irds Eye and the UK Frozen Food

Industry
Case Analysis
Group A1:
Abhishek Tigga
(PGP31125)
Ankit Kumar (PGP31135)
Atul Karwasara
(PGP31143)
Bhoomika Bhataria
(PGP31018)
Nishant K Singh

Why Vertical Integration

Raw Material
(vegetables)
Providing
farmers
harvesting
equipment,
agricultural
techniques,
long term
contracts

Raw Material
(Fish &
Poultry) Entered
broiler
chicken
(1958),
fishing
industry
(1965)

Higher quality
products to
overcome
overheads by
charging
premium,
capture profit
margins
across value
chain

Faster
reaction to
demand
change i.e.
rapid growth
of 40% per
annum (in
1950s &
60s),
Industry

Developing
Infrastructure
Provided
Retailers
financial help
to purchase
refrigerators

Prevent New
competition
by capturing
value chain,
Industry
structure
moving
towards
integration

Disadvantages: complicated process, inefficiency,Increased overhead

costs, Low exit barriersdue to investments in vertically integration

Competitive Advantage
Action Taken
Increased consumer awareness about convenience and value for money of
frozen products
Offered discount (average 6%) on published trade prices to retailers
Utilized television commercials effectively to increase the brand awareness

Impact
Charged premium for high quality product
Increased consumer satisfaction and improved brand Image

Action Taken

Action Taken
Developed innovative food
processing and freezing technique
Introduced fish fingers(1955), beef
burgers (1960), new fish, meat and
dessert products

Impact
Between 1950 - 60 birds eye
accounted for 60% of UK frozen
foods

Brand
Leadershi
p
Product
Innovatio
n

Advantag
e

Action Taken
Improved vegetable varieties,
cultivation technique and harvesting
equipment's

Impact
Pioneered in frozen products with
the quality higher than competition

Competiti
ve

Operation
al
Efficiency

Product
Quality

Persuaded industrial refrigerators

producers to develop open tap
refrigerated cabinet display through
partners
Utilized manpower and equipment
efficiently to counter seasonality of
materials

Impact
Birds Eye return on capital was
highest among its peer and stood at
15.9%

Action Taken

National
Distributi
on

Served 93000 outlets directly under

its supply chain system

Impact
Tonnage sales increased 40% per
annum during 1950s.

Why industry de-integrate

Increased Own
Labeled Products

Increase demand
from Catering

Maturity of
Frozen food
industry

Late 1970s saw increase in

number of supermarket
chains

Increased demand from

catering segment in 1970-80
period, 25% in 1978

Mature industry saw

technological revolution in
machineries and increased
productivity of labors

Shift of power from producers

to retailers

Demand in bulk packaging

Reduced entry barriers gave

rise to small firms giving
specialized offerings

Private label market share

increased from 0% in 1966 to
28% in 1982

Gave rise to intermediaries

like Menu master ltd.

Specialization reduced cost

and complexity in business

These retailers didnt have

expertise in the segment and
opened up opportunity for
specialized intermediaries

As these firms were not able

to cater to distribution, they
gave rise to specialized
intermediaries like Flying
Goose

Major targets were retailers

and caterers who emphasized
low pricing rather than brand
name

How to stop industry de-integration

Alliance with
Supermarket
Chains

It led to shift in balance of power from producers to

retailers
Retailers own brand market share increased from 0 29%
in 1982 (Ex : 2)
An alliance with supermarkets could have provided Bird
Eye with better reach and greater market

Entered into
the Catering
Segment

Percentage consumption increased from 16% in 1967 to

30% in 1973 (Ex : 1b)
Could have initiated a distribution level dealing with these
customers

Prevented New
Competition

Owned the entire value chain

Entry barrier would be high due to high capital needs
Prevented the entry of small firms providing specialized
offerings
Focus on developing short term and long term partnerships

What should Birds Eye Do

Divest off
Supplier
Distributi
on
businesse
Selli
s
ng
Increased market share of Private
to
labels to 21 % in 1978
Should consider entering into alliance
priv
to recapture market share
ate
labe
ls

Decrease overheads
Parity in cost structure
More agile and respond quickly
to changes in its business

Lev
erag
e
Bra
nd

Consum
er
Marketi
ng
Red
uce
prod
uct
line
s

Recognized Brand in Frozen

Foods Industry
Leverage the brand to
generate revenue

Shift from Trade

marketing
Consumer focussed
Results in consumer
sales

Product proliferation
Difficulties in Marketing the wide
range of products
Concentrating on the most
profitable products