Case Study | 03 October 2024
How a Frozen Food Company Faced Demand Constraints and Alleviated Its Challenges?
Posted by : Dhruv Bhatia
A leading frozen food company ventured into the production of alternate protein foods and faced supply and demand issues. The company manufactured and marketed frozen meat and vegetable-based products and garnered a generous amount of revenue and consistent growth. The company then ventured into alternate protein food sources, but price inflation of raw materials elevated the cost of manufacturing and made the product pricey. This led to fewer customers being willing to pay such a premium price, and the overall demand for the product diminished, with the company facing immense losses. The company couldn’t tackle the situation and the management hired Research Nester to provide solutions and insights through their extensive supply and demand analysis.
An overview:
- The company had been engaged in the development of frozen food in the Indian subcontinent.
- The organization generated a high revenue from its meat, poultry, vegetables, and ready meals segments.
- As the company attained sustainable growth, the executives wanted to upgrade the company as per new trends and saturated their funds with the production of alternate protein.
- The volatility in the prices of raw materials and extraction methods using more power & water consumption, caused the product price to be raised which in turn caused the demand to be decreased, hence causing the company loss.
- The company failed to assess the situation internally and the managing team sought help from Research Nester.
The Story
Established in 2010, the company provides high-quality, fresh, processed products, and frozen snacks from meat, poultry, and vegetables, for consumers and retailers. The organization thrives on being the best in its field and is committed to producing quality, dependable frozen products that satisfy the customer’s needs. The company earned a considerable amount of net profit and a customer base. In an attempt to upgrade itself according to the latest market trends, money was put into alternate protein products. The company executives failed to see the bigger picture and the firm went into loss, primarily because of fluctuating prices of raw materials used to make alternative proteins. Extraction technologies used also posed a challenge. The culmination of these factors made the product prices very high, which caused a decrease in demand. The organization failed to assess and find a solution to their crisis and the management hired Research Nester to help the company incorporate a proactive strategy that would enable them to build up their sales and come out of this crisis.
Our Solution:
Research Nester analysts did a thorough supply and demand analysis of the situation and concluded that the erratic prices of the raw materials were mainly responsible for the company’s downfall. RNPL analyst suggested the following measures keeping in mind the current alternative protein market scenario:
- Look for extraction techniques that require less electrical & water consumption as well as produce less wastewater.
- Avoid the use of chemicals (e.g.) hexane with GRAS (Generally Recognized as Safe) solvents to create protein products with desirable functionalities.
- Raw materials can’t be easily replaced so, the goal is more aligned with the taste of the product, as customers expect an authentic experience from the first bite and throughout the entire food experience.
- The marketing of the product is very essential, the company should focus more on its digital marketing of the product.
- After Covid -19 consumer health awareness has become a major aspect. “clean label” is the key to success here. For consumer benefit, products should bear a recognizable, concise, and easy-to-read list of ingredients and allergen advice.
Results
After improvising as per the points provided by the analysts the company recovered its investment in the product. The company marked a growth in profits from 17% in 2020 to 29% in 2022. The company emphasized more on their marketing analytics as well as focused on their R&D for innovations. This eventually created a sustainable demand in the market and the company acquired balanced growth. The company was able to build a stronger market position and consequently profitable growth through the implementation of insights provided by Research Nester.
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