Pringles Expansion Into Israel
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This presentation explores the possibility of Pringles establishing a factory in Israel. All Hypothetical of course. Before Procotor and Gamble dumped them.
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Pringles Expansion Into Israel
- 2. Founded 1837 (173 years in business) Serve 4.2 Billion Customers Worldwide Employ 127,000 People Worldwide NYSE: PG Consumer Goods Industry Revenue $78.9 Billion Net Income $12.74 Billion Total Assets $134.83 Billion
- 3. Product Focus: ◦ Beauty & Grooming ◦ Health and Well-Being ◦ Household Care 50 Leader Brands Driving Force Billion Dollar Brands: ◦ Bounty, Cover Girl, Crest, Dawn, Downy, Duracell, Gain, Gillette, H ead & Shoulders, Olay, Pampers, Pantene, Pringles, Tide, A lways, Mister Clean
- 4. Brands Sold in 180 Countries with Operations in 80 Countries Global Organization with Local Focus Manufacturing Operations Based In: ◦ United States ◦ Canada ◦ Mexico ◦ Latin America ◦ Europe ◦ China and other parts of Asia (31 wholly-owned factories) ◦ Africa ◦ Australia
- 5. Introduced in 1968 Stackable, Fun-Shaped Potato Crisp P&G Health and Well-Being Business Unit, Snack Food Category Multitude of Flavors to Appeal to Regional Tastes Pringles Sticks Spin-off
- 6. Standard of Living Expansion High Consumer Interest in New Products Potato Chips Led the Savory Snack Market in Israel, Accounting for a Share of 38.1% Pro-American Business Sentiment Population 7.2 million, Diversity Gaza Strip Embargo Lifted for Certain Products, Includes Potato Chips Purchasing Power $1 US = 3.67841 Israeli New Shekel Member World Trade Organization
- 7. Unrest in Israel Unrest in Middle East Culture Distribution Local Competitors
- 8. Issue: Strategy: ◦ Political/Religious ◦ On-Going Risk Unrest in Assessments to Israel, partition of Determine if Benefits Palestine, creation of Outweigh Risk a Jewish state, an ◦ Constantly Monitor Arab state, and an New Developments UN-administered ◦ Maintain Open Dialog Jerusalem with Government ◦ Ongoing Officials/Agencies Political/Religious ◦ Neutral Status Unrest in the Middle East
- 10. Issue: Strategy: ◦ Cultural Kosher ◦ Research and Preference Development to Focus ◦ Language on Local Preferences ◦ Develop Flavors to Cater to Preferences ◦ Hire Local Talent who have the Expertise and Knowledge to Assist
- 11. Issue: Strategy: ◦ Two Primary Grocery ◦ Focus on Developing Store Chains in Israel Solid Relationship with ◦ Few Mom & Pop Small two Primary Grocery Store Community Stores Chains ◦ Open Air Markets ◦ Hire Local Talent who have the Expertise and Knowledge to Assist ◦ Marketing Blast to Get Customers Excited about Product ◦ Research Vending Machine Sales as an Opportunity for Open Air Markets
- 12. Issue: Strategy: ◦ Local Competitors ◦ Analyze Strengths Utilize Nationalism as and Weaknesses of a Means to Gain Competitors and Competitive Capitalize on Lessons Advantage Learned ◦ Analyze Local Competitor Strategies and Implementation ◦ Create a Tactical Plan to Compete
- 13. SWOT ANALYSIS Macro Snack Food Industry Strength Weaknesses S W • Willingness to Expand • Negative Press Related to Snack • Diversified Product Foods/Health Concerns • Products Altered to Local • Workforce Spread Over a Wide Preferences Geographic Area • Spoilage Rate Opportunities Threats O T • Snack Food Consumption • Competition Growing Worldwide • Substitutes/Cheaper Products • Environment for Global Available Growth/Trade Barriers Lifting • Global Economic Downturn • Internet Marketing Sales Trends
- 14. SWOT ANALYSIS Micro Proctor & Gamble/Pringles Strength Weaknesses S W • Branding • Limited Snack Food Industry • Financial Presence • Global Organizational Structure • Kosher Food Development • Pringles Flavors Easily Altered • Significant Capital Outlay for Local Preferences • Packaging/Labeling • Ingredients Available Locally Requirements More Strict • Israeli/Hebrew Website in Place Opportunities Threats O T • Environment for Global • Volatility of US Dollar Growth/Trade Barriers Lifting • Middle East/Israel Unrest & • On-Line Social Network & Government Volatility Internet Marketing • Competition with Diverse Techniques Product Portfolios • Environmental Goals Doubled • Substitutes Available/Cheaper for 2012 • Due to Economy, Consumer • 2010 Unemployment Rate Spending Decreases Globally 8.3% in Israel
- 15. SWOT ANALYSIS Macro Israel Strength Weaknesses S W • Standard of Living Expanding • Security/Terrorism Remains • Consumer Interest in New Precarious Foods/Products • Kosher Requirements • Snack Growth Rate Increasing • Import Requirements Strict • Extensive Transportation • Traditional Business Week Network/Energy Infrastructure Sunday through Thursday • World Trade Org Member/US • Distribution Barrier Government Support • 2010 Unemployment Rate 8.3% Opportunities Threats O T • Hi-Tech • Israel Unrest/Government • Pro-American Volatility • Population: 7.2 million • Middle East Unrest Uncertainty • Gaza Strip Embargo Lifted • Consumer Spending Decreases • Purchasing Power $1:3.67841 Shekel • Education Level on the Rise
- 17. Short Term: Long Term: ◦ Brand Building ◦ Brand Building ◦ Develop a Winning ◦ Innovation-Translate Team Utilizing Local Consumer Desires into and Global Talent New Products ◦ Consumer ◦ Scale-Drives Efficiency Understanding- and Consumer Value Uncover the Unarticulated Needs of Consumers ◦ Go-to-Market Capability-reach retailers and consumers at the right place and time
- 19. Locate in Beersheba Manage Locally Local CEO ◦ Yossi Yitzhak Former Executive at Osem - Nestle Israel Education LLB, MBA Staff Rabbi for Kosher Expertise P&G Israel Liaison
- 21. Current Products for Israel ◦ Potato Crisps in Snack Packs and Large Containers Original, Sour Cream & Onion, Jalapenos, and Barbeque ◦ Pringles Snack Stix Possible New Products ◦ Packaged Latkes for Hanukkah shallow-fried pancakes of grated potato, flour and egg, often flavored with grated onion or garlic and seasoning
- 22. Potential Opportunities Outweigh Risks Proceed with Manufacturing Operation/Sales Expansion into Israel
- 23. QUESTIONS ?
- 24. Procter & Gamble Corporate Website http://www.pg.com Pringles website http://www.pringles.com Reuters Business & Financial News, by Nidal al-Mughrabi, Israel Eases Gaza Embargo to Allow Snack Food In 9 June 2010 http://www.reuters.com Market Report, Savory Snacks in Israel to 2014, http://www.pr- inside.com Doing Business in Israel—U.S. Commercial Service Israel http://www.buyusa.gov/israel/en/doing_business_in_israel.html USDA Foreign Agricultural Service GAIN Report, Global Agricultural Information Network, 23 Nov 2009. Mehadrin Tnuport Export, Israel: Potato and carrot season started. By: Wim Geurts 2 March 2010. http://www.freshplaza.com Linked In, Yossi Yitzhak personal page Alacra Store, Premium Business Information Source http://www.alacrastore.com/research/d-and- b/Israel/Snack+Foods_potato+chip
Hinweis der Redaktion
- RyanIntroductionThank the Board members for coming.We were tasked with researching the possibility of Pringles expanding into Israel.
- RyanYou are aware of P&G success, but here are a few highlights…
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- SonyaPringles is a Potato Crisp not a Potato Chip – Potato chip industry required distinction as Pringles is made of 42% potato (dried potatoes) with remainder 58% being wheat starch and flours (potato, corn, and rice) mixed with vegetable oils and an emulsifier.
- SonyaIsrael is located in the Middle East, bordering the Mediterranean Sea, between Egypt and Lebanon. Area comparative – slightly smaller than New Jersey (20,770 sq km)Increased Standard of Living = Increases Disposable IncomeThe market for savory snacks in Israel increased at a compound annual growth rate of 4.9% between 2004 and 2009. Leading players in Israeli savory snack market include PepsiCo, Inc., Unilever and Matzot. (Savory Snacks in Israel to 2014 Market Report)(Israel eases Gaza Strip Embargo to Allow Snack Foods) Reuters, June 2010
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- RyanFollowing World War I, the League of Nations granted Great Britain the Mandate for Palestine, which included responsibility for securing "the establishment in Palestine of a national home for the Jewish people".[15] In November 1947, the United Nations voted in favor of the partition of Palestine, proposing the creation of a Jewish state, an Arab state, and a UN-administered Jerusalem.[16] Partition was accepted by the Zionist leadership but rejected by Arab leaders, and a civil war began. Israel declared independence on 14 May 1948 and neighboring Arab states invaded the next day. Since then, Israel has fought a series of wars with neighboring Arab states,[17] and has occupied territories, including the West Bank, Sinai Peninsula, Gaza Strip and the Golan Heights, beyond those delineated in the 1949 Armistice Agreements. The border between Israel and the neighboring West Bank is not formally defined by the Israeli government,[18][19][20][21] as a result of a complex and unresolved political situation. Israel has signed peace treaties with Egypt and Jordan, but efforts by elements within both parties to diplomatically solve the problem have so far only met with limited success.
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- SonyaIsrael law determines that the sole authority for certifying food as kosher is the Council of the Chief Rabbinate of Israel. Between 60 and 65% of the Jewish population prefer Kosher food.
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- RyanStrengths:Branding-P&G Brands/Pringles recognized worldwide.Financial - P&G Profit Margin is 15 times Industry Average (Industry being Consumer Goods, not necessarily Snack Food Industry).Weaknesses:Israel law determines that the sole authority for certifying food as kosher is the Council of the Chief Rabbinate of Israel. Between 60 and 65% of the Jewish population prefer Kosher food.P&G lacks expertise in Israel package/labeling.Israel has strict marking and labeling requirements that frequently differ from those of other countries. Hebrew must be used; English may be added provided the printed letters are no larger than those in Hebrew.Opportunities:Just Recent Gaza Strip Embargo lifted on Certain Foods, includes Potato Chips, excellent opportunity to get a foot in the door.Pro-American business and productsIsrael’s 2010 unemployment rate average was 8.3%; which is an improvement over 2001-03 Israel recession period where it reached 10-12%.Threats:Competition (locally and nationally) with Diverse Product PortfoliosSubstitutes Snack Foods/Chips are Available and CheaperUnrest can cause changes in Government laws and regulations.
- RyanStrength – Standard of Living Expanding in Israel = Greater Disposable IncomePotato Chips led the Savory Snack market in Israel, Accounting for a share of 38.1%. Savory Snack growth rate 4.9%.Extensive road network exists that connects the entire country. Israel has advance inland (bus and plane) and international transportation facilities. Ben Gurion International Airport located between Tel Aviv and Jerusalem. In recent years underwent modernization and expansion of the train system. Extensive freight services are available and most often used between Haifa, the port in the north, and Ashdod, Israel’s primary port in the South, near the Beer Sheva region.Energy Infrastructure – 17 power station sites, including 5 sites for steam driven power stations. In 2009, government issued tenders for two solar power stations to be located in the South, Independent Power Producers and Natural Gas transmission network from Egypt.Commitment to Israel’s security and well being has been a cornerstone of U.S. policy in the Middle East.Weaknesses: Israel’s 2010 unemployment rate average was 8.3%; which is an improvement over 2001-03 Israel recession period where it reached 10-12%. While high unemployment is a weaknesses for Israel, P&G sees it as a opportunity.Opportunity:Population: 76.4% Jewish (of which Israel-born 67.1%, Europe/America-born 22.6%, Africa-born 5.9%, Asia-born 4.2%), non-Jewish 23.6% (mostly Arab). 32.9% of Israelis were born outside of Israel, which allows for diversity of tastes.Education level on the rise – almost 3000 Israeli students took the GMAT in academic year 2008-2009, more than double from 10 years ago. Israel has the highest number of GMAT takers per capita of any country in the world.
- SonyaOur International Strategy is build around our core competencies.
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- SonyaP&G is a Transnational organization and has a global structure in place. We have three Global Business Units in Place. Pringles is part of the Health & Well-Being Global Business Unit under Snacks and Pet Care division. Global Operations is comprised of our Market Development Organizations (MDO), which is responsible for developing go-to-market plans at the local level. The MDO includes dedicated retail customer, trade channel and country-specific teams. It is organized along five geographic units: North America, Western Europe, Central and Eastern Europe/Middle East/Africa (CEEMEA), Latin America and Asia, which is comprised of Japan, Greater China and ASEAN/Australia/India/Korea (AAIK). Global Business Services provides technology, processes and standard data tools to enable the global business units and the MDO to better understand the business and better serve consumers and customers. The global business service organization is responsible for providing world-class solutions at a low cost and with minimal capital investment.Corporate Functions provides company-level strategy and portfolio analysis, corporate accounting, treasury, external relations, governance, human resources and legal, as well as other centralized functional support. The Israel Pringles operation would fit into the currently established global structure (Health and Well-Being Global Business Unit, under Central & Eastern Europe/Middle East/Africa (CEEMEA) MDO geographic unit.
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- SonyaBased on the information presented, we feel the potential opportunities outweigh the risks.Opportunities being: Pro-American sentiment, trade restrictions lifting for Gaza Strip, Standard of Living Increasing creating greater disposable income, raw materials available locally, extensive transportation network, etc.Risk: Israel and Middle East Unrest creates uncertainty. Any time there is uncertainty, there is a threat/risk.