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Smucker’s Uncrustables in Germany

Smucker’s Uncrustables in Germany

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Smucker’s Uncrustables in Germany

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  1. Smucker’s Uncrustables in Germany by Steve Guy Nate Jones Allyson Kappers Lindsey Quinn Kristin Tschantz

  2. Assessment of Potential Market: Competition • 2 Categories: Frozen Food and Ready Made Meals • Frozen Food

  3. Competition Cont… • Ready Made Meals • 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

  4. Assessment of Potential Market: German Consumer Demand • German Frozen Food Market: • $6.84 billion and growing at 13.8% since 1999 • Ready Made Meals was largest sector • German Ready Meals Market: • $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)

  5. DISTRIBUTION Location of Production and Market Entry: 3 Basic Options for Entry: Scotland United States Germany Current Distribution Agent

  6. 1. Smucker’s Production Facility in Scotland • Part of the United Kingdom, and therefore follows rules of imports, exports, tariffs, and taxation applicable to the UK • 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.

  7. German location relative to Scotland

  8. 2. Producing and Shipping from United States • There is the option to produce within the United States and ship overseas to Germany • 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

  9. 3. Create a Production Facility within Germany • Would reduce costs of transportation, and would open up future business options for Smucker’s within Germany • 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: • Help with currently increasing unemployment rate of 10.5% • Would help the slow down of US imports, while boosting German economy

  10. Current Distribution Agent • 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. • Have ability to keep frozen and pre-packaged foods fresh, as well as an extremely efficient delivery service • They have a new facility Deutschland (western part of Germany) , but is not a food and beverage distributor • Possible Locations • Austria, Czech Republic, France, Ireland, Netherlands, Poland, Portugal, Spain and UK

  11. Consumer Related Issues Segmentation and Targeting • Demographics • Geographic • Benefits • Psychographics • Behavior

  12. United States Target Demographics • Schools • Elementary Schools • Busy Parents • Parents in their 30’s-50’s looking for a convenience good • Upper Middle to upper class lifestyle • Teenagers • Convenient after school snacks • Snacks between school and other activities

  13. German Target Demographics • Families in Germany • Total Population: 85,424,609 • 81% live in families • Priority on children—feel children complete a family • Middle Class to Upper Middle Class Families • Personal Income per Capita= $27,600 • Income Tax Rate: 30.3% • Older Population and single-person households for packaged foods • Decline of traditional family meals • Need for single portion products • Higher disposable income

  14. United States Target Geographics • 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 • Includes under developed areas with low disposable income

  15. German Target Geographics • Target areas of the country with the highest per capita population • 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 • Over 60% of Germans rent homes, furnished with appliances such as refrigerators, freezers, and microwaves

  16. Targeted United States Benefits • Time Efficient • Reduces time to prepare, clean-up, and pack • Goods are Pre-Packaged • No mess • Easily stored and kept fresh by freezing

  17. Targeted German Benefits • 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

  18. Targeted United States Psychographics • Targeted for Families with two full time working parents • Parents that are working and trying to accommodate the busy schedules of their children • Families that do not have time for sit down dinners • Too busy to prepare a family lunch/dinner • Personality and Behavior types: • Busy, organized, impatient

  19. Targeted German Psychographics • Target Family Life • 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 • Much of personal disposable income spent on healthy food and products • Interested in Health and Fitness services (exercise and dieting)

  20. United States Behavior • Not targeted towards children, but will reward children that participate • Online games and activities within the Smucker’s website • Product available at schools • 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

  21. German Behavior • Tendency to buy products that are healthier • 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

  22. Marketing Mix • Positioning • Distribution • Product • Promotion • Price

  23. Uncrustables distribution in the US • Available in many school cafeterias • Frozen foods section of grocery stores • Can be found in WalMart stores and other similar multipurpose retailers

  24. Channels of Distribution in Germany • 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

  25. Retail Distribution in Germany • The Great Atlantic and Pacific Tea Company • Worldwide retail organization with local headquarters in Germany • Stores include Kaiser’s and Tenglemann Sumpermarkets • Discount supermarkets • Aldi, Lidl, Plus • MiniMalls • New line of grocery stores, similar to WalMart supercenter

  26. 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) White bread not popular 3rd ranking spread market in world Recent increase in jam consumption Personal fridge/freezer ownership not as common Limited freezer space Don’t place large value on brands and labels Product (US vs. Germany)

  27. Packaging in US • Cardboard box • Color matches color of spread • Graphic similar to picnic table cloth • Picture of glass of milk • English label – “Uncrustables”

  28. Packaging in Germany • 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) • translation: Ohne Kruste • Translation may not hold same meaning for Germans due to their lack of concern for the crust on bread

  29. Promotion of Uncrustables in US • 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

  30. Mass Media outlets and promotion in Germany • Television reaches 92.6% of population • Newspapers reach 95% of pop. • Magazines reach 88% of pop. • Radio reaches 88% • Sponsorship of Sporting Events • Germany plays host to Soccer/Football’s World Cup in 2006

  31. Germany Expenditures on Advertising in 2003 Average cost of 60 second spot per screen per week in Germany is $101.42

  32. Price • $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 • Possible requirement of production facility • Costs of media advertising • Possible distribution costs • VAT • Cost of shelf placement in stores • Consideration of personal income availability

  33. Auf Wiedersehen