Michel et Augustin Cookies: Culinary Adventures Competing Against Food Giants 1. The Market French cookie market is an established market with a lot of strong brands. There are several key characteristics of the market, which is essential for the development of Michel et Augustin Cookies: * Growth of French cookie market is driven by a rising interest in quality rather than increasing volume. * Due to increasing returns to scale, undifferentiated small players have lower chances to compete with larger firms. * Artisanal confectionery products like pastries, traditional treats and macaron are dividing customer attention. * Main distribution channel is major retailers, amassing 75.1% of all cookies sold, creating an advantage in terms of economies of scale for bigger players. * Dominated sales by few multinational corporations, especially LU owning 7 out of top 10 cookie brands and retaining a 41% market share. * Increasing sale of private label biscuits compared to the cookie market average. As it is seen, French market has a few large players who dominate market through major retailers, and it requires time, money and energy to penetrate into the market as a small company without necessary differentiation. We can use Porter’s 5 Forces to further analyze the market. * Threat of new entrants: Low. As it was mentioned before, it is hard to penetrate into the main distribution channels and there are relatively high fixed costs for mass production. * Threat of substitutes: Very High. Differentiation is not apparent. Customer loyalty is not very strong. Switching costs are very low and there are many products with similar price and quality. * Bargaining power of suppliers: Low. Firm switching costs are relatively low, economies of scale is present favoring the companies. * Bargaining power of buyers: Very High.