External Environment Analysis of Protein Shake Market

This report analyses the external environment of the Protein Shake market using Porter's Five Forces Framework. It discusses the profitability and size of the market, evaluates the bargaining power of buyers and suppliers, and identifies the threat of new entrants and substitutes. The report recommends adding new flavours and improving quality to expand the market. The report concludes that the market will grow fast in the next five years.

FOOD MARKETING 0
FOOD MARKETING

FOOD MARKETING 1
Executive summary
The aim of this report is to analyse the external environment of Protein shake market.
Protein shakes market is developing continuously, it can be said that the sale of the protein
shakes is increasing continuously in the next five years. For analysing the external
environment of the market, porter five forces framework is used. All the information is taken
from the authentic websites, journals and books. Add the new flavours or improving the
qualities are the methods which help the market for expanding into the market. From the
analysis, it has been recommended that the market should fixed higher prices and add new
flavours. The research shows that the market will grow fast in the next five years.

FOOD MARKETING 2
Contents
Introduction..................................................................................................................3
Description of the industry...........................................................................................3
Porter’s five forces framework.....................................................................................3
The threat of new entrants.........................................................................................4
Bargaining power of buyer.......................................................................................4
Bargaining power of supplier....................................................................................4
Substitutes of the market...........................................................................................5
Competitor Rivalry...................................................................................................5
Opportunity and Threat................................................................................................5
Recommendation..........................................................................................................6
Conclusion....................................................................................................................7
References....................................................................................................................8

FOOD MARKETING 3
Introduction
With the development of food industry, protein shakes market is also developing (Allied
Market Research, 2017). There are many tools to analyse the external environment. In this
report, Protein shake is taken into consideration to analysis the protein shakes sector whether
it will achieve the goal or objectives or not. In the starting of the report, profitability and size
of the Protein shakes are discussed. After that, the company external environment is analysis
by using Porter's five forces framework. The recommendation is given for which the
industry can improve the market. In the end, the conclusion has been given based on the
report.
Description of the industry
Protein shakes in Australia is developing at a CAGR rate of 9%. It is observed that the
Australia women demand is increases for the protein shakes. Protein shakes market is set to
grow to 45.27 billion. In 2016, 28.37 billion dollar is earned by the market.
(Source: Imarc, 2018)
Protein shakes market has a variety of flavours in the product. It is expected that the protein
shake market growing at $3946 million in 2023. Protein shakes is popular just because of

FOOD MARKETING 4
their benefits such as manage weight, health and give energy to remain active (Allied
Market Research, 2017).
Protein supplement market, 2016-2023 ($Million)
(Source: Allied Market Research, 2017)
Porter’s five forces framework
The threat of new entrants-
High Threat
Low Investment
Bargaining Power of Buyer-
High Power
Bargaining Power of
Supplier-
High Power
Large number of suppliers
Substitute-
Fresh Juice
Energy Drinks
Competitors -
Fresh Juice market
Energy Drinks market

FOOD MARKETING 5
The threat of new entrants
It has been seen that the protein shakes industry has a high threat of new entrant just because
of the low investment in the market. New companies can enter the market with some new
qualities. In the present days, people becoming more conscious for their health and they start
believing in quality instead of cost which attracts the new companies to enter the market.
Government regulation is the only barrier for the new companies to enter the protein market.
Existing protein shakes firms has the high risk of new entrant due to low-cost requirement
(Mathooko, and Ogutu, 2015).
Bargaining power of buyer
It has been evaluated that the bargaining power of the buyer is high. It is observed that the
nutrients sections of the departmental stores are extended day by day due to the increasing
demand of the consumers for the protein shakes. Departmental stores give discount to the
consumers which attract consumers more for the product. There are various manufacturing
companies those provide the protein shakes on discount. These manufacturers create many
options for the consumer to deal with the best choice. A large number of buyers are a reason
for the high bargaining power of buyers (Obeng, Luchs, Inman, and Hulland, 2016).
Bargaining power of supplier
It has been analysed that the protein shakes market has the high bargaining power of the
supplier because of many manufacturing firms. Protein shakes raw material has very
common ingredients which can easily available in the market. There are very few suppliers
of the raw material of Protein shakes which increase the bargaining power of suppliers. The

FOOD MARKETING 6
firms cannot switch the suppliers of the market because of minimum suppliers in the market
(Dobbs, 2014).
Substitutes of the market
It has been seen that the protein shakes industry has a high threat of substitute. Protein
shakes market has a high risk from protein bars or Fresh juice. Some people avoid shakes
because they believe that it is not healthy for the health thus they buy the fresh juice, green
tea. Patients prefer the fresh juice instead of protein shakes. The industry has the risk of
losing the customers because of the substitute product. There are many products which can
easily replace the protein shakes thus; the protein shake industry has a high threat of
substitute (Porter, and Heppelmann, 2014).
Competitor Rivalry
Nowadays, it is observed that the consumers becoming more conscious for their health. It
has been evaluated that the competition level of the market is high. There are many
competitors of the protein shakes market in the food industry such as protein bars company,
or fresh juice suppliers. Competitors of the market use new recipes or adding new flavours
to attract the consumers toward their product. Fresh juice and protein bars industry overtake
the market of protein shakes the market. Competitors industry uses the new strategies to
attract the customer for their product. Consumers demand is increase toward the healthy
products thus the new companies enter into the market with the quality of the product.
Protein shake market has the high threat of competitors (Sohel, Rahman, and Uddin, 2014).
Opportunity and Threat

FOOD MARKETING 7
Opportunity Grab the market share
Threat New entrants
Competitors
Opportunity
It has been analysed that the protein shakes industry has an opportunity to expand the market
or grab the energy drink market. It is observed that the protein shakes market is a substitute
for the energy drink market thus they can easily grab the market (Pandey, 2018).
Threat
It has been seen that the protein shakes industry has a high threat of the competitors or the
substitute market. The new companies can enter the market with new features which are also
a threat to the market. Increasing competitors are the threat for the protein shake market
(Keune, 2018).
Grab the market
Opportunity
New entrants
Competitors
Threat

FOOD MARKETING 8
Recommendation
In the present scenario, the consumer prefers healthy food. Protein shake market should sell
the product at the higher prices to make the product precious or to make the good image of
the product. The market should sell the healthy and fresh products to make a strong brand
name in the market (Rothaermel, 2015).

FOOD MARKETING 9
Conclusion
From the above analysis, it has been concluded that protein shakes market is developing by
increasing the demand of the consumers toward the healthy product. Consumers are the
main element of the industry. Protein shakes market has the high threat of new entrants
because of the low cost required. It is observed that the Protein shakes market can be
replaced by the protein bar and fresh juice. With the increasing manufacturing firms, the
bargaining power of supplier is increasing with the bargaining power of the buyer. By
analysing the external environment of the market, it can be said that the company should add
the new flavours and improve the quality of the shakes to satisfy the customer. The market
also has to set the higher price of the product which makes the strong brand image in the
market.

FOOD MARKETING 10
References
Allied Market Research. (2017) Protein Supplement Market. [online] Available from:
https://www.alliedmarketresearch.com/protein-supplement-market [Accessed 7/08/18].
Dobbs, E. M. (2014) Guidelines for applying Porter's five forces framework: a set of
industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
Imarc. (2018) Whey Protein (Powder and Concentrate) Market - Global Industry Trends,
Share, Size, Growth, Opportunity and Forecast 2018-2023. [online] Available from:
https://www.imarcgroup.com/whey-protein-powder-and-concentrate-market [Accessed
7/08/18].
Keune, M. (2018) Opportunity or threat? How trade union power and preferences shape
occupational pensions. Social Policy & Administration, 52(2), pp.463-476.
Mathooko, F. M., and Ogutu, M. (2015) Porter’s five competitive forces framework and
other factors that influence the choice of response strategies adopted by public universities
in Kenya. International Journal of Educational Management, 29(3), pp.334-354.
Obeng, E., Luchs, R., Inman, J. J. and Hulland, J. (2016) Survival of the fittest: How
competitive service overlap and retail format impact incumbents’ vulnerability to new
entrants. Journal of Retailing, 92(4), pp.383-396.
Pandey, M. (2018) The opportunity-threat theory of decision-making under risk. Judgment
and Decision Making, 13(1), p.33.
Porter, M. E., and Heppelmann, J. E. (2014) How smart, connected products are
transforming competition. Harvard business review, 92(11), pp.64-88.

FOOD MARKETING 11
Rothaermel, F. T. (2015) Strategic management. US: McGraw-Hill Education.
Sohel, S. M., Rahman, A. M. A. and Uddin, M. A. (2014) Competitive profile matrix (CPM)
as a competitors’ analysis tool: A theoretical perspective. International Journal of Human
Potential Development, 3(1), pp.40-47.