Comprehensive Analysis of the Dairy Industry in the UK

This report presents an in-depth analysis of the dairy industry, focusing on the UK market. It begins with an introduction highlighting the industry's growth and emphasis on product development. The core of the report examines macro-environmental factors through a PESTLE analysis, assessing political, economic, sociological, technological, legal, and environmental influences on the dairy sector. It then delves into micro-environmental factors using Porter's Five Forces, evaluating the threat of new entrants, substitutes, buyer power, supplier power, and competitive rivalry. The report concludes with key findings, emphasizing the dynamic nature of consumer preferences and the importance of strategic adaptation. Recommendations are provided, urging the industry to carefully consider market factors and competitor strategies. References to academic journals and online resources are included to support the analysis.

INDUSTRY SECTOR
ANALYSIS

Table of Contents
INTRODUCTION...........................................................................................................................1
Macro-environment factors.........................................................................................................1
Micro-environmental factors.......................................................................................................2
CONCLUSION................................................................................................................................3
RECOMMENDATIONS.................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
In UK the dairy industry is growing to a greater extent as they are having expertise for
processing and distributing with the dairy products. They are known for there freshly pasteurised
milk which is healthy for the humans (Gould, 2012). Thus, the industry highly focuses on the
developing with high standards of production and coming up with new products to be served.
Further, in this report detailed analysis of dairy industry is been done which assist includes the
determination of competitive challenges and the opportunities which are faced by the industry.
Macro-environment factors
PESTLE Analysis
It is an efficient model which is highly been used to evaluate the external factors which
have a great influence on the operations of the dairy industry (Industry Overview. 2015). Further,
this industry is a sub-set of agricultural industry which means it involves the activities such as
production, sale of milk products such as cheese, milk, cream, cheese etc. which provides with
high satisfaction level to the customers. Further, there are number of factors which affects the
dairy industry. Thus, following factors are as follows:
 Political- The policies and regulations determined by the government which are related
to the dairy products has a great influencer on the decisions made by the farmers for
keeping there livestock and producing with the products. If the policies are in favour of
promoting beef than the farmer will slaughter the cow rather than keeping them for milk
(Ismail and Nielsen, 2010).
 Economic- The most important element which highly affects the dairy industry is the
purchasing power of the people in the economy. It is been seen that milk is an considered
as a basic thing which is purchased by every individual irrespective of there purchasing
power. Thus, it can be concluded that the sales of this would not hit if the income is low.
 Sociological- In the present scenario, people are shifting towards the vegan lifestyle
which have a negative effects on the sales of the dairy products. Moreover, people are
concerned about there weight so they are avoiding the products as they are having greater
amount of fat components in them. Thus, the industry has to come up with low fat
products so as to retain there sales in the market.
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 Technological- This is an important factor which has helped the dairy manufacturers to
market the products to the customers which assist them to increase with there sales
volume. Moreover, in the recent time, the farmers are practising with different
technological equipments which ultimately increase the cost price of the products.
 Legal- In this the manufacturers are obliged to follow all the laws which are been
determined for the production as well marketing the products in the market. Further, it is
important to determine the ingredients and the expiry date of the products so that no one
is harmed by it.
 Environmental- It is been clear that the whole dairy industry is dependent on health and
availability of livestock (Law, Harvey and Reay, 2013). Thus, it is important for the
farmers to take several measures to keep there livestock away from diseases so that it do
not effect there quality products. Moreover, the products must be stored in a proper
manner so that they do not loose there effectiveness.
Micro-environmental factors
Porter's five forces
It is an important model which is used to analyse the different parameters of the industry
which assist in developing the strategy for the business. Thus, under this there are mainly five
factors which which affects the dairy industry. The following are been determined as under:
 Threat of new entrants- In this industry it requires with high amount of capital for
making the investments. Thus, it is not possible for people to start with this and attain the
economies of scale. So there low degree of new entrants in the industry.
 Threat of substitutes- It is having a medium degree of substitutes products in the
industry. As in the market there are large number of other substitutes for the milk, thus it
is important to focus on other dairy products which will help to retain the competitiveness
in the industry (Papademas and Bintsis, 2010). This will also result in increasing the
profitability of the industry. Moreover, the cost price of the products also vary from time
to time and as per the brand. This increases the degree to substituting the products with
others.
 Bargaining power of buyer- In this industry, there are large number of firms which are
serving with the similar products with different brands. Thus, it is crucial for the
organization to develop high quality and unique products to gather the customers.
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Further, it is clear that the bargaining power of customers is very high as they are having
number of options available with them.
 Bargaining power of suppliers- As in this industry the suppliers are mainly the farmer
which are serving with the milk to the companies for the final products. Thus, the
bargaining power is low in this case (Robinson, 2012).
 Rivalry among competitors- In the industry there are large number of competitors
which includes big companies as well as the local people which are serving with the same
products to the customers. Thus, for this industry there is high degree of competition
level in the market. Thus, it become important to maintain the quality of the products so
as to provide the customers with efficient products which satisfy them to a greater extent.
CONCLUSION
From the above report it can be concluded that the dairy industry is growing with the time
but the needs and preferences of the people are changing on the regular basis. Thus, it becomes
important for the organizations to evaluate there demands and develop with the products
accordingly. Further, the micro as well as macro environmental factors have a great impact on
the operations and sales of the dairy industry.
RECOMMENDATIONS
By developing with the proper analysis of the market it is been recommended that the
dairy industry must evaluate the different factors which mainly includes the micro and macro
before developing with the strategies of the organization. Moreover, the policies which are
followed by the competitors must also to be seen on regular basis so as to maintain image in the
market. Further, they must evaluate with the opportunities which will help them to grow the
industry to a greater level.
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REFERENCES
Journals and Books
Gould, G. W., 2012. New methods of food preservation. Springer Science & Business Media.
Ismail, B. and Nielsen, S. S., 2010. Invited review: plasmin protease in milk: current knowledge
and relevance to dairy industry. Journal of dairy science. 93(11). pp.4999-5009.
Law, R., Harvey, A. and Reay, D., 2013. Opportunities for low-grade heat recovery in the UK
food processing industry. Applied thermal engineering. 53(2). pp.188-196.
Papademas, P. and Bintsis, T., 2010. Food safety management systems (FSMS) in the dairy
industry: A review. International journal of dairy technology. 63(4). pp.489-503.
Robinson, R. K., 2012. Modern Dairy Technology: Volume 2 Advances in Milk Products.
Springer Science & Business Media.
Online
Industry Overview. 2015. [Online]. Available through: <http://www.dairyuk.org/industry-
overview>. [Accessed on 2nd January 2017].