Transcript Smucker’s Uncrustables in Germany

Smucker’s Uncrustables in
Germany
by Steve Guy
Nate Jones
Allyson Kappers
Lindsey Quinn
Kristin Tschantz
Assessment of Potential
Market: Competition
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2 Categories: Frozen Food and Ready Made Meals
Frozen Food
Major Competitors
2003 Market Share
Private label
21.2%
Langnese-Iglo GmbH
13.8%
Aldi GmbH & Co KG
12.5%
Conditorei Coppenrath & Wiese GmbH & Co
KG
9.4%
Dr August Oetker Nahrungsmittel KG
7.4%
Wagner Tiefkühlprodukte GmbH
6.1%
Competition Cont…
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Ready Made Meals
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Competitors in Germany: Nestle, the Campbell
Soup Company, Danone ( or Dannon), Unilever, Dr.
Oetker, Frost, Suedzucker, Iceline, Nordwest, and
Grand Metropolitan
Danone is the second largest producer in the
world of cereal biscuits and snacks.
Market forecast for German Ready Made
Meals is predicted to reach growth of $3.32
billion in 2008
Assessment of Potential Market:
German Consumer Demand
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German Frozen Food Market:
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$6.84 billion and growing at 13.8% since 1999
Ready Made Meals was largest sector
German Ready Meals Market:
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$2.59 billion in 2003 and growing at 6.7% since
1999
Ranked 3rd overall behind France and UK
Frozen Ready Made Meals accounted for 81.7% in
2003 ($2.1 billion)
DISTRIBUTION
Location of Production and Market Entry:
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3 Basic Options for Entry:
Scotland
United States
Germany
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Current Distribution Agent
1. Smucker’s Production Facility in
Scotland
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Part of the United Kingdom, and therefore
follows rules of imports, exports, tariffs, and
taxation applicable to the UK
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No Import/Export Tax amongst members of EU
VAT Tax: 17.5%
There is also an issue of what means of
transportation to move the product from the
UK to Germany, as there is a body of water
and neighboring countries dividing the two
countries.
German location relative to
Scotland
2. Producing and Shipping from
United States
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There is the option to produce within the
United States and ship overseas to Germany
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Drawback to this option is that this would be very expensive,
and would tack on a cost to the final product
There would be additional costs from export taxes and the
VAT of Germany
More expensive cost of labor
Would require multiple methods of transportation to move
from United States to Germany, and would be increasingly
expensive
Germany and United States are already
primary trading partners
Smucker’s currently outources logistics to a
worldwide company that has operations in
the U.S. and overseas
3. Create a Production Facility
within Germany
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Would reduce costs of transportation, and would
open up future business options for Smucker’s within
Germany
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Would be very expensive, and would be starting from
scratch to build new facility
Could buy out an existing facility within the country
Could partner with existing company within Germany to take
existing breads and spreads and brand them with Smucker’s
VAT Rate: 16%
Highway Systems permit timely distribution
Labor Force:
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Help with currently increasing unemployment rate of 10.5%
Would help the slow down of US imports, while boosting
German economy
Current Distribution Agent
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Smucker’s uses the supply chain management company Tibbett and
Britten to handle their distribution of Smucker’s products throughout
North America
Tibbett and Britten is a worldwide company with a strong presence in
Europe and could be used with the three options for market entry.
Tibbett and Britten is in the surrounding countries of Germany, and
specializes in food and beverage distribution.
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Have ability to keep frozen and pre-packaged foods fresh, as well
as an extremely efficient delivery service
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They have a new facility Deutschland (western part of Germany) ,
but is not a food and beverage distributor
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Possible Locations
 Austria, Czech Republic, France, Ireland, Netherlands, Poland,
Portugal, Spain and UK
Consumer Related Issues
Segmentation and
Targeting
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Demographics
Geographic
Benefits
Psychographics
Behavior
United States Target
Demographics
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Schools
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Busy Parents
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Elementary Schools
Parents in their 30’s-50’s looking for a
convenience good
Upper Middle to upper class lifestyle
Teenagers
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Convenient after school snacks
Snacks between school and other activities
German Target Demographics
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Families in Germany
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Middle Class to Upper Middle Class Families
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Total Population: 85,424,609
81% live in families
Priority on children—feel children complete a family
Personal Income per Capita= $27,600
Income Tax Rate: 30.3%
Older Population and single-person households for
packaged foods
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Decline of traditional family meals
Need for single portion products
Higher disposable income
United States Target Geographics
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Families in busy suburban settings
Target areas with access to large
grocery chains that carry Smucker’s
products
Not typical for areas that are super rural
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Includes under developed areas with low
disposable income
German Target Geographics
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Target areas of the country with the
highest per capita population
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Cities are located close together, and form
one of Europe’s larges agglomerations
Three largest cities are Berlin, Hamburg,
and Munich
Target public housing in the large cities
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Over 60% of Germans rent homes,
furnished with appliances such as
refrigerators, freezers, and microwaves
Targeted United States
Benefits
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Time Efficient
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Goods are Pre-Packaged
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Reduces time to prepare, clean-up, and
pack
No mess
Easily stored and kept fresh by freezing
Targeted German Benefits
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Can be used as a quick, hassle free
meal or snack food
Clean and easy product for children’s
lunches or snacks
Provides valuable daily nutrients for
growing and developing children
Targeted United States
Psychographics
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Targeted for Families with two full time
working parents
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Families that do not have time for sit down
dinners
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Parents that are working and trying to
accommodate the busy schedules of their children
Too busy to prepare a family lunch/dinner
Personality and Behavior types:
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Busy, organized, impatient
Targeted German Psychographics
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Target Family Life
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German tradition is that children complete a family
Benefits family life by being clean, easy to use,
time saving, small portions
German Lifestyle is very concerned for their
personal health
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Much of personal disposable income spent on
healthy food and products
Interested in Health and Fitness services (exercise
and dieting)
United States Behavior
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Not targeted towards children, but will reward
children that participate
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Product available at schools
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Online games and activities within the Smucker’s
website
Children are trying the product at schools and
convincing parents to buy the product later
Shows parents the ease of using the product
Gives a recognizable good, with a homemade
quality, at a “grab-and-go” convenience
German Behavior
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Tendency to buy products that are
healthier
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White bread is not commonly consumed
Not a large level of consumption of peanut
butter, but an increase in the consumption
of jams, jellies and spreads (3rd ranking
spread market in the world)
Germans and Europeans tend to
purchase frozen bakery products rather
than frozen spread products
Marketing Mix
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Positioning
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Distribution
Product
Promotion
Price
Uncrustables distribution in
the US
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Available in many school cafeterias
Frozen foods section of grocery stores
Can be found in WalMart stores and
other similar multipurpose retailers
Channels of Distribution in
Germany
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No Smucker’s facilities in Germany
currently
Transportation systems are of more
advanced in world
Majority of food industry outsources
logistics/distribution to other companies
Method of logistics/distribution similar
to that of US
Retail Distribution in Germany
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The Great Atlantic and Pacific Tea Company
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Discount supermarkets
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Worldwide retail organization with local headquarters in
Germany
Stores include Kaiser’s and Tenglemann Sumpermarkets
Aldi, Lidl, Plus
MiniMalls
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New line of grocery stores, similar to WalMart supercenter
Product (US vs. Germany)
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Made with white bread
PB&J and grilled cheese
Stored in freezers
Boxes of 4 single
servings
Under widely
recognizable Smucker’s
label
Main feature is absence
of crust (not a concern
in Germany)
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White bread not popular
3rd ranking spread
market in world
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Recent increase in jam
consumption
Personal fridge/freezer
ownership not as
common
Limited freezer space
Don’t place large value
on brands and labels
Packaging in US
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Cardboard box
Color matches color of spread
Graphic similar to picnic table cloth
Picture of glass of milk
English label – “Uncrustables”
Packaging in Germany
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Box must be recyclable (green dot approval)
There are no taboo colors in Germany
Europeans like to picnic
Milk consumption is similar to that of the U.S.
Speak German (with 4 main dialects)
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translation: Ohne Kruste
Translation may not hold same meaning for
Germans due to their lack of concern for the crust
on bread
Promotion of Uncrustables in
US
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Television
Advertisements feature
little girl on a tire swing
Coupons
Provide fact sheets to
schools for
consideration on lunch
menus (example to the
right)
Focus on Uncrustables
on the Smucker’s
website
Mass Media outlets and
promotion in Germany
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Television reaches 92.6% of population
Newspapers reach 95% of pop.
Magazines reach 88% of pop.
Radio reaches 88%
Sponsorship of Sporting Events
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Germany plays host to Soccer/Football’s
World Cup in 2006
Germany Expenditures on
Advertising in 2003
Media
Costs in U.S. Currency (in
millions)
Television
$5,035.84 (million)
Newspapers
$8,604.93
Magazine
$5,234.05
Radio
$765.09
Cinema (advertising prior to
movies)
$212.74
Average cost of 60 second spot per screen per week
in Germany is $101.42
Price
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$2.89 per package in US
VAT incorporated into price of products in Germany
Based solely on current US price, would be
approximately 3.82 euros.
Actual cost would include
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Possible requirement of production facility
Costs of media advertising
Possible distribution costs
VAT
Cost of shelf placement in stores
Consideration of personal income availability
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