Brannigan Foods

7 July 2016

Suggested Strategy 1) Raise Investments in Dry Soups / Healthier Soups / Fast Meals

2) Increase advertising investment in Fast & Simple Soup meals and Heart Healthy Soup line.

Brannigan Foods Essay Example

 Fast & Simple Soup meals addresses the market demand created by professionals and working mothers looking for quick, healthy meal. Sales of this line are growing @ 12%. Interesting to see this is growing without advertising so why spend?

 Heart Healthy Soup line with low-sodium is well positioned to address the concerns of the over-50 consumers.

3) Provide promotional couponing and sampling of hot new flavors, in particular dry mix Gazpacho and Teriyaki Beef Fast & Simple meal. Why these two?

 Gazpacho increases sales during warmer months, decreasing seasonality.

 Teriyaki beef positions company in fast growing Asian soups category.

4) Continue to promote dry soups, even if they cannibalize Ready-to-Eat (RTE) soups.

Bottom Line Srikant wants to increase advertising and promo spending by $18 million. He thinks this should help stop the slide in sales and market share, but this will also reduce next year’s profits.

Whats wrong with this proposal? The CEO will not like that profits will be revised downward in 2013. Plus although the trend in the future was toward healthier options, it didn’t necessarily mean this will come to fruition as close to 70% of the US was overweight and interested in changing their eating habits so why chase a trend which may not even be working?

Claire Mackey – Director of Finance & Planning

Suggested Strategy M&A, Claire wants to buy a small competitor who offers healthy and more convenient soups as well as flavors that are gaining in popularity (Mexican, Southeast Asian)

Bottom Line

Claire likes Red Dragon Foods the best; they have $36 million in sales EBITDA $4.2million.

Acquisition will probably add around 1.5 to 3.5% to sales within five years. Red Dragon will cannibalize less than 0.3% of total sales.

Acquisition would be reasonably cheap in terms of hitting profit.

Clark is looking for minimum ROI of 10% after five years of sales.

What’s wrong with this proposal?

The company acquired Annabelle’s Foods soups division five years ago and that acquisition had high hopes as well, the acquisition has been a nightmare since. It was only supposed to take two years to breakeven but it ended up taking five.

Anna Chong – Head of R & D / Chief Innovation Officer

Strategy

Best option isn’t to buy another company with products they can easily duplicate

Milk the cash cows and invest in rising stars.

Increase ad and promo support spending for new products. Helps longer term.

Develop new products internally instead of buying a company!

Increased spending for the new Ready to Eat (RTE) products from R&D including

Raise R&D budget to $19 million from $14 million to increase pace of new product creation and development. (Examples in case)

Bottom Line Invest in the company, don’t buy another brand, focus on what you have and put $ into R&D

What’s wrong with this proposal? Many new products are bombs, as in the past. Low success rate for new products in the industry. However, Anna had some good ideas as the innovation was taking off from a customer standpoint. New RTE flavors were a good dieas as they can increase price per can to $0.10 which means net earnings will be increase of $12 million after spending 6% of the proposed advertising budget just for these specific new prodcuts.

Bob Pugh, VP Sales & Marketing

Strategy

Take a $0.05 cent price per can cut on the core RTE wet soups. These account for 64% of division sales and 71% of total profit. (This will eat into profits)

Increase Advertising and Promo budget by $20 million to get back market share for the brand, as it was taken away in recent years due to slowdown in A&P spend.

Bottom Line

What’s wrong with the proposal?

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