Uncrustables

1. Uncrustables Venturing Forth to Japan

2. Team Japan Stephanie Smoot Charles Hobing Ronita Farria Jared Holden Chris Chester

4. Potential Market? • Consumer Demand (similar economic strength as the United States) • Traditionally, parents & grandparents fixed meals throughout the day • In recent years, frozen foods & fast foods have gained significant market share as Japanese interests have shifted toward convenient foods • Ready-to-Go-Meals similar to Uncrustables are slowly being implemented into the culture • Competitors have already introduced similar products • Mothers are working outside the home and children are attending a vast array of activities outside the classroom • More difficult to schedule & prepare meals

5. Yamazaki Today, its products include bread, sweet buns, Japanese-style confectionery, Western-style confectionery, processed bread, and prepared rice and side dishes, as well as jam, desserts and prepared foods in retort pouches. Blueberry Jam Sandwich! (Japan 1998)Another great idea from Yamazaki Bakeries in Japan.  A simple slice of white bread is transformed into a snack treat with a schemer of blueberry jam! Direct Competitor

6. Leading Competitors • Nestle & Yayoi & ITOCHU • Ajinomoto • Katokichi • Nihon Suisan & Nichirei • Nichiro Sunfoods

7. Nestle, Yayoi & ITOCHU • Joint venture in 2000, the two made new frozen brand called Buitoni. • This product is an Italian pasta • The companies have also added frozen personal pizza, gratin, and other frozen small pasta dishes.

8. Ajinomoto • “For over 90 years, we’ve been the brand Japanese food-lovers rely on for the freshest, best-tasting, and most convenient ingredients seasonings and entrées.” • In Japanese jam market with Welch’s • Japanese # 1 in brand recognition. • Competitive with rice bowls and other rice snacks. • Joint ventures worldwide with companies like Kraft and Kellogg.

9. Katokichi • Katokichi has extended its product range into confectioneries, dairy products, soft drinks as well as a vast array of frozen foods. • Such products include breaded shrimp, potato croquettes, seasoned rice and Japanese style buckwheat noodles. • Katokichi aims to maintain high sales by focusing on providing balanced-nutrition, calorie-controlled, safe food.

10. Nihon Suisan & Nichirei • Both companies are large in Japan, especially in frozen goods and fish products. • These companies have gone global and have made joint ventures with other global companies, some even from the US.

11. Nichiro Sunfoods • Traditional company which relies on brand loyalty • Retains quality under the motto of “providing products that will satisfy its customers” • Over 46% of Nichiro’s sales are generated within frozen foods. • The Group’s main business areas include the manufacturing and selling of processed foods, as well as the catching, purchasing and selling of marine products.

12. Frozen foods market

13. Market Share & Potential • Uncrustables are categorized under frozen ready meals • nearly 25% of the frozen foods market and growing • With growing capacity of frozen foods market, a reliable means of distribution will be necessary

14. Distribution • Smucker’s Locations: • Nearest production facility to Japan is located in Australia • Transportation possibilities • Shipping from Australia • Other major facilities in: • United States (Uncrustables manufacturing location) • Canada • Brazil • United Kingdom

15. Distribution & Imports • Tariff 2%-3.4% • One of the lowest in the world • Inexpensive to ship to Japan • Possibilities for Distribution Include: • Ship Uncrustables from Scottsville plant • Expensive • Logistics chain required to complete transfer • Produce Uncrustables in Australia and ship to Japan • Expensive • Purchase new capital to manufacture product • Produce in Japan • Joint Venture • Merger & Acquisitions • Franchise

16. Distribution cont… • Importers, such as Smucker’s, often distribute directly to the retailer. • In Japan, 30% of snack foods and confectionaries, such as Uncrustables, are delivered in this manner. • The remainder distribute to wholesalers. • Wholesalers are crucial to the food distribution industry in Japan. • Their services are in high demand • The industry leaders are SAN-ESU Inc., Yamaboshiya Co., Ltd and Takayama Co. • Possible business relations • Products are bought at small profit margins by larger supermarkets such as Daiei, Ito-Yokado, Jusco, or convenience stores such as Seven-Eleven, Lawson • Similar to U.S. wholesaler distribution methods

17. Role of Wholesaler • Vital role due to warehousing capabilities in limited storage market and excellent delivery standards. • Retailers are currently cutting back on the merchandise that they stock in inventory. • Convenience Factor • Wholesale companies are willing to handle all supplier issues and paperwork that retailers wish to avoid. Convenience is the number one priority of the retailer.

18. Distribution Channel

19. Price of Distribution • Product importers generally set profit margin of 10-15%. • After import tax and transportation costs, companies expect to sell their product to wholesalers for 40% of the retail price. • Example • About 45 yen every 100 yen asked for as the sticker price.

20. Market Segmentation • Demographics- • Total Population: 127,215,000 • Life expectancy : 82 years • Age • Children ages 5-14: 9.6% • Parents ages 25-44: 27.6% • average female marriage age 27.3 yrs • average make marriage age 30.0 yrs. • Rarely bear children before marriage • Grandparents ages 60-74: 17.08% • Nearly 65% grandparents live with family • Gender • Male (48.9%) • Women (51.1%) • Race: • Japanese (99%) • Korean & Brazilian & Pilipino (1%) • Distribution of Wealth: • Gross Domestic Product (2003E): $4.3 trillion (2004F): $4.8 trillion • Real GDP Growth Rate (2003E): 2.5% (2004F): 4.5% • Religion: • Shinto & Buddhism

21. Segmentation cont… • Psychographics • Activities/Interests • Large Spectator sports: • Baseball & Soccer • Heavy Emphasis on exercise • Jogging, skiing, martial arts • “after school, kids stay to participate on athletic teams” • Opinions • Health conscious: • “Lunches are very well balanced meals. The Japanese eat a lot of protein and carbs. They aren’t really dairy and sugar people”

22. Segmentation cont… • Geographic's • Live in urban areas: 78.7% • Provides highest density of supermarkets and advertising capability • Rural & work in agriculture: 6% • Maintains cultural biases towards Western products • 50% live on 2% of the land • Highly dense Cities • Tokyo: 14 million

23. Buyer Behavior • Japanese do not buy in bulk • Purchase groceries for only a few days in advance • Eat smaller portioned meals • Not many large grocery chains • “Peanut Butter isn’t readily available” • Eat fresh foods more often • Diet consists mainly of rice and fish • Eat fast foods less often • Mainly Japanese style fast food • Fresh foods & not fried as American • Smaller portions & more expensive

24. Targeting • Smucker’s does not target kids • Products in America targeted towards parents • Children carry strong influence in what is bought • In Japan, 65% of the elderly live with their children • Major role as caregiver for grandchildren • “I can’t see a grandma in Toyama buying some Uncrustables”

25. Current Positioning • Brand Equity • Americans recognize JIF & Smucker’s • Americans associate these names with: • Quality & expertise in product category • Family oriented organization • Lunch sandwich for children • Snack between school and activities • Fast and convenient • American “soccer moms” on the go • Easy to make, children can make without assistance

26. Positioning in Japan • No Brand Recognition • Smucker’s products are not presently in the country • Similar products are available and can be compared against • Implementation through the 4 P’s • Distribution • Product • Promotion • Price

27. Distribution • Retail environment • Fewer large chain grocery stores • Reach people with Western food interests • Carries specialty items such as Peanut Butter • More assortment and shelf space • More local groceries/convenience stores • Reach wider range of people more frequently • Carries more traditional rice and fish products • Less shelf space

28. Product • Core Product Concept- • PB&J and Grilled Cheese without crust • Peanut butter is not accessible • White bread and sweets are not consumed as heavily as in the U.S. • Strawberry jam and jelly are prominent in pastry dishes • Grilled cheese is only consumed in Western Style Restaurants • There are a number of people who really like Western food

29. Product cont… • Brand • No Brand Recognition • Smucker’s and JIF not currently in the country • Possibility for brand image • Building Recognition and Awareness is costly • Keep current image • Smucker’s traditional American image • Alter image

30. Product cont… • Labeling • Requires brand name to be printed in Japanese • Japanese translation of brand name may not equate American meaning • No regulation on ingredients listed and nutrition facts • Can be in Japanese or English because both languages are taught throughout schooling

31. Products cont… • Packaging • Japan's packaging laws were designed in conjunction with waste management and recycling initiatives in mind. • Although there are no bans on any type of packaging material in Japan, the government has strongly encouraged businesses and industries to use recyclable packaging materials. • Bright, colorful packaging is tasteful to Japanese consumers

32. Promotions in the U.S. • Advertising message • Quick and easy snack or meal • Family values shown, adult and child interaction • Ex. Picnic lunch • Current Message • Grilled Cheese: “Kids and Adults Agree: Grilled Cheese is the #1 hot Sandwich” • PB&J: “Kids and Parents Agree: PB&J is #1 in lunch time Sandwiches”

33. U.S. Promotion cont… • Types of promotion • Sales Promotion • Price discounts • coupons in print ads in magazines and news papers • Samples, at specifically designated locations • Bonus packs • Contest and sweepstakes • Smucker’s 2004 Cookie Classic, free gifts with catalog subscription • Event sponsorship • Smucker’s stars on ice: represents wholesome family entertainment • Feed you Imagination give-away: could win an all inclusive trip to see stars on ice

34. U.S. Promotion cont… • Public Relations • Smucker’s Holiday Classics: a contest to win festive Holiday gifts • Direct Marketing • Free Smucker’s online store catalog • Free Smucker’s Recipe Booklet

35. Promotion in Japan • “The real key to success… is good advertising that emphasizes taste and wellness messages” • Current emphasis on family values relates to wellness • Comparison advertising is culturally frowned upon • Belief in harmony and peaceful coexistence • Current message of # 1 disrupts harmony • TV ad’s can not exceed 18% of weekly broadcast time – minimized to 10% during primetime hours

36. Promotion in Japan cont… • Types of promotion • Sales promotion used throughout Japan • Price discounts • Coupons • Contest & Sweepstakes • Japanese enjoy contests and game show prizes • Event Sponsorships • Seen as appropriate method of advertising • Public Relations • Public opinion large factor in overall acceptability of product • Direct Marketing • Value knowledgeable salespeople • Catalogs frequently used throughout country

37. Media Ads

38. Outdoor Sites

39. Promotion in Japan • Public transportation is the largest form of transit • Geographic coverage consists of dense urban areas that efficiently accommodate advertising • Subways: conducive to advertising • Buses: interior and exterior advertising • Billboards: found in consumer districts of major metropolitans

40. Pricing • Currently $2.19- $2.79 (varies by retailer) • Only packs of 4 are currently being sold • In Japan, the number 4 is a representation of death • Changing units in package will change cost • Changing package design will change cost

41. Pricing in Japan • 241.995-308.295 Yen (Uncrustables) • Supermarkets, grocery stores, and convenient stores prices vary • Lunch meals range from 280 Yen to 500 • Full dinner meals -inexpensive range from 500 to 1000 Yen -expensive range from 1000-3000 Yen

42. Questions?