MKT2401 Brannigan Foods Case Analysis

Option 1: Invest in the growing sectors

What
- Increase investments on growing categories of dry soups, healthier soups, and fast meals so as to improve brand image and drive long-term growth
- 4 ‘P’s; Product: Fast & Simple soup line (sales growing at 12% per year) positioned to meet the needs of working mothers and professionals; Heart Healthy soups positioned to address concerns of over-50 consumers
- Dry soups category is expanding; 2 dry mix packs can be sold in the space of one can, increasing sales potential by 180%
- 4 ‘P’s; Promotion: Increase advertising investment in Fast & Simple soup meals and Heart Healthy soup line so as to reinforce awareness and induce trial
- 4 ‘P’s; Promotion: Promotional couponing and sampling of hot new flavours, e.g. dry mix Gazpacho (for warmer months) and Teriyaki Beef Fast & Simple meal (for Asian soups category)
- Increase advertising and promotion spending of $18 million

Pros
- $18 million increase will stop slide in sales and market share

Cons
- $18 million increase will reduce next year’s profits; pressure from CEO, board, stockholders
- Spending more on these small lines might not produce the projected sales; breakeven sales?
- Competition: Tipha’s products had lower gross profit than the core products
- “On-trend” initiatives may not become large category for Brannigan’s because consumers may choose not to change their eating habits (i.e. to eat healthier)

Option 2: Acquire product lines to complement the core in growing sectors

What
- Roarin’ Cajun Foods; ten-bean dry mix soup; Whole Foods; $18 million sales; Estimated EBITDA: $2.8MM
- Red Dragon Foods; Southeast Asia and Chinese soups; Safeway, Ralph’s chains; $36 million sales; Estimated EBITDA: $4.2MM; Use Brannigan’s brand to reduce advertising & promotional investment required by