Global chocolate market analysis, post a major acquisition in the market

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Jean Green
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1 1 Global chocolate market analysis, post a major acquisition in the market Client A Leading Management Consulting Firm Objective The client wanted to understand the impact of a major acquisition in the Global Chocolate industry, focusing on specific areas where its client would be affected The report enabled the client to provide strategic insights to its client on how to maintain and further strengthen its position Client Impact Enabled the client to map the position of the key players in the industry and probable market position of the new entity Porter s Five Forces analysis highlighted the effect of acquisition on competition level and potential entry barriers

2 2 Table of Contents Strategic Analysis of the New Entity (formed after the M&A) Global footprint, resilient product range and dominant market position Quality control issues - A major concern area Increasing presence into newer segments Capitalizing strong position in emerging markets Joint entity expected to protect and expand innovation pipeline; launch smaller packages with a more economical pricing, and focus on emerging economies Industry Landscape: Porter Five Force Analysis Low threat from new entrants as launching a company would require huge investment Very high rivalry within the global chocolate industry Leading industry players have a lot of cash to spend, so intense competition Margins are fairly similar for most companies Competitor Comparison: Strategy and Market Position Industry is at a level playing field overall with some regional variations The new entity expected to introduce new products and improve existing ones Has been targeting wellness sub-category Most of the other players are at a nascent stage in terms of customizing their offerings towards health and wellness needs of customers Recommendations on Strengthening Market Position

3 Key Insights One of the leading confectionery companies in the world and fifth largest player in the global chocolate market Intends to achieve growth by leveraging strong operating performance Has

3 3 Key Insights One of the leading confectionery companies in the world and fifth largest player in the global chocolate market Intends to achieve growth by leveraging strong operating performance Has been restructuring its business segments across geographies to focus on its core competencies Key elements of Future Strategy: Hedging against commodity prices rise Invest in clever marketing approach Achieve a better position in the healthy products segment Set up dedicated health and wellness division Focused on gaining competitive advantage in sales and distribution over its competitors in both developed and developing markets Most of the players are focused on launching differentiated chocolates in the market

4 4 Key Insights Players have significant scale advantages resulting in efficiencies in purchasing, manufacturing, marketing and distribution Generic and local brand food retailers pose a threat to existing players Seven major players account for more than 70% of the world market The industry is mature and categorized by slow growth High demand for product differentiation Very high exit barriers The new entity holds strongest market position in terms of market share in the global and developed markets Not a strong foot-hold in emerging markets

5 5 Feasibility Studies Client A National Association for Information and Communications Technology (ICT) Industry in South-East Asia Objective Support the member companies in developing an understanding of the Indonesia s digital music, video and online gaming market, by analyzing: Market dynamics and prevalent business monetization models Online customer segments and prevalent buying patterns Business environment in Indonesia Client Impact Helped the client identify targetable consumer segments and their digital media consumption behavior/preferences Provided intelligence on addressable market, key players across the value chain and potential collaborators Also, identified the successful business and revenue models, and online payment gateways used in the country

6 6 Table of Contents Country Analysis: Indonesia s Business Environment Analysis Limited liability company is the most common type of presence for a foreign investor Corporations are taxed at a rate of 25% 10 regions designated as Special Economic Zones Despite several terrorists attacks since 2000, Indonesia is politically stable Government committed to a free-trade policy Digital Consumer Market Analysis Internet penetration is higher amongst males and younger consumers Broadcast TV is the leading media in the country Desktop PC and mobile phones are the most popular means of accessing the internet Online Gaming Market Analysis Industry expected to grow at a CAGR of 16.6% during Player 1 is the largest player in the country XX games hold majority of the country s online gaming market share Sale of virtual goods is the most common monetizing method Digital Music and Video Market Analysis Value chain comprises of content creation, formatting, aggregation and distribution Key players in the digital music include Player 1, Player 2, Player 3, etc. Player X, Player Y and Player Z are leading players in the digital video industry Prevalent business monetization models include subscription, direct sales, licensing and bundling

7 Key Insights The most common type of presence for a foreign investor in Indonesia is by establishing an Indonesian incorporated limited liability company Under the Indonesia Economic Masterplan

7 7 Key Insights The most common type of presence for a foreign investor in Indonesia is by establishing an Indonesian incorporated limited liability company Under the Indonesia Economic Masterplan , the country aims to develop six Indonesia economic corridors Of 22% of the internet population in Indonesia, age group comprises of the most active users Broadcast TV is the leading media in the country with highest time spent on it Ownership of an internet-capable mobile phone is more than double to that of a desktop or notebook computers

8 Key Insights Indonesia is the third largest online gaming market in the Southeast Asia Online games are available in a number of genres including MMORPG, Casual, Web Games and FPS By 2012 end,

8 8 Key Insights Indonesia is the third largest online gaming market in the Southeast Asia Online games are available in a number of genres including MMORPG, Casual, Web Games and FPS By 2012 end, there were 11 online game publishing companies in the country, with 6 new companies set up during the year Some of the players in content distribution include Player 1, Player 2, Player 3 etc. Online payment systems are in the development stage with industry witnessing new entrants Digital music industry offers a variety of revenue streams to the service providers

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