Going Global with General Mills

                General Mills is not happy when innovation is not taking place. This is why they are quite literally taking over the world. The company just recently finished a deal to take over Brazilian food company, Yoki. General Mills also sells products in Canada, Ireland and India to name a few. This rise in international business opens up new leadership jobs for people who are willing to develop and market new products in new countries. As new leaders come in with new ideas and new connections they enable the company to expand and lead new projects all over the world. The biggest role of entrepreneurs in General Mills is developing business in foreign countries.

                It takes a very special and talented leader to head such huge ventures in the business world so it comes as no surprise that General Mills has the number one leadership development ranking in the country. General Mills supplies its employees at all stages with mentors, access to leadership experts and speakers, training at the General Mills Institute, tuition reimbursement, and even individual development planning. They also pride themselves in the fact that over 85% of their leaders are promoted from within the company; people not only want to work there but they want to stay there. The General Mills current CEO, Ken Powell, is a great example of the kind of leader expected at the company. He is currently working with food producers in Africa to help them develop new techniques and means to be successful in their businesses. General Mill raises top notch leaders who not only help their company, but the whole world.

 

“General Mills CEO says company is ‘hungry to help’ food producers in Africa.” General Mills. General Mills, 18 Oct. 2012. Web. 18 Nov. 2012. <http://www.generalmills.com/en/Media/NewsReleases/Library/2012/October/PartnersInFoodSolutions.aspx&gt;.

“General Mills completes Yoki acquisition.” General Mills. General Mills, 1 Aug. 2012. Web. 18 Nov. 2012. <http://www.generalmills.com/en/Media/NewsReleases/Library/2012/August/yoki_8_1.aspx&gt;.

“General Mills No. 1 in leadership development ranking.” General Mills. General Mills, 11 Oct. 2012. Web. 18 Nov. 2012. <http://www.generalmills.com/en/Media/NewsReleases/Library/2012/October/LeadershipExcellence.aspx&gt;.

Barriers for entrepreneurs

In the cereal production industry, there are significant barriers for entrepreneurs in establishing themselves in the industry. The industry depends heavily on brand loyalty; so establishing companies is often hard due to customer’s unwillingness to change. It is additionally hard to build relationship with distributors such as grocery stores when you are small-scale. Also, the market is saturated with highly established companies that control a large market share and have low input prices due to economies of scale. However, there is room for innovation in this market as consumers are still willing to try new products. A strategy for start-up companies would be to set prices low in the beginning in order to offer a cheaper alternative. Below are the factors for entering the cereal marketplace:

Competition is less competitive in other markets such as specialty food products. Due to an absence of major players in the industry, start-up is relatively easier. 60% to 70% of the establishments in the industry employ four people or less. In this industry where there are a large number of small players, entrepreneurship will be easier. The lack of major companies stems from the amount of specialization these establishments have. Simply, the opportunity cost for large firms to research and develop products for this industry is not worth it because it serves such a small customer base.

Sources:

Eben, Jose (2011, August). Specialty Food Stores in the US. IBUS World. Retrieved from:http://clients1.ibisworld.com.proxyau.wrlc.org/reports/us/industry/competitivelandscape.aspx?entid=1046#BTE

Tang, Olivia (July 2012). Cereal Production in the US. IBUS World. Retrieved from: http://clients1.ibisworld.com.proxyau.wrlc.org/reports/us/industry/competitivelandscape.aspx?entid=226#BTE

Market Trends Influencing Innovation

The food and beverage industry has seen a lot of change in recent years due to the nature of the industry. Consumer tastes and expectations are two of the hardest things in business to predict and control. With that being said the major players in this industry are constantly forced to innovate their products and hope the consumers buy. Most of the innovations that I’ve seen throughout the industry are either related to packaging or ingredients used. Many businesses within the industry are using changing consumer tastes to revamp their advertising and packaging efforts. Some techniques used include flexible food packaging that is cheaper, better for the environment, and more aesthetically pleasing to the costumers. A more important innovation, in my opinion, is the change in ingredients used. One of the biggest trends in this industry was a push to be more organic. As a result employees within these companies are trying to make their products healthier and more organic. Kraft, for example, just came out with a new product that is using ingredients like real milk, and granola that will have a much higher nutritional value than some of their previous products. In my opinion this industry is never going to stop innovating. There isn’t a point where people will find the perfect food and love it forever. Since tastes are always changing so must the products offered.

 

The competitive landscape of the food and beverage industry has not changed that much over the years. The level of competition has remained relatively constant, but that does not mean that this industry isn’t competitive. It is actually one of the most because it has to follow changing market trends so closely. The leading entrepreneurs in this industry have help to make the products even better, but there are so many big players, that no company can remain stagnant for much time at all.                       

 

Diamond, R., & Wiggins, A. (2012, February 13). Kraft foods launches new innovation in snacking with kraft milkbite milk & granola bars. Retrieved from http://www.kraftfoodsgroup.com/mediacenter/country-press-releases/us/2012/Pages/us_pr_02132012.aspx

Innovation in the Food and Beverage Industry

There will always be a demand for food.  As long as people lie they will need to consume food.  Since the demand for food is constant, companies must innovate in order to keep customers.  Some innovations are directed to reaching a certain demographic, while others support convenience.  For example, an Italian chocolate company has developed a chocolate egg that comes with a free condom, in hopes of reaching a more adult audience.

Yet another area of innovation is production.  This area is fairly broad.  Innovation can range from new ways to raise animals for slaughter to new ways to produce soup.  I personally had never thought about how changing the way a product is produced changes the way it tastes, but one new innovation in the Food and Beverage industry has been the advent of multiple emulsions.  Emulsions are used in the production of dairy products, soups, sauces, and even some beverages.  Multiple emulsions are expected to create a more desirable texture in these foods to and increase customer acceptance and by extension increase demand for foods that employ this new production method.  Another innovation that has occurred in food production is that of more humane slaughterhouses.  Although unlike multiple emulsions more humane slaughterhouses do not affect taste, they still have an effect on customer acceptance and demand. Current trends in the Food and Beverage Industry have pointed to a higher customer demand for humane production of beef, chicken, and pork.  In fact, some of the most popular restaurants and grocery stores boast the production methods of their suppliers, such as Chipotle’s association with humane pork producers.

Innovation is very important in the Food and Beverage Industry.  From production, to packaging, innovation is critical for Food and Beverage companies to pursue in order to grow and stay ahead of competition.

 

Resources

 

De Hoog, E. (2011). Emulsions for New Functionalities. Prepared Foods, 180(6), 99-105. Retrieved from: http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=ccae61de-32ef-4438-aa57-3daed809aace%40sessionmgr15&vid=2&hid=15

 

Strategy and innovation news. (2012). MarketWatch: Food, 19. Retrieved from: http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=1110be5f-8399-46e0-ba7a-3439ed10cbe3%40sessionmgr4&vid=2&hid=107

 

What Lies Ahead for the Food and Beverage Industry?

                This report delivers an annual report of the Food and Nonalcoholic Beverage and the changing demands in a changing economic environment. Since the economy is still relatively weak, analysts predict food and beverage manufacturers facing “the challenge of seeking an optimal balance among prices, volume, and profitability.” But even with the presence of such issues, the food and beverage industry is still one of the optimal choices for small businesses and entrepreneurs to begin because of its vast opportunities for success. Because of the presence of a mature food market in the United States, many businesses in this industry (including new ones) are turning to markets in other places of the world such as Asia and Eastern Europe. This allows businesses to expand their market, thus, increasing their profit.

                Many companies in this industry are restructuring themselves for the consumers’ satisfaction. As the demand for healthier foods and drinks continues to rise, businesses focus on supplying products that fit the consumers’ credentials. Such items include products that are “low in calories, provide supplemental vitamins and minerals, create energy, and/or offer other health benefits.” Businesses are either discontinuing or selling off products that don’t resonate with consumers. Because of this reshaping of current companies’ products, small businesses and entrepreneurs have a better chance of being success in this industry if they take into consideration this health trend in producing their products. For example, PepsiCo’s brand Frito Lays introducing lightly salted potato chips to their product line.

                ConAgra Foods employed roughly 1.4 million workers. The workforce at ConAgra consists of 20,000 hourly production workers (who are mostly unskilled) and about 6,500 who are managerial and professional employees. Similar to most companies in the food and beverage industry, most workers at ConAgra are utilized for their technical skills while a small percentage of employees work in management and hold administrative roles.

 

Nkemdilim Chukwuma

 

Work Cited

Graves, Tom, & Kwon, Esther Y. (2012, June) Industry Surveys: Foods & Nonalcoholic Beverages (Includes Agribusiness) .Standard and Poor’s. Retrieved by                 http://www.netadvantage.standardandpoors.com.proxyau.wrlc.org/NASApp/NetAdvantag                e/showIndustrySurvey.do?task=showIndustrySurvey&type=pdf&code=fnb

Hansen, Fay. (2008, February) The Toughest HR Job in America. Workforce.com. Retrieved by                 http://www.workforce.com/article/20080228/NEWS02/302289988/the-toughest-hr-job-                in-america#

Current Financial Climate

In this industry it’s hard to pinpoint which factors will influence economic activity, and whether or not it will be positive. Companies like Kellogg and Kraft, for example, have shown positive growth at least in the past quarter. Kellogg has reported a 2.5% increase in net earnings in Q3, with an improvement from 3.31 billion to 3.7 billion. Kellogg is a very well known company with very high brand loyalty and brand recognition. With that said it doesn’t surprise me that they had this growth in the last quarter, and I predict will continue to show growth. They may run into issue in terms of CSR from time to time, but in terms of their finances they seem to have everything under control. It’s a little difficult to read Kraft’s financial reports because as of the split they just had with Mondelez. 

But Kraft has still continued to stay strong. I don’t think they would have decided to split if it wouldn’t be a good decision financially. This year they have seen an anticipated growth in the new branch. With the new company reporting an increase of 5.4% to a net income of $1.03 billion, compared to a $976 billion. Interestingly enough Mondelez, the ex-partner of Kraft, has also shown an increase of about 5% in revenue in the same quarter. I think that since the split both companies are now able to specialize and focus more of their time on where they make the most of their money.  Mondelez still owns many other brand name countries like Oreo, Toblerone, and Cadbury, which definitely accounts for why Mondelez is still doing well even after the split. 

For the rest of the industry I think the other companies are financially stable because in all the charts I have encountered these companies have consistently been towards the top. All the charts I have found gage how competitive these companies are being regardless of other factors such as CSR, marketing trends, and state of the economy.

Devon Wallick

 (2012, Nov 2) Kellogg reports 2.5% rise in Q3 net earnings & Net Resources International. Retrieved November 7 from http://www.foodprocessing-technology.com/news/newskellogg-reports-25-rise-in-q3-net-earnings

(2012, Oct 2) Kraft Foods split into two independent companies & Net Resources International. Retrieved November 7, 2012 from http://www.foodprocessing-technology.com/news/newskraft-foods-splits-into-two-independent-companies

ConAgra Foods Eliminating Cost: Good for Them, Better for Us

Within the food and beverage industry, organic foods and healthy drinks are becoming increasingly demanded products by not only American customers but customers all over the world. Health officials and consumers are shifting the problem of healthy eating from a personal concern to an issue demanding businesses’ attention. If unable to react in a way that favors consumers’ choice, these businesses may suffer a loss in revenue because consumers will be unwilling to purchase its goods.

                That is probably why in February of this year, the United States and the European Union countries have decided to create the Organic Food Agreement. In effect since June 1st, the agreement allows producers to sell their organic products in both regions, thus, helping farmers to expand into new markets and encourage the purchase of organic goods. This agreement also lowers the cost involved in selling businesses’ goods as organic because, prior to this agreement, businesses had to separately obtain certificates and fill out extensive paperwork before they could enter the “organic market.” In turn, these high costs led farmers to charge high prices and receive less consumer business which meant less profit for the company.

                ConAgra Foods, as one of the leading American companies in the food and beverage industry, has been able to more than quintupled their income from August 2011 to August 2012, from $52 million to $263.1 million, respectively. With the Organic Food Agreement in full effect, ConAgra Foods has surely reaped the benefits. By taking advantage of the low cost of production and distribution, ConAgra Foods has maximized their profit by not only lowering prices to elevate consumers’ willingness to purchase ConAgra goods,  but by broadened their market in order to reach a greater number of potential consumers.

Nkemdilim Chukwuma

 

Work Cited:

Marks, Benjamin S. (2012, Feb 19). Current Events in the Food and Beverage Industry: Organic Food Agreement signed by both E.U. & U.S. Blogspot. Retrieved November 7, 2012 from blogspot.com

 

Cereal for Breakfast, Lunch and Dinner? Okay with Kellogg

Unlike other food companies, Kellogg might be benefiting from the recession. This is because many of Kellogg’s products are inferior goods, meaning demand rises when income declines. Many people are choosing to substitute lunch and dinner meals for a bowl of cereal. Cereal is relatively cheap and offers good nutrition, so many consumers are turning to it for a substantial meal. The recession has increased demand for cheap foods such as cereal, cereal bars, and other quick and cheap meal alternatives. Compared to other companies, Kellogg is not suffering as much from the recession mostly due to it being the number one supplier of cereal in the world.

Kellogg’s recent acquisition with Pringles has lead to an increase in company revenue. This was a form of horizontal integration as Kellogg aims to become more prevalent in the snack food industry. This acquisition will give Kellogg a greater market-share of the snack-food industry. This is beneficial as a trend toward a less regimented meal program and more of a snacking through the day lifestyle develops. Operating profit suffered due to acquisition costs and initial advertisement costs. However, I think this is temporary and profit will soon exceed past levels once Pringles is fully acquired. Food safety has been a forefront issue for Kellogg, as they have had to fire more employees to cut operating costs. Kellogg’s Chief Executive says Kellogg will invest an additional $70 million to improve manufacturing.

Works Cited:

Geller, M. (2012). Kellogg Co reported higher-than-expected quarterly profit on Thursday as strong performance in its Pringles business offset costs related to a recall last month of Mini-Wheats. Retrieved November 7, 2012 from Reuters http://www.reuters.com/article/2012/11/01/us-kellogg-results-idUSBRE8A00OF20121101

Fredrix, E. (2010). Cereal for dinner? Recession boost General Mills. Retrieved November 7, 2012, from We Seed http://www.weseed.com/company/k-kellogg-co/article/1377961

Tyson Foods: Income and Debt

Tyson Foods has experienced an increase in sales (as reported by their income statement) from 2009 ($26,704M) to 2011 ($32,266M).  Their gross profit on sales for 2011 was $2,199M, which is down from $2,514M in 2010.  This suggests that between 2010 and 2011 a greater proportion of sales revenue had to be re-invested in as the Cost of Sale and was not reported as profit.  While the increase in sales suggests growth in Tyson Foods, the greater proportion of Costs of Sales diminishes this slightly. The increased loss in revenue by Tyson Foods suggests decline in the company, regardless of the increases in sales.

While there has been a short-term loss in gross profit (from 2010 to 2011), the long-term finances of Tyson Foods have been strong.  From 2008 to 2011 their gross profit has increased by about $1,000M.  Sales revenue has increased fairly steadily from 2009 to 2011 by about $2,000M.  Thus, the reason for the drop in gross profit is due to a sharp increase in the Costs of Sales from 2010 to 2011.  The Costs of Sales had been fairly constant from 2008 to 2010, but between 2010 and 2011 the Costs of Sales increased by about $5,000M.  If Tyson Foods can decrease their Costs of Sales, their gross profit will increase dramatically in 2012.

The recession of 2008 through 2009 brought up long-term debts up in the Food and Beverage industry.  From 2008 to 2009 the long-term debt of General Mills, the major Food and Beverage company, increased from $4,348.7M to $5,755.4M.  General Mills long-term debt stay at a similar level ($5,671.6M) until 2011 when it dropped slightly till $4,843.1M.  Tyson Foods, however had a different reaction to the recession.  Tyson Foods long-term debt in 2009 was $3,258M and then dropped significantly in 2010 ($2,135M) and stayed at this level consistently from then till now.  This information collected from both the General Mills and Tyson Foods balance sheets suggest that Tyson Foods better adapted to the change in the economy and was therefore able to bounce back quicker than General Mills.

References

General Mills (2011).  Annual and Other Reports.  General Mills.  Retrieved from http://phx.corporate-ir.net/phoenix.zhtml?c=74271&p=quarterlyearnings

Tyson Foods (2011). Fundamental- Annual Balance Sheet.  Tyson.  Retrieved from http://ir.tyson.com/phoenix.zhtml?c=65476&p=irol-fundBalanceA

Tyson Foods (2011). Fundamental- Annual Income Statement.  Tyson.  Retrieved from http://ir.tyson.com/phoenix.zhtml?c=65476&p=irol-fundIncomeA

Revenue, Profit, and Loss in the Food and Beverage Industry

There is and always will be a market for food; it is a necessity that we all need to survive. This means that food is always in demand, the tricky part is managing supply. Companies need to be able to produce the right amount of product so that people will buy it leaving very little waste and the company will be able to make a profit. Revenue is the total amount of income a company receives during a given time. The amount of money that is left after you take out all of the fixed and variable costs is the profit. Loss occurs when money is spent but no money is gained. For the food and beverage industry revenue comes from the selling of each company’s food products. To find profit we have to subtract the costs. Some costs for the food and beverage industry range from leasing land for factories, to utilities in all the production plants, to distribution, to packaging. Costs also include all of the wages that companies pay their employees. Everything that is left after paying for all that is the company’s profit. A big factor for loss in the food and beverage industry is that their product has an expiration date, some of the food only lasts for a few days and once it goes bad it must be thrown away and even though the company paid to produce it, they receive nothing back. Companies need to be able to react quickly to changes in the market and new trends in order to maintain a high level of revenue and a high profit.

 

“Food Industry Overview.” IRS. IRS, 24 July 2012. Web. 7 Nov. 2012. <http://www.irs.gov/Businesses/Food-Industry-Overview—Accounting-Principles,-Information-Systems,-&-Industry-Operating-Procedures&gt;.

“Product Lifecycle Management in the Food and Beverage Industry.” Oracle. Oracle Corporation, Feb. 2008. Web. 7 Nov. 2012. <http://www.oracle.com/us/industries/045637.pdf&gt;.