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Beech-Nut

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Submitted By Zaidi
Words 514
Pages 3
Introduction:
The case describes the problem faced by Peter Andersen CEO of Beech-Nut Nutrition Corporation about a delivery of apple juice concentrate from the Beech-Nut supplier for making apple juice. A private detective dramatically arrived at Beech-Nut plant situated at Canajoharie, New York and announced that the truckload of apple juice concentrate which had just been delivered to Beech-Nut by a supplier was in reality a truckload of flavored sugar water. The detective wanted Beech-Nut to join lawsuit against the supplier of the bogus concentrate. Andersen had conversation with his team members about the issue to get better understanding and consult with his legal advisers for the solution of the problem.
Beech-Nut Nutrition Corporation:
Company was founded in 1891 as a purveyor of smoked meats. Then diversified the business and entered into the business of selling food concern such as Life Savers, Table Talk pies and Tetley Tea. It was taken over by Squibb a large pharmaceutical and health care products company in 1969. In 1973 baby food division was taken private under the name of Beech-Nut by a small group of Pennsylvania businessmen led by lawyer Frank Nicholas. Nicholas as CEO tried to build the company image as provider of natural foods under the name of “Mr. Natural” and removed added salt and sugar from the Beech-Nut products. Due to financial problems Nicholas decide to sell the company in late 1970s. In 1979, world largest food company Nestle, S.A purchased Beech-Nut for $35 million. After acquisition Nestle provided an additional $60 million to upgrade the 80-years old Canajoharie plant and increase the marketing budget. Nestle also renamed the company “Beech-Nut Nutrition Corporation” to reflect its commitment to nutrition. By 1981, Beech-Nut was primarily a baby food company with sale of $79 million on about 14 million cases of product. Its primary markets were US northeast and Midwest as well as California. The company also exports to 45 countries.
Product Mix:
Beech-Nut produced about 200 different baby food lines including juices, strained foods and juniors (combination of soft vegetables or fruit) for older babies. Apple juice products contribute 30% of sales and considered to be the major item. Apple juice and apple juice products were made from concentrate, which was more easy to store and transport than fresh juice. Universal was the supplier of this concentrate to Beech-Nut according to the provided specifications. Beech-Nut reconstitutes the concentrate as juice. All the company’s juices were pure and only additive to juices was Vitamin C for extra nutrition value.
Beech-Nut Facilities:
Beech-Nut’s corporate headquarter in Fort Washington, Pennsylvania, housed marketing & sales as well as corporate staff, along with a free customer hotline. The company operates with two plants. The larger plant was at Canajoharie New York having work force between 700 and 900 and manufacture most of Beech-Nut products. The other plant was situated at San Jose, California with a work force of about 300 people. Tom Storer, vice president, Operations is responsible for both plants.

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