Pacific Grove Spice

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Pacific Grove Spice Company Harvard Business School 5/1/2014 By: Roman Bulakh & Tu Khai Ha EXECUTIVE SUMMARY Pacific Grove Spice (PGS) opened for business as a small specialty grocer on the Monterey Peninsula of California in the early 1980s, selling a selection of foods, coffees, teas, and spices. Within 10 years the company became known as “the” place to find spices in Central California, and spices dominated the company’s sales mix. Currently, the company is a manufacturer, marketer, and distributor of high quality spices and seasonings with reputation, sales, and shipped orders covering all 50 states. The spice industry began around 3000 B.C. when ancient Egyptians started using spices in food, cosmetics, and embalming. As demand for spices increased, trade developed between producing and consuming regions. Two contemporary trends increased the use of spices in American foods. First, the publication of Mastering the Art of French in 1961, and the broadcast of “The French Chef” in 1963. The book and television program began a movement toward the exotic and flavorful spices in American cooking. The Second trend was regarding the growing concern about obesity and diet. Health-conscious consumers, who wished to reduce the amount of fat in their diets while maintaining flavor, could use spices and seasonings to improve the taste of low-fat meals. Although the spice industry was dominated by large multinational firms like McCormick & Company and Associated British Foods plc, many small firms were competing successfully for a share of chefs’ purchases and spice-rack space. The current problem for PGS is that the company must meet the bank’s requirements of reducing interest-bearing debt to less than 55% of total assets and the equity multiplier to less than 2.7 times by June 30, 2012. In addition, the firm must decide whether it should produce and

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