MGT 3650 | Saputo Inc.

Saputo Inc. Strategic Analysis

Muhammad Jan Din, Aiko Okagbue, Ann Ouko, Seun Bakare, Lisa MacTavish

MGT 3650-Y

Dr. Ryan Parks

Thursday, June 15th, 2017

Word Count: 5049

1
 MGT 3650 | Saputo Inc.

 Executive Summary

We have been asked to analyze a publicly-traded multinational company which recently

took part in a significant corporate strategy. We have decided to focus on Saputo Inc., a dairy

producer founded in the 1950’s in Montreal due to its pattern of fast paced growth in the

international marketplace over the past few decades. Most recently, Saputo Inc., reaped net

earnings of $731 Million in its fiscal year ending 2017, an increase of 21% over 2016. The

company has 50 plants, sells products in over 40 countries and employs over 12,800.

We have conducted analysis on its internal, external and strategic positions. We found Saputo to

be successful due to its ability to determine consumer needs, its effective low-cost and quality

leadership strategies. It also has skill in successfully acquiring and benefiting from new capital in

international markets such as the USA and Australia.

Our analysis found Saputo Inc. needs to focus on a few important issues that can affect its

business results. First are fluctuations in foreign exchange market that can harm its revenues.

Saputo Inc. needs to take advantage of tools to soften the impact of unexpected fluctuations such

as currency hedging, strategic hedging or through price increases in its products.

As Saputo Inc. has proven effective in integrating into international markets, it needs to

carefully study international ventures in new regions for political stability and demographic

trends to prevent losses from political instability and the competitive advantage of other

producers. The company also needs to maintain positive relations with its international network

of suppliers to obtain best possible pricing in raw materials, to compete as effectively as possible

with other producers in the international market.

Saputo Inc. has seen tremendous fast paced growth in the international community; yet,

its market share is still low, compared to other international dairy producers such as Agropur.

2
 MGT 3650 | Saputo Inc.

Saputo Inc. therefore needs to focus on growing its market share in its existing markets. By

adopting the recommendations made in this report, we are confident Saputo Inc. can accomplish

this goal.

Introduction

Saputo Inc. is a North American dairy producer with a success story. A family business

that started in Montreal in the early 1950’s, the company has grown over the past decades into a

publicly traded multinational enterprise (Saputo Inc., 2017).

This report intends to analyze how Saputo Inc. remains one of the most successful dairy

producers in the world. We look at its history and conduct an analysis on external and internal

factors and study its strategic position in the global marketplace to form recommendations and

conclusions from an analytical perspective.

Background

According to the company’s website (Saputo, 2017), Saputo Incorporated was founded

by the Saputo family in 1954 after immigrating to Montreal in the early 1950s from Sicily.

Saputo, manufacturing only cheese, started with little more than $500.00 and a bicycle for

deliveries. After founding the company, the Saputo quickly established themselves and their

business in Montreal’s Italian community.

In 1957, Saputo built its first sizeable production facility in Montreal. The demand for

cheese grew during the 1960s, partly due to the increasing popularity of pizza during that period

which contributed to the company’s growth. Soon after, they began to incrementally grow in the

following decades by acquiring other dairy and cheese producers and by developing a logistical

network to meet their growing needs for distribution.

3
 MGT 3650 | Saputo Inc.

During the 1980’s, Saputo ventured internationally, purchasing two cheese plants in

1988. They moved their headquarters to Saint-Leonard, QC and focused on diversifying its

production into other dairy products and its geographical distribution. They acquired two cheese

producers in Quebec during the 1990s before completing their IPO in 1997 (Saputo, 2017).

Many acquisitions followed in the new millennium. They acquired 10 more producers of

cheese or dairy products including three more producers in the USA, and Molfino Germania

S.A., Argentina’s third largest milk producer.

From 2011 to 2017 the company continued its trend of positive growth, focusing more on

international markets such as Australia and US where they acquired 5 more companies. The

company now uses over 8 billion liters of milk per year to produce a variety of dairy products

sold in over 40 countries (Saputo, 2017). It operates 50 plants and employs 12,800. According to

its annual report for their fiscal year ending in 2017, they provide products to three primary

market segments: Retail (50%), foodservice (39%) and industrial (11%) (Saputo, 2017).

The company has a strong financial position, the last 3 years has seen a consistent

increase in the total revenue accumulated from its different country of operations. It had a 21%

increase in revenue, which resulted in $86.2 million increase in cash and net earnings totaling

$731.1 million for their fiscal year ending in 2017 (Saputo, 2017). Saputo has maintained a

steady pattern of growth since its inception – over 60 years of growth.  

Internal Analysis

The success of the company over the years have been influenced by the presence of a strong

corporate governance practices coupled with a clear vision for rapid growth through mergers

4
 MGT 3650 | Saputo Inc.

and acquisitions (Saputo, 2013). As of 2012, the company has 53 plants in Canada, the

United States and Argentina (Saputo, 2013).  However, the following SWOT analysis and

VRIO analysis demonstrates the company’s capabilities and resources.

    SWOT Analysis

Strengths:      

1. Strong research and development

Saputo's research and development team supports operations across all of the company's

facilities. This team works closely with the marketing team for innovative dairy products and

new recipes to meet customer and consumer requirements. In FY 2014, the company's core

product launches mainly focused on protein and value-added beverages, as a result of the

research that showed growth in away from home consumption in this category (Saputo,

2016). The company developed several national chain menus around new frappe and shake

items, and also launched ultra-filtered protein milk containing less sugar and more protein

than regular reduced fat milk (Saputo 2016). Furthermore, the company continues to invest in

new cheese making technologies it has developed internally. These technologies resulted in

product improvements, as well as better manufacturing process control and efficiency. The

company introduced several US cheese product line extensions under the Frigo brand. Saputo

also introduced new products in ESL creams/creamers, value-added milk and cultured

products categories of the dairy foods division (the US) (Saputo, 2016). Therefore, the team

not only works towards improving the efficiency and functionality of Saputo's products but

also towards enhancing its manufacturing processes. This gives the company a competitive

5
 MGT 3650 | Saputo Inc.

advantage as it can bring products to the market faster in line with evolving customer

preferences.

2.     Strong production capability

Saputo has strong manufacturing capabilities. The company's dairy operations are mainly

divided into three segments: the US, Canada and international segments. Under the US

segment, Saputo operates 24 manufacturing facilities, all of which are company-owned with

an exception of two facilities. All the manufacturing facilities located in the US have an

overall excess capacity of 6%. Under its Canada segment, the company operates 23

manufacturing facilities, all owned by the company except one facility. All the Canadian

manufacturing facilities have an overall excess capacity of 30% (Saputo, 2016). Furthermore,

under its international segment, the company operates manufacturing facilities in Argentina

and Australia. The company operates two owned manufacturing facilities located in

Argentina, with an overall excess capacity of 23%. Saputo also operates two owned

manufacturing facilities located in Australia, with an overall excess capacity of 28% (Saputo,

2016). Majority of the manufacturing facilities are owned by Saputo which provides the

company with the flexibility to quickly react to the market changes. This also allows the

company to considerably reduce the risks associated with outsourcing of production, such as

loss of control over cost control.

Weaknesses:

      Highly competitive and regulated market

6
 MGT 3650 | Saputo Inc.

The Canadian dairy industry is always becoming increasingly competitive and it tightly

regulated. These tight regulations make exporting prices high and make exporting products in

general more challenging.

Saputo is a part of an industry where all the products are common which leads to tight

competition. Saputo will therefor need to spend lots on research and development to maintain

their competitive advantage to produce more niche products.

Opportunities:

1. Growing its market share in existing markets

Saputo has the opportunity to build on their existing markets.  Better relationships with current

suppliers can help Saputo keep their production costs low when prices go up, because suppliers

will be more willing to make deals with companies they have good, strong relationships with.

This will keep Saputo garnering more market share because they can set their market price.

       2. Continue to grow internationally

Saputo has positioned themselves for continued international growth. They have demonstrated

this through serial acquisitions. Their latest acquisition in 2014, buying Warrnambool in

Australia allows for Saputo to enter another market to produce dairy in.  They’ve acquired a

well-known brand in Australia and can continue to grow their world dairy market share. China is

also great opportunity for Saputo Inc. to invest in.

Threats:

1. Diet trends

7
 MGT 3650 | Saputo Inc.

Right now, there is a shift in the way people consume their calcium. A new diet trend is to use

dairy substitutes to get your daily intake of calcium and vitamin D.  This includes almond milk,

coconut milk, and even vitamin supplements. However, this may be a threat, but Saputo has done

a great job offering new products such as their ultra-filtered protein milk, and moving into the

snack world offering meat and cheese combos.  If Saputo keeps investing in creating innovative

products, this threat can become an opportunity to stay competitive.

2. Reputation

In 2015, a video was released showing animal abuse being done at one of Saputo’s milk

suppliers in Chilliwack, BC (Atkins, 2015). This caused animal welfare activists to protest

Saputo and ask for a boycott to all their products. Saputo’s response was to create new policies

on animal treatment and to spend $1 million on animal-care education (Atkins, 2015).  

VRIO Analysis

The VRIO stands for value, rarity, imitability and organization. The company products

are highly valuable to the consumers. However, as valuable as the company products are in

the market, the products are commoditized because of the presence of competitors that

produces the same products. The major thing that makes the consumption of Saputo products

in the market high is because of the reputation the company has built over the years.

Rarity:

No one can say that dairy products are rare in the market. Most of all the products of

Saputo are very common in the market. The company's major competitors such as Agropur

cooperative, Parmalat, Sargento Foods, Leprino Foods, Nestle, Danone, and Dairy Farmers

8
 MGT 3650 | Saputo Inc.

of America, among others also produce similar products of Saputo. However, Saputo

competes primarily on the basis of product quality, brand recognition, brand loyalty, service,

marketing, advertising and price.

Imitability and Organizationally Embedded:

Saputo does not have a monopoly of products and so, imitation is very easy. None of the

products of Saputo has a shortage of competitors and imitators. However, the organizational

aspect of the company had in some ways gave Saputo a sustain competitive advantage

through its ability to  maintain a leadership position in many markets, with a geographically

well-diversified infrastructures, solid reputation of its brands and continued investments in

research and development with the aim of improving its overall efficiency.

External Analysis

Important Variables

          Dairy products and grocery products are highly used in consumer households and is one of

the highest manufacturing channels for agricultural products in Canada and around the globe.

This is a bonus for dairy and grocery producer companies such as Saputo because they can target

different consumer needs. The company is skilled at targeting emerging economies becomes an

advantage to them to enable growth. This opens the marketplace to many different consumer

options. According to their website, Saputo’s involvement in the production, sale and

distribution of food products, relies heavily on brand recognition and loyalty from its clients.

Nonetheless, because they supply products not only in Canada but in places like Argentina, the

company has to consider the political, economic, social, technological, environmental and legal

factors. Due to economic factors, it has become challenging for the company to produce milk (its

9
 MGT 3650 | Saputo Inc.

raw material) in high demanding country like Argentina due to its high production and low

market price mainly in the export sectors. Location and accessibility is also an important variable

for the company because it helps the company determine their market niche (Saputo, 2013). For

example, the company generates more revenue in the Canadian market compared to Argentina

due to the price differences in anticipation with the political factors in terms of foreign trade

policy. In Argentina, the demand for products is high but the market price is lower in order to

increase their marginal profit. In Canada, the demand is moderate but the market price increase is

high.

Key Success Factors

          Due to its low cost leadership strategy with quality products compared to its competitors,

Saputo has been able to streamline their processes to meet the customer expectations and

operational excellence. With new technology factors in place and their innovation in growth,

Saputo has focused on looking more at their streamline process in terms of wage reductions and

efficiency. As Stated in Saputo Inc, use of robotics has been able to reduce labour cost mostly in

the packaging departments which can be labour intensive. With the organization structure in

place, Saputo has been able to streamline the workplace with the reduction of redundant

positions and number of divisions. With clear handling from each division, Canada, US and

International, the company is able to oversee its activities to help maximize benefits and reduce

labour costs. Another key successor is Saputo’s expansion through the acquisitions of global

markets with similar products in their mission goal of low cost and high product quality. For

example, Saputo has acquired markets in the US, domestic firms and Argentina. One of their

biggest acquisitions was the Australian cheese factory Warrnambool which the company won 88

percent of shares (Wang S 2015). This was a huge advantage for the company because it gave

10
 MGT 3650 | Saputo Inc.

them the opportunity to access new markets in Asia and Australia where 50 percent of the cheese

factory sales were profitable. With an increase of 42 percent in revenue, the company was able to

do this by looking at the growth potential and development in the markets especially in China

due to its market size (Wang, 2015). From a social factor point of view, the shift in the diet

change trend and more of the western foods, the company has been able to gain a competitive

advantage. The growth achievement within the company has been around the focus of

effectiveness and patience in learning and taking the time to recognize and assess the global

market to conduct business sustainably.

Two Key Competitors.

          The two main competitors for Saputo are Groupe Lactalis (A French Company) and

Agropur Cooperative (a Canadian company). From Saputo’s company weakness, they have

increased promotion and higher cost in milk which in turn calls for a revision of the milk pricing

formula in the US and Canada. Nonetheless, the competitiveness of selling prices in the export

market and increase of sales volume with low profit margin has anticipated the demand for dairy

products. Because the company does business abroad, they have been challenged with high

fluctuation rates with regards of foreign exchange and a decline in consumer milk consumption.

Even though the company is facing high competition, they have been able to operate efficiently

with offerings of better product mix and lower transportations costs due to its production and

suppliers being within the distribution centers. Groupe Lactalis offers similar products that

Saputo does. Both companies operate abroad and have good research and development initiatives

that are in tune with consumer preferences. However, Groupe is more known worldwide with

over 229 production sites in over 85 countries and has excellent marketing and advertising

channels (Groupe Lactalis, nd). Groupe tends to have sustainability of manufacturing facilities

11
 MGT 3650 | Saputo Inc.

unlike Saputo who had to improve some facilities by upgrading their technology and close down

two of their Montreal facilities.

Another major competitor for Saputo is Agropur. Even though Saputo does not have huge

distribution like Agropur, they still provide similar products. Both Agropur and Saputo are well

known for their good quality and consumer friendly products. The main challenge that Saputo

faces in regards to Agropur is competition of limited market share in the Canadian industry.

Saputo has surpassed its competitors, however, with the increase in the market share globally and

acquisitions and mergers which Saputo is strong at.

In order for Saputo to catch up with the Canadian competition and be able to increase its

profitability, the company will need to balance its focus within its domestic production as much

as the foreign market not to end up losing over 26 million in shares with little lack of pushing

domestic prices down (Linde, D. nd). Lastly, Saputo needs to focus on having a strong supply

chain management system while having existing customer relationship with the US and

Canadian markets.  

Strategic Position

Saputo’s Strategic Position

Saputo Inc.’s competitive position is that they “produce, market, and distribute a wide

array of dairy products of the utmost quality” internationally to their consumers and customers

(Saputo Inc., n.d., p. 2).  They are positioned as one of the top 10 dairy processors in the word,

the largest dairy manufacturer and processor in Canada and are the top 3rd and 4th dairy

producers in Argentina and Australia (Saputo Inc., n.d.).  They are also ranked as a top third

cheese producer in the US (Saputo Inc., n.d.).

12
 MGT 3650 | Saputo Inc.

Saputo has managed these great rankings amongst their competitors by having a global

reach.  Since their start in 1954, Saputo has been making acquisitions to further development

their company.  “In the 1970s and 1980s, the company bought up manufacturing plants across

Canada, then entered the US market in 1988 by acquiring two cheese plants. It continued

undertaking a number of strategic acquisitions in the 1990s that helped diversify its product lines

and grow its customer base in Canada and the US. [Saputo] then expanded its operations beyond

North America in the 2000s through the acquisition of two Argentinian plants, a number of

European manufacturing facilities”, and in 2014 they expanded into Australia by purchasing

Warrnambool Cheese and Butter Factory Co (Wang, 2015, np).

In 2017 their revenues were up by 1.6% overall, had 22 plants in Canada, 24 plants in the

US, and 4 plants internationally (Saputo Inc., 2017). Their revenue is generated by three

segments. The first segment, retail (supermarkets, convenience stores, mass-merchandisers,

cheese boutiques, etc.) is where 50% of their total revenues come from (Saputo Inc., 2017). The

second segment, foodservice (distributors, hotels, restaurants), brings 39% of their total revenue

(Saputo Inc., 2017).  The final segment is industrial (food processors using Saputo products)

which brings in 11% of their total revenue (Saputo Inc., 2017).

To maintain their strategic position, Saputo needs to look past Canada.  They need to

grow internationally because the Canadian dairy industry is always becoming increasingly

competitive and is tightly regulated (Cousineau, 2014). The acquisition of the Australian dairy

company, Warrnambool, “was a way to pierce further into the Asia Pacific region and [to] take a

piece of growing world demand for dairy protein.  China, in particular is seen as a major

potential buyer for imported dairy solids as its own domestic products of milk declines and its

middle class continues to grow” (Van Praet, 2014, np). The reason for this domestic decline of

13
 MGT 3650 | Saputo Inc.

dairy products is due to the 2008 melamine milk scandal (Wang, 2015). The people in China no

longer trust their domestic brands (Wang, 2015). This leaves a huge opportunity for foreign dairy

producer to come into China with their products.

Competitors Strategic Positions

The dairy industry is a hugely competitive market. Saputo’s top three competitors are

Groupe Lactalis, Agropur Cooperative, and Sargento Foods Inc.

Looking at Groupe Lactalis, this is the giant in the dairy industry, as they have 229

production sites in 85 countries across the globe (Groupe Lactalis, nd). Groupe Lactalis is closest

to the Asian market by having production plants in Oceania. It’s clear that Groupe Lactalis’

strategic position is to be the global leader in the dairy industry, and as of right now, they are.

Agropur Cooperative, is “a major player in the Canadian dairy industry” (Agropur Dairy

Cooperative, 2017, np).  They have over 8000 employees working across 39 plants in North

America (Agropur Dairy Cooperative, 2017).  They make just under $6 billion in sales, and

producer more than 5.9 billion liters of milk a year (Agropur Dairy Cooperative, 2017). Agropur

has yet to cross the ocean, and their strategic position right now appears to focus on growth by

“processing milk into innovative, value-added products and ingredients” (Agropur Dairy

Cooperative, 2017, np).

Finally, Sargento, the American company all about innovating the industry. Sargento is

only located in the USA, but they export their products internationally. Their strategic position is

similar to Agropur, in that they want to be innovative, and they have been. Sargento was the first

to invent pre-cut cheese, cheese in vacuum packaging, package pre-sliced cheese, shredded

14
 MGT 3650 | Saputo Inc.

cheese, and resealable packaging.  They might not be producing products globally, but they have

a strong niche in the industry with these innovations, which is a good strategic position to have.

Saputo’s Competitive Advantage

          Saputo has a sustainable competitive advantage. They have products sold in several

countries under well-known brand names, which gives them the brand loyalty and brand

recognition needed to stay competitive (Saputo Inc., 2017). However, to sustain and grow their

competitive advantage, Saputo needs to stick with their strategic position and continue to grow

and acquire businesses across the globe. The Asian market, China in particular, would be a huge

win for Saputo if they are able to invest in that market. They have a huge growing middle class

population, who dislike their domestic products.  Saputo can come in and provide foreign dairy

products to these people.  The acquisition of the Australian dairy firm allows Saputo to inch

closer to that Oceania/Asian market. It also inches Saputo closer to the dairy giant, Groupe

Lactalis. Saputo CEO, Lino Saputo Jr. summarizes their strategic position the best; “the

characteristic of this market is that the only way you can find growth really is either to steal

volume from your competitor or perhaps to make some acquisitions. We feel very good about

our position” (Van Praet, 2014, np).

Recommendations

Saputo Inc is Canada’s leading dairy producer and among the top 3 dairy producers in the

United States. Saputo Inc, up to date has been successful in growing their company by their

numerous acquisitions both domestically and internationally which have yielded great returns

and ensured their position as 1 of the dozen biggest dairy producers in the world. The company’s

financial report for the fiscal year ended March 31, 2017 shows that 36% of its revenue is from

15
 MGT 3650 | Saputo Inc.

domestic business activities, 12% is due to its Argentinean and Australian Market and 52% is

from its U.S operations. The company also has 22 of its plants in Canada and 28 internationally

located. Majority of its revenues are from international business operations and it is important for

the company to implement strategies to increase its revenue as it continues to expand (Saputo,

2017).

The importance of having a thought-out currency management strategy cannot be

underestimated as a company’s ability to be profitable and survive internationally is dependent

on foreign exchange. Reduction in the revenues from the US and other international markets

were because of market factors such as increase in the cost of raw materials and decrease in

demand and mostly the foreign exchange currency fluctuations against the US dollars. The first

recommendation for Saputo Inc. is to secure means to prevent these fluctuations as it further

heads into international waters in a bid to expand its business. The company can make use of

methods such as currency hedging where the company outsources its foreign currency

transaction to a currency trader which is a risky method; strategic hedging where they use the

currency in the country of operation for investment purposes and sourcing of raw materials to

offset any fluctuations in getting the money out of the country and into other currencies. Another

strategy would be to charge more by the percentage of average currency fluctuation in that

country so that the impacts of such fluctuation is mitigated.

In addition, having a good supplier relationship to combat fluctuations and increases in

the price of the raw materials needed for the production processes to occur so as to make use of

price hedging and avoid purchasing raw materials at a price higher than normal. This will help

combat increased prices of goods that occur when the price of raw materials equally increases so

as to prevent decrease in sales resulting from a decrease in demand that occurs when there is a

16
 MGT 3650 | Saputo Inc.

price increase. Having better relationships with suppliers gives the company a competitive

advantage compared to its competitors because as prices go up they will be able to produce their

goods at a cheaper price and make profit without the need to increase prices thereby garnering

more market share due to their lower prices in the marketplace.

As Saputo prepares to enter more international markets, it is important for the company

to consider the location and its ability to offer a comparative advantage to the company by

entering markets where the competition is not so strong that they would be unable to immerse. In

addition, the political climate is an important consideration, the rules and regulations governing

the dairy industry is an important consideration so that roadblocks to expanding and grabbing

hold of the market share are avoided. As the company makes plans to expand into New Zealand

and China from Australia, into Brazil and other Asian markets innovation that sets it apart from

its competitors such as Groupe Lactalis, who is equally going global, and local competitors, such

as Agropur, will enable the company to be successful in its expansion. Being aware of the

demographics such as the increasing middle class in China and cultural factors along with

changes in diet present in these international markets are also important factors, some countries

have very low consumption of cheese due to its heritage, diet and culture. A dairy company

entering such a country unless it moves away from its core strategy and product will be

unsuccessful in such an environment.

Due to the Canadian dairy industry regulations that make it difficult for companies to

export dairy products from Canada, Saputo and other top dairy producers build plants and

locations in international countries. Revenues that would have been generated from their exports

and the jobs taken away from Canadians are results of these regulations. The company focusing

mostly internationally loses a big share of the Canadian market to its competitors, the Canadian

17
 MGT 3650 | Saputo Inc.

dairy regulation reported from 2005 to 2015 that dairy imports greatly exceeded dairy exports. In

2015, exports accounted for $210.7 million while imports were at $899.4 million showing the

need for home produced dairy products (Canada Dairy Information Centre, 2017). The company

with its innovation and use of technology in the dairy sector could develop these dairy products

being imported for consumption, with the strength of its brand name and position in the market

there would be no difficulty in garnering a market share.

It is inarguable that Saputo’s competitive position is because of their ability to expand

globally through their acquisitions in various countries. Compared to their counterparts, Groupe

Lactalis who is in 43 countries with 229 plants they still have some way to go. Agropur focuses

on growing regionally with 39 plants in North America, 8000 employees and a little under $6

billion in sales. Sargento with its innovative strategy and being the first to put certain innovative

products in the market, it is evident that Saputo still has some way to go to beat its competitors.

Saputo’s expansion on a global scale and even regionally can be even more beneficial if they

combine their growth strategy with innovative strategies geared towards providing the same

products in better innovative ways. This combination of strategies will push Saputo to the top

and enable them to grab an even superior market share.

Conclusion

Saputo with its humble beginnings and steady rate of growth it has been subject to in the

last few decades speaks to the ability and strong position of the company. Their ability to

determine consumer needs, low-cost and quality leadership strategy, and target emerging

economies and establish a stronghold in such economies can be attributed as the reason for their

success in the dairy industry.

18
 MGT 3650 | Saputo Inc.

To ensure continuous growth of the company and higher revenues, the recommendations

for the company to control foreign exchange fluctuations, determine need for strong supplier

relationships, expand domestically and regionally, assess factors that can deter profitable

international expansion and the importance of innovation and technology have been expanded

upon.

Dairy Farming: Saputo sources milk from over 12,000 dairy farms in Canada, the United States, and
Argentina. In 2020, the company processed 3.5 billion liters of milk.

Milk Processing: Saputo operates over 50 processing plants worldwide, which processed over 7 billion
liters of milk in 2020.

Cheese and Dairy Product Manufacturing: Saputo produces over 300 different types of cheeses,
including mozzarella, cheddar, and feta. In 2020, the company produced over 720,000 metric tons of
cheese.

Packaging and Distribution: Saputo's products are sold in over 50 countries around the world, and the
company has a strong distribution network that includes over 50,000 retailers, restaurants, and
foodservice providers.

Marketing and Sales: Saputo invests heavily in marketing and sales to promote its products. In 2020, the
company's advertising and promotion expenses were CAD 139 million.

Customer Service and Support: Saputo has a dedicated customer service team that provides support to
its customers. In 2020, the company's customer service expenses were CAD 49 million.

Recycling and Waste Management: Saputo is committed to sustainability and has implemented several
programs to reduce waste and recycle materials. In 2020, the company recycled over 80% of the waste
generated at its facilities.

Saputo has a history of acquiring companies as part of its growth strategy. The company
has made several strategic acquisitions over the years, including the recent acquisition
of Dairy Crest, the UK's largest dairy company, and the acquisition of Murray Goulburn,
Australia's largest milk processor. Saputo has a clear plan to leverage these acquisitions
to gain a competitive advantage in the global dairy market. Here are some ways the
company plans to do so:

Diversify its Product Portfolio: Through its acquisitions, Saputo has been able to diversify its product
portfolio and expand its presence in new markets. For example, the acquisition of Murray Goulburn has
allowed Saputo to strengthen its position in the Australian dairy market and expand its product offerings
to include new categories such as cream and milk powder.

19
 MGT 3650 | Saputo Inc.

Achieve Cost Synergies: Saputo looks to achieve cost synergies by optimizing its operations and supply
chain. The company aims to leverage its scale to negotiate better prices from suppliers and reduce costs
across its operations, which should result in improved profitability and a competitive advantage over
smaller rivals.

Expand its Geographic Footprint: Saputo is using its acquisitions to expand its geographic footprint and
gain a foothold in new markets. For example, the acquisition of Dairy Crest has allowed Saputo to enter
the UK dairy market, which is one of the largest in Europe.

Enhance its Innovation Capabilities: Saputo is leveraging its acquisitions to enhance its innovation
capabilities and stay ahead of the competition. The company is investing in R&D and product innovation
to develop new products that meet changing consumer preferences and trends.

Diversification of Product Portfolio: In fiscal year 2021, Saputo generated CAD 15.9 billion in revenue, of
which CAD 8.1 billion was from cheese products, CAD 4.4 billion from dairy products, and CAD 3.4 billion
from other products. The company's acquisitions have allowed it to expand its product offerings to
include new categories such as cream, milk powder, and flavored milk.

Cost Synergies: In its fiscal year 2021, Saputo achieved CAD 71.8 million in cost synergies from its
acquisition of Murray Goulburn, exceeding its initial target of CAD 40 million. The company has also
realized cost synergies from its other acquisitions, such as Warrnambool Cheese and Butter in Australia.

Geographic Footprint: The acquisition of Dairy Crest has allowed Saputo to enter the UK dairy market,
which is one of the largest in Europe. In 2020, the UK cheese market was valued at approximately USD
4.8 billion. The acquisition has also given Saputo a platform to expand into other European markets.

Innovation Capabilities: Saputo has invested CAD 28.2 million in R&D in fiscal year 2021, a significant
increase from the CAD 11.7 million it invested in fiscal year 2020. The company's focus on innovation has
led to the development of new products such as flavored milk and plant-based dairy alternatives.

Vertical Integration: In fiscal year 2021, Saputo produced approximately 3.7 million liters of milk per day
and had a total processing capacity of 6.5 million liters of milk per day. The company's vertical
integration has allowed it to reduce costs and increase efficiency, resulting in a gross profit margin of
24.2% in fiscal year 2021.

Diversified Product Portfolio: In fiscal year 2021, Saputo sold approximately 1.7 billion pounds of cheese
and 876 million liters of dairy products. The company's diverse product portfolio has helped it to achieve
consistent revenue growth, with revenue increasing by 3.3% in fiscal year 2021 despite the challenges
posed by the COVID-19 pandemic.

Global Presence: In fiscal year 2021, Saputo's International segment generated revenue of CAD 1.9
billion, representing approximately 12% of the company's total revenue. The company's global presence
has helped it to capitalize on growth opportunities in different regions, such as the growing demand for
dairy products in Asia.

Strong Brand Recognition: In fiscal year 2021, Saputo's Cheese Division had a market share of
approximately 33% in the Canadian cheese market, and its Dairy Division had a market share of
approximately 31% in the Canadian fluid milk market. The company's strong brand recognition has
helped it to maintain customer loyalty and gain market share.

20
 MGT 3650 | Saputo Inc.

Commitment to Sustainability: In fiscal year 2021, Saputo reduced its greenhouse gas emissions
intensity by 1.5% and sent zero waste to landfill from 65% of its facilities. The company's commitment to
sustainability has helped it to appeal to environmentally-conscious consumers and attract new
customers.

These data points demonstrate how Saputo's competitive advantages have translated into strong
financial performance and market position

1. What general topic will your essay address?

The general topic of my essay will be the common misconception that success in life can
be achieved without a formal education. This misconception is often propagated by
anecdotes of successful individuals who did not attend college or who dropped out of
school to pursue their dreams. However, I believe that this overlooks the importance of
formal education in building the skills and knowledge necessary for long-term career
success.

2. What commonly held misconception concerning this topic will it seek to correct?

My essay will seek to correct the misconception that formal education is not necessary
for success in life. I will argue that while practical experience can be valuable, a formal
education provides a strong foundation in critical thinking, problem-solving, and
communication skills that are crucial for career advancement and long-term success.

3. What groups of people do you feel most commonly hold this misconception?

This misconception is commonly held among people who did not complete their formal
education, as well as among those who value practical experience over academic
achievements. This includes individuals who believe that degrees are not necessary to
succeed in certain industries or those who believe that experience is more valuable than
education.

4. What is your hypothesis of why this misconception persists?

I believe that this misconception persists due to the success stories of a few notable
individuals who achieved success without formal education, as well as the general
perception that higher education is expensive and time-consuming. Additionally, some
people may view formal education as too rigid and not flexible enough to adapt to the
changing demands of the job market.

21
 MGT 3650 | Saputo Inc.

5. What kinds of sources (e.g. peer review, credible popular sources, interviews) will
you access to better understand the origin of this misconception and its main
premises?

To better understand the origin of this misconception and its main premises, I will
access a variety of sources including peer-reviewed articles, books, and interviews with
experts in the field of education and career success. I will also examine case studies and
statistics that demonstrate the relationship between education and career success.

6. What do you believe is the correct / most truthful position to hold on this topic?

I believe that while it is possible to achieve success without formal education, a formal
education greatly increases one's chances of success and is a crucial factor in achieving
long-term success and career advancement. A formal education not only provides
foundational knowledge and skills but also opens doors to a wider range of
opportunities and connections.

7. What kinds of sources (e.g. peer review, credible popular sources, interviews) will
you access to better understand your counter-claim?

To better understand my counter-claim, I will access a variety of sources including peer-

8. What obstacles do you believe you may face in researching or writing this essay?

One obstacle I may face in researching and writing this essay is the potential for bias
from sources that may have vested interests in promoting formal education. For
example, universities and colleges may have an incentive to promote the value of formal
education to attract students. Additionally, it may be challenging to persuade readers
who already hold a strong belief in the value of practical experience over academic
achievements. Therefore, I will need to present my argument using evidence and clear
reasoning to effectively persuade my audience.

22
 MGT 3650 | Saputo Inc.

References

Agropur Dairy Cooperative. (2017). Corporate profile. Retrieved from

http://www.agropur.com/en/profile/

Agropur Cooperative. (n.d.). Retrieved June 09, 2017, from

http://www.foodincanada.com/features/the-big-cheese/\

Atkins, E. (2015, June). Dairy giant Saputo responds to animal abuse video. The Globe and Mail.

Retrieved from https://www.theglobeandmail.com/report-on-business/dairy-giant-saputo-

releases-animal-welfare-policy/article24731245/

Cousineau, S. (2014, January 17). Saputo’s road to Asia paved in white gold. The Globe and

Mail. Retrieved from https://www.theglobeandmail.com/report-on-business/saputos-road-

to-asia-paved-in-white-gold/article16390889/

Government of Canada (2017). Canada Dairy Information Centre. Canada’s Dairy Industry at a

Glance. Retrieved from: http://www.dairyinfo.gc.ca/index_e.php?s1=cdi-ilc&s2=aag-ail

Groupe Lactalis. (n.d.). Key figures. Retrieved from http://www.lactalis.fr/en/the-group/key-

figures/

Linde, D. V. (n.d.). Canada's 'big three' dairy processors poised to profit from TPP, though

details are scarce. Retrieved June 04, 2017, from

http://business.financialpost.com/news/agriculture/canadas-big-three-dairy-processors-

poised-to-profit-from-tpp-though-details-are-scarce

Saputo. (n.d.). History-overview. Retrieved from

http://www.saputo.com/en/Our-Company/History-Overview

23
 MGT 3650 | Saputo Inc.

Saputo Inc. (2016). Saputo, Inc. SWOT Analysis, 1-8 ( American Psychological Association)

Saputo Inc. (2013). Saputo, 2013 annual report. Retrieved from

http://www.annualreports.com/Company/5108  

Saputo Inc. (2017). Saputo 2017 annual report. Retrieved from

http://www.saputo.com/en/Investors/Shareholder-Reports/2017

Saputo Inc. (2017). Over 60 Years of Passion. Saputo. http://www.saputo.com/en/Our-

Company/History-Overview

Van Praet, M. (2014, February). Saputo Inc. eyeing more acquisitions beyond Australia’s

Warrnambool, CEO says. Financial Post. Retrieved from

http://business.financialpost.com/investing/saputo-earnings-acquisition

Wang, Sissl. (2015). Saputo’s global reach. Canadian Business. Retrieved from

http://search.proquest.com.ezproxy.uleth.ca/cbcacomplete/docview/1690735082/84D625

06117641E2PQ/1?accountid=12063

Z. (n.d.). Saputo SWOT Analysis | USP & Competitors | BrandGuide. Retrieved June 04, 2017,
from http://www.mbaskool.com/brandguide/food-and-beverages/5541-saputo.html

24