Gardenburger Situation Analysis, Swot & Alternatives

Section 1 - Situation Analysis

1.0 Internal Conditions

There has been an evolution in the vision for the Gardenburger Company. This vision was originally to:

Pursue visionary ideas that are helping to sustain the health and integrity of our planet. We are committed to offering healthy food choices to the world, supporting meatless concerns and advocating the benefits of meatless eating.

Current management has built on this vision and has adopted the following direction:

1.1 Objectives

1. To bring the highly profitable Gardenburger into the mainstream consumer market

2. To become the leading developer, producer, and branded marketer of great tasting, convenient meat replacement alternatives in all major distribution channels.

3. To make the brand the premier name in the category.

1.2 Strategies

Growth Strategy

1. Brand the veggie patty category

2. Leverage the brand into new channels (achieve a min. of 70% penetration for six SKUÐ'ÐŽÐ'¦s)

3. Support expansion with advertising and promotion

4. Strengthen leadership position in current channels (food service, club store, grocery)

5. Develop & introduce new products

Product Strategy: Focus efforts primarily on veggie patty category rather than meat alternatives.

Distribution Strategy: Aggressively expand distribution into the mainstream retail grocery channel.

Sales Strategy: Leverage the original Gardenburger veggie patty and its flavour variants to position its product with the trade as the number one veggie patty in each of the food service, natural food store and club store channels in order to become the number one veggie patty in the mainstream retail grocery channel.

Marketing Strategy

1. Build awareness of the category and the brand.

2. Position the brand as healthy, good tasting and convenient.

3. Target the brand to the Ð'ÐŽÐ'Ґhealth modifierÐ'ÐŽÐ'¦ segment.

Pricing Strategy: Slightly higher price than the competition due to companyÐ'ÐŽÐ'¦s perception that their product was better quality and tasted better.

Spending Effort

1. Focused primarily on print ads in food service trade publications, trade shows, off-invoice promotions with distributors, in-store sampling and radio advertising to consumers.

2. Planned to increase budget in 1998 particularly in national television and print media.

1.3 Brand strength, equity & performance

Ð'„X Gardenburger has steadily grown in sales over the years; from $13M in 1993 to $39M in 1996

Ð'„X Distribution is broad in the US and Canada- in over 30,000 food service outlets, 10,000 retail outlets, and over 4,000 natural food stores

Ð'„X Currently holds 21% of the meat alternatives market which is second to MorningstarÐ'ÐŽÐ'¦s share of 42%.

1.4 Sources of added value and SCA

Ð'„X Focus on the veggie patty category rather than just meat alternatives- creates an area of specialty and expertise (competitors do the opposite)

Ð'„X Differentiates the product by not formulating it to taste like meat; uses natural ingredients

Ð'„X There is no real SCA for Gardenburger

1.5 Resources Ð'ÐŽV human, capital, technological, financial

Ð'„X CEO, Lyle Hubbard: reputation for increasing profits and reviving images

Ð'„X Distribution channels- through approx. 60 independent food brokers and 500 active distributors

Ð'„X Product is shipped in temperature controlled fleets; stored in frozen storage warehouses in major cities in the US & Canada

Ð'„X Gardenburger has limited financial resources as advertising & promotional efforts increase to meet strategic objectives. Their cost structure puts them at a disadvantage vs. their competitors.

1.6 Organizational Structure and Values

Ð'„X Initially founded in 1981 by restaurant entrepreneur & chef, Paul Wenner.

Ð'„X Has maintained small organizational structure.

Ð'„X Sticks to the original recipe and expands product lines from it.

Ð'„X Hubbard is leading company away from its initial vision into a more mainstream vision. He is also a Ð'ÐŽÐ'Ґmeat loverÐ'ÐŽÐ'¦ and may not share the sensitivities of the vegetarian and healthy food consumers. This direction presents a significantly higher degree of risk than the company is used to.

Conclusions: Gardenburger is a small company with limited resources. This condition will have a significant negative impact on the ability of the firm to execute HubbardÐ'ÐŽÐ'¦s new strategy. Gardenburger also does not have the capital or human resources in place to execute the strategy, particularly the sales force required to achieve the listings required in national grocery chains.

2.0 Competitive Framework

2.1 Competitive Map

The following Competitive Map places the brands in relation to their current position with respect to the three main segments of consumers; vegetarians, cultural creatives and health modifiers. GardenburgerÐ'ÐŽÐ'¦s three main competitors were more likely to compete in the health modifier segment. They were