Download PDF The Pre-feasibility Study of Potato Chips Industry Investment in New Zealand

1.Summarypotato_chips_industry0

New Zealand potato chips are popular in the domestic market and foreign market with their best quality, safety, and authenticity. The potato chips market of New Zealand is on the rise. The proposed project involves setting up a potato chips industry in New Zealand that is equipped with automatic potato chips machines. This study mainly analysis the current market, the pre-feasibility of setting up a plant, the whole snack food market in order to give an overall perspective of the market.

2. General Introduction to Potato Chips

A potato chip or crisp is a deep-fried or baked thin slice of potato that is commonly served as an appetizer, side dish, or snack. Potato chips are the most popular snack food in the world. People snack on potato chips almost every day. Even though people have more concern about the health issue, potato chips still are in badly need as potato chips manufacture invent low-fat potato chips for girls who are on a diet and less oil and fat content for customers.

Snack Food Market

Snack_food_market0

When comes to the potato chips industry, it should be equipped with highly automatic potato chips machines which can save labor and reduce the material cost, save energy and increase efficiency.

3. Crucial Factors & Steps in Decision Making for Investment

3.1. SWOT Analysis

Before entering a new market, market research should be done in order to make strategic planning. A SWOT Analysis can be helpful when making a decision for investment. It can give investors a whole view of the new market.
STRENGTHS

  • The plentiful raw material, fresh potatoes.
  • Highly automatic potato chips production equipment can increase the efficiency
  • Premium quality potato chips are badly in demand with people paying more attention to a health issue
  • Having high credibility around the world when it comes to food quality, safety, and authenticity
  • Low-cost structure than Australia or the United States
  • Favorable investment environment
  • Low inflation economic environment

WEAKNESS

  • Less skilled staffs compared with the already established companies
  • Climate problems and disease may cause a shortage of material sometimes.
  • Initial period waste
  • Weak market linkage

OPPORTUNITIES

  • High demand for premium quality potato chips domestically and abroad
  • Busy lifestyle making people tend to on-the-go foods in New Zealand
  • Potato chips are one of the most favorite snacks in New Zealand
  • The potato chips market is expanding day by day.
  • The growth of the Asian middle class; increasing wealth in Asia as it is a major export market for New Zealand snack food.

THREATS

  • Competition from already established potato chips industries
  • Exchange rate variability

3.2. Key Success Factors

To enter a new market, one of the most important things is marketing as it is a way to gain attention from people. It is also a key to opening the market and showing its advantages and differences and high quality. Another factor, the fundamental of the products is the product. Only a product of premium quality can enter the market successfully. Besides that, advertisement and promotion activities should be done to gain the market share.

4. New Zealand Potatoes Production & Potato Export

Potatoes were first planted in New Zealand in 1769. After people see some advantages of potatoes over other traditional crops, New Zealand people began growing them in quantity as potatoes could be grown in cooler climates, give higher yields, and were easier to store. With improved growing practices and fewer viruses, the yield and quality of potatoes increase during the 20th century. By the beginning of the 21st century, New Zealand potato growers were averaging 60 tonnes hectare. There are over 50 varieties of potatoes grown in New Zealand. Production mainly in the Pukekohe, Manawatu, South Canterbury, and Southland areas.

new_zealand_potato_planting

In 2013, New Zealand potato production reached 525,000 metric tons and was marginally (5%) ahead of 2012 production. The potatoes not only meet the domestic demand but are also exported to other countries, mainly processed potatoes, such as frozen french fries, potato chips, and crisps. Fiji is by far New Zealand’s biggest market for fresh potatoes as exports to Fiji in 2012 and 2013 increased approximately 15% in volume compared to previous years. There had been some “disruption” in the export of frozen French fries, of which about 8000 tonnes are exported each month. Australia is one of New Zealand’s major export markets, mainly taking French fries, potato chips, and other processed potato products. New Zealand’s potato export market also includes Asia, Vietnam, South Korea, and other countries.
New Zealand Grown Potatoes Production&Demand Estimated 2012

Description
Metric Tons
Total Volume to Merchant or Actually Processed
500,000
Processed for Domestic Consumption
250,000
Processed for Export
165,000
Retained for Seed
5,000
Exported Fresh
30,000
Consumed Fresh Domestically
50,000
Total Usage
500,000


5. Potato Chips Market in New Zealand

5.1. New Zealand & Snack Food Industry

New Zealand’s snack food market contains sweet snack foods market and salty snack food markets. Potato chips belong to the salty snack foods market. In New Zealand, there is a competition in snack foods market from a number of suppliers, and, in particular, from Lay’s, ETA, Pringles, Prolife, Mexican Foods, Bluebird, Progressive, and Foodstuffs. Though people in today pay more attention to the health issue, snacks still are their favorite foods. The snack foods market still appears to increase in the following year.

5.2. Potato Chips Market

potato_products_price

Potato chips are the most popular snack food in New Zealand. As market research, about 44% of New Zealanders in the year to January 2013 bought some in an average four-week period which was unchanged from the year to January 2009.
New Zealand – a country trusted worldwide in having high credibility when it comes to food quality, safety, and authenticity. Therefore, New Zealand’s potato chips are quite popular in foreign countries. The export of potato products reached South East Asia, Australia, Malaysia, Singapore.
Australia is one of the main export markets, taking over 46% of the
the total volume of all potato products exported in 2012.

Among the whole export potato products to Australia, frozen French fries comprise 98% of the total volume and potato chips comprise 2%. The export potato chips market is of potential for a new player.
New Zealand Potato&Potato Products Export

Destination Country
2007
2008
2009
2010
2011
2012
% of Total in 2012
Australia
48,170
48,908
44,962
40,556
51,647
40,571
46.2%
Fiji
20,587
18,041
19,359
18,996
18,238
22,614
25.7%
Thailand
2,875
1,244
2,804
1,296
4,955
4,852
5.5%
French Polynesia
4,808
4,104
4,093
4,622
4,313
3,848
4.4%
Japan
4,515
2,835
3,882
4,011
4,526
3,681
4.2%
Papua New Guinea
1,806
1,886
2,242
2,912
3,454
2,186
2.5%
New Caledonia
1,569
2,599
2,013
1,856
3,098
1,688
1.9%
Samoa (Western)
1,329
1,367
1,611
1,453
1,324
1,594
1.8%
Malaysia
5,849
3,908
6,945
9,739
3,016
1,358
1.5%
Philippines
1,338
1,311
2,550
2,359
1,633
1,139
1.3%
Singapore
1,326
1,147
5,449
5,467
832
908
1.0%
Rest of the World
8,051
6,683
5,449
5,394
6,015
3,432
3.9%
World Total
102,223
94,031
101,357
98,660
103,050
87,875
100%

5.3. Target Customers

The New Zealand potato chips target children and young adults. Most families with children under 16 living are more likely than those without children to have purchased snack foods, especially potato chips with the best taste, flavor, crispy which are factors that attract young people and children.

6. Conclusion

With plentiful raw material, fresh potatoes, the favorable investment environment in New Zealand, a new player can enter this potato chips market with less risk. The domestic and export market of potato chips are full of potential and all in demand for premium quality potato chips. A new player that can produce high-quality potato chips may occupy market share in the future.

 

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