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

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

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;.

A Healthier America with ConAgra Foods

As of 2012, healthy foods and drinks are becoming increasingly demanded products in the food and beverage industry. Health officials and consumers, relating the consumption of certain foods and beverages with obesity, are making eating healthy not only a personal issue but a business concern. Many people are becoming increasingly health conscious and concerned with their fat, sugar and salt intake, thus demanding companies to reevaluate the key ingredients in their products. “Food and beverage producers failing to respond to the obesity issue risk a negative impact on sales.” The issue of obesity has certainly encouraged many consumers to eat healthier and make wiser choices when it comes to meals. The rise of “100% Natural” foods, Gluten-free, and goods containing no GMOs are becoming more and more popular and appealing to a wider range of customers, especially in snack foods.

Healthy Choice, a ConAgra Foods’ brand was created in response to the growing desire for healthy choices. Not only do they offer healthy entrees, and 100% natural meals, Healthy Choice is beginning to extent their healthy selections to snack foods. Now offering different soups and yogurts, ConAgra is promoting a healthy choice for all foods. Though it may not seem like soup are snacks, it is important to take into consideration that the majority of snacks eaten are at home, not on the go. ConAgra’s Snack Pack pudding brand also promote healthy snacking while providing a variety of different flavors.

For this reason, and many more, ConAgra Foods has certainly created competition with the food and beverage industry. With their brands found in 97% of America’s households, and 28 of them ranked first or second in their category, ConAgra Foods, without a doubt, has become a leading company in America’s landscape. 

                                                                                                                                       Nkemdilim Chukwuma

Frank, John N. (2012, July). Healthy Snacking – US. Mintel 40 Oxygen. Retrieved from                                          http://academic.mintel.com.proxyau.wrlc.org/display/590614/

(2012, July). Future trends in food and drink in 2013 and beyond. RTS Resource Limited. Retrieved from                 http://www.rts-resource.com/Blog/Latest-Trends/Future-trends-in-food-and-drink-2013-and-                beyond/2012/7/26.aspx

(2006). Obesity concerns in the food and beverage industry. London, UK: Ethical Investment Research  Services. Retrieved from http://www.eiris.org/files/research%20publications/seeriskobesityfeb 06.pdf

Marketing Trends in a Competitive Landscape

In our industry recent trends have included organic products, gluten-free, food allergy-conscious items, whole grain, and portion size. It may seem like a lot of intersecting trends throughout the industry but all of those things mentioned can really be organized within two categories, health and organic. In the area of health consumers or really paying more attention to smaller portions. This seemed a little strange to me that consumers would be willing to pay the same price and get less food, but according to market trends buyers want to know that this product is associated with being healthy. The problem with obesity in this country has really reached an all time high. So instead of sacrificing taste their sacrificing portion size. Next is the trend in this market to be more organic. The choice to be organic is for many of the same reasons as generally being healthier, but the choice to be organic has a lot to do with being humane to animals, what’s in your food, and the way it’s prepared. I think that people prefer food that is has less chemicals and preservatives, a more simplified product than what has been known in the market so far.  

In today’s market, players in the food and beverage industry have very stiff competition.  Not only are there challenges with food scares and new consumer trends they are forced to worry more companies entering the industry and adding competition to an already competitive area. My company is Kraft and I believe they won’t have many challenges with the new competitors since they been in the market for so long and already have a loyal consumer base. In this industry it’s all about the demographics and brand loyalty. Since so many products are the same with different packaging and companies promoting them, it really depends on the consumers. And Kraft has pretty loyal consumers in my opinion.  As for the rest of the industry, I think that due to the increased competition domestically and even abroad its hard to say who stands a chance, and what a company has to do to make themselves known. It seems they need to avoid big problems, and make sure they have something good to show in ever sector of their company.

Gren, C. (2011, 12 11). Food & beverage industry trends for 2012. Industry Leaders, Retrieved from http://www.industryleadersmagazine.com/food-beverage-industry-trends-for-2012/