Bc Packers

B.C. Packers

Introduction

B.C. Packers was founded in 1923 as a private company and was purchased 61 years later in 1984 by George Weston Limited, a publicly traded multi-billion dollar conglomerate.

B.C. Packers sells mainly canned tuna and salmon products all over the world and in Canada under the brand names of Cloverleaf, Rupert, Bumble-bee, and Paramount.

From its plant in the Philippines, B.C. Packers also manufactures and sells a canned cat food in Japan called Lovely.

The Issue

The managing directors at B.C. Packers have recently been considering entering the Canadian cat food market. Apart from being an attractive business opportunity, this venture would be a good solution for 2 issues B.C. Packers currently faces:

- The fish by-product left over from the processing of canned salmon and tuna is generally sold in bulk as fish meal, which is not very profitable. If it were used for the production of cat food to be sold in Canada, this waste could turn into a valuable product for the company

- There is excess capacity in the Philippine plant.

Although there are many reasons pointing to a probable success of B.C. Packer's venture into the Canadian cat food market, this would also implicate a huge investment, numerous complications, and extreme risk, due to tough competition, for example. All in all, this could be a very profitable step, or a costly mistake.

For / Against

B.C. Packers has many things going for it when it comes to the cat food business, but there are also many scary thing going against it. In order to make a rational decision it is important to weigh the facts and see which side comes out heavier - for or against.

For

- B.C. Packers has already had a successful experience selling cat food in Japan, meaning that they know more or less how the industry works.

- There has been a considerable increase in the number of cats as household pets in North America over the last 5 years, due to demographic changes in society - houses are getting smaller as space is running out; women spend less time at home, meaning that having a dog is out of the question since they require a high level of attention which cats don't.

- Because of its canned tuna and salmon products business in Canada, B.C. Packers has an established network of brokers there already.

- B.C. Packers is highly regarded by the Canadian retail trade.

- George Weston can provide product research support for B.C. Packers' cat food products. This research is very useful so that the right product is put on the market, instead of something nobody wants.

Against

- There are numerous brands of cat food on the market, meaning intense shelf space competition, putting in danger the distribution of the product.

- The cat food industry is a highly competitive race, with competitive pricing strategies like big discounts and promotions.

- Most grocery stores already have their own cat food brand.

- Friskies, number 3 cat food in the USA, is to be introduced in Canada in 1990.

- The free trade agreement between the USA and Canada will mean even stiffer competition.

- Extremely high advertising costs are involved in the cat food industry.

Questions

If B.C. Packers were to decide to go ahead with the cat food deal, a few questions still remain to be answered:

What type of cat food would be sold? Dry / canned / semi-moist / snacks ?

What category? Premium / gourmet / national / price ?

What flavours should be available? Fish / meat / poultry / other ?

In what size packages? If canned - 90 grams / 170 grams / 380 grams , etc ??

Where will the product be sold? Grocery stores / specialty pet food stores / vets ?

In order to answer these questions we should take a look at the options available:

Gourmet

- features many special flavours, like whitefish & tuna, salmon, tender beef, cod, sole & shrimp, etc.

- Premium price

- Directed at consumers with higher disposable income, that give great importance to their cats, and think that higher price reflects higher nutritional value.

- Sold mainly in cans that vary between 85 and 105 grams.

- Holds 12.5 % of the market share

- Experienced a 50% annual growth rate in the first 2 years.

Premium