinese consumers are extremely interested in buying imported products, in order to taste
and try different flavors and brands. (McKinsey & Company, 2021)
Competitors in of Nuts in China:
Now looking at competition of nuts in China we found that the main two direct competitors
are:
Three Squirrels (Market Share 3.3%):
Three Squirrels is a Chinese company that specializes in selling various types of snacks,
including nut snacks. Some of the nut snack products sold by Three Squirrels include:
1. Roasted nuts: Three Squirrels sells a variety of roasted nuts, such as peanuts,
almonds, cashews, and pistachios.
2. Nut bars: Three Squirrels offers nut bars made with different types of nuts, such as
almonds, cashews, and macadamia nuts.
3. Nut mixes: Three Squirrels sells nut mixes that contain a variety of different nuts,
such as walnuts, pecans, and hazelnuts.
4. Flavored nuts: Three Squirrels offers flavored nuts, such as spicy peanuts, honey
roasted cashews, and salted caramel almonds.
Bestore Food Co Ltd (Market Share 2.5%):
Bestore Food Co Ltd is a Chinese company that produces and sells a wide range of snacks,
including nut snacks. Some of the nut snack products offered by Bestore Food Co Ltd
include:
1. Roasted nuts: Bestore Food Co Ltd sells various types of roasted nuts, including
almonds, cashews, peanuts, and pistachios.
2. Nut clusters: Bestore Food Co Ltd offers nut clusters made with a combination of
different types of nuts, such as almonds, walnuts, and pecans.
3. Nut bars: Bestore Food Co Ltd sells nut bars made with different types of nuts and
sweeteners, such as honey and maple syrup.
4. Nut mixes: Bestore Food Co Ltd offers nut mixes that combine different types of nuts,
such as cashews, almonds, and macadamia nuts.
5. Flavored nuts: Bestore Food Co Ltd provides flavored nuts, such as wasabi-flavored
peanuts, BBQ-flavored almonds, and spicy cashews.
Luohe Pingping Food Co (market share 2.7%):
Luohe Pingping Food Co is a company located in the city of Luohe, this organization is a
modern food enterprise specializing in spicy snacks. This company is compromised in
promoting Chinese culture, innovating and complying with healthy expectations of the
Chinese consumers. Some of the snacks that this company produce, it is important to notice
that these snacks are substitutes of the peanuts, are the following:
1. Seasoned Flour Products: Luohe Pingping Food Co offers products made of flour,
soybean, and spices. These products can be spicy or sweet.
2. Vegetable Products: Luohe Pingping Food Co develops products of different
vegetables including kelp and konjac, the flavors of these products are spicy and sour.
3. Bean products: Luohe Pingping Food Co has a product which is made of tofu that has
the flavor of beans. This type of product is chewy and soft.
Comparison of Competitiveness
Competitive Profile Matrix
Based on our analysis of the Chinese snack market, it is evident that Three Squirrels stands
out as the strongest competitor. This is due to several factors, including their larger market
share, continuous product innovation, and exceptional customer experience. In order to gain a
deeper understanding of the competitive landscape, it was necessary to compare Three
Squirrels, BeStore, and Luohe Pingping Food Co to Barcel, highlighting the areas where
Barcel needs to strengthen their strategies to successfully enter the Chinese market. It was
decided to select BeStore, Three Squirrels, and Luohe Pingping Food Coas as the main three
competitors within the market that is going to be penetrated, due to the fact that WantWant is
going to be part of the entry strategy further explained in the development of the project, due
to this it was decided to rely and investigate about the three direct competitors of Barcel on
the Chinese market.
Valuation of companies
Company
Grupo Bimbo
BeStore
Three
Luohe
Squirrels
Pingping
Food Co
Valuation
$ 101,606,000.00
$ 2, 397,830.00
$ 2,257,918.00
$799,654.22
Among these three companies, Grupo Bimbo stands out as the most powerful, providing us
with an opportunity to enter the market aggressively and with a strong presence. With Grupo
Bimbo's resources and support, Barcel has all the necessary tools to successfully penetrate the
market. It is worth noting that Grupo Bimbo's financial stability and strategic expertise can
help Barcel navigate any economic challenges that may arise.
It is important to mention that this simple valuation of the organizations involved to develop
a successful strategy for Barcel was made by subtracting the Total Liabilities from the Total
Assets of each organization.
Presentation:
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Conclusions
As it can be seen in this report, the savory snacks industry is composed of different and
delicious products that are consumed on a daily basis. These savory snacks include foods like
chips, popcorn, corn tortilla, rice snacks, nuts and seeds, among others. All over the world,
this industry is forecasted to have a growth in the next few years, and as it was described on
this document the Asian market is one of the continents that will be registering most growth
in hand with several changes and innovations for this industry.
For the purposes of expanding the market of Barcel, a specific country of this region was
selected: China. Based on the information presented on the paper it can be determined that in
this country the previously mentioned industry is also estimated to keep growing, and several
trends will be following the industry such as healthier alternative snacks, premiumisation, etc.
Due to the data presented before, and the consumption habits of the consumers in the selected
market it was determined that the adequate product of Barcel for entering the market are
Golden Nuts Select, which are the premium peanuts of the brand.
By knowing this information it is important to notice that because of the high consumption
and popularity of this snack in China, the company will be facing to several competitors, but
based on the entry strategy and what Barcel is look for, it was decided to evaluate the three
main competitors of Barcel which are the following: Three Squirrels, BeStore, and Luohe
Pingping Food Co.
These brands are the ones that are most present in the Chinese market, and the three of them
have a varied product portfolio that makes them strong to compete with Barcel. On the
analysis made to these companies it was determined that there are several strengths that
Barcel has to develop or enforce to penetrate this market correctly, but it is also important to
notice that Barcel has several advantages that make the organization stronger in front of the
others even though the company is not even in this market yet.
To conclude the savory snacks industry, specifically the nuts snacks are an opportunity for
Barcel to enter a new market and become one of the leaders as it is in other territories. As for
the selected market, China, it is also a great opportunity for Barcel to grow, to find new allies,
adapt to new consumption habits, innovate, and in the future expand to further countries with
similar characteristics such India and Indonesia. Barcel has to take advantage of entering this
maker to continue developing the emporium that the brand already has in other places.
References:
Crunchbase. (n.d.). Three Squirrels - Crunchbase company profile & funding. Crunchbase.
Retrieved
April
25,
2023,
from
https://www.crunchbase.com/organization/three-squirrels-e-commerce
Euromonitor
International.
(2021).
Savoury
Snacks
https://www.euromonitor.com/savoury-snacks-in-asia-pacific/report
in
Asia
Pacific.
GlobalData.
(2021).
APAC
Savory
Snacks
Market
Analysis.
https://www.globaldata.com/store/report/apac-savory-snacks-market-analysis/?scalar=true&p
id=140547&sid=28
Leong, S. X. R. (2016). Review of PESTEL Analysis of China. LinkedIn.
https://www.linkedin.com/pulse/review-pestel-analysis-china-dr-stephen-x-r-leong-%E6%A2
%81%E9%8C%AB%E6%A6%AE%E5%8D%9A%E5%A3%AB/
Ltd., G. D. U. K. (2023, April 19). China nuts and seeds (savory snacks) market size, growth
and forecast analytics to 2026. Market Research Reports & Consulting | GlobalData UK Ltd.
Retrieved
April
25,
2023,
from
https://www.globaldata.com/store/report/china-nuts-and-seeds-market-analysis/
Ma, Y. (2022, June 28). China: Peanut consumption. Statista. Retrieved April 25, 2023, from
https://www.statista.com/statistics/872898/china-peanut-consumption/
McKinsey & Company. (2021). China consumer report 2021: How COVID-19 has changed
China's
shoppers.
https://www.mckinsey.com/~/media/mckinsey/featured%20insights/china/china%20still%20t
he%20worlds%20growth%20engine%20after%20covid%2019/mckinsey%20china%20consu
mer%20report%202021.pdf
Passport
2022.
Nuts
in
China.
https://www.portal.euromonitor.com/?kqgtIspm6Q7S5cRYIVAGQA4O4UtrvupCTphz3wotL
T9B%2fOcwYWp61g%3d%3d
Statista.
(2021).
China:
Peanut
consumption
https://www.statista.com/statistics/872898/china-peanut-consumption/
Sumaart.com, B. S. (n.d.). BeStore.
https://www.517lppz.com/en/about
About.
Retrieved April
2011-2022.
25, 2023,
from
Trade.gov.
(2021).
China
Labeling/Marking
Requirements.
https://www.trade.gov/knowledge-product/china-labelingmarking-requirements#:~:text=All%
20products%20sold%20in%20the,can%20be%20imported%20or%20exported.
Weilong
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https://www.weilongshipin.com/Uploads/file/20230323/1679582932982563.
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Appendix
Figure 1. Five Forces of Porter Analysis
Force
Assessment
Description
Threat of
New Entry
HIGH
China markets are quite hard to enter as companies will need to
consider whether to register themselves into the GACC in order to be
available to introduce products to the country. As well, the market
for our products of interest (specifically nuts) is extremely hard as,
there are many regulations like ; Sanitary certificate
(SADER)translated to chinese, The labeling of the product needs to
be in Chinese (Name,nutrimental data, etc), the packaging needs to
be fully sealed and there's a need to have a custom broker agent
officially related to the GACC.
On other hand, the trajectory of new entry products is quite hard as
there are already competitors such as Pepsico and other local ones
with better market shares, meaning more investment on MKT
strategies to cross this barrier.
Threat of
Substitution
HIGH
The threat of substitution is high, as we are focusing on nuts, China
has a lot of different brands that sell this product within the market,
and some of them are national brands. Nuts are one of the most
consumed snacks in China.
For example, we found out about Three Squirrels (三只松鼠), Bai
Cao Wei (百草味), Want Want (旺旺), Lee Kum Kee (李锦记),
among others, but these are the main ones within the market. These
brands are mostly sold in convenience stores, where Barcel will sell
their products in the country as well. It is important that in China
other types of nuts and seeds are popular snacks, which means that
there are several substitutes for peanuts.
Supplier
Power
MEDIUM
As it is known, the category of snacks that will be introduced to the
Chinese market are nuts.The raw materials that will be needed for
the production of these snacks are: peanuts, herbs and spices, wheat
flour, chiles, salt, packaging. Some of the suppliers of these raw
materials will be available in the China Market, but others are
mainly available in other countries such as Mexico. For some raw
materials such as peanuts the price of changing suppliers is low, and
easy but with others it can be a threat for the organization. As it is
already mentioned in this analysis some raw materials are common
which mean that they can be obtained easily in this market, but
others such as chiles can be hard to find in this market. Considering
that Barcel will be new in this market, and positioning of this brand
in other countries this customer will be considered a big customer for
the suppliers in China.
With this information it can be determined that the suppliers are
essential for the production of the snacks they are very relevant for
the supply chain of the industry, but some of them are easy to
replace, it is important to mention that the suppliers could be a great
ally in the industry for positioning against the main competitors of it.
Last but not least, it has to be mentioned that some of the suppliers
can put a lot of pressure on the brand.
Buyers
Power
MEDIUM
High competition, low switching cost.
“The average volume of per capita consumption in the nuts market in
China is expected to amount to 0.5kg in 2022”
Increasing demand for more healthy snacks.
Customer loyalty. High percentage of product purchase
Competitive
Rivalry
(minus)
HIGH
The snack industry in China is highly competitive, with multiple
local and international brands competing for market share. which is
why companies are looking to continuously innovate and
differentiate their products to stay competitive in the market. The
intense competition has led to price wars and aggressive marketing
strategies, which can make it challenging for new entrants to enter
the market.
The main competitors in the snacker industry in China are:
Want Want China
PepsiCo
Nestlé
Mondelez International
Orion Confectionery
The main exit barriers are:
high fixed costs
brand loyalty
dependence on suppliers and distributors
Regulatory and legal barriers
Threats of new entrants is high when:
High
Product differentiation is
x
Switching costs are
Entrance to the local market
x
x
Access to raw materials is
Government restrictions and requirements are
Low
x
x
Threats of substitute product is high when:
High
Low
Product differentiation of the substitute x
product is
Improvement in relation to other substitutes is
x
Power of suppliers is high when:
High
Availability of substitute product is
x
Importance of the customer for the supplier is
x
Low
Differentiation of the suppliers products is
x
Cost of switching suppliers is
x
Power of buyers is high when:
High
Switching cost is
x
Customer loyalty is
x
Increasing demand for specific products is
x
Intensity of competitive rivalry
when:
Low
is high High
Number of competitors is
x
Product differentiation is
x
Exit barriers are
x
Strategies for differentiation are
x
Low