Pan Boricua Inc. was formed back in 2001 when Auriel Rivera and Franco came up with a plan to export Puerto Rican bread to the United States. Their major product was pan sobao which is bread that is known for its unique flavor and texture; and it’s made in Puerto Rico. An opportunity was identified when several Puerto Rican residents would take several pounds of pan sabao from local bakeries to the United States. The program included the export of frozen bread dough along with branded bread-loaf paper cover and merchandising at the point of sale. The initiative was aimed at cities in the United…show more content… This encouraged many competitors to leave the traditional bread market and look for opportunities in the niche markets such as gourmet and specialty breads. There are various factors that increase the threat of new entrants to the ethnic bread market. Firstly is the projected increase in the Hispanic population in the United States by 2025 which means demand will be generated and thus room for companies to satisfy that demand. Second of all is the fact that consumers are willing to pay higher prices for specialty bread which means that it will be more profitable. These two factors will encourage more competitors to enter this market; hence the threat of new entrants is relatively high.
THREAT OF SUBSTITUTES
Currently, there are not many close substitutes for the Puerto Rican pan sobao in the United States market. In fact, Mi Pan Asociados is the only other company that sells pan sobao in the United States. That does not mean that consumers will not select one over the other. However it is also important to not that there exist other choices when it comes to specialty bread. This includes specialty breads from other cultures from Mexican Tortillas to Cuban bread. All in all, the threat of substitutes for pan sobao is relatively low as there is only one direct competitor. However, this threat from Mi Pan Asociados’s pan sobao will keep the prices for Pan Boricua’s pan sobao down.
