Competitive Strategies of Ethnic Food Companies in Sweden

Abstract:   Title: Competitive Strategies of Ethnic Food Companies in Sweden Authors: Düriye Canbaz – Aktuğ Yılmaz Instructor: Prafulla Acharya Course: EFO 705-Master Thesis Date: 25/05/2009 Introduction: Sweden has a population of 9.1 million habitants and approximately 1.2 million people or 13% of the Swedish population consists of foreign nationalities or individuals born abroad. If the second generation is included in the consideration then the number increases to approximately 1.6 million which in the end corresponds to over 17% of the total population. (Market Brief Focus on Swedish Market, 2007, p.3) Under such circumstances, it is not unusual to see demand for ethnic food. During the last few years, ethnic food products have experienced a very positive market trend and the development is a reflection of both the increasing number of immigrants and native Swedes increasing interest in ethnic foods. (Ibid, p.6) “Several years ago, immigrants constituted the principal consumer group of ethnic foods, but this has changed over the years” that “Swedish consumers are now more and more regarded as the main consumer group of ethnic foods” (Ibid, p.6) Under such circumstances, the competition among the companies rise that companies try to raise their level of competitiveness. Doing so, companies adopt some strategies and develop some competences to outperform the rivals. Problem: How to compete in Swedish ethnic food stuff industry? Sub questions; -          What competitive strategies should be carried out? -          What competences and competitive advantages should be developed?   Purpose: The aim of this thesis is to identify the competitive strategies of existent ethnic food stuff companies in Sweden in order to set a success model for the new entrants as a guideline. To be able to set a clear model the distinctive competences of the companies on which strategies are constructed will be identified. Method: In this dissertation we used both primary and the secondary data. The primary data that we used consists of interviews that we made with the informants from the ethnic food stuff companies and retailers. The secondary data that is used in the thesis generally consists of resources that are relevant and valid such as reports from Swedish Chambers, European Union and reports from United States Department of Agriculture (USDA) as well as some dissertations from Swedish universities. Analysis and Conclusions: In Swedish ethnic food market both market structure and companies’ resources play important role in the shaping of competitive strategies. Case companies Laroc AB and Sevan AB follows the product differentiation strategy. Companies differentiate in quality, price and product variety. Also, they follow special strategies in branding and target different consumers groups. We recommend to new entrants to follow Sevan’s strategy in the short time which is providing well known brands from Middle Eastern region. However, in the long run, we recommend them to follow Laroc’s strategy which is generally based on creating its own brand name. One of the other recommendations we have for the new entrants is working with the independent stores that are not explored by the other ethnic food stuff companies. Another recommendation that we have for new entrants is the processed food and ready meal products. In the market for Middle Eastern processed food and ready meal products, there is a limited range of products. Ethnic food market is changing, as the only thing that does not change is change itself. Ethnic food is losing its ethnicity as it gets appreciated by the consumers and embeds into culture. Thus, both current competitors and new entrants should be aware of the changes and orient themselves accordingly.