Strategic Analysis of Mitchell’s

Fruit Farm Ltd.

 Objective of Analysis
• Our objective is to strategically analyze
Mitchell’s tactics to utilize value chain
efficiencies and market trends and impact of
those tactics on the company’s financial
indicators
 Road Map
• In 1947, as a result of emergence of Pakistan,
Mitchell’s lost three fourth of its market to India
• In 1957, the Mitchell’s family sold majority of its
shares to the Pakistani investor’s
• Sophisticated food processing machinery was
installed and additional products were added to a
growing range of preserves, fruit, drinks, juices,
canned fruits, sauces and vinegar
• In 1980 came the sweetest chapter of all with
diversification to confectionery industry
• In 1983 Mitchell’s golden jubilee was celebrated
with a fan fare and a chocolate bar, appropriately
named as "Jubilee" was launched to
commemorate the event
• In the year of 1994 it was ISO certified, the first
food company to be certified
• In 2001, Mitchell’s launched moulded chocolate
and launched products like gift box of pralines,
golden hearts and top milk was accepted by
consumer.
Mitchell’s Prodcuts
• Jam Jellies and Marmalade - 15 products
• Squashes and syrups - 22 products
• Ketchup and sauces - 20 products
• Canned food – 19 products
• Fruit drinks – 13 products
• Bottled water – 2 products
 Competitors
• SQUASH MARKET
1. Shezan
2. Sundip

• PRESERVES MARKET
1. Shezan
2. Salman’s
3. Ahmad
4. Rafhan
5. National
• SAUCES AND TOMATO KETCHUP MARKET
1. Shezan
2. Ahmad
3. Knorr
4. Rafhan
5. National

• PICKLE MARKET

1. Shezan

2. National

3. Shangrilla

4. Ahmad
• CONFECTIONERIES MARKET
1. Candy land
2. Mayfair
3. Hilal
4. Kidco
5. Nestle
6. B.P
 FACTORY OF MITCHELL’S
• The production facilities and factory offices are situated in
the Renal Khurd district near Okara
• This place is about 115 kilo-meters far from the head office
of the company in Lahore.
• The capacity of the plant is not determinable as it is a multi
product plant
• Capable of producing several interchangeable products
• The farms of MITCHELL’S Fruit Farms Limited are also occur
between renal Khurd and Okara
• The farms of the company lying on the area of 450 acres.
• The distance between renal and Okara district is round
about 13 km
 Importance of Location
• Renala Khurd is home to the food processing
company "Mitchell's Fruit Farms Limited“
• It has orchards of guava & citrus running b/w the
lower bari doab canal and the Multan Road
• This region is also well known as a major
producer of sugarcane & rice
• These crops can be cultivated due to abundance
of water supplied by the lower bari doab canal &
smaller water channels.
• Okara District is famous for its fertile lands,
peaceful natural environment and green fields of
potato, tomato, sugarcane, wheat, rice and maize
crops
• Oranges and Mangoes orchards are famous
• Okara District is also famous for
the lemon, guava & grapefruit orchards,
belonging to the food processing
company, Mitchell's Fruit Farms Limited
• The orchard runs for about 6 miles
• Following fruits are being cultivated / grown
at Mitchell’s own agriculture land.
• Lemon 100%
• Grape Fruit 100%
• Sevlik Orange 100%
• Tomato 30%
• Garlic 30%
 Quality Control & Training
• From selection of the finest fruits, to processing and
packaging, quality control plays a key role in every step of
the process
• Quality Control staff
• Up-to-date laboratory
• Two line-control labs for the Groceries and Sugar
Confectionery divisions
• Incubation lab
• Updating of employee skills by training
• Acquisition of new technology
• Re-evaluation of its quality control and quality assurance
system Management
Target Market: up to 80 years. Core target
market includes ages between 15 – 30
• Age: 10 and above for chocolate and
confectionery
Family Life Cycle: Young, Children and Old
people
Psychographics: Middle, Middle Upper, Lower,
Lower Upper, Upper class
COUNTRIES WHERE MITCHELL’S MAKE
IMPORTS
• 1. Malaysia
• 2. Singapore
• 3. Indonesia
• 4. England
• 5. Philippine
• 6. China
• 7. Germany
MAJOR IMPORT ITEMS OF MITCHELL’S

• COCOA BUTTER
• COCOA POWDER
• HPK OIL (HYDROGENATED PALM KERNELS)
• METAL CAPS
• PINEAPPLE CONCENTRATE
 LOCALLY PURCHASED ITEMS

The following are the major items that MITCHELL’S

Fruit Farms Limited purchase from the domestic
market:
• Raw material includes spices, tomatoes, fruits,
vegetables, colours and flavours.
• Packaging material- Packages Pvt Ltd
• Different types of chemical because of their low
quantity are purchased from the domestic market
• Engineering solutions
 Distribution
• Premier is responsible for managing the
distribution system of the company.

• Mitchell’s has divided the whole country into

three regions and there are about more than
270 distributors.
 Pricing
• Different pricing strategies are used for different
products
• Normally, the strategy makers use premium-
pricing strategy

• The reasons of adopting this strategy are:

1. Very good repute and image of the company
2. Best high quality of the products.
3. Mitchell’s target middle, upper middle & elite
class of the total food market
 Trade Trends
• The traditional food retail sector comprise about 95% of all
food retail stores in Pakistan
• While the modern retail sector (hypermarkets,
supermarkets, discount stores, etc.) make up the remaining
5%
• Pakistan GDP is about 20 trillion Rupees
• GDP growth is about 2.7 %
• Pakistan has a population of over 170 million
• consumer with middle income class estimated at about
25% of the total population
• With a share of expenditures on food and beverages
estimated at 42% of income
 Headline Industry Data

• 2012 food consumption growth = +7.8%,

CAGR forecast to 2016 = +9.3%

• 2012 soft drinks value sales growth = +14.2%,

CAGR forecast to 2016 = +8.8%

• 2012 grocery retail sales growth = +20.9%,

CAGR forecast to 2016 = +12.2%
SWOT
TOW’s Matrix
 Porter’s Five Forces
Threat of New Entrants:
• Threat of entry depends upon the
extent to which there are barriers to entry
• A food company requires a big manufacturing
unit which requires a huge capital investment
• Groceries-manufacturing unit is highly capital
intensive and because of high capital
investment it has high risk for new to enter
introduction
Supplier’s Power:
• Foreign suppliers have power of bargain because the
material is not available locally and the buyer don’t
have any option other than import, so the
supplier charge the high prices and transaction is done
through banks by opening letter of credit and buyer
also has to bear high transportation cost and import
duties.
• local suppliers have small fruit farms, food companies
are highly capital intensive so they don’t have any
power because they can’t do forward integration.
• There are large numbers of fruit, vegetables, sugar and
other raw material suppliers so the buyer checks the
quality of suppliers’ products and make contract with any
one which meet their requirements regarding quality as
well as price
• Another reason of no influence of the suppliers over the
Mitchell's is that the company
itself producing large amount of fruit, vegetables, milk and
butter. In this way, backward integration reduces the power
and influence of suppliers of the raw material
• Mitchell's has very good repute in the market since from
the 1933. another fact is that Mitchell's is the market giant
in its industry, so every supplier want to work with the
Mitchell's
Buyer’s Power:
• The buyers don’t have any power because the
prices of the products are fix
• Competition among food companies leads the
company to face problems in the price
competitiveness
Competitive Rivalry:
• It could be concluded that the food market is
highly competitive.
• And the degree of competition in the industry
is increasing day by day.
• Which may cause Mitchell’s to change it’s
premium pricing strategy
Substitute:
Consumers have following options:
• Nestle
• Shezan
• Haleeb
• Ahmed
• Salman’s
Impact of Strategies in Financial
Terms
Financial Indicators Analysis
Sales breakup
 Review
• Overall economic conditions in the country did not improve
over the previous year
• As a result managing the manufacturing operations with
frequent Electricity and Gas outages amidst low economic
growth together with high inflation remained an unending
challenge
• The costs of main Raw & Packaging materials as well as Energy
continued to rise necessitating selling price adjustments
• The company's net sales recorded a growth of almost 30 %
rising from Rs. 1,377 million to Rs. 1,794 million
• This rise was supported by groceries and confectionery sales
showing an upward trend of 49 % and 9%, respectively
• Exports recorded an 81% increase in value
• Optimization of costs and operating margins
helped in increasing Operating Profit from Rs. 107
million to Rs. 147 million.
• Improvements in the Supply Chain and sound
management of Working Capital helped in
limiting increase in financial charges from Rs.37
million in the previous year, to Rs. 38 million
• Short term running finances secured:
Rs 154,794,581 in 2011
Rs 166,615,728 in 2010
• As a result of all the efforts After Tax Profit for the
year was Rs 73 Million compared to Rs 46 million
in the corresponding period last year
• The Company manages liquidity risk by
maintaining sufficient cash and the availability of
funding through an adequate amount of
committed credit facilities
• At September 30, 2011, the Company had Rs 390
million available borrowing limits from financial
institutions
• Rs 13.580 million cash and bank balances
Financial Ratio’s Analysis
 Conclusion
• Mitchells is in growing sector
• Growing population of Pakistan
• Caters basic necessity good
• Inflation, per capital income and power tariffs
are causing problems
• Showed rapid growth in export, company
should focus more geographic locations
• Company identified right tactics to increase
operating profits and increase working capital
efficiencies to perform above industry average
• Company has strong history and brand name
• Most of company’s products are still relatively
young in industry ( chocolates, juices and
other confectionery)
• A good future prospect