Market Size and Forecast - the UK - Assignment Example

Name Tutor Title Institution Communicating about the concrete benefits of organic products to customers in a tangible ay is important for the brands producing them. Given the fact that the market is flooded with brands of organic products, efficient communication of a given brand to its customers is efficient for the success of the brand (Emma Clifford 2013). Such brands enable the customers know all they need at a glance. Sblended as a company that deals in the production and distribution of organic milk has a responsibility for efficiently communicating the contents of its products to its customers. At the beginning of 2013, the scandal of organic food products being contaminated with horse meat or DNA severely affected the market for these products. This dominated the news coverage for weeks making customers cautious of such products. After the incidence, only half of organic food consumers in the UK still have trust in organic food brands (Consumer Trust in Food 2013). This has affected several organic food brands including Sblended’s organic milk products. Almost two fifths of the adult consumers in the United Kingdom advocate for stricter regulations in the organic food industry. This has led to strict requirements set to be met by companies dealing in this industry before they are awarded certificates for operation. However, more than a quarter off buyers suggest that organic food products are more appealing to them after the onset of this scandal. During the period between 2008/2009, the organic food market faced the start of a sharp decline. Sales in this kind of industry drastically fell for over 27% as customers started valuing their money more than before. Customers could only spend on goods they considered safe and scandal free. The decline period for the market for organic products finally came to an end by the onset of 2012. According to Mintel,s estimates, the sales for organic products increased by 1% in 2013. Several factors probably contributed to the rise in sales. Probably the rise of UK’s economy, the improvement in customer’s confidence in organic food products and the rise of customer spending on organic food stuffs. With these factors constantly getting into play, the organic food industry may continue rebounding over the future years. Several factors however, still hinder the growth of the organic food market in the current times. The tarnishing of the organic food chains and the speculations that the prices for such products are not justified tend to hinder the industry. This makes it important for organic food brands like Sblended to constantly communicate to their customers the reasons for the constant high prices for their products. In this instance, the Sblended Company should compare the constant rise in the price of its organic milk products to the lower stocking densities of cows. Organic food companies should start addressing issues directly affecting the consumers such as the taste as well as the quality of their products rather than the general green as well as ethical issues concerning their products. Most of the major factors contributing to the decline of sales in this type of market include the high costs of organic products as well as the fact that such products are constantly falling out of consumer choice. The compositions of organic food products make the consumers look at the term organic as false. According to market research, there is no evidence that supports the customer choice of organic food products over non organic food products. Only a third of the consumers think that organic food products have an upper hand as far as health, quality and environmental factors are concerned. This makes organic food companies to increase the communication of the benefits of their products to customers in general. Research shows that about a third of consumers of organic products advocate for more information to be brought forward about the benefits of the organic products to the users. The information these consumes advocate for inclusion in the advertising of organic food products is about how the animals re reared or how the crops were grown to term them as organic. Organic food companies can also use technology to their advantage in marketing their products. Companies dealing in this type of industry can create apps that lead the consumers to websites containing information about their products. This is by considering the fact than most people under 35 years of age would be more interested in finding about these products through social sites. Uploading real life footages of crops, animals and animal products as well as their processing would really benefit the company in it’s striving to customer awareness. Other methods include using digital games to allow customers rear their own crops and animals digitally. The EU has played a major role in the regulation of organic food products. In September 2013, the EU conducted several reviews on the certification of companies distributing organic food products. Companies such as the Sblended Company were monitored in various areas of production including the labeling and production hence required to set international standards in all their areas of production. The leading organic farm group in Europe, the IFOAM welcomed this move by the EU and considered it as a move to strengthen the industry. An update on the regulations set concerning this industry in 2007 acts as a major solution for strengthening the industry and returning it back to profitability. There have also been suggestions of the improvement of certification of the companies dealing with the organic food industry. Market Size and Forecast The sliding of the UK into recession led to the collapse of the market for organic food and drinks in the country. The fall in the market is attributed to the less spending by people on organic foods and drink and as from 2009; the market started declining at a constant 12%. Customers all across the UK started abstaining from the organic products and opted for cheaper alternatives. The recession was however, not the only reason for the decline in market for these products. The research by the Foods Standards Agency and the resulting report published in 2009 indicated that there were no significant benefits of the organic foods and drinks in terms of nutrients and health benefits as compared to the non organic ones. This subsequently led to a significant fall in the sales of the organic food products. Supermarkets and other retail outlets started cutting down on the stocking for these products due to the constantly falling sales. According to the market research done by Mintel, the sales significantly dropped by 26% between 2008 and 2013 to 1,185 million pounds. This affected most of the companies such as the Sblended that dealt in the production and supply of organic food and drink products. Within the same period of time, the shares the organic food products had in the general food industry significantly dropped by 2.6%. However, by the onset of 2013, a sales rise of 0.6% is projected for the industry considering the projected recovery for the market of the organic food and drink products. The stabilization is supported by the fact that the number of customers that have bought organic food products in 2013 equals the number of customers who have cut back from the industry which is at 12%. The market penetration for organic foods and drinks is estimated to be at 57% in the last 12 months. This current success can be attributed to the increased spending of the customers in the UK as people are becoming more confident about their finances. Customers are now putting spending aside and are focusing more on getting health products no matter their costs. As of the market analysis in 2013, customers in the UK are reducing the lookout for offers and are less cautious about saving money hen ding grocery shopping. The horse meet scandal also significantly contributed to the success of the organic food and drink industry. According to the market analysis, the scandal increased the popularity of the products hence increasing the number of customers for the industry. The increase in trust in organic foodstuffs has made many customers in the UK focus on getting healthy foodstuffs when doing their shopping. The advertisement for the health benefits of organic foods by the Organic Trade Board has also increased the popularity of the industry and also the sales of the products from the industry. The widespread campaigns for organic foodstuffs have increased customer awareness over the years and have led to the success of the industry after years of declining. More customers have started gaining trust in the industry from 2013. This is attributed to the widespread campaigns done by the organization companies such as the sblended have increased their sales indicating a benefit in this sudden rise in customer trust in the industry. Despite the fact that the industry has an anticipated growth as from the increase in consumer spending by over 13% in the current times, the recovery of the company is not that likely. Even as customers continue spending more on organic food products, the company is most likely to continue being haunted by the earlier negative perceptions about the organic products. The uncertainty about the benefits the organic products have over non organic products still continues to be a hindering factor to the growth of the industry. according to the results of the market research done by Mintel indicating a possible marginal increase of the company’s sales by about 2% by 2018 to reach 1,209 ponds, this does not translate to the steady increase in sales of the organic products. The value of the market is indeed not expected to reach that predicted for its value in 2018. There is a reflected slowed growth in the organic milk industry in the coming years. This slowed growth affects the Sblended Company directly as it deals in organic milk products. further evidence suggest that with maintaining the current prices of organic milk product, the sales of the industry are projected to drop by over 17% by the onset of 2018. Other factors projected to negatively impact on the industry include the socio-economic shift. This projected negative growth in the market is attributed to the negligible growth of the ABs who is the core purchasers of organic products. The harp growth of both the Cs and the Es of over 9% and 13% respectively present the major challenge to the growth of the industry. Market research suggests that only 38% of E consumers have actively bought organic products in the past 12 months. This value is low as compared to the number that bought this product in the past tears that consisted of over 57%. This makes it important for the organic foods and drink companies to turn round the high end image and become more accessible and justify the quality of their products in order to increase the sales of their products. In the case of the Sblended Company, it should strive to justify the benefits of its products over other milk products in the market. However, given the current growth of the market, the industry is projected to grow at a constant rate of 8% in the next 25-34 years. During this time, the industry is expected to cover over 14% of the market. Several regulations put in place by the EU are also expected to affect the industry in its aims for attaining success by 2018. Forecast Methodology Mintel has produced a model of forecasting the growth of the organic food and drink industry basing on a statistical package software SPSS. The model is based on historical sizes of data in the market. The forecast for organic foods and drinks contains seven segments according to their value in the market. In this forecast, the dairy products fall under the second segment of products for children under the age of 15 and the fourth segments of dairy products for people under the age of 35. The model predicts the future uncertainty in the market for the various products and occurs at a 5% interval from the 90% mark. Smoothies and Soft Drinks Soft drinks have several benefits to our bodies apart from the fact that they have an incredible taste. Companies producing these smoothies incorporate various nutrients such as fruits, veggies and nuts. These contain various vitamins and nutrients that are important for the growth and development of our bodies. Apart from this, smoothies help in hydrating our bodies given the fact that over 70% of our bodies are made up of water. The incorporation of veggies in the smoothies help the consumers eats more veggies that have significant benefits to our bodies. These are sometimes termed as plant smoothies. These types of smoothies are beneficial to our health as they help in digestion apart from adding to the vitamin content in the body. Smoothies also contain fiber that plays a major role in the prevention of constipation. The nutrients contained in the smoothies also play a major role in maintaining body weight as well as health. Smoothies are important for people who have a tendency of skipping breakfast as a single intake contains all the nutrients required to start an individual’s day off. Research has also proven that smoothies are important in improving the efficiency of the digestive system as well as having benefits in the mental capacity. The market for smoothies and other soft drinks in the UK has been on a constant increase in the past few years. Just as the perception of organic foods and drinks being healthy, the market for smoothies and fruity drinks has also improved basing on its benefits on the individual’s health. More people have started appreciating products that are considered health than in the past hence causing the increase in the market for such products. The targeted population for both soft drinks and organic foodstuffs has increased in the past few years. However, this industry has faced several issues that have led to stagnation of this growth. The changing of people’s perception on the benefits of such products in terms of heath has led to this stagnation. Despite this, the market for the products is projected to grow at a constant rate in the coming years basing on more consumer confidence than in the past. More people are starting to appreciate these benefits and laying back cost issues. This is attributed to the increase in customer spending on health products than in the past times. 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