2. Agenda
► Introduction
► The Swiss bakery market
► Market Composition and Main Players
► Competitors
► Substitutes
► Potential Entrants
► Suppliers
► The role of corporate social responsibility
► Concluding remarks
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3. Introduction
► Bread, pastries, chocolates…
► 2010: 49.3 kg of bread per capita
► More then 200 different kind of bread at sale
► Retail bakery vs. wholesale bakery
► Characteristics of the Swiss food market (Rudolph and Weber 2011):
► High value of quality
► High loyalty, importance of image
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4. The Swiss Bakery Market
► Market volume 2011: 2.2 billion CHF
► Sales influenced by the World economic crisis
► Market in a maturity state
Schweizerischer Bäckerei- und Konditoreiverband SBKV 2012
4 Christian Busin, 25.05.2012 Schweizerbrot 2012
5. The Swiss Bakery Market
► A picture of the Swiss retail bakery market
► Main cost drivers (as share of total turnover)
► Employees 44-46%
► Ingredients 30%
SBKV 2012
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6. The Swiss Bakery Market
► Fragmented Market (Porter)
► Low overall entry barriers
► High transportation costs
► Diseconomies of scale
► Entry barriers for foreign competitors
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8. Main player: Goupe Aimé Pouly
► Headquartered in Geneva
► Several independent companies
► Pouly Tradition SA
► Boulangerie Polli
► Turnover of about 85 million CHF in 2007
► Founder: Aimé Pouly
PME 2007
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9. Main player: Goupe Aimé Pouly
► Successful innovation: The Pain Paillasse
► Trademarked combination of flour
► Joint venture with Groupe Minoteries
► Franchise system:
1‟200 bakeries in Switzerland and 11 other countries
in Europe sell the bread
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10. Main player: Bäckerei Hug
► Biggest retail bakery chain in Central Switzerland
► 19 branches, specialized on bread and buns
► Central production in Lucerne
► Annual turnover 2011: 30 million CHF (1.5% market share)
► Family-owned in the 5th generation
► management bay-out in 2009 (Paul Phillip Hug)
► Retail business: focus on high quality and geographic area of Central Switzerland
► Wholesaling business: cost leadership, capacity utilization
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11. Main player: BackWerk
► German company with 1 branch in Schaffhausen
► Self-Service
► Focus on price leadership
► Heavily depending on central points of sale
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12. Main players: Summary of the generic strategies
► Focus strategy: high quality and particular segment (i.e. limited geographic market)
► Only BackWerk stands out (“real” bakery?)
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13. Competitors
► Direct competitors in the bread market
► Food retailer
► Petrol station shops
► Substitutes and potential entrants
► McDonalds, Bretzelkönig
► Foreign Retail Bakery chains
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14. Competitors: Migros
► Biggest Food retailer in Switzerland (26% market share in food)
► Own bakery: Jowa
► 792.8 million turnover 2011
► 8 regional industrial and 90 in-store bakeries
► supplies Migros twice a day with fresh products
► Point of Sale: 623 supermarket and 150 petrol station shops
► Product range
► about 200 breads
► Relatively cheap standard breads to high quality products (Pain Création)
► Sustainability and CSR valued high
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15. Competitors: Coop
► Second biggest food retailer (market share 22%)
► High-quality approach, implementation of a process
that allows longer fermentation
► Operates 7 industrial and 35 in-store bakeries
► 230 products
► Point of sale: 557 supermarkets and 258 Coop Prontos
► Production strategy 2015
► CSR issues
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16. Competitors: Aldi
► Market entry 2005, 150 branches
► 8 different breads, all of them organic
► Relative cheap prices
► Automatic-baking oven as an innovation?
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17. Illustrative Map of the Swiss Bread Market
very specialized
Average
Retail Bakery
the Product Range
Specialization of
somewhat
specialized
standard range
Low High
Quality Focus
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18. Competitors: Petrol Station Shops
► Competitive advantages: long opening hours, good reachability
► Products final baked in-store
► Main players:
► Coop Pronto
► Migrol (Migros)
► BP
► Eni (Agip)
► Avec
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19. Substituts: McDonalds
► Easy Morning strategy
► Range of breakfast meals: Croissant, toasts, drinks
► Aims directly at market shares of retail bakeries
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20. Substituts: Bretzelkönig
► Offers pretzels, sandwiches, hot dogs
► Point of sale: highly frequented places (railway station)
► High quality, high price strategy
► Targets at commuters
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21. Potential Entrants: Paul
► French boulangerie chain from Lille
► 449 franchises worldwide in 27 countries
► 140 different kind of bread
► Strategy: bakery-based fast-casual coffee
► Products centrally produced in France and deep-frozen delivered to the branches
► Switzerland: Naville with franchise rights
► 4 branches in 2008, ambitious plans
► All closed down by the end of 2009
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22. Potential Entrants: Kamps
► German retail bakery chain
► Early 2000s: 2„000 branches in Germany and the Netherlands (Bakker Bart)
► German market: determined by price
► Financial difficulties and down-sizing
► Newest strategy: KAMPS Backstube
► Back to the roots
► Self-made products
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23. Suppliers
Flour
► Main supplier: Swiss mills
► Very concentrated market
► Bakery industry not a big customer
► Threat of forward integration
► High bargaining power
► Limitation of the power:
► Strategy of product standardization by the SBKV (lowers switching costs)
► Pistor (purchasing cooperative)
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24. Suppliers
Labor
► Well-skilled workers needed
► High value of apprenticeships
► Wage agreement between union and employers representatives
► GAV, universally valid
► High bargaining power of Labor
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25. Buyers
► Very differentiated
► Purchase only small quantities
► But:
► have qualitative alternative sources (Migros, Coop)
► face only low switching cost
► Medium bargaining power
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26. Corporate Social Responsibility
► Many bakeries too small to be a political actor
► However: local initiatives that show CSR
► Procurement practice: organic ingredients, free-range eggs, sustainable palm oil
e.g. Beck Keller: purchases its ingredients entirely from local farmers
► Usage of resources: high power intensity of the baking process
e.g. Bakery association of Obwalden: waterpower
► Human resources: Educating apprentices as a social issue, extremely high share of
apprentices in the bakery sector (12%)
e.g. Sutter Begg: Rookie-Club
Porter and Kramer 2008
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27. Concluding remarks
► The Swiss retail bakery market is at change:
► Trend toward concentration
► Competition from food retailer with high quality strategy
► However: still very much fragmented
► Possible solution: Franchising!
► Why not?
• Insufficient financial resources
• Locally driven bakery market?
• Failure of such a strategy (Paul)
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