Engro Food Limited
Engro Foods Limited was officially launched as a fully owned subsidiary of Engro in 2004. Using dairy as a stepping stone to enter into the food business, the Company has established state-of-the-art processing units in Sukkur and Sahiwal, along with an ice cream production facility in Sahiwal. Top quality brands like Olper’s, Olwell, Tarang, Omore and Owsum have been successfully launched under the helm of Company’s dairy products. To support these brands and their highest standards of quality, Engro Foods has invested heavily in milk processing and milk collection infrastructure. Engro Foods now plans to venture beyond the dairy sector. In this pursuit, grain and fruit markets have been analysed in great detail. Engro has launched its new brand in fruit juices called as olfrute. Engro Foods’ vision is “Elevating Consumer Delight Worldwide” and the Company aims to generate a significant portion of its revenue from foreign operations.
BCG Matrix Model
The BCG matrix or also called BCG model relates to marketing. The BCG model is a wellknown portfolio management tool used in order to analyze and position the product by keeping in view the market share as well as the market growth rate of the product. BCG matrix is often used to prioritize which products within company product mix get more funding and attention. The BCG model is based on classification of products (and implicitly also company business units) into four categories based on combinations of market growth and market share relative to the largest competitor. In order to elaborate the BCG matrix, I have chose Engro foods limited. Though Engro has a number of other business in which it involve but in this report I have focused only in one business unit of Engro which is Engro foods limited. Engro foods have launched six major brands since 2004, year of establishment of Engro foods. In these six major brands five are dairy products. In year 2010, Engro has launched olfrute which is a fresh juice product by this particular company. In this report, I have categorized all the six major brands of Engro foods in to four categories of BCG matrix. The decision of this categorization has been made on the basis of two major things that are market share and the growth in the market.
Engro Foods Limited
Data has been adopted from the Engro portfolio analysis report 2011
Engro Foods Limited
Olper’s Olwell TVC Tarang Omore Owsum Olfrute
Revenues (million PRS) $4500 $2550 $3200 $759 NA NA
Profits (million) $2000 $1500 $1305 $200 NA NA
Percent Market Value 60 25 35 12 NA NA
Growth Rate (percentage) +4 -6 +8 +5 NA NA
Though the experiences of haleeb in the case of candia was bitter. haleeb and milk pack had the monopoly in the tetra pack diary industry but after the olper success a lot of other brands like good milk. The initial promotion and the sales figures depict that it can be a successful product but still the results of this brand has yet to come. This has get a great failure and the market share of Olwell as compared to nesvita is quite low beside this its sales are started decreasing as compared to the previous year figures.
Olper is one of the well renowned brands by Engro foods and this has lead to a drastic change in the diary industry of Pakistan. In this particular period Engro food has also launched flavored milk with brand name owsum. Olfrute is facing a tough competitor with a strong brand name of Nestle.
Engro has lauched a brand with the name Olwell with high calcium and low fat. As both of the products are relatively new in the market as compared to its competitors and the market share is not so well but still in this shortage period this growth rate and the market share is incredible. Olfrute has relatively low market share but the growth potential is quite high. Before olper.
At the end of year 2010. Divesting Strategy can be used as from the past two years the market share has been started losing and also the there is slow market growth for this product. There is a lot of potential in both of these products and company can increase its market share by massively investing in these two products. the company must constantly invest in order to grow the current level of market share. Now the market of the olper has a relatively high market share and the third largest milk producer in Pakistan. Investing Strategy must be used in order to constant the growth. Engro food has launched its first juice brand name olfrute. Engro Foods Limited 3
. nurpur etc got enter into the market.Stars
In the BCG matrix. now just see what Engro will do in order to make this brand a success. I have placed two products in the star categories that are Omore and tarang as the growth rate of these two products are quite high as you can see in the table-1. Olper milk and cream come under the same umbrella of brand name olper. Beside this the market share is also increasing. Harvesting Strategy should use and Engro should milk its cow for the Omore and tarang in order to increase their current market share.