1. How would you characterize the snack chip category and Frito-Lays competitive position in the category? * The United States snack food industry recorded retail sales of $37 billion in 1990, a 5 percent increase from the year before. A large source of growth results from increased per capita consumption. Consumers are buying more snack chips per person, an increase of 2 pounds over four years.
As a result, since founded, in ten years, Natureview Farm’s revenues had grown from less than $100,000 to $13million. By 2000, Naturalview Farm produced twelve refrigerated yogurt flavors in 8-oz. cups and four flavors in 32-oz. cups. Because of the product’s longer shelf life, Natureview Farm’s brand of the 32-oz.cups had achieved a 45% share of this size segment in the natural foods channel.
Starbucks v. McDonalds On January 7, 2008 the Wall Street Journal reported that McDonalds was introducing coffee bars to 14,000 of its U.S. restaurants . This is a huge project helping McDonalds in its “coffee war” with Starbucks. Like Starbucks, each coffee bar will have its own barista (someone who prepares and serves coffee) and flaunt cappuccino and espresso machines. The company estimates $1 billion in additional sales revenue will be added to the company’s income statement . McDonalds has benefited from several years of strong growth, having nearly $22 billion in sales in 2006.
12B Capital Budgeting Methods and Cash Flow Estimation Tasty Foods Corporation (Part A) Directed Tasty Foods Corporation is a food conglomerate with major product lines of cereals, frozen dinners, and canned sodas and fruit juices. The firm was founded in 1955 by Henry Abercrombie, an ambitious college graduate who had just acquired a small inheritance and who wanted to be his own boss. Equipped with an idea for an instant hot cereal, Henry founded Tasty Foods. The instant hot cereal was well received by the public, and through Henry’s industriousness, his superior ideas, and his excellent business instincts, the company expanded considerably during its 40-plus years of existence, both by acquisitions and innovative product ideas. Three years ago, because of his age and declining health, Henry hired his daughter, Abigail, as a management trainee with the intention that she would eventually succeed him as president of the company.
In order to achieve her marketing objective, she has to allocate communication budget in such a way that it would result in 10% increase in profit over 2007 estimates. Marketing Mix Strategies: RBS had high distribution penetration. Maximum distribution was of 1 lb box. There was a 150 person sales team to manage retail and wholesale accounts. Sales-force was incentivized by a quota system with quarterly volume quotas.
April 28, 2011 (Bloomberg) -- PepsiCo Inc., the world’s largest snack-food maker, reported a 27 percent gain in first-quarter sales, bolstered by purchases in international markets. PepsiCo’s sales rose to $11.9 billion, compared with the $11.8 billion average of estimates compiled by Bloomberg. Excluding items such as integration costs and hedges, profit was 74 cents, compared with the 73-cent analyst average. PepsiCo, led by Chief Executive Officer Indra Nooyi, has developed new flavors to appeal to markets internationally, relying on chip sales overseas to make up for slower beverage sales volumes in North America. Volume in the South American foods business climbed 2 percent.
In 1965 PepsiCo Inc was formed when beverage giant Pepsi cola and snack food icon Frito-lay agreed to a merger. In the years after, leading up to 1996 the company pursued a growth strategy through acquisitions of businesses in the snack food, beverage and fast food industry, which they believed had potential benefits in cost sharing and skills transfer. Companies acquired during this period included KFC, Pizza Hut, Taco Bell, Mug root beer, 7UP, sun chips, etc. However, by 1996 it became apparent theses potential benefits were difficult to accomplish and in 1997 the company underwent a major portfolio restructuring which spun off the company’s restaurants as publicly traded companies. This portfolio restructuring initiative was geared to acquire powerful and emerging brands which would bolster PepsiCo’s profits and dominance within the market.
It was estimated that the industry would rise 8.1 percent per year on average through 2014. The industry does look like it is growing and it’s looking attractive to many people. For example, the television show “sex and the city” put specialty cup cakes on the market and introduced many people to the art of specialty cupcakes. And on page C-33 it says “the cupcakery business is expected to grow 20% between the years 2009 and 2014. This trend influenced the hit TV show Cupcake Wars.
) -> Competitors are growing faster than Mcdo -Small decreasing in McDonald's market share - 60% of the incomes depend of the franchisees - U.S market reached maturity TOWS: SO: - Maintain the abroad growth using the brand image and the adaptation ability - Combine the Limited Edition concept with the healthy food to create a new interest and to adapt the permanent offer to customer needs. - Improve the brand image toward the parents by using partnerships WO: - Take in place new training plans for employees to decrease the rate of turnover and to improve the customer service. - Increase the product diversification by using the experiences and results abroad, if possible. ST: - Use the strong activity abroad to "flee" the american market which reached the maturity. - Use the adaptation ability and create some products sympathetic with the new wave of technological advance as reheat products like soups to take away.
Frito-Lay is a company that came into existence when Elmer Doolin and Herman Lay, both entrepreneurs in the snack food industry, merged their companies in 1961. When the company again merged in 1965, this time with the Pepsi-Cola Company, it became a leader in its market segment. With its largest and main market becoming saturated, namely the USA, it was time to search for new markets abroad. With the company trying to capitalize from its economies of scale and global brand image it believed it could compete with local competitors. Pepsi entered the Chinese market in 1981 to sell soft drinks, and Frito-Lay followed in 1994.