United Cereal: Lora Brill’s Eurobrand Challenge – Case Solution

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United Cereal: Lora Brill's Eurobrand Challenge Case Answers

Background of United Cereal: Lora Brill’s Euro brand Challenge

Founded in 1910 by Jed Thomas, United Cereal (UC) began its expansion into Europe in 1952 with the acquisition of a baked goods company in England, which was followed by other acquisitions elsewhere in Europe. This strategy used existing networks to save money and time on start-ups, made it easier to facilitate marketing and branding, and sought economies of scale, which would thereby increase revenues.

In contrast to this, the central values of United Cereal were called “The UC Way,” laying emphasis on consumerism, extended consumer testing, and innovation.

UC invented the concept of brand management in the food industry by treating each brand as a national profit center to increase efficiency and good competition among subsidiaries. Some of the other key values important for growth and results throughout the company were loyalty and growth by internal promotion.

The 2008 recession highlighted communication lapses in the “mini UC” strategy that led to high SG&A costs and more than 4% drop in profit globally from 2007 to 2009.

Arne Olsen, the predecessor of Brill, undertook the “Europeanization initiative” to increase horizontal communication through ETTs, European Technical Teams, for standardizing product groups, increasing the pace of R&D. He attempted to standardize frozen fruit juice but because of country managers’ resistance he failed, so he realized that he needed a balanced approach.

Challenges:

• High SG&A Costs
• Profit Declines
• Resistance to Centralization

Context: Lora Brill was appointed as VP in Europe and undertook the “Eurobrand” strategy of standardizing products across Europe to take advantage of the cultural convergence of the European Union. Despite these odds, Brill hoped to cut down the flab in operations and exploit market opportunities.

1. Should Lora Brill, European VP of United Cereal (UC), authorize the launch in France?

There is a growing interest for healthy breakfast options in Europe and Special K by Kellogg’s is the only brand in the fruit-based cereals segment (in France) currently. Berry Burst Cheerios are going to be launched soon in France. The competition in this segment is now low.

‘Spot the market, make the market’ has been a core philosophy at UC. The industry is moving towards healthy cereals and launching Health Berry Crunch will allow United Cereal to catch on to this trend early.

The cereals market is highly competitive with low market growth. In low market growth segments, the fight for market share is more extreme and product innovation is key for a company’s success.

Since it is an extension line product, Healthy Berry Crunch has reduced launch costs. If the health segment in France is targeted correctly, it could prove to be highly successful. Therefore, we believe that Healthy Berry Crunch should be launched.

2. Should Healthy Berry Crunch become UC’s first Eurobrand?