Financial Analysis In comparing The Hershey Company with one of its closest competitor, Nestlé, we find that The Hershey Company is financially healthier and stronger. Table 1 shows some financial ratios of both companies. In analyzing both the current and quick ratios, Hershey’s ratios are higher; therefore the company has more capability to pay off its financial obligations. The debt-to-equity ratio is also higher for The Hershey Company; this is good news for its shareholders because the greater earnings are shared among the same amount of shareholders. However, the company must be careful because a too big of a ratio can eventually lead to bankruptcy (Investopedia).
Kraft Foods has turned into the number one worldwide player in chocolate and confectionery and snacks units accounting for 51% of group sales, which is an increase compared to the previous one that was 37%. These two groups are less commercial and expand faster than Kraft foods' other segments. KFT first quarter of 2011 shows an operating EPS of 52 cents per share. The benefit of these increased investments is thanks to the strong productivity, power brands, and disciplined cash management. More than that, KFT has been making good progress in capturing the synergies from the Cadbury acquisition.
These beverages, which generally command higher price points than their carbonated contemporaries, now account for more than half of all industry growth. The attractiveness of the alternative beverage market makes this an appealing alternative for companies both in the industry and those looking to diversify into an emerging market with tremendous profit potential. The industry is subdivided into four geographical regions; the United States, Asia-Pacific, Europe, and the Americas (excluding the United States) with the United States accounting for over 40% of the industry’s global market share and representing a major battle market determining success within the industry. Currently Pepsi controls nearly 50% of this market and is looking for opportunities to increase market share globally and expand the company’s product line. Intensity of Competition Among Rivals The Pepsi Co., along with all participants in the alternative beverage industry face stiff competition among rivals with the competitive intensity constantly increasing among the industry leaders.
4. Why Anheuser Busch is not able to dethrone Red Bull? As a beer producer with steady annual beer sales, Anheuser Busch wants to share the energy market with Red Bull. Red Bull would be Anheuser Busch’s biggest competitive
Global Marketing Strategy – Case #3 Team Paradigm New Belgium Brewing: Social Responsibility as a Competitive Advantage Synopsis: New Belgium Brewing (NBB) is seeking to grow without sacrificing its human scale and its culture of social responsibility as a competitive advantage. NBB is a highly successful craft brewery based in Fort Collins, Colorado founded by Jeff Lebesch and his wife Kim Jordan in their basement back in 1991. Jeff, an electrical engineer, was inspired to create his own brew back in Colorado on a biking trip in Belgium while sampling the area’s finely crafted brews. NBB has experienced tremendous growth since its inception, to become the 9th largest brewery and the 3rd largest craft brewery in the US with revenues exceeding $97 million and having over 300 employees. NBB makes 7 standard beer lines which includes Sunshine Wheat, Blue Paddle, Abbey, Mothership Wit, 1554, Trippel and the best-selling Fat Tire Ale.
Analysis of the Situation Stakeholders Analysis: The decision to launch the Hockley Classic will impact the following stakeholders: Consumers * Offered a light craft beer of higher quality than similar imported beers * Increasing their interest in Hockley’s beer offerings Employees * Trained on new policies and procedures to produce the Hockley Classic * More hours available for the employees Owners * Opportunity to penetrate lucrative craft light lager market * Potential opportunity for Hockley to grow and make their brand more well-known Distributors * Collaboration with existing and new distributors interested in selling the Hockley Classic * Opportunity for increased revenue if product is
(Wines, Spirits are fastest) * Sales are fragmented in the Canadian market * Ontario is the largest market * Quebec is second * BC is third * Ontario and Quebec is 60% market * Brand sales vary per province – why Molson not sold in Quebec? * Import sales increased from 2.5 to 6.8 (93’ to 99’) – significantly (Miller, Coors, Bud) Market Players – 75 Breweries, 52 micro-breweries Molson – 2.5 billion in sales. The oldest beer brand in North America (founded 1786) * . The Molson Canadian has 12% of Molson’s market share * Overall market share decreased from 52% in 89’ to 45% in 99’ * Strategy: Focus on existing market, expand to new markets, position as an international brewery. * In 2000, Downey (head of marketing) consolidated the brand in 7 unique positions * Coors, an import, but distributed by Molson: 2.4 billion, 15% increase in sales.
What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants? Competition is strong in the Alternative beverage industry with all beverage company’s coming out with their own drinks to increase sales volume because of the decreasing sales volume of the soft drink industry. Competition among rivals is the strongest force with the market slowing in growth and the amount of completion in the market companies where offering drinks at cheaper prices. Monster matched Red Bull on price but offered twice the amount of volume in their drinks for example. Suppliers of aluminum cans have a weak competitive force because there are so many of them and they have to win contracts with the energy drink companies.
Though Mondavi was presented with the threat of industry consolidation among their main rival wineries, the company was initially persistent to remain independent, relying on the U.S. market for boosted sales. While their main competitors pursued other acquisitions, Mondavi focused on the growth of its popular premier brands. At the turn of the twenty-first century, the global wine industry reports that retail sales have ranged from $130 billion to $180 billion. There were three categories of wine that vineyards produced and sold: table, dessert (or fortified), and sparkling (champagne). Table wine possessed the largest share of the market.
4. What actions would you recommend to Carlos Fernandez to help Grupo Modelo sustain or improve its competitive position, especially its international operations, and its long-term financial performance? The characteristics of global beer industry depends on the following factors * Extremely competitive * Few large companies producing many labels * Growth rate: the industry will continuue to grow at a small rate This global beer industry continues to be extremely competitive as more big brands are entering into the market. Most large companies also have multiple private label brands to target different tastes and needs of consumers throughout the world. There are a lot of challenges that this industry is facing.