Small and Medium Sized Food Producers - how are they affected by the trading blocs and the distributors’ own brands? : A case study of three SME in the food industry
Background: The Swedish food industry has changed dramatically during the last decades and to become and remain as a player has become a demanding task for several of the small and medium sized enterprises (SME). The trading blocs have increased the development of their own brand (DOB) and this has given the SME new competition but also the possibility to produce these products for the trading blocs. In addition to this the trading blocs have be-come more and more centralized and to strengthen their position in nego-tiations and other aspects which are important for the trading blocs.Purpose: The purpose of this paper is to increase the understanding of how the trad-ing blocs, with their development of their own brand, affect the Swedish small and medium sized producers in the food industry. It is also to look into what kinds of strategies that are used by the SME in order to tackle the competition from the distributors own brands.Method: To fulfill our purpose a qualitative approach has been used for this thesis. Seven different interviews have been done, either by phone or face to face, with the three largest trading blocs and with four the SME in Sweden, three producing and one distributing company.Conclusion: The focus on low prices and the trading blocs’ stronger, central position on the market have made the competition more intense. To be or remain as a player on the market it is important for the SME to be a supplier to the trading blocs. However, since there are many players striving to become a supplier it is a tough situation and the price becomes an important factor. The trading blocs want low prices and keep pushing the suppliers to keep them low, or even lower them. This price focus is a major issue for the SME, and the DOB have become an important mean for the trading blocs to keep prices low. Due to scenarios like this it is very important for the SME to have strategies in place and the most common and most efficient is the bypass and flanking attack strategies. These two strategies are intense and keep the SME alert when it comes to product development and new innovations.
School:Högskolan i Jönköping
Source Type:Master's Thesis
Keywords:food industry distributor s own brand small and medium businesses
Date of Publication:05/29/2007