Economics Cia - 2: Case Study On Fieldfresh Foods: Frozen Vegetable Business

ECONOMICS
CIA – 2
CASE STUDY ON FIELDFRESH FOODS: FROZEN

VEGETABLE BUSINESS
A.Ajjay
1828201
MBA V&W
CASE STUDY ON FIELDFRESH FOODS: FROZEN
VEGETABLE BUSINESS
SYNOPSIS
FieldFresh was a joint venture between Bharti Enterprises and the Rothschild family
in 2004.It is headquartered at the landmark Airtel Centre, in Gurgaon, India.
FieldFresh decided to engage in horticulture namely fruits and vegetables. They
started exporting packed fruits and vegetables to the overseas market. In 2007, the
Rothschild familys’ stake in FieldFresh was acquired by Del Monte Pacific
Limited(DMPL).Following this change they started other culinary products like
Ketchup,sauces,beverages,Italian food items, canned fruits and others. In 2009, they
started to expand their business by selling fruits and vegetables in Indian markets as
well. In the middle of 2010, they decided to sell frozen vegetables. Fresh Green Peas
and Fresh Sweet Corn were the frozen vegetables sold by them. In this paper we are
analyzing the case study in various dimensions and perspectives and answering the
questions that Mr.Nandrajog had.
OBJECTIVES
 To analyze the profitability between FGP and FSC
 To analyze the factors affecting pricing
 To analyze the products and their target markets
 To analyze the demand between FGP and FSC
 To analyze the three year forecast of FieldFresh Frozen
ANALYSIS
PROFITABILITY BETWEEN FGP AND FSC
Based on the data from Exhibit 8, for both FGP and FSC we can observe that Quantity
is demanded more in Modern Trade (MT) and it is demanded less in the other
channels like General Trade A, Food Service A and Others. This has a greater effect
in both revenue and gross profit. While comparing the gross margins of Frozen Green
Peas (FGP), it is highest in the Modern Trade (MT) and it is zero in General Trade A
and negative in both Food Service and Others. But the Net gross margin of FGP is a
positive (2%).In case of Frozen Sweet Corn nearly same observations can be made.
The gross margins of Frozen Sweet Corn (FSC) is highest in the Modern Trade (MT)
and it is negative in all different channels like General Trade A (GTA) Food Service
A (FSA) and Others. But the main difference is that the Net gross margin of FSC is a
negative (-6%). When it comes to Net Gross Margin of both FGP and FSC, in MT it
is positive with 21% whereas for other channels it is negative. The Net Gross Margin
in total is negative (-2%).So based on these data, Fresh Green Peas is more profitable
than Fresh Sweet Corn. So Field Fresh Foods has to do more business with FGP rather
than FSC. Also they can increase their Net Gross Margins by increasing the Modern
Trade and by reducing the other channels. This is because Frozen Vegetables are not
preferred in Indian Market.
FACTORS AFFECTING PRICING

They procured Fresh Green Peas and Fresh Sweet Corn mostly from the agri trade
markets and a small quantity from farmers. Initially prices varied depending on the
quality and quantity .The frozen vegetables were required to be kept at -18 degrees
Celsius. Lack of physical storage and transportation were not developed in India
which resulted in high distribution costs. Other factors like storage and distribution
also resulted in higher prices. Initially they dint not spend in branding, but their
competitors had invested in brand building. Their product specifications were set at
higher levels than their competitors. Due to this customers started recognizing them
and started appreciating the higher quality of the product and this created a brand.
FieldFresh decided to focus on maintaining high quality products and brand building.
These factor led to increase in price and their price was the highest when compared to
competitors. This can be clearly seen in the (Exhibit 7)
PRODUCTS - THEIR TARGET MARKETS AND CHANNELS

Based on the various studies and visits fresh fruits and vegetables has a great market
in Europe and US .Even in India there has been changes in retail chains. So FieldFresh
can export fresh fruits and vegetables to other countries as well as can be sold in
Indian markets as well. In other words fresh fruits and vegetables can be used for both
Modern Trade and General Trade. Frozen Fruits and vegetables has high demand in
the international market. In India it is not preferred because only fresh fruits is
preferred here. So Frozen Fruits and vegetables can be exported to other countries in
large number which makes them to achieve a greater profit. In India it is demanded
less and demanded increases for it during April – November when fresh produces was
not available in large quantities. So, very few quantities can be used to explore Indian
market to avoid losses. So large volumes of Modern Trade of frozen fruits and
vegetables would make them to achieve a larger profits and General Trade should be
reduced to reduce losses and increase the gross margin. Another way to scale up the
business is to increase the production of Fresh Green Peas (FGP) rather than
increasing Fresh Sweet Corn (FSC), because FGP is demanded more than FSC. So
targeting the right market with the right products fetches you greater profits.
DEMAND BETWEEN FGP AND FSC
The output of FGP is 150,000 metric tonnes whereas the output of FSC is 25,000
metric tonnes. This shows that FGP is demanded more than FSC. The contribution of
small processors of the total quantity was larger when compared to national level
brands. The demand for the FGP paved way for the small processor to dominate the
FGP market. But the main disadvantage of FGP is even though it is sold throughout
the year, their demand was low from December to April. The reason for this is that
Fresh peas were available in abundance and the prices were very low. When it comes
to FSC, the national brands dominated the sales more than the small ones.
ANALYSIS ON THREE YEAR FORECAST OF FIELDFRESH

FROZEN
Comparing the three years of data given in Exhibit 9, we can see that the number of
cities is increasing every year.
While Comparing the MT, the dominance of FieldFresh coverage is increasing every
year like 43.10%, 70.01%, 80 % , in terms of GTA there is a gradual increase 77.58
%, 80% , 83 %. For FSA the dominance is less 11.49%, 30 %, 30%.
In all the three years, FGP dominates with 61.10% whereas FSC has only 38.89 and it
remained the same next year 2013-2014.
FieldFresh Revenue increases greatly in the MT whereas it increases gradually in
GTA. Also the Gross Margin followed the same pattern. Gross Margin of MT
increased greatly while GTA increased gradually. Important observation is that only
FSA is making a loss and it is increasing every year.
From these observations to gain higher profits, FieldFresh has to increase the MT and
GTA and to reduce the losses it has to reduce the FSA. Thus the Gross Margin can be
higher. In MT and FSA, Fresh Green Peas (FGP) is demanded more whereas in GTA
Fresh Sweet Corn (FSC) is demanded more.
CONCLUSION
What could be the best way to structure the frozen vegetables business and
scale it up?
Frozen vegetable business has a rising demand for exporting to other countries. So
FieldFresh must concentrate on exporting frozen vegetables to other countries. Before
selling those in Indian market, a deep research has to be carried out. Research can be
of any method like survey or test market. Research must be based on the demand of
the product and where it is demanded. The other factors of research can be the list of
competitors and their pricing. These references are based on Exhibit 4. The proper
and effective supply chain starting from procurement, processing, and maintain the
vegetables at frozen state has to be implemented. The logistics infrastructure for
physical storage and transportation has to be developed to a greater level. Branding
and advertisements must be made more effective in India to capture the Indian market.
Because in India, the frozen market is not appreciable as they have fresh market.
These data can be used to structure the frozen vegetables in the best way to scale up
the business.
Could the business manage to be profitable?
Yes, FieldFresh can be profitable. They can be profitable by following certain
strategies. Based on the Exhibit 8, the best way to scale up the business is to target the
products with the respective markets where it is demanded more. So frozen vegetables
like FGP and FSC are demanded more in the MT than in other channels. So doing a
large number of business in MT and less business in other channels makes your Net
Gross Margin more profitable. Another way to scale up the business is to increase the
production of Fresh Green Peas (FGP) rather than increasing Fresh Sweet Corn (FSC),
because FGP is demanded more than FSC. When the demand for the product is high
and increases, the price for the product also increases and hence more profit is made.
So targeting the right market with the right products fetches you greater profits.
What should be the way forward?
The most important step is that to reduce the prices of frozen vegetables by using
advanced technologies and resources to its maximum use. Because the price of frozen
vegetables by FieldFresh is costlier when compared with its competitors. This is in
reference with the Exhibit 7. The next step is that they should start exploring MT with
other vegetables too. Before exploring they must do prior research about the demand
for other frozen vegetables. So that they don’t end up in losses. After this they can
explore the same Indian markets too. The way forward for the company is that they
must start exploring the area of Frozen Fruits also. Frozen fruits is also of greater
demand in the global market.Once experimented in the global market and again based
on researches and surveys, it can be launched in Indian Markets also. Because India
has a lot of untapped markets.

Economics Cia - 2: Case Study On Fieldfresh Foods: Frozen Vegetable Business

Uploaded by

Copyright:

Available Formats

Economics Cia - 2: Case Study On Fieldfresh Foods: Frozen Vegetable Business

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Economics Cia - 2: Case Study On Fieldfresh Foods: Frozen Vegetable Business

Uploaded by

Copyright:

Available Formats

ECONOMICS

CASE STUDY ON FIELDFRESH FOODS: FROZEN

FACTORS AFFECTING PRICING

PRODUCTS - THEIR TARGET MARKETS AND CHANNELS

ANALYSIS ON THREE YEAR FORECAST OF FIELDFRESH

You might also like