FIELDFRESH FOODS: FROZEN VEGETABLES

BUSINESS
MANSI
1828145
SECTION N
INTRODUCTION

FieldFresh was started in 2004 as a joint venture between Bharti Enterprises and Rothschild family
and after a certain amount of time i.e. in 2007 the stake owned by the Rothschild Family was taken
over by the Del Monte Pacific Limited (DMPL). The time when the company was formulated they
decided to venture their business in horticulture namely fruits and vegetables. They observed that
the packed fruits and vegetables was a big business therefore they started exporting packed fruits
and vegetables to overseas market.

They set up a Research and Development Department of fresh vegetables in Punjab, India named
agri-centre of excellence for keeping check of the quality of the product being sent out. The
products included mushrooms, okra, chilies, grapes, pomegranates. After the transfer of ownership
to Del Monte they added ketchups, sauces, beverages and canned fruits etc. to their product range.
They all were sold under the brand name of Del Monte.

In 2009 after seeing the rising demand of the food products the company decided to not only
export the products to overseas market but also to sell fresh fruits and vegetables in Indian markets.

With the simultaneous addition of new products in their business, the company gained experience
and knowledge of the various food elements across the chain of fruits and vegetables, thus helping
them in taking strategic decisions. Following this methodology they aimed to post revenue of 5
million Rupees by the end of the financial year 2014-2015.
 OBJECTIVES

Apart from properly analyzing and understanding the case – FieldFresh foods: frozen vegetables
business, there are also few other recommendations and questions below are detailed through this
study.

 What would be the best way to structure the frozen vegetable business and scale it up?
 Could the business manage to be profitable?
 What should be the way forward?

ANALYSIS

Growth Opportunities:

Living in the 21st century, one thing which is clearly understood is the need of speed in life.
Whether it is the working professionals, students or the general public, all of their needs are based
on time and what is available to them instantly. This is the place where frozen foods come into
play. They all need food on the go which requires less effort in preparing and thus the market of
frozen foods is expanding day by day. Thus the grocery stores provide these frozen food items on a
large scale and earn profit from their sales. The most sold frozen food items are peas and corns.

FieldFresh have a network that is vast and will be assume an important part in the development of
their business. One strongpoint is that solidified nourishments are thought to be the contrasting
option to crisp sustenance. Microwaves and other electronic equipment have made it easy for the
packaged foods to be cooked easily.
Thus the above discussion shows that frozen foods have a huge and immense demand in the market
as it is the need of the hour. With the right amount of funding and a clever marketing strategy they
will be able to expand their network as fast and vast as possible.

What would be the best way to structure the frozen vegetable business and scale
it up?

From Exhibit 8, it is seen that FieldFresh had the highest revenue from MT while GTO
and FSO caused losses to the company. Thus, the company was making profit only from the MT.
That was because they handled the GTO and FSO through wholesale trade and their products
were priced higher than the other brands. From Exhibit 4, its clearly visible that FSO and GTO
has higher value than GTA and FSA. Thus, to scale up, they must also try to capture the market
of GTO and FSO by reducing their prices, or launching cheaper products under the same brand
name. And since only the brand Safal is offering premium products with high price, through
proper branding and consistent quality, the demand for the product will rise among the MT, GTA
and FS categories and it can have a good competition with Safal. Also, they could use transport
with cold storage in built as this was the limiting factor for the distribution of their frozen foods.

Could the business manage to be profitable?

From exhibit 8, the company is facing negative margins in all channels except MT as this
is the only channel that appreciated the brand’s high quality irrelevant of the price. In all other
channels, especially FSA, the margins were very low, though this food service channel had the
highest market volume. Since this was in the initial stage, the company was only able to cover a
limited number of cities .In the exhibit 9, they have forecasted the increase in cities coverage for
2012,

2013, 2014 as 58, 67,72 respectively and an increase in outlet coverage in the existing cities.
From exhibit 10, they have also forecasted an increase in their marketing and promotional
budget. Due to this, their forecast has shown a good increase in margins, except the FSA
channel which is still forecasted in negative figures. But this table has no mention of the GTO
and FSO channels which were given least importance and was not included in the table of
exhibit 9. It can be seen that the MT has shown tremendous response to the company’s branding
and quality and is showing high volume of sales.
Thus considering the sales as a whole, the MT can compensate the other channels and manage the
business to be profitable.

What should be the way forward?

From Exhibit 5, it can be observed that, none of the brands are present in south India except
Trimurti, which has a limited presence but has lower price. This means that they have
tremendous potential to expand to new markets that can bring in good revenues. Also, since
frozen food is preferred in metro and tier-1 cities by the A group of customers, their products
with good branding won’t have the trouble of selling their products at higher prices. They can use
this to expand to many other major cities in the country. From Exhibit 8, the FSA has caused the
company major drops in gross margin. And since Food Service industry is one of the highest
consumer of the frozen foods, marketing and supply of quality product can increase the margins
of their products.

SWOT ANALYSIS

Strengths:

 Consistent quality of products.

 High product specification.
 Recognized brand name.
 Huge distribution network.
 Investment in research and development.

Weaknesses:

 High pricing as compared to the competitor.

 No experience and knowledge of sourcing free green peas.
 No control over the procurement cost of green peas.
 Complex supply chain system.
Opportunities:

 Sourcing fresh green peas from the farmers directly.

 Opening more number of outlets in the urban area.
 Developing a much more efficient supply chain management system.

Threats:

 The competitors have a better sourcing business model for the procurement of fruits and
vegetables.
 An average Indian consumer still prefers to buy fresh vegetables rather than frozen ones.
 Consumers in rural India and smaller towns were not brand conscious and hence pickup
cheaper products.