Zorbas & Sons Plc Business Plan

4.0 Market Analysis Summary

Bakery industry is one of the most rapidly growing industries in Cyprus with many players asserting a market share. The clientele is wide including retail and wholesale customers. Every single local resident could potentially be a customer, as bakery products are highly demanded well distributed and affordable to anyone.

Zorbas bakeries are focusing on meeting the demand basically in retail but also wholesale markets in Cyprus and overseas. Our target includes the local population of all income categories, without yet excluding foreign population.

4.1 Market Segmentation

Our target market consists of the following groups:

The local residents Our Company has already established a large regular customer base and aims to expand it further. This will ensure a consistent revenue base enhancing the stability of the company. Further expansion of our sales-network together with the improvement of product-service quality and price are critical for winning larger market stake.

The tourists

Tourist traffic comprises approximately 10% of the revenues. Strategic alliances with key players in tourism industry will help us to capture this segment of the market. Convenience high visibility and quality will increase our competitiveness in that market segment.

The Wholesalers in local and global base

Zorbas bakeries remain one of the strongest players in this particular segment improving permanently its capability to respond on increasing demand by expanding its production facilities, adapting new technologies, and implementing progressive production methods.

Table: Market Analysis

Market Analysis

2011 2012 2013 2014 2015

Potential Customers Growth CAGR

Local residents(retail) 10% 200,000 220,000 242,000 266,200 292,820 10.00%

Tourists 5% 20,000 21,000 22,050 23,153 24,311 5.00%

Local and global Wholesalers 15% 500 575 661 760 874 14.98%

Total 9.59% 220,500 241,575 264,711 290,113 318,005 9.59%

4.2 Target Market Segment Strategy

In our market strategy we will mainly focus on the segment of Local residents. The size and broadness of the customer base in that particular segment, the regularity of customer's stream, the already established sales network, the competitive advantages that Zorbas possess in terms of technologies, facilities, experience in customers service are key factors contributing to that choice. Zorbas bakery products and services are affordable in terms of price and due to their quality can be attractive to everyone. Focusing thus on wider market segment, providing quality, good prices (using the advantage of technology and scale economies)and nonetheless convenience will ensure high earnings.

Strengthening the relations to wholesalers enhancing on the same time the global distribution of our products would be also an important strategic object giving perspectives for growth.

4.3 Market Needs

The demand for bakery products has been steadily increased over the last years. That could be seen as a consequence of the increase in population of local residents and most importantly of the change in Cypriots' consuming behavior. The spectrum of products demanded has been also increased. Consumers are now more conscious about their expectations as they are better informed about the trends and products in the global markets. They are now asking for convenience and service in addition to healthy products with fresh ingredients and high quality standards.

Zorbas responds to that change by improving its technology and facilities ensuring this way the quality in preparation and on the same time scale economies. We are permanently introducing new differentiated products monitoring continuously the quality and freshness of ingredients. For the convenience of our customers we expand our retail store networks screening carefully the location and we introduce delivery services. Our employees are permanently supervised and trained for reaching excellence in service.

4.4 Market Trends

Cypriots over the last years have become conscious about their health. There are some clear indications of a trend in the market for biological products and for traditional products that have proved to be very healthy. Additionally, customers ask for products and services beyond the traditional function of bakeries. Cafes' or restaurant's offerings are now also required in a Bakery store.

Zorbas bakeries have responded to those opportunities betimes redefining or readjusting its strategy to this direction.

4.5 Industry Analysis

The Cyprus Bakery market is one of the largest markets in the food industry. The total volume (despite the lack in systematic recording) is estimated approximately just under 40 millions units. There are three principal sectors that constitute the Cyprus baking industry. The larger (plant) baking companies (including Zorbas Bakeries) produce around 30% of bakery products sold in Cyprus. In-store Bakeries within supermarkets produce the 20% and high street retail bakers the rest 50%.

Fig. 1 Market share of Cyprus bread production by volume

% by volume

Large plant bakers

30

In-store bakeries

20

Master bakers

50

100

Source: Trade Sources

Plant Bakeries

Plant bakeries produce among others wrapped bread on a large scale. One third of all the bread consumed in the Cyprus is wrapped and sliced - for convenience, for keeping qualities and value for money.

Most (but not all) of the plant manufacturers produce bread for sale under retailer labels -- including convenience stores and major multiple retailers