Essay on Frito Lay - Cracker Jack Case Analysis

1561 Words Jun 29th, 2010 7 Pages
Frito-Lay Company - Cracker Jack 1. Why has Borden Foods decided to sell Cracker Jack?

Borden Foods is in the process of divesting of snack and non-food products in order to focus efforts and resources in growing their pasta and grain based meal segments. Borden management has also recognized the value and equity in the heritage Cracker Jack brand. The Cracker Jack brand currently (1996) sits in the number two position in terms of Ready-To-Eat (RTE) caramel popcorn product category market share with approximately $192 million in retail sales. With increased competition, Borden has unsuccessfully attempted to grow sales in the past five years, with the introduction of new flavor offerings. The Cracker Jack brand offerings is comprised of
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FL experience with a variety of promotional methods including sponsorship (potential opportunity for individual box sales).CJ brand has been under marketed since 1992.

In market testing, consumers are unaware of CJ new product offerings.

CompetitionCJ is # 2 in RTE caramel popcorn market, with untapped potential identified by FL teams.Competition is actively advertising consumers.Manufacturing & DistributionFL has strong Domestic and International distribution channels and relationships.

FL has unique position to have involvement throughout the food production and distribution chain. Borden is inefficient, only operating at 33 % capacity and CJ brand takes up 32% of space.

CJ has small # of representatives. Poor focus on CJ as it must compete for attention with offerings across multiple product lines.

Ineffective distribution mix with 65 independent food brokers.Industry/Market StructureCJ has 97% brand awareness and 95% among current consumers of caramel popcorn products.

CJ has maintained a positive, and consistent image since inception.

Recent growth opportunities in the low/no fat product offerings.Rising material costs FinanceFL demonstrated financial strength with $1.63 billion operating profit and $9.68 billion in net sales. Annual growth rate of 13% between 1991-1996.Borden continues to integrate regular price increases to maintain profitability

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