...Intro At the beginning of the 21st century the future of the beverage and food industry seemed to be unclear. With a slow growth rate of only 2% per year, food and beverage companies were desperately seeking the ways to enhance sales and profits. Many companies such as Kellogg's, Sara Lee, Quaker Oats and others considered merging to be a solution and thus the turn of the 21st century was marked by $ 30.5 billion worth of mega-mergers . One of the largest mergers was the merger between PepsiCo and Quaker Oats which occurred on August 2,2001. This biggest strategic decision PepsiCo Corporation ever made added not only the necessary boost in sales needed to attain tremendous growth, but also positioned company as a dominating force in the food and beverage industry. Detailed analysis of this decision, its impact on productivity and cost is presented below. Analysis In order to understand clearly the motivating factors of this decision, it would be useful to describe the nature and position of the two companies on the global market arena prior to the merger. Quaker Oats was formed in 1901 in Raven, Ohio by joining several oat-milling companies. Before the merger, 92% of Quaker Oats' U.S. brands held number one and number two positions in their respective categories. However, throughout its life, Quaker frequently tried itself in non-food industry, which all weakened the company's greatness and left little worse off. The primary reason was that Quaker could not handle the scale...
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...1.0 EXECUTIVE SUMMARY General Mills is planning to launch a new ready-to-eat whole grain children’s cereal called Pirate Oats. Pirate Oats will be the first cereal of its kind offering the health benefits of whole grains while still being preferred by the target market of American children under the age of five. Children will favor Pirate Oats because of the cartoon mascot Captain Grain pictured on the front of the box. Parents will love Pirate Oats because it will keep their children healthy and at lower risk to develop childhood obesity and type two diabetes. This is because Pirate Oats will be lower in excess sugar, and higher in whole grains, than the competition. Pirate Oats will be marketed through an advertising campaign on popular children’s after-school television shows on networks such as Nickelodeon and FOX. First year marketing efforts will result in revenues equalling 10% of the target market as well as a 2% total market share gain for General Mills within the ready-to-eat breakfast cereal market. Achieving these goals will allow General Mills to reliably turn a profit within the first year of sales. 2.0 SITUATION ANALYSIS General Mills has long been a standard in the ready-to-eat breakfast cereal marketplace. It has many cereals marketed to, and designed for children, and has enjoyed a healthy market share to date. With the recent health food craze, the rise in childhood obesity, and poor diet being blamed for heart disease, type two diabetes, as well as cancer;...
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...Marketing Assignment Introduction The product I have chosen for my marketing assignment is Flahavans Porridge. The Oats mill in Kilmacthomas, Co Waterford was founded in the late 1700’s. The Oats mill was originally used by local farmers. Originally the oatmeal was a heavier type than the Flahavans oatmeal we now have today. Flahavans expanded their business in 1935 by introducing an oatflaking facility this enabled them to produce a finer flake, which is faster to cook. Immediately Flahavans went from strength to strength and is now the leading porridge oats brand in Ireland. Six generations of the Flahavans family have run the business. John Flahavan is currently the chairman of the company. Flahavans selected their panel of growers locally to help them produce the distinctive texture and taste their porridge has. Kilmacthomas has its own micro climate, hidden in the shelter of the Comeragh Mountains, also close to the sea, ensuring a constantly mild winter which gives a better quality oat grain. Flahavans breakfast cereal is a 100% natural product, which is not genetically modified in any way. Flahavans customers have been enjoying the taste of their product for over 200 years. http://www.shelflife.ie/article.aspx?id=1064 Marketing Mix The marketing mix is the combination of four major tools of marketing, known as the ‘four Ps’: Product, Price, Promotion and Place. The four P’s represent a framework that can be used in developing strategies for marketing...
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...ACQUISITION PEPSICO AND QUAKER OATS COMPANY By the end of 1999, following a multi-year restricting effort, PepsiCo had once again become one of the most successful consumer products companies in the world. In less than four years, it had achieved an 80% increase in net income, on 30% lower sales, and with 75% fewer employees! PepsiCo’s major subsidiaries were the Pepsi-Cola Company, which was the world’s largest manufacturer and distributor of snack chips, and Tropicana Products, the largest marketer of branded juices. Throughout 1999, PepsiCo was closely tracking several potential strategic acquisitions. In the fall of 2000, it appeared that the right moment for an equity-financed acquisition had arrived. At this time, PepsiCo management decided to initiate a confidential discussion with The Quaker Oats Company about a potential business combination. Quaker Foods North America manufactures, markets, and sells ready-to-eat cereals, hot cereals, flavored rice and pasta products, mixes and syrups, hominy grits and cornmeal in North America. Products manufactured and sold include Quaker oatmeal, Cap'n Crunch, and Life cereals, Rice-A-Roni products, Aunt Jemima mixes and syrups, and Quaker grits. Gatorade, a key brand in Quaker’s portfolio, had long been on PepsiCo’s wish list. On October 5, 2000, an investment-banking team from Merrill Lynch met with the top executives of PepsiCo to discuss a possible business combination between PepsiCo and Quaker Oats. The goals of the meeting...
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...Oat cereal made from refined and processed to make it more convenient to eat, taste is also improved, becoming popular health food. Which has many health benefits of dietary fiber may reduce the biological effects of LDL triglyceride fat protein, to promote excretion of cholesterol, prevent diabetes, help reduce the incidence of diabetic vascular complications; can catharsis catharsis for habitual patients with constipation have a good help; oatmeal genus low heat food, easy to cause satiety after eating, long-term consumption has a slimming effect. Apple porridge Method: Wash apples and carrots with a good eraser wiping dishes. The good oatmeal and rub 1 tablespoon carrot into the pot, pour the milk and 1/4 cup of water and simmer. Cook and then into the opening 2 tablespoons rub apples until boiled. Oat milk pudding Method: First take 1/2 of boiling milk, oats and mix well into the standby. When the remaining 1/2 of the milk is heated to 40 ℃, then add the whole eggs and sugar, stirring with a whisk in the same direction uniform, then sieved twice, then add 1 practices soaked oatmeal stir. The pudding was poured into the practice of two arms, covered with a layer of plastic wrap, steamed into the rice cooker in 12 minutes. After removing the raisins to put Strawberry milk oatmeal Method: Take the milk into the pot, then add the oatmeal and strawberry jam, stir in low heat, without boiling, the temperature of the ice can not milk, remove from heat and let cool...
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...way are related to the corporation’s previous products or services on the market, too establish oneself with new, on a from the corporation’s point of view, completely unknown market (Grant). Although the idea of diversification as a strategy for growth and risk reduction is rather old, it was only after 1950 it became popular to let the corporation expand over different markets and product lines. This growth strategy continued to attract more and more companies, until it culminated in the 1970s when it became popular to build conglomerates, that is, companies expanding by adding more and more unrelated business to the corporation, often via acquisitions. In the following decades, the trend of diversification went down, for the benefit of focusing on core competences. This as a result of financial economists and business leaders starting to doubt the value of diversification. One reason for this was the increased focus on shareholder values, which requires transparency, which is difficult to achieve in companies with multiple businesses (Grant). Today...
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...● used social media to bash on wild oats ● tried to acquire wild oats but was stopped by FTC ● was growing large and worrying stakeholders ● friendly and diverse workforce ● the growth ○ family investments ○ built strong loyalty ● lots of acquisitions ○ tried to learn from those they acquire3 ■ ex learned about produce meat and seafood departments ■ 65% of revenues ○ did acquire wild oats ○ competing with costco and walmarts of the world ● industry context ○ regulatory environment became more stringent on what constitutes as organic ○ organic industry had trouble with distributors ○ farmers usually sell to distributors which sold to retailers ○ United natural foods ○ usually regional distributors win ● competition; ○ 3 types ■ lower cost alternatives ■ trader joes ■ cheap organic when they have it ■ tried to fight this ■ private labels ■ marketing that its cheaper than people think ■ "whole paycheck" ■ conventional supermarkets ■ walmarts and safeways join in ■ naturally grown ■ small sellers such as co-ops and farmers' markets ■ grew ○ made experience more attractive to lure cust ● implementing mission ○ people ■ "decentralized" ■ "team members" ○ values ■ 5% of after tax profits to charity ■ grow only at pace that has good cust service ■ good wages and benefits ■ focusing on food quality ■ large variety but strick standards ■ tried to educate and have nice store displays with local farmers ■ employees criticize some of the products...
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...adapt and change according to the consumer preferences. Traditional food items like breads and toasts, which used to be common on the breakfast table, are now being slowly replaced by cornflakes, wheat porridge, white oats and muesli. This trend is rising with leaps and bounds with a 23 % rise, especially in the urban areas and according to the industry experts, the trend is about to stay for the next few years. REASONS FOR THE CHANGE LESS TIME CONSUMING: The segment is getting increasingly competitive with more food marketers aiming at capitalising on the increasing demand for easy to cook foods. Due to busy schedule of the working people, the consumers in the urban areas have started switching to breakfast cereals because of their ease in preparation. They are easy to use and blend. HEALTH BENIFITS: Apart from this, the rise in cardiac problems and other health issues like high cholesterol levels, obesity, diabetes, high blood pressure, etc has led to the realisation amongst the people of the importance of health food products. INOVATION: With the new age grains like the oats, now being provided in innovative blends, is no more alien to the customers. The companies have started providing the goodness of healthy grains in the traditional forms also like Oats Dosa, Multigrain dosa etc. AWARENESS: The marketers of these products have promoted their product’s...
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...Cases, 13th Edition 23. PepsiCo’s Acquisition of Quaker Oats Case © The McGraw−Hill Companies, 2002 1 case 23 PepsiCo’s Acquisition of Quaker Oats John E. Gamble University of South Alabama In 2001, PepsiCo was the world’s fifth-largest food and beverage company, with such brands as Lay’s, Tostitos, Mountain Dew, Pepsi, Doritos, Aquafina, and Lipton contributing to revenues of approximately $26 billion. PepsiCo’s revenues had reached $31 billion in 1996, but a new corporate strategy embarked upon in 1997 slimmed the company’s portfolio from a collection of fast-food restaurants, snack foods, and beverages to a sharply focused lineup of convenience foods and beverages. Between 1997 and 1999, CEO Roger Enrico spun off Kentucky Fried Chicken (KFC), Taco Bell, and Pizza Hut as one independent, publicly traded company; created a stand-alone softdrink bottling business through an initial public offering; and entered additional snack and beverage categories with the acquisitions of Cracker Jack and Tropicana. Enrico’s focus on convenience foods and beverages placed PepsiCo in food and beverage categories that grew at twice the 2 percent industry growth rate and gave it a 2-to-1 market share lead over its nearest competitor in the convenience food and beverage industry. Roger Enrico and Quaker Oats Company’s CEO, Robert Morrison, jointly announced on December 4, 2000, that PepsiCo would acquire Quaker Oats. The move would combine PepsiCo’s 13 brands (with retail...
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...Introduction The purpose of this case analysis report is to review the history and financial reports for PepsiCo to determine whether or not the merger with Quaker Oats is a good project. The analysis in this report will provide key insights into what the company does and if/how the merger with Quaker can benefit PepsiCo. Company Overview The first Pepsi-Cola company was founded in 1902 by a young pharmacist from North Carolina, Caleb D. Bradham. After initial struggles with bankruptcy, the company again emerged in 1934, under new ownership and with better fortunes. Even though this year was in the middle of the Great Depression, sales soared and the company embarked on six decades of sustained and profitable growth. In 1965, Pepsi-Cola merged with the Texas-based snack manufacturer, Frito-Lay, Inc. The company, now called PepsiCo continued to grow during the 1970s and 80s through acquisitions of other companies. In 1984, the company underwent some restructuring efforts to re-focus on soft drinks, snacks, and restaurants. PepsiCo, incorporated on November 13, 1986, is a global food and beverage company. By 1995, PepsiCo sales had reached $30B, and it had 470,000 employees worldwide. Historically, it has been one of the most successful consumer products companies in the world. Between 1988 and 1994, PepsiCo had invested close to $7B to acquire thousands of fast-food and casual dining outlets. The company was investing “too much money too fast” and operational complexities were...
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... Foods should acquire Wild Oats and increase its product offerings to enable lifestyle shopping and maintain its leadership posi:on Whole foods currently is the leader in the natural-‐ food retail chain and the fastest growing company in the grocery market • Natural food segment growing at 7% • Whole foods sales -‐ 16.3% of total sales in the natural product stores • Increasing compe88on from Gourmet & tradi8onal retailers and Discount stores Challenge: How to maintain their status as a market leader in the Natural food Category while coping with increasing compe::on Acquire compe88on such as Wild Oats Increase private label offerings Increase conven8onal brand offerings Summary strategy Consumer segments Competition opportunities Conclusion Whole Foods strategy is to offer best in class natural/organic offerings to ideologically-‐mo:vated, affluent consumers Strategy Method Benefit Acquire Competencies & ...
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...Quaker Oats purchased the new kid on the block, Snapple, for $1.7 billion. Fresh from their success with Gatorade, Quaker Oats wanted to make Snapple drinks just as popular. Despite criticisms from Wall Street that they paid $1 billion too much for the fruity drinks, Quaker Oats dove head-first into a new marketing campaign and set out to bring Snapple to every grocery store and chain restaurant they could. However, their efforts failed miserably. Snapple had become so successful because they marketed to small, independent stores; the brand just couldn’t hold its own in large grocery stores and other retailers nationally. Pepsi and Coca-Cola themselves began releasing Snapple-like drinks and the general public’s new-found taste for Snapple beverages was beginning to wane. After just 27 months, Quaker Oats sold Snapple for $300 million (or, for those of you doing the math, a loss of $1.6 million for each day that the company owned Snapple). CEO William Smithsburg’s reputation was forever tarnished, and numerous executives were fired. Rasmussen College School of Business QUAKER OATS AND SNAPPLE “We have an excellent sales and marketing team here at Gatorade. We believe we do know how to build brands, we do know how to advance businesses. And our expectation is that we will do the same as we take Snapple as well as Gatorade to the next level.” -Don Uzzi, President of the Quaker Oats Beverage Company, North America. 1) SUMMARY/HISTORY The Quaker Oats Company...
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...COMPANY BACKGROUND Whole Foods Market was founded in Austin, Texas, when four local businesspeople decided the natural foods industry was ready for a supermarket format. Their founders were John Mackey and Renee Lawson Hardy, owners of Safer Way Natural Foods, and Craig Weller and Mark Skiles, owners of Clarksville Natural Grocery. The original Whole Foods Market opened in 1980 with a staff of only 19 people. It was an immediate success. At the time, there were less than half a dozen natural food supermarkets in the United States. It has grown in leaps and bounds since then. Today, they are the world’s leader in natural and organic foods, with more than 310 stores in the North America and the United Kingdom (About Whole Foods Market). During its 31-year history, Whole Foods Market has been a leader in the natural and organic food movement across the United States, helping the industry gain acceptance among growing numbers of consumer concerned about the food they eat (Thompson, Strickland, & Gamble, 2010, p.C-2). The company seeks out the finest natural and organic foods available, maintains the strictest quality standards in the industry, and has an unshakeable commitment to sustainable agriculture. Add that to the excitement and fun they bring to shopping for groceries, and you start to get a sense of what they are all about. John Mackey, the company’s cofounder and CEO, believes that Whole Foods’ rapid growth and market success has much to do with its having “remained...
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...COMPANY BACKGROUND Whole Foods Market was founded in Austin, Texas, when four local businesspeople decided the natural foods industry was ready for a supermarket format. Their founders were John Mackey and Renee Lawson Hardy, owners of Safer Way Natural Foods, and Craig Weller and Mark Skiles, owners of Clarksville Natural Grocery. The original Whole Foods Market opened in 1980 with a staff of only 19 people. It was an immediate success. At the time, there were less than half a dozen natural food supermarkets in the United States. It has grown in leaps and bounds since then. Today, they are the world’s leader in natural and organic foods, with more than 310 stores in the North America and the United Kingdom (About Whole Foods Market). During its 31-year history, Whole Foods Market has been a leader in the natural and organic food movement across the United States, helping the industry gain acceptance among growing numbers of consumer concerned about the food they eat (Thompson, Strickland, & Gamble, 2010, p.C-2). The company seeks out the finest natural and organic foods available, maintains the strictest quality standards in the industry, and has an unshakeable commitment to sustainable agriculture. Add that to the excitement and fun they bring to shopping for groceries, and you start to get a sense of what they are all about. John Mackey, the company’s cofounder and CEO, believes that Whole Foods’ rapid growth and market success has much to do with its having “remained...
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...its customers and team members, create wealth through profits and growth and care about communities and environment. Current Strategy and possible growth The core value of Whole Foods was “Whole Foods, Whole People, Whole Plant.” They cared about their foods, their staff, their customers as well as the environment, so they came up with many strategies, which are listed as follow: I. Expanded the company by opening new stores and acquiring attractive candidates. Because of the growth need of the company, acquisition was a good way to roll. The biggest acquisition for Whole Foods was the purchase of its biggest competitor, Wild Oats Market, in 2007. This gave Whole Foods an easy way to enter into new big cities and even new states, but meanwhile costs of capital were large too. According to the failure of Wild Oats Market, which generated excessive debt from acquisition, Whole Foods should watch out and avoid this kind of mistake happen. II. Opened larger new stores and reallocated smaller old stores to bigger sites, which were more visible and had more parking spaces. Whole Foods preferred to locate stores in busy shopping spots and premier real estate sites. They usually did analysis...
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