Mitchells Fruit Farms: A history of company growth

Mitchells Fruit Farms: A history of company growth Mitchells Fruit Farms Limited is the oldest and most trusted Food Company in Pakistan. Since starting its operations in 1933, the Company has gone from strength to strength, and its wide variety of products has inundated breakfast tables with farm-fresh consumables, straight from its orchards in Renala Khurd products of a high standard, enriching the lives of millions of people with all the goodness of nature for a healthy lifestyle. Today Mitchells family continues to grow, reaching more and more households worldwide with an ever-increasing array of farm-fresh products ranging from thirst-quenching Squashes Syrups; fruity Jams, Jellies and Marmalade; rich Tomato Ketchup savory Sauces; tasty Pickles; refreshingly nutritious Canned Fruits Vegetables; and a wholesome assortment of Candies Chocolate from its wide range of confectionery products. Francis J. Mitchell arrived in Bombay from Scotland at the end of World War I. He had been invited by his brother who was already established in North Western India as a contractor to the government for construction of the railway network in this part of the subcontinent. At that time, when Francis was already an old man of over sixty years, an opportunity came his way in the form of the emerging irrigation system being laid out in the canal colony districts of West Punjab. He was successful in obtaining the lease of 720 acres of agricultural land in the then Montgomery district. The area allotted to him extended for nearly seven miles from Renala Khurd to Kissan, sandwiched between the arterial lower Bari Doab Canal and the Lahore/Karachi railway. He initiated the business of growing grapes for eventual sale as dried raisins and sent his younger son Richard to Australia for training at Mildura which was well known as a centre of specialisation in the field of horticulture. The The company, with Francis Mitchell as its Governing Director and his two sons Leonard and Richard as Directors, was incorporated in 1933 and given the name Indian Mildura Fruit Farms Ltd. The North Western Railway had opened to traffic a few years before the acquisition of the land by the Mitchell family. Francis Mitchell was asked by the railway authorities to propose a name for the adjoining station. Hence the word Kissan which subsequently became a familiar brand name. The trial planting of grapes, which began in 1921 and lasted until 1924, unfortunately did not prove to be a success. The vines suffered serious damage from pests during the rainy season, just when the grapes needed dry weather for ripening. The entire plantation was replaced with citrus, which, fortunately, proved to be profitable. The elder son, Leonard, was sent specially to South Africa to look for good rootstock, which was the foundation of Valencia orange trees these are well established on the farms today. With the outbreak of World War II, demand for canned fruits and vegetables for the allied troops, stationed in India, began to grow rapidly. To cost-effectively cater to this growing demand, a factory was established in Bangalore, South India. A new joint-stock company by the name of Kissan Products Ltd. was registered. PHASE II: AFTER INDEPENDENCE As a sequel to Independence in 1947, Indian Mildura Fruit Farms Limited lost nearly 75% of its Indian market. The companys name was changed to Mitchells Fruit Farms (Pvt.) Ltd. and the brand name MITCHELLS became the exclusive property of the Pakistani company. Likewise, the Indian company acquired exclusive use of the KISSAN brand name. Francis Mitchell died in 1933 and his elder son, Leonard, became Chairman. After his brothers tragic death in an air accident, Richard took over the chairmanship in 1949 and continued in this capacity until his death in 1987. The family sold its shares gradually, having inducted Pakistani shareholders in 1957, and retired to Eastbourne, U.K., in 1959. Richards wife, Betty, retained her links with the Company in the capacity of Director until 1991. She died in 1995. COMPANYS INFORMATION SALES The national market, particularly in the major cities was saturated with the imported foodstuff. Although foreign fruit preserves, sauces and drinks were visible on the shelves of the largest stores these were not as abundant as imported confectionery, especially various brands of chocolate. It would appear that much of this merchandise continues to be brought into the country through unofficial channels without payment of imported duties. Despite these unhelpful conditions Mitchells were able to achieve a significant increase of over 10% in the sales of confectionery and succeeded at the same time in recording a marginal growth in our traditional groceries business. CAPITAL EXPENDITURE In the beginning they have invested around Rs.29.76 million in putting up modern automated facility in the form of building and machinery. An independent feeder of supply of electric power directly form the WAPDA grid station together with a new standby generator were commissioned in January 2002.at a cost of Rs.14, 535,652.this should result in considerable savings in power bills. Internal cash generation and bank borrowing have met the capital expenditure bill in full. HUMAN RESOURCE Human Resource has also the pivotal importance for the company. Management and employee skills are constantly being updated through training courses and study tours both at home and abroad. Currently Mitchells is operating with 32 executive staff members along with a big sales and labor force RESEARCH AND DEVELOPMENT The success of Mitchells products, and the taste that has been winning consumers hearts for generations, is the result of the Companys ongoing investment in and emphasis on quality control, reinforced by research and development (R D). Both sections closely coordinate with the Marketing and Exports Office in Lahore where product concepts are initiated and passed on to the R D section for formulation. Once the RD section has prepared samples of new products, the Marketing Division carefully carries out product evaluation. QUALITY CONTROL TRAINING Along with R D, the Quality Control section ensures that all our products live up to the consumers high expectations. From selection of the finest fruits, to processing and packaging, quality control plays a key role in keeping a vigilant and unrelenting eye on every step of the process. The Quality Control staff, with a main up-to-date laboratory, two line-control labs for the Groceries and Sugar Confectionery divisions, and an incubation lab, ensures that there is no deficiency in quality standards during production. As the Company considers its employees its most important asset, management skills are being constantly updated by sending executives on training courses and study tours, both at home and abroad. QUALITY POLICY Mitchells Fruit Farms Limited, is committed to produce best quality products meeting our customers requirements at competitive prices, strengthening our position as a quality managed company. To meet this obligation, the company will continue: 1. Updating of employee skills by training 2. Acquisition of new technology 3. Re-evaluation of its quality control and quality assurance system Management. EXPORTS AND IMPORTS EXPORTS At present, MITCHELLS products are being exported to several parts of the world, including UK, USA, and the Middle East. In future the Company is planning to make MITCHELLS a brand name familiar with households in every part of the world. IMPORTS There are certain Mitchells products that are being imported. For example, we import pineapple from Singapore. Only fruit is imported, the rest of the process is done in our farms. Some of the fruit is imported in the form of pulp such as mango. We do grow mangoes in our farms but due to the increasing demand of mango items we have to import some of the quantity from other countries to meet the demand. Sugar is also imported. PRESENT PERFORMANCE OF MITCHELLS The Company passed a major milestone when it went public in 1993, receiving a record subscription for its shares floated on the market. The year 1998, the 65th for Mitchells, brought another major distinction for the Company; the ISO 9001 accreditation, making it the first food company in Pakistan to achieve the honor. Today in Pakistan, Mitchells is the only major company with fully integrated operations having its own growing and processing facilities at one location. Modern high-volume industrial equipment, professional management and a trained workforce ensure that Mitchells maintains its lead. Fully computerized and inter-linked regional sales offices manage burgeoning countrywide sales, with those in major cities, Karachi, Lahore, Rawalpindi and Islamabad. All the offices are on the Internet/e-mail network ensuring uninterrupted flow of data. Highly qualified executives using modern management tools from the Head Office in Lahore handle commercial, financial and accounting functions. A smooth distribution system with nationwide coverage and consistency of quality have kept the most prestigious national institutions loyal to Mitchells growing product range. These include Pakistan International Airlines (PIA), leading five star hotels and clubs, Utility Stores Corporation, Canteen Stores Department, chains of main stores and established restaurants in major cities. FUTURE PROSPECTS We believe that given the vast agricultural potential of Pakistan, there are bright prospects for the food processing industry, which can helpmeet the nutritional needs of the growing urban population within the country as well as provide a surplus for export. The pre-requisite for such a development is a healthier and expanding economy. We are confident that our company is well placed to derive full benefit for the opportunities as they arise. MITCHELLS OBJECTIVES Mitchells objective is to provide its customer with healthy, innovative and best quality food that will tempt their appetite at all times. Above all, Mitchells also promise convenience variety at affordable prices. VISION AND MISSION STATEMENT 1. To be a leader in the markets we serve by providing quality products and efficient services to our consumers while learning from their feedback to set even higher standards for our products. 2. To be a company that continuously enhances its superior technological competence to provide innovative solutions and superior products as per requirement of the market place. 3. To be a company that attracts and retains outstanding people by creating a culture that fosters openness and innovation, promotes individual growth, and rewards initiative and performance. 4. To be a company which combines its people, technology, management systems, and market opportunities to achieve profitable growth while providing fair returns to its investors. 5. To be a company that endeavors to set the highest standards in corporate ethics in serving society. SITUATIONAL ANALYSIS MITCHELLS Mitchells launched its squashes in the year 1941. Mitchells was the sole player in the field of squashes at that time. They were the first movers in rich fruit citrus. They identified the need of, make to drink product. After the proper customer need analysis consistent screening and evaluation by the Mitchells research and development department a totally new product (squashes) was designed in the form of rich fresh fruit citrus .It was a break through innovation They availed the opportunity and gained the first mover advantage. So they get hold of major market share , and with the passage of time they captured the market knowledge and rare resources Mitchells got the competitive advantage because they had the first mover advantage Fully integrated operations. Specially farm fresh fruits with having their own growing and processing facilities Mitchells had professional management and the trained workforce Mr. Richard got training from Australia Mildura at the initial stage A smooth distribution system with nationwide coverage Right products, quality and reliability. Management was committed and confident Mitchells was the pioneer in the field of squashes, they gained massive market share and achieved the positive word of mouth regarding there products as they are made of fresh farm fruits. Target Market: The target market at the time of launch was up to 60 years of age and the core target was 15-30 years of age. Segmentation: They segmented their product on the socio economic classes focusing on- A, B+ and B. Marketing Strategy: As they had the first mover advantage they utilized it fully and initially promoted squashes by newspapers, posters radio channels. But they mainly invested there resources in building there corporate image . MAJOR COMPETITOR SHEZAN: The company was incorporated in 1964 as a Private Limited Company, with the main objective to set up an industrial undertaking for manufacturing of juices, squashes, sherbets, jams, pickles and preserves from fruits and vegetables. Shezan International Limited was conceived as a joint venture by the Shahnawaz Group of Pakistan and Alliance Industrial Development Corporation of U.S.A. The agricultural background of the Pakistani sponsors induced them to establish this agro-based industry. Today Shezan is the largest food processing unit having developed and installed the capacity to meet the countrys local as well as export needs. While introducing a me too product, squashes the major threat was to compete Mitchells, who already got the major market share by capturing rare resources and already gained knowledge of key factors and issues of the market. It was very costly for Shezan to overtake Mitchells.There was a high risk involved in competing with Mitchells fruit Farm Company. Shezan had the advantage to follow the already set product standards of Mitchells regarding research and development. Shezan had the line of action to grab market share by offering high quality and better taste followed by product variety by analyzing the Mitchells squashes. Target Market: Shezans target market is up to 60 years of age and their core target market is 15-30 years of age. Segmentation: They segmented their product on the socio economic classes focusing on A, B+ and B. Marketing Strategy: Launched squashes in 1968-1969. at that time they promote it by newspapers, posters radio. On radio there was a show with the name HIT BREAK the host name was HAMAD. They used market skimming strategy by offering low prices to capture the market share. SHEZANS COMPETITIVE STRATEGY  ·Initially launched only three flavors of squashes which were ( mango, orange and lemon). But in current market it has 6 flavors  (orange, mango, mix fruit, lemon and lemon barley, pomegranate)    ·Ã¢â€š ¬Ã‚  Shezan was available in 735 ml. glass bottle but now its available in pet bottle of 830 ml  ·Ã¢â€š ¬Ã‚  Complete backward integration in case of this company since it is the only company that has its own sugar mill as well in the name of Shahtaj Sugar Mills, Mandi-bahauddin.  ·Ã¢â€š ¬Ã‚  Shezan has the most developed distribution channels network and therefore it has an advantage of reaching maximum customers throughout Pakistan with the help of small retailers as well as larger retailers  ·Ã¢â€š ¬Ã‚  Shezan owns 60% of shelf space in all of the almost 16,000 outlets of Utility Stores  ·Ã¢â€š ¬Ã‚  Shezan is involved in advertisements and low cost promotional campaigns which makes it a very generic brand name in the mind of consumers when they are out shopping for squashes.  ·Ã¢â€š ¬Ã‚  Shezan is the largest food processing unit having developed and installed the capacity to meet the countrys local as well as export needs.  ·Ã¢â€š ¬Ã‚  Shezan has the highest production capacity as compared to its competitors. MITCHELLS CURRENT STRATEGY Mitchells refreshing Squashes are made from the Farm Fresh Fruits in a hygienic environment keeping in view the health of their valued customers. Mitchells procure raw material from fresh and sun ripened fruits especially grown on their orchards in Renala, they offer a range of energizing natural fruit flavors that promise to liven up your day. Mitchells is the only major food company in Pakistan today with fully integrated operations having its own growing and processing facilities at one location. Modern high-volume industrial equipment, professional management and a trained workforce all combine to ensure that Mitchells continues its dominance as the innovator, market leader and trend setter. In 1998 Mitchells became the first food company in Pakistan to achieve ISO 9001 accreditation, thus becoming more competitive on the international stage also. Squashes has now stagnate growth and product itself is at maturity stage so Mitchells is trying to retain the market share and its loyal customers. Mitchells introduced squashes pet bottles with the quantity 1.5 liter and 810 ml Mitchells squashes are available in seven flavors (orange, mango, mix fruit, pineapple, guava, lemon and lemon barley) Mitchells Diet Squashes are available in eight flavors. Mitchells squashes contain extensive fruit content which is the major differentiation factor. In year 2001 and 2002 they run a biggest campaign for squashes. Mitchells used more than 200 hoardings displayed all over the Pakistan As squashes has stagnate growth and product itself is at maturity stage the company is focusing upon building its corporate image rather than investing solely on squashes advertisements. So they dont want to waste their money on squash ads. Last year Mitchells launched DIET squashes, for NICHE MARKET. POS material of advertisement has only been used to promote it. Mitchells Diet Squashes contain No Sugar and have 90% less calories than Regular Squash Mitchells Diet Squashes are available in two flavors. Diet Mixed Fruit Squash, and Diet Orange Squash Mitchells is using consumer and trade promotion. But mainly focusing on trade promotions. . In Lahore the retailer benefit is 12+1, it means Mitchells give one free bottle to its retailer on the purchase of 12 bottles but on the other side in Karachi the trade promotion policy is 24 + 3 i.e. on the purchase of 24 bottles Mitchells give 3 bottles to its retailers. Thus Mitchells make the use Their unique selling proposition is quality .They never compromise on the quality. Even if they got any complain then they immediately replace it. Mitchelles believes that success of the organization lies in the satisfaction of its customers. Therefore Mitchells has always given first priority to its customers feed back and this they do by the following ways Thorough questionnaire feed back forms Thorough shop keepers Through ISO procedures (CPA, Corrective and Preventive Actions) The feedbacks and opinions of the customers are very useful for them and besides this they study the feedback and try to implement that accordingly. MARKET ANALYSIS The market for Squashes in Pakistan is mainly influenced by branded competitors in this specific product category. These competitors have firm distribution channels.. As a majority of the countrys population is in lower-lower to lower-middle class, this is the reason that people are more price conscious and secondly the also look for the convenience of products due to this reason there is a demand shift observed in the squash industry. The demand of Squashes is now limited only for few months in major areas of country. The Business of Squashes in Lahore is at its peak between May and November So Mitchells play a different strategy as far as region Lahore is concerned but on the other side business in Karachi remains stale and on the same level of graph thorough out the whole year thus Mitchells imply different strategy in terms of Karachi. The reason of this limited demand according to the market analysis is because that you cannot relate squshes with different occasions for example the way red syrup Jam-i-Sheerin and Rooh Afzah are relating themselves to Ramadan and Muharam, another big reason of the limited demand of the Squashes is because of i ts usage which is limited upto a thirst quenching drink but red syrup can be utilized in many ways apart from drinking such as toping, used in milk etc Target market The targeting decision determines which customer group the organization will serve. Selecting good market targets is one of the management most demanded challenges. Mitchells basically design the strategy to target the Social economic class of A B+ grade. But then by the time every class becomes part of their market. There primary focus was A B+ rank but now they target overall market and go for mass market. The reason is from the age group of (3-80) years old people use it as a refreshing and energetic drink. Target approach is being used by the Mitchells in case of Squashes product variety. Here the segments are not clearly defined but extensive target. Target Market Demographics: up to 80 years as target market while core target market includes ages between 15 30. Age: 10 and above Family life cycle: Young, Children, Old people. Psychographics: Middle, Middle Upper, Lower, Lower Upper, Upper class. Benefits: Quality, Rich in taste. Segmentation The concept of one-size-fit-all mass market is no longer relevant. Companies have to define that which segment they are about to target. Few years back, squashes segmentation was on the basis of behioral, life style and usage rate was high but now the potential is not in the market. Even consumption pattern has been decreased due to the entrance of other substitute products. Market needs Talking about the need of market there is a need of those products which are comparatively cheap as well as give ease to consumer. In todays world everyone is in hurry and customer want quick drink and quick food just to save their time. Considering Mitchells squashes need was there few years back when powdered drink and juices and energy drinks were not introduced to the market. So mitchells took the first mover advantage to introduce it though they conducted a research to create a need and capture a major market share at that time. 1. Quality craftsmanship Mitchells never compromise on its quality of fruit. Their squashes have extensive fruit content. There quality remains consistent all the time. 2. innovations As Mitchells company felt that customer are now very health continuous so they introduce DIET SQUASHES last year with the slogan lose weight not taste. But they have introduced it for the niche segments only. They even didnt use promotion activities for these innovations. 3. customer services As each and every company are trying to have good relationship with the customer. So in this regard if they got any complains related to their products they replace it without wasting the time of customer. CUSTOMER SATISFACTION MEASUREMENT: The success of the organization lies in the satisfaction of its customers. Therefore Mitchells has always given first priority to its customers feed back and this they do by the following ways Thorough questionnaire feed back forms Thorough shop keepers Through ISO procedures (CPA, Corrective and Preventive Actions) The feedbacks and opinions of the customers are very useful for them and besides this they study the feedback and try to implement that accordingly. Market trends Trends are changing rapidly, so nobody knows the customer who will buy our product today will buy it tomorrow as well as or not. At this time quashes are in MATURITY stage. The reason is because it takes relatively more time in getting ready instead of other new drinks. So there is still not any hope to create a new market in this industry. The only strategy Mitchells is using just to retain their existing customer and not looking for new customers. Its basically depend that customer is loyal to the product or not. The customers who are heavy users of squashes might not be shift to other substitute because they are loyal to it. Market growth Now there is no more growth in squashes industry due to consumer preferences and other factor is customer are very price conscious now. They want to have instant drinks to save their time but at cheap rates. So market has been shifted due to other drinks like powdered drink, instant drink, juices and red syrup. So now squashes are lying in CASHCOW because it gives money but not further growth. As Mitchells is the pioneer and still leader in the market so contain major share of market so far. BCG MATRIX SWOT analysis of Mitchells Strengths Fully integrated operations Having its own growing and processing facilities Modern high-volume industrial equipment Professional management and a trained workforce A smooth distribution system with nationwide coverage Right products, quality and reliability. Management is committed and confident Weaknesses Customer lists not tested Some gaps in range for certain sectors Customer service staff needs training More budget needed for Human Resource Development Opportunities Mitchells can continue its dominance as the innovator Can maintain its position as market leader Can also continue to be a trend setter International and domestic market expansion Introducing new verities of food products Local competitors have poor products End-users respond to new ideas Can surprise competitors Threats Political instability International Financial crises Challenge of work force diversity Changing technology and concept Legislation could impact Retention of key staff critical Possible negative publicity Market demand very seasonal SWOT analysis of squashes Strength: power of quality which remain consistent. Weakness: price and cost of ingredients used in squashes. Opportunity: can define more segments like introduce squashes in small bottles so reach customer buying power. Threat: all the substitute drinks. Picture of squashes: Competition analysis The competition is very fierce among the competitors so Mitchells always get the first mover advantage and still the leader of market. It has major share in the market. Direct competitors: Shezan squashes Indirect competitor: red syrup, instant drinks Market shares Mitchells 40% Shezan 38% Kinza 11% Others 11% Positioning strategy We provide high price, high quality premium product. Our market share in only Lahore is 30% for squashes. More than 50% of the area of the shelves in the stores is covered from Mitchells squashes. Position: We focus on positioning because it is important for developing the image that our product projects in relation to our competitors products (shezan).   Positioning in relation to a competitor: We place our products directly against the competitors products. this strategy is suitable for us because we have a solid differential advantage against our competitor Positioning in relation to a product class or attribute: We sell our product with the slogan We provide farm fresh quality drink And consider it to be our competitive edge against our competitors and for the same reason we focus on this attribute claiming that since we have our own farms we provide you with the squashes made of fresh fruit. Positioning by price and quality: We consider our squashes to be a premium product. That is high quality, high price. All our customers buy them due to brand loyalty. They know that they are getting something that is worth what they are paying. Marketing mix Product Strategy: It is a consumer product. Initially it was a convenience product but due to the massive demand shift observed in the market the customers are more eager to buy ready to drink products. Sugar Confectionary NEW LAUNCHES: Mitchells Diet Squashes Mitchells refreshing Diet Squashes are made from the Farm Fresh Fruits in a hygienic environment keeping in view the health of our valued customers. Our Diet Squashes contain No Sugar and have 90% less calories than Regular Squash. Mitchells Diet Squashes are available in two flavours.  ·Ã¢â€š ¬Ã‚  Diet Mixed Fruit Squash, and  ·Ã¢â€š ¬Ã‚  Diet Orange Squash Product life cycle: Pricing Strategy: Mitchells pricing goal is to increase sales volume and maintain or increase the market share. In order to seek higher sales volume we often apply discounting techniques or other aggressive pricing strategies. Mitchells had charged premium price due to there brand image in the market for a long time. But, due to shift in demand it has become almost to its competitors. They cannot afford to fall below certain level of prices as they have to maintain certain profit level. At this point they are facing tough competition because one glass of squash costs 7.5 Rs on the other hand the price of powdered drink is 5 Rs per glass. Cost of 810 ml of bottle of Squash for retailer (including tax) = 71 bottle Cost of 810 ml of bottle of squash for consumer (including tax) = 82 bottle Profit margin = 11 bottle. Cost of 1.5 liter of bottle of squash for retailer (including tax) = 227.5 bottle Cost of 1.5 liter of bottle of squash for consumer(including tax) = 244 bottle Profit margin = 16.5 bottle Distribution Strategy Mitchells adopted the channel-Structure Strategy for distribution. They believe that product should be distributed directly from manufacturer to customer or indirectly through one or more intermediaries. They sell their products sometimes directly and sometimes they sell their products through retailers. Like in Lahore they need to sell thei