Pringles Expansion Into Israel

Procter & GamblePringles Expansion to

IsraelSonya BarkerRyan Huelsmann

Founded 1837 (173 years in business) Serve 4.2 Billion Customers Worldwide Employ 127,000 People Worldwide NYSE: PG Consumer Goods Industry Revenue $78.9 Billion Net Income $12.74 Billion Total Assets $134.83 Billion

Procter & Gamble:

Product Focus: ◦ Beauty & Grooming◦ Health and Well-Being◦ Household Care

50 Leader Brands Driving Force Billion Dollar Brands:

◦ Bounty, Cover Girl, Crest, Dawn, Downy, Duracell, Gain, Gillette, Head & Shoulders, Olay, Pampers, Pantene, Pringles, Tide, Always, Mister Clean

Procter & Gamble:

Brands Sold in 180 Countries with Operations in 80 Countries

Global Organization with Local Focus Manufacturing Operations Based In:

◦ United States◦ Canada◦ Mexico◦ Latin America◦ Europe◦ China and other parts of Asia (31 wholly-owned factories) ◦ Africa◦ Australia

Procter & Gamble:

Introduced in 1968 Stackable, Fun-Shaped Potato Crisp P&G Health and Well-Being Business Unit,

Snack Food Category Multitude of Flavors to Appeal to Regional

Tastes Pringles Sticks Spin-off

Pringles:

Standard of Living Expansion High Consumer Interest in New Products Potato Chips Led the Savory Snack Market in

Israel, Accounting for a Share of 38.1% Pro-American Business Sentiment Population 7.2 million, Diversity Gaza Strip Embargo Lifted for Certain Products,

Includes Potato Chips Purchasing Power $1 US = 3.67841 Israeli New

Shekel Member World Trade Organization

Opportunities in Israel:

Unrest in Israel Unrest in Middle East Culture Distribution Local Competitors

Barriers to Entry into Israel:

Issue:◦ Political/Religious

Unrest in Israel, partition of Palestine, creation of a Jewish state, an Arab state, and an UN-administered Jerusalem

◦ Ongoing Political/Religious Unrest in the Middle East

Strategy:◦ On-Going Risk

Assessments to Determine if Benefits Outweigh Risk

◦ Constantly Monitor New Developments

◦ Maintain Open Dialog with Government Officials/Agencies

◦ Neutral Status

Overcoming Unrest in Middle East:

Map of Israel

Issue:◦ Cultural Kosher

Preference◦ Language

Strategy:◦ Research and

Development to Focus on Local Preferences

◦ Develop Flavors to Cater to Preferences

◦ Hire Local Talent who have the Expertise and Knowledge to Assist

Overcoming Cultural Barrier:

Issue:◦ Two Primary

Grocery Store Chains in Israel

◦ Few Mom & Pop Small Community Stores

◦ Open Air Markets

Strategy:◦ Focus on Developing Solid

Relationship with two Primary Grocery Store Chains

◦ Hire Local Talent who have the Expertise and Knowledge to Assist

◦ Marketing Blast to Get Customers Excited about Product

◦ Research Vending Machine Sales as an Opportunity for Open Air Markets

Overcoming Distribution Barrier:

Issue:◦ Local Competitors

Utilize Nationalism as a Means to Gain Competitive Advantage

Strategy:◦ Analyze Strengths

and Weaknesses of Competitors and Capitalize on Lessons Learned

◦ Analyze Local Competitor Strategies and Implementation

◦ Create a Tactical Plan to Compete

Overcoming Local Competitors

• Willingness to Expand• Diversified Product• Products Altered to Local

Preferences

• Snack Food Consumption Growing Worldwide

• Environment for Global Growth/Trade Barriers Lifting

• Internet Marketing Sales Trends

• Competition• Substitutes/Cheaper Products

Available• Global Economic Downturn

• Negative Press Related to Snack Foods/Health Concerns

• Workforce Spread Over a Wide Geographic Area

• Spoilage Rate

S W

TO

Macro Snack Food IndustrySWOT ANALYSIS

Opportunities

Strength

Threats

Weaknesses

• Branding• Financial• Global Organizational

Structure• Pringles Flavors Easily Altered

for Local Preferences • Ingredients Available Locally• Israeli/Hebrew Website in

Place

• Environment for Global Growth/Trade Barriers Lifting

• On-Line Social Network & Internet Marketing Techniques

• Environmental Goals Doubled for 2012

• 2010 Unemployment Rate 8.3% in Israel

• Volatility of US Dollar• Middle East/Israel Unrest &

Government Volatility • Competition with Diverse

Product Portfolios• Substitutes Available/Cheaper• Due to Economy, Consumer

Spending Decreases Globally

• Limited Snack Food Industry Presence

• Kosher Food Development • Significant Capital Outlay• Packaging/Labeling

Requirements More Strict

S W

TO

Micro Proctor & Gamble/PringlesSWOT ANALYSIS

Opportunities

Strength

Threats

Weaknesses

• Standard of Living Expanding• Consumer Interest in New

Foods/Products• Snack Growth Rate Increasing• Extensive Transportation

Network/Energy Infrastructure• World Trade Org Member/US

Government Support

• Hi-Tech• Pro-American• Population: 7.2 million • Gaza Strip Embargo Lifted• Purchasing Power $1:3.67841

Shekel• Education Level on the Rise

• Israel Unrest/Government Volatility

• Middle East Unrest Uncertainty• Consumer Spending

Decreases

• Security/Terrorism Remains Precarious

• Kosher Requirements • Import Requirements Strict• Traditional Business Week

Sunday through Thursday• Distribution Barrier• 2010 Unemployment Rate 8.3%

S W

TO

Macro IsraelSWOT ANALYSIS

Opportunities

Strength

Threats

Weaknesses

P&G Strategy Built Around Core Competencies:

Short Term:◦ Brand Building◦ Develop a Winning

Team Utilizing Local and Global Talent

◦ Consumer Understanding-Uncover the Unarticulated Needs of Consumers

◦ Go-to-Market Capability-reach retailers and consumers at the right place and time

Long Term:◦ Brand Building◦ Innovation-Translate

Consumer Desires into New Products

◦ Scale-Drives Efficiency and Consumer Value

International Strategy:

Global Structure:

Operations: Locate in Beersheba Manage Locally Local CEO

◦ Yossi Yitzhak Former Executive at Osem - Nestle Israel Education LLB, MBA

Staff Rabbi for Kosher Expertise P&G Israel Liaison

Map of Israel

Products: Current Products for Israel

◦ Potato Crisps in Snack Packs and Large Containers Original, Sour Cream & Onion, Jalapenos, and

Barbeque ◦ Pringles Snack Stix

Possible New Products◦ Packaged Latkes for Hanukkah

shallow-fried pancakes of grated potato, flour and egg, often flavored with grated onion or garlic and seasoning

Potential Opportunities Outweigh Risks

Proceed with Manufacturing Operation/Sales Expansion into Israel

Recommendations:

THE ENDQUESTIONS ?

Procter & Gamble Corporate Website http://www.pg.com Pringles website http://www.pringles.com Reuters Business & Financial News, by Nidal al-Mughrabi, Israel

Eases Gaza Embargo to Allow Snack Food In 9 June 2010 http://www.reuters.com

Market Report, Savory Snacks in Israel to 2014, http://www.pr-inside.com

Doing Business in Israel—U.S. Commercial Service Israel http://www.buyusa.gov/israel/en/doing_business_in_israel.html

USDA Foreign Agricultural Service GAIN Report, Global Agricultural Information Network, 23 Nov 2009.

Mehadrin Tnuport Export, Israel: Potato and carrot season started. By: Wim Geurts 2 March 2010. http://www.freshplaza.com

Linked In, Yossi Yitzhak personal page Alacra Store, Premium Business Information Source

http://www.alacrastore.com/research/d-and-b/Israel/Snack+Foods_potato+chip

Sources: