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The Global Food Crisis • Courses of Action for a Food Manufacturer • June 7, 2011
LASSONDE INDUSTRIES INC. • Distinctive Food Products
Product Lines Develops, manufactures, and markets specialty food products. Specializes in marketing wines in innovative, ecofriendly Vinopaks. Lassonde Specialties Inc. Arista Wines Lassonde Industries Inc. 2010 Sales: $536 million Lassonde Industries Inc. develops, manufactures, and markets distinctive food products. A. Lassonde Inc. The Canadian leader in the development, manufacture, and marketing of fruit juices and fruit drinks.
Our Mission The mission of Lassonde Industries Inc. is to be the Canadian leader in the production and marketing throughout Canada of food products that by their quality and variety contribute to the enjoyment and wellness of consumers. Our Operations Nine (9) plants located close to consumers or fruit producers.
What Characterizes Us Vision Long-term strategic vision (plant today to harvest tomorrow). The next quarter is not the priority, just a step.
The Main Issues • Consolidation of clientele • Changing consumers • Labour shortages • Increase Canadian per capita consumption of fruit juices and fruit drinks • Consolidation of suppliers • Consumers spoiled by low prices • The overall increase in the price of foodstuffs
Having Vision Means: • Deciding our future. • Controlling our future before others control it.
The global food crisis = The overall increase in the price of foodstuffs
The global food crisis is an unprecedented increase in the price of numerous foodstuffs. • The cost of raw materials has increased 5.7% and, during this time, the cost of a barrel of oil has increased 16%.
The Global Food Crisis • Upwardly spiralling demands from countries such as China, India, and South America, countries that are improving their standards of living. • The price of foodstuffs such as coffee has increased (for example, Starbucks has increased the price of its coffee by 17%). • Institutionalhedgefund investors have become major players in food commodities, speculating by building positions and thus pushing prices upwards.
Some crops are replaced by cropsconnected to oil or other more expensive forms of energy (sugar, corn). • The global food crisis is made worse by a sharp increase in prices caused by the weakness of the U.S. dollar. • The global food crisis is also the result of rich countries doing little to encourage poor countries to develop their agriculture, this so as to maintain high food prices.
Yesterday’s Solutions • Offer product lines at the same price = product line marketing. (But what happens when the cost of every raw material increases?) • Reduce product size (always very popular). • Change recipes while keeping the product taste the same. • Increase prices (beware of the impact on consumption and sales volumes). • Innovate.
Current Solutions • Rely more than ever on innovation. • Buy land and pay food producers on a contract basis. • Build on positioning with food producers in emerging countries (sustainable development).
A. Innovation Definition: Innovation is the ability to make a connection between various variables so as to translate ideas into a new product; or it is a new way of making an existing product.
R&D at Lassonde • Lassonde invests close to 1% of its sales in R&D. • 33% of sales attributable to new products launched over the past three years. • An experienced team of 11 food industry specialists. • Innovate, set yourself apart, act quickly. • Flexible R&D, and being ready to respond to threats or challenges. • Launch 20–25 new products a year. • Focus on developing juices that are good for your health and that taste good.
Innovation Oasis Health Break – 10 fruits, with probiotics and antioxia 2007 Winner: • Grand Prix–Category: Non-carbonated beverage
Innovation Definition: • TwoExamples: • Apple juice: Same product but different technologies
Innovation • Orange juice: • From “made from concentrate” to “not made from concentrate”
Innovation • Innovation spurs capital investment. • Innovation creates expertise. • Innovation keeps our headquarters here. • Innovation gives us new market segments (nutraceuticals).
Innovation Innovation creates quality jobs and a company that is good to be with. Training and development of competencies in the workplace - 735 employees received 12,326 hours of training. Advancement in the workplace - 40% of our white-collar workers have supervisory positions through internal promotion.
Innovation Decrease in absenteeism - Absenteeism rate of 3.5% (below the Canadian average of 6%) A 12% decrease in disability costs Better labour relations - Collective agreement of 4 to 6 years - No arbitration in 7 years - 22 continuous improvement committees - Personnel turnover of less than 5%
B. Buy Land / Lease Land If a food manufacturer wants to secure the supply of a foodstuff for its specialized plants, it should buy or lease land from food producers. (Some countries search the world for land.)
C. Build on Positioning with Food Producers in Emerging Countries (Sustainable Development) • Partnerships with producers of new or existing crops in emerging countries. • Help emerging countries to invest in agriculture and to find expertise. • Exchange expertise. • Give a P.O. for financing • Get raw materials at competitive prices for a set period.
Partnerships with producers of new or existing crops in emerging countries. (cont’d.) 2. Work with local growers on good crops (Kent & Keith mangos). 3. Make sure that the money goes to the food producers (have proof).
By enabling emerging countries to improve their crops, we help to stabilize world prices and help the rest of the planet.
Food is the basis of everything. • Consumers from rich countries have become used to prices for certain foodstuffs. • Poor countries want to improve their lot.
“Instead of giving fisherman enough fish to feed them for a day, let us show them how to fish, and we will have helped them to feed themselves for the rest of their lives.” ... • … and we will be able to feed ourselves for the rest of our lives.