Alpine Food on the UK's Market - Article Example

ALPINE FOOD Table of Contents 1. Terms of reference page 3 2. Method page 4 3. Findings page 4 4. Conclusions page 6 5. Recommendations page 7 6. Bibliography page 8 1.Terms of reference Given current economic downturn, an external consultant has been sought for advice on Alpine Food’s UK prospective markets. Based on consultant’s assessments Mr. Derek Slattery, CEO, has commissioned Mikheil Chkhartishvili, author, to create a report, due in three weeks, on significance and implications for Alpine Food. Board’s extraordinary meeting has settled on three main concerns after review of consultant’s findings: 1.1 Environment. Consumers, increasingly aware of environmental issues, want to purchase home-grown, -produced, and -manufactured products. ‘Low-mile’ food is an issue particularly at stake. 1.2 Packaging. Product packaging has seen developments in recent years and has shown steady sales growth for companies opting for less. 1.3 Going organic. ‘Natural’ reigns supreme amongst customers who prefer ‘organic’ over ‘non-organic’. 2.Method Building upon consultant’s primary research a secondary research has been conducted by an author. Given Devon’s unique status as home of locally produced food nationwide (Exeter city council n.d.) as well as Devon’s rural character, food supply networks providing for Alpine Food have been assessed. Moreover, primary research’s discussion of cost-cutting strategies (e.g. product packaging) calls for an investigation of possibilities to follow same strategies adopted by competition and / or to create strategies consistent to Alpine Food’s mission and values. 3.Findings 3.1 Exeter’s current core accessibility indicators, especially to food stores (Department for transport 2009), greatly weaken Alpine Food’s supply networks. Alpine’s delivery system (basically one based on trucks) requires, moreover, special product packaging and handling, a mark-up competitors have cut back on leading to steady growth in sales. Further, lead time for domestic and international orders of raw food required for muesli, granola, dried fruit and nuts suffers prolonged delays due to inconsistencies in supply chain systems, a major disadvantage given customers’ increasing preferences for low-mile food (Ho & Gala 2005). Put differently, due to Alpine Food’s basic reliance on international markets for raw food supplies, expected delays in international orders factor in frequently in company’s delivery system’s in domestic market given a wide range of political and social issues as well as regulatory measures external to company’s control and particularly exacting on an already vulnerable delivery system during high-demand periods. Moreover, Alpine’s sole production facility in Exeter, Devon hardly meets, let alone misses up on a strategic market opportunity of, growing demands for fresh food all over UK, simultaneously. 3.2 For Alpine’s specialty offerings – breakfast cereals, snack bars, and dried fruit and nut – Alpine enjoys a competitive edge given growing national and international consumer’s preference for locally and organically produced foods let alone national agencies’ favourable characterisation of organically produced foods (Food standards agency n.d.). 3.3 Even though Alpine’s core products promise potential expansions into bordering market segments such as confectionery and bakeries, UK’s market for confectionaries, bakeries, and breakfast cereals is one characterised by continuous innovations as well as finely divided shares (Fletcher 2006). Typically, big players dominate confectionery market. That is, Alpine finds little opportunity entering confectionery’s territory. However, given ‘fresh food’ stamp Alpine Food brands her products, expanding into a bordering market may distract company’s focus from addressing core business issues as have been raised in consultant’s report. 3.4 In the past two years, many companies in UK food and beverage markets have lowered their packaging cost to check the recent global downturn and volatile packaging costs. They are introducing broader product ranges and low-cost packaging techniques that can attract the consumers in a more budget-friendly way (Rees). It is also true that packaging is related to the eating habits of the consumers. People always prefer to eat fresh fruit and vegetables. Therefore over packaged items may not be attractive to them, when the products are mere cooking ingredients, fruits and nuts. Therefore offering these products in simple low-cost packages seems to be profitable for the company. The most important step taken in the UK markets is the introduction of biodegradable packaging system (California State University and Chico Research Foundation). The previous packaging materials like glass, plastics, light metals and paperboard are being replaced by the new packaging techniques which would produce more rigid, stable and resalable packages (Cheruvu, Kapa, and Mahalik, 418). In this way the use of Modified Atmospheric packaging System shows potency for growth for the food and beverages markets in UK. Also the new version of packaging techniques has more attracting consumer capacity as they have desirability towards the more organic techniques. The Modified Atmospheric Packaging (MAP) has been emerged as a high quality packaging technique in recent times as it could alter the atmospheric conditions inside the package and, therefore, can maintain the food quality for longer periods. This technique is very useful for the fresh fruits and vegetables. These items remain fresh for four to seven days (Rooney 62). Nowadays packages greatly influence the consumers’ purchase decision. New and attractive package attracts consumers more towards existing brands too. These low cost biodegradable packages lower the packaging cost for the company and would attract the consumers for their organic quality. Alpine food products, using such low cost environment-friendly packages, have a potential to grab the UK food markets more progressively. 4.Conclusion Based on Findings, Alpine Food’s major liability rests in weak delivery system infrastructure. Alpine’s exclusive dependency on a trucking system for delivery is, moreover, an overload during high demand times. Alternative means for delivery (e.g. internal canals) as well as innovative arrangements with partner retailers and / or stores should be put in place. Moreover, relying on a trucking system for delivery not only exhausts company’s operations but requires additional costs (of handling and packaging) which have been disposed of by competition. By adopting alternative means of delivery, Alpine Food can dismiss packaging costs almost entirely such as via introducing new (locally produced) offerings catering to growing market segments increasingly aware of health issues, offerings based on conceptualizations of “fresh’ and ‘immediate consumption’. This is particularly significant for customers’ residing all along River Exe and beyond where a combination of environmentally friendly onboard delivery means (e.g. canoes) and Preferred Partner (PP) deals with local producers is apt to induce customers increasingly conscious of local produce and low-mile food. By same token, Alpine Food can strike similar deals with local producers and retailers all across the U.K. in order to meet customers’ growing demand on local, organic, and low-mile food. Indeed, in order for Alpine Food to address such issues a significant shift in company’s procurement strategy, wholly dependent on international markets, which in turn is bound to bring about changes in delivery system from one based on fossil fuels and long haul into a low-mile and multi-modal one. 5.Recommendations Apart from packaging cost-cutting strategy, Alpine could find in licensing agreements both a source for additional income and an opportunity for product development and market share expansion. Investing in production facilities can also enhance Alpine’s market position and help meet growing demands across a wider geographical spread. Finally, Alpine’s entry into newer markets should be based on company’s core values and vision. 6.Bibliography Department for Transport (2009) 2008 core accessibility indicators. Retrieved 23 Sept 2009 from http://www.dft.gov.uk/pgr/statistics/datatablespublications/ltp/coreaccessindicators2008 Exeter City Council (n.d.) Exeter: Capital city of Devon. Retrieved 23 Sept 2009 from http://www.exeter-devon.co.uk/ Food Standards Agency (n.d.). Organic food. Retrieved 24 Sept 2009 from http://www.food.gov.uk/foodindustry/farmingfood/organicfood/ Fletcher, A. (2006) UK confectionery market outlook 'positive'. Retrieved 24 Sept 2009 from http://www.confectionerynews.com/Formulation/UK-confectionery-market-outlook-positive Ho, M. and Gala, R. (2005). Food miles and sustainability. Retrieved 25 Sept 2009 from http://www.i-sis.org.uk/FMAS.php Tom Colls (2009), Retrived 24 Sept 2009 http://news.bbc.co.uk/go/pr/fr/-/today/hi/today/newsid_8023000/8023172.stm Reference Rees, Eifion, Reusable packaging in the UK: cost the major factor, Ecologist, June 2009, retrieved on October 8, 2009 form: http://www.theecologist.org/News/news_analysis/277705/reusable_packaging_in_the_uk_cost_the_major_factor.html Hartman, Harvey H., Food Safety from a Consumer Perspective, The Hartman Group Pulse Report (Summer 2005). Retrieved on October 9, 2009 from: http://ssrn.com/abstract=775886 California State University and Chico Research Foundation.Contractor’s Report to the Board: Performance Evaluation of Environmentally Degradable Plastic Packaging and Disposable Food Service Ware. Zero waste California, 2007. retrieved on October 9, 2009 from: http://recycling.stanford.edu/food/CIWMB%20Degradable%20Plastics%20Study%205-07.pdf Cheruvu, Priyanka, Kapa, Sumaja and Nitaigour P. Mahalik. “Recent advances in food processing and packaging technology”. International Journal of Automation and Control Issue.  Volume 2, Number 4, 2008.   Rooney, Michael L. “Introduction to active food packaging technologies” in Jung H.Han eds. Innovations in Food Packaging. Food Science and Technology International Series. 2005. Read More