Salvador's Sauces

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Salsa Manufacturer Business Plan

Market Analysis Summary

We have been selling at the rate of $2,500 per month to local restaurants, small grocery stores and distributors of Hispanic foodstuffs. Salvador's is currently awaiting approval for a large grocery chain to carry our products, and has received a commitment from a large distributor to sell from $100,000 to $150,000 of product per year. There are several other large grocery chains that have been approached and are in various stages of interest in carrying the Salvador's line of product.

4.1 Market Segmentation

The Hispanic food industry is in a boom period. While there are many items from various vendors available, Salvador's has approached the market as a Specialty Retailer: a provider of authentic high quality Hispanic salsa and chips.

We have made significant inroads with several area restaurants and a small grocer's, each providing us with a market presence. We are now looking at developing our own store front as an adjunct to our current marketing. There is is a need for a specialty retailer catering specifically to the Hispanic client and to the individuals that appreciate authentic Hispanic cuisine.

In addition to the above, we are also looking at packaging our products for other groups to use for fundraising events, gift baskets for corporate promotions, and the possibility of a house restaurant to further advertise and promote the products.

Market Analysis
1996 1997 1998 1999 2000
Potential Customers Growth CAGR
Grocery Stores 75% 53 93 163 285 499 75.17%
Distributors 100% 5 10 20 40 80 100.00%
Restaurants 45% 18 26 38 55 80 45.20%
Other 12% 10 11 12 13 15 10.67%
Total 67.32% 86 140 233 393 674 67.32%

4.2 Target Market Segment Strategy

We are initially focusing on the Hispanic community. They will be able to appreciate more readily the authenticity of the product. The market will observe the products they choose, and they will indirectly become promoters of our products.

4.2.1 Market Growth

The market analysis shows us a broad range of prospective clients, covering more than one ethnic group or body. The largest of these groups of customers is that of the mainstream American, which is projected to grow at 12% per year. The fasting growing segment is Hispanic, which is projected to grow at 22% per year.

4.3 Industry Analysis

The Hispanic food industry is relatively new, and its popularity is ever on the increase. The authentic taste is not common in this industry, which gives Salvador's a leg up on the competition.

In an industry currently in a steady upward growth curve, Salvador's is poised to capitalize on the consumer's desire for authentic, high quality, Hispanic cuisine.

While a troubling economy can affect many areas, food items are generally not as affected, with specialty items seeming to always find favor in the market place.

4.3.1 Competition and Buying Patterns

There are many suppliers of salsa and similar products currently available on the shelves at your local grocer. However, there is still a lot of room for new products and new companies.

By positioning ourselves at the higher end of the market, we expose ourselves to consumers trying to get out of the rut, who continue to use a product that they have long forgotten why they buy. By not trying to compete head on, we are selling our product consistently and increasingly. With entrance into some of the larger grocery chains we will broaden our audience considerably.

4.3.2 Main Competitors

Although Salvador's is staking out the high end of this market, we can not fail to be compared with some of the current leaders in this arena. Chi - Chi's, El Paso, and Hunt's are just a few of the participants in this segment. Most have been on the shelf for so long they are taken for granted by the consumer. Our fresh approach to authentic taste and texture makes us different.

4.3.3 Industry Participants

While there are currently several vendors in this market selling competitive products, the commonality of those products provides an opening in the marketplace for the vibrant packaging and positioning of Salvador's salsa and chips. We stand out on the shelf, we stand out in the restaurant, and we will stand out in the mind of the consumer.

4.3.4 Distribution Patterns

While current brand names carry more weight in the marketplace, because of our unique marketing approach using local restaurants, and displaying and demonstrating our wares in local grocery stores, we are able to build consumer awareness at a margin of the cost of television and radio advertising.

In going to food fairs, neighborhood festivals and the like, we build consumer awareness and generate demand at the same time. While at these events we are also able to directly research the market and hear first-hand what the consumer is seeking.