Ralcorp Competition
Now Viewing Ralcorp's competition in: Cookie and Cracker Manufacturing
Call Preparation Questions
Customers, Marketing, Pricing, Competition
Who are the company's customers? - Typical customers are grocery wholesalers, warehouse clubs, restaurant chains, food service and vending machine distributors, and convenience stores (c-stores).
How much does the company rely on key accounts for sales? - For most cookie and cracker manufacturers, Wal-Mart typically accounts for 10 to 20 percent of total sales.
Does the company produce private-label brands? - Some companies specialize in private-label brands for grocery and c-stores. In aggregate, the private-label segment is typically among the top five revenue-generating cookie and cracker brands.
What are the company's sales channels? - Sales channels can include third-party brokers, internal sales forces, food distributors, and direct store delivery (DSD).
How does the company market its products? - Major types of marketing include TV and radio ads, coupons, celebrity tie-ins, discounts and promotions, sweepstakes, and product-specific websites.
How does the company respond to food trends? - Companies latch on to emerging food trends by publishing recipes that incorporate the product into a meal or snack. Cookie and cracker makers often reformulate products to capitalize on food and diet trends.
How does the company respond to customer needs and inquiries? - Most companies manage toll-free help lines and web-based email submission forms to address product questions and concerns.
How invested is the company in Internet marketing? - Highly interactive, extensive websites promote brand awareness. Most large companies manage restricted-access Intranets or electronic data interchange systems for e-commerce transactions and inventory management. Smaller companies may sell direct-to-consumer on the Internet.
What are the typical prices received by the company? - Typical product prices are $3 to $4 for a 16-ounce box. Individually wrapped items cost around $0.50 to $1. Private-label brands cost 20 to 40 percent less than name brand products.
How has retailer consolidation challenged the company's success? - Consolidation of retailers has shifted the buying power from manufacturers toward retailers.
Competitive Landscape
Demand is driven by population growth, consumer tastes, and health considerations. The profitability of individual companies depends on efficient operations, effective marketing, and a strong sales force. Large companies have advantages in purchasing, distribution, and marketing. Small operations can compete effectively by manufacturing allergen- and sugar-free products, high-end cookies and crackers, or products containing unusual ingredients. Average annual revenue per employee is $325,000.
Business Challenges
CRITICAL ISSUES
Highly Competitive Industry - The cookie and cracker industry competes with a number of other impulse purchases and snacking options, including potato chips, nuts, energy bars, in-store bakery items, fast food, and baking at home. Cookies and crackers are indulgence items that are among the first foods eliminated or restricted for those trying to lose weight. Cookie and cracker manufacturers compete against one another, bidding for space on store shelves of major retailers and battling for consumer mindshare.
Volatile Ingredient Prices - The price of critical commodity inputs such as wheat flour, shortening, soybean oil, corn sweetener, and chocolate can increase significantly due to poor farm yields, unpredictable weather patterns, high import tariffs, and government farm subsidies. Ingredient prices typically represent 50 percent of a cookie and cracker manufacturer's total cost of goods sold. Because of the large number of competitive substitutes and that cookies and crackers are discretionary purchases, manufacturers are often unable to pass higher costs to consumers.
Industries Where Ralcorp Competes
- Food
- Grains
- Pastas & Cereals(primary)
- Canned & Frozen Foods
- Flavorings, Spices & Other Ingredients
- Sauces & Condiments
- Grains
