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Industry Analysis of the Food and Beverage Industry in Trinidad and Tobago

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THE UNIVERSITY OF THE WEST INDIES, ST.

AUGUSTINE

DEPARTMENT OF MANAGEMENT STUDIES

BUSINESS STRATEGY AND POLICY

(MGMT 3031)

February 23, 2018

INDUSTRY ANALYSIS OF THE FOOD AND BEVERAGE INDUSTRY IN TRINIDAD AND TOBAGO

[pic 2]

BY: STRATEGIC INNOVATORS

Group Members and ID Numbers:

NAME

ID NUMBER

Amelia Henry

814000230

Donald Deane

809001197

Gina Daisley        

813117730

Nikolas Ramsaran

808011402

Contents

INTRODUCTION        3

International Food and Beverage Industry        3

Local Food and Beverage Industry        3

Economic Factors        4

Market Size        4

Stages in the Industry Life Cycle        5

Competition        5

Porter’s Five Forces        6

Strategic Group Mapping        6

INTRODUCTION

International Food and Beverage Industry

The manufacturing sector, specifically the subset is the Food and Beverage Sector which consists of two industries in itself:1) the food processing industry and 2) nonalcoholic beverages.

It is seen as one major employer when compared to the Energy Sector. It was estimated that in 2004 an estimated 3,390,317 employees were employed by the United States restaurant industry, whereas in 2018 there is an estimated workforce of 3,777,535. Thus, it then shows a steady increase over a 14-year period.

The diagram below gives an indication in the growth of the labour market outside of the Caribbean Region, with a steady growth rate from 2004 to 2018.

[pic 3]

Local Food and Beverage Industry

In the Commonwealth the manufacturing sector contributes a significant percentage of revenue when compared to other non-energy sectors an estimated 11.9% to net gross domestic product. While in the Caribbean the manufacturing sector isn't as prominent as tourism is the main income earner, Trinidad has an active manufacturing sector with a promising food and beverage industry.

Currently being the largest sector in non-energy production. This industry employs 10000 people and contributes to reduction in the food import bill. There were exports of 900 million between 2004 and 2005. Notable organizations in this industry would include Unilever, Nestle, Coca Cola, Carib Breweries, HADCO, SM Jaleel and Blue Waters.

Advantages of Food and Beverage industry in Trinidad and Tobago:

1.        Proven successful track record of both established multinational and local companies

2.        Geographical advantage with close proximity to North and South American markets

3.        Low production and export costs

4.        Strategic shipping and trade advantage

5.        Highly integrated turnkey service from product inception to packaging

Economic Factors

The main factors that can be used to evaluate the dominant forces of the Beverage Industry are as follows:

1. Market Size

2. Competition

3. Stage in Life Cycle

4. Number of Companies in the Industry

5. Industry Profitability

The Food, Beverages and Tobacco Products contributes an average of 3.5 percent of total Gross National Product over the 2017 annual review of Trinidad and Tobago. Where the industry’s performance did not experience significant growth the last fiscal year, the decline it experienced is as estimated 0.1 percent. Whereas, in the previous year, 2016 the sector experienced a growth rate of 11.5 percent. This means that the industry earned over the 2016/2017 fiscal year a TTD$5,463.3 million. With the sector being seen as a majority contributor to the nation’s income, the industry is also profitable when compared to other non-energy sectors within the Trinidad Economy.

Market Size

The size of the beverage industry is small when compared to that of competing sectors. However, globally the revenue generated within its parameters sums to US$87,971million in 2018. In the long term it is projected that an annual growth rate of 11.3 % would bring about a total market volume of US$134,963m in the year 2022, as the largest percentage market share is held in Chinese Economy.  

Stages in the Industry Life Cycle

[pic 4]

The industry life cycle can be seen in the diagram above. There are five stages in the industry life cycle these being the 1) Development stage 2) Growth stage 3) Shake-out stage 4) Maturity stage and 5) Decline stage. The Food and Beverage industry can said to be in the maturity phase of the product life cycle diagram, during this stage the companies in the industry experience a steady increase in sales and has high market share.

Competition

One of the major economic factors within any industry is that of competition. There is increasing competition among the larger industries such as Pepsi, Coca Cola and Schweppes, to name a few. Competition arises when new ideas are brought about within companies. For example, Coca Cola has over 350 brands within its company alone therefore Pepsi and Schweppes would want to create more brands within their companies in order to get ahead of Coca Cola. There is also a lot of competition in the food industry, between KFC, Royal Castle, Burger King and McDonald's, just to name few. Just as with the beverage industry, the food industry would come up with new ideas in order to increase their competitive advantage within the industry. For example, KFC was competing with Subway using the “Plenty for 20” and “Real Deal” options. When looking at competition, we can also speak on the number of companies within the industry. There are numerous established, developing and emerging companies within the food and beverage industry, which is contributing to even more competition. Smaller companies such as home businesses are using their selling price as a way to gain loyal customers, hence larger companies may be losing sales. For example, an entrepreneur with a small business would provide the same meal as Max Grill House, for much less, hence making it affordable to the public.

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