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Executive Summary
The Coca Cola Company is currently the leading beverage provider in the United States
and around the world. The Coca Cola Company has been able to do this because of their core
mission, which is to refresh the world, to inspire moments of optimism and happiness, and to
create value and make a difference (Company Mission Statement). Being on top and
outperforming competitors is Coca Cola’s main goal. In recent years, however, Coca Cola’s
main competitors PepsiCo and Dr Pepper Snapple Group have been doing their best to take Coca
Cola’s top spot, specifically PepsiCo. Some of the reason for PepsiCo’s success is through its
efforts in the snack food manufacturing industry with its partnership with Frito-Lay. In recent
years PepsiCo has generated more than 40% more revenue than Coca Cola. PepsiCo’s net
revenue after 2010 was at $60 billion while The Coca Cola Company’s was at $38 billion
(Mergent Online). Part of the reason PepsiCo has experienced a greater revenue is largely due to
their presence in the snack foods manufacturing industry. Therefore The Coca Cola Company
should increase their presence in the snack food manufacturing industry in order for them to keep
up with PepsiCo.
I propose that Coca Cola partner with ConAgra Foods, which is currently fourth in the
snack food manufacturing industry behind PepsiCo Frito Lay, Kraft Nabisco, and Procter and
Gamble (Hoovers). Currently The Coca Cola Company already is partnered with Procter and
Gamble, which has already allowed them to enter into the snack foods manufacturing industry.
The Coca Cola Company needs to further its efforts by partnering with ConAgra Foods so it can
continue to expand and compete directly with PepsiCo in the beverage and snack food
manufacturing industry. Partnering with ConAgra Foods will be greatly beneficial because of
their experience within the snack food manufacturing industry. The Coca Cola Company and
Peltier 1
ConAgra Foods will be able to benefit from each other in this possible joint venture. The Coca
Company will further benefit from the experience ConAgra Foods already holds within the snack
foods manufacturing industry whilst at the same time ConAgra Foods will benefit from the
structural and financial strengths provided by The Coca Cola Company. I want to use Coca
Cola’s mission to inspire happiness and refreshing the world in order to influence consumers to
purchase both Coca Cola and ConAgra Foods Food’s products, which will also help increase net
sales and market share.
Peltier 2
Table of Contents
The Coca Cola Company………………………………………………………………………….4
Incentives for The Coca Cola Company to Enter the Snack Foods Manufacturing Industry…….6
The Snack Foods Manufacturing Industry (Context)……………………………………………..7
The Coca Cola Company Expansion……………………………………………………………...9
Recommendation………………………………………………………………………………...10
Collaborators……………………………………………………………………………………..10
Competition………………………………………………………………………………………11
Customer…………………………………………………………………………………………11
Segmentation…………………………………………………………………………………......12
Target market…………………………………………………………………………………….13
Positioning……………………………………………………………………………………….14
Conclusion……………………………………………………………………………………….15
Bibliography……………………………………………………………………………………..16
Appendices………………………………………………………………………………………17
Figures 1-4……………………………………………………………………………………17-18
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The Coca Cola Company
The Coca Cola Company is a beverage retailer, manufacturer, and marketer of non-
alcoholic beverage concentrates and syrups. Coca Cola formula and brand was invented by John
Smith Pemberton in 1886. He then sold the formula and brand to Asa Candler in 1889; who then
incorporated The Coca Cola Company in 1892. Since then The Coca Cola Company offers more
than 200 brands in over 150 countries and produce over 1.6 billion product sales daily. The Coca
Cola Company’s headquarters is located in Atlanta, Georgia. The Company currently produces
over $38 billion in total revenue (Mergent Online) The Coca Cola Company’s previous five-year
net revenues are as follows:
Figure 1The Coca Cola Company Net Sales
(in Thousands)
Report Date 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006Currency USD USD USD USD USDScale Thousands Thousands Thousands Thousands Thousands
Net operating revenues $ 35,119,000
$ 30,990,000
$ 31,944,000
$ 28,857,000
$ 24,088,000
Cost of goods sold $ 12,693,000
$ 11,088,000
$ 11,374,000
$ 10,406,000
$ 8,164,000
Gross profit $ 22,426,000
$ 19,902,000
$ 20,570,000
$ 18,451,000
$ 15,924,000
Income before income taxes $ 14,243,000
$ 8,946,000
$ 7,439,000
$ 7,873,000
$ 6,578,000
Net Income $ 11,859,000
$ 6,906,000
$ 5,874,000
$ 5,981,000
$ 5,080,000
(Mergent Online)
The Coca Cola Company possesses numerous strengths that has helped them in becoming
one of the top companies in the world. One strength is that Coca Cola is known very well
worldwide. The Coca Cola Company brands are easily recognized and the company owns four of
the top five soft drink brands in the beverage industry: Coca-Cola, Diet Coke, Sprite, and Fanta
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(AcuVal). The Coca Cola Company produces over 150 brands that produce $30 billion in total
revenue, which has been increasing year to year. These strengths allow The Coca Cola Company
to produce new products and expand into different markets.
The Coca Cola Company is a very successful company, with limited weaknesses. Word
of mouth is a strength and weakness for every company. There are many people that have a lot of
good things to say about The Coca Cola Company, while there are many individuals who are
against The Coca Cola Company and the products that they produce. A good example of this is
when The Coca Cola Company received negative publicity in India during September of 2006.
The company was accused by the Center for Science and Environment (CSE) of selling products
containing pesticide residues. These pesticides contained chemicals that could cause cancers,
damage the nervous and reproductive systems, and reduce bone mineral density. Such negative
publicity could adversely impact the company’s brand image and the demand for The Coca Cola
Company’s products. Another weakness of The Coca Cola Company is health concerns facing
soft drinks. It is known that Coke and other soft drink products are not very beneficial to the
body. With today’s constant shift to health products, some products could possibly lose
customers. This new focus on weight and health could be a problem for The Coca Cola
Company’s products that are labeled detrimental to a person’s health. These possible weaknesses
are a cause for concern in future soft drink sales, a further incentive to expand the The Coca Cola
Company to expand into other financially beneficial industries.
The Coca Cola Company has few opportunities in its business. Coca Cola has the
opportunity to advertise its less popular products. With The Coca Cola Company’s large income
it has the available capital to invest into some of the other unpopular beverage brands on the
market. It would be very beneficial for The Coca Cola Company to be able to market their other
Peltier 5
brands to the extent they market their top 4 products. With The Coca Cola Company’s success
and income they have the opportunity to buy out their competition and to expand into different
markets. The Coca Cola Company could buyout up and coming smaller beverage providers to
keep competition at a minimum. The Coca Cola Company can also expand into other markets
besides the beverage industry to help increase income and keep The Coca Cola Company as one
of the best companies in the world. It may cost a lot in the short term but in the long term, if it all
goes according to plan, could result in a large profit.
Despite the fact that The Coca Cola Company dominates the beverage market, it still has
to deal with many threats. A major threat that The Coca Cola Company faces is the shifting of
health concerns. With more consumers becoming aware of the health risks of The Coca Cola
Company’s products can result in a major decrease in their products purchases. Another major
threat is The Coca Cola Company’s competition. The Coca Cola Company main competitor is
PepsiCo, which sells a very similar product, Pepsi, which is comparable to The Coca Cola
Company’s leading product Coke. The Coca Cola Company needs to be careful that Pepsi does
not grow to becoming the more successful and popular drink. There are other beverage products
that are not soft drinks that pose as a threat as well, such as juices, coffees, and milk. (a more in
detail SWOT analysis can be found on page 17 Appendix 1)
Incentives for The Coca Cola Company to Enter the Snack Foods Manufacturing Industry
The Coca Cola Company’s competition is highly competitive with non-cola beverages,
such as iced tea, fruit juices, and bottled water, making strides into what the beverage industry
calls the ‘share of stomach.’ In recent years other companies have been trying to claim top spot
and go on the offensive to compete with The Coca Cola Company, specifically PepsiCo. PepsiCo
Peltier 6
has been taking strides to outperform The Coca Cola Company. PepsiCo purchased Quaker Oats
in 2001 obtaining their billion-dollar sport drink brand Gatorade. Not only did PepsiCo obtain
the brand Gatorade but it also obtained Quaker Oat’s many snack foods, which will market well
alongside PepsiCo’s snack partner Frito Lay. PepsiCo’s Frito Lay is a snack brand that produces
over $13 billion in net sales. (See Figure 2)
The Coca Cola Company is lagging behind PepsiCo and their expansion efforts;
however, The Coca Cola Company is trying to keep in stride with PepsiCo. When PepsiCo
partnered with the mega brand Starbucks coffee, The Coca Cola Company soon after acquired a
small but well-known coffee brand, Planet Java. Another area outside of the beverage industry
that PepsiCo entered was in online marketing. PepsiCo partnered with Yahoo and promised
integrated online marketing. The Coca Cola Company, not wanting to be outdone by PepsiCo,
quickly partnered with AOL, another leading online marketing source. Since PepsiCo is doing its
best to dominate not only the beverage industry but the snack manufacturing industry and other
industries also, The Coca Cola Company needs to continue in their efforts to compete with
PepsiCo in the snack manufacturing industry as well as any other industries.
The Snack Foods Manufacturing Industry (Context)
A snack is described as a small quantity of food eaten between meals or in place of a
meal. Snack foods generally comprise bakery products, ready-to-eat mixes, chips, and other light
processed foods. The United States snack foods manufacturing industry includes about 500
companies that produce combined total revenue of $24 billion (Hoover). Some of the major
companies include PepsiCo’s Frito-Lay, Kraft’s Nabisco subsidiary, and ConAgra Foods. The
top 50 companies own 90% of the total snack foods manufacturing industry revenue (Hoover).
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The snack foods manufacturing industry’s top five leading companies in the United States are as
follows:
Figure 2Snack Food Manufacturing Top 5 Companies Revenues and Sales
(in Millions)
Company Sales Revenue Market Share Total Market SalesPepsiCo Frito-Lay $ 13,224 55.10% $ 24,000Kraft Nabisco $ 6,001 25.00% $ 24,000Procter and Gamble $ 3,135 13.06% $ 24,000ConAgra Foods $ 1,289 5.37% $ 24,000B & G Foods $ 487 2.03% $ 24,000
Figure 3Snack Food Manufacturing To 5 Companies Sales Revenue Past 3 years
(in Millions)
Company 2010 2009 2008PepsiCo Frito-Lay $ 13,224 $ 12,507 $ 11,856Kraft Nabisco $ 6,001 $ 4,964 $ 5,025Procter and Gamble $ 3,135 $ 3,114 $ 3,204ConAgra Foods $ 1,289 $ 1,300 $ 1,200B & G Foods $ 487 $ 471 $ 411
The top five companies in the snack foods manufacturing industry have all been
experiencing growth in net sales in the past three years. This is a sign of a good industry for a
company to enter. However, the snack foods manufacturing industry face similar problems that
the beverage industry face. One major area of concern is the increasing health awareness. A lot
of the snack foods manufacturing companies have leading products that are not considered
healthy snacks. They are high in sodium, cholesterol, calories, and other non-healthy ingredients.
However, this does give these companies the opportunity to develop healthier snacks for
consumers.
Peltier 8
The Coca Cola Company Expansion
In response to PepsiCo’s expansion efforts Coca Cola has responded by partnering with
other companies. Coca-Cola has partnered with Nestle and set up the Coca-Cola Nestle
Refreshments Company in order to become a more aggressive company. Nestle offers strong
research and development while Coca-Cola offers a well-established infrastructure. Also Coca-
Cola has also partnered with Proctor and Gamble, owners of the beverage Sunny Delight. Coca-
Cola wanted to take advantage of Proctor and Gamble’s packaged goods experience. Coca-Cola
wants to use Proctor and Gamble’s experience in the snack manufacturing industry to help Coca-
Cola enter into the snack manufacturing industry. Coca-Cola has developed a new perspective in
that it “no longer wants to just dominate the fizzy red drink category, but it wants to become the
global leader in innovative snacks and nutritional beverages.” Coca-Cola not only wants to buy
the world a Coke, but everything that goes with it. The carbonated beverage industry is hardly
growing, but despite the needing to maintain the lead on PepsiCo, it cannot allow PepsiCo to get
ahead in the snack food manufacturing industry that it has been for decades. (Angelo Fernando)
Due to PepsiCo’s success in the snack foods manufacturing industry The Coca Cola
Company needs to further its efforts in the snack foods manufacturing industry. The Coca Cola
Company has already partnered with Procter and Gamble, which allowed them to enter into the
snack foods manufacturing industry. Procter and Gamble currently ranks third in terms of net
sales and market share in the snack foods manufacturing industry (See Figure 2 for details). The
Coca Cola Company needs to take one step further to continue to increase its market share in the
industry and become the leading company by partnering with another leading competitor in the
industry.
Peltier 9
Recommendation
The Coca Cola Company should form a joint venture with ConAgra Foods. The Coca
Cola Company would get 50% of ConAgra’s total sales. ConAgra Foods currently ranks fourth
in terms of net revenue and market share in the snack foods manufacturing industry producing
1.2 billion dollars (Mergent Online). With The Coca Cola Company’s strong infrastructure and
ConAgra Foods’ experience in the snack foods manufacturing industry, both companies could
benefit from each other. ConAgra would get The Coca Cola Company’s strong infrastructure that
should allow for ConAgra Foods to increase their market share and net revenues while The Coca
Cola Company will be able to further its presence in the snack foods manufacturing industry.
Collaborators
ConAgra Foods was founded in 1919 and is one of North America’s largest packaged
foods companies. ConAgra Foods’ products are available in supermarkets, as well as restaurants
and food service establishments. The headquarters of ConAgra Foods is located in Omaha,
Nebraska. ConAgra Foods is a company that produces over $11 billion in net revenue. (Mergent
Online) ConAgra Foods specializes in two different segments: Consumer Foods and Commercial
Foods. Consumer Foods provide branded, private label, and customize foods products in
categories such as meal, entrees, condiments, sides, snacks, and desserts. Consumer Foods
produced over $7 billion in 2010 with snacks producing $1.289 billion of the total revenue.
Commercial Foods provide branded foods and ingredients including potato products, milled
grain ingredients, vegetable products, seasonings, blends, and flavors. Commercial Foods
produced $2.235 billion in total revenue in 2010 (Mergent Online).
Peltier 10
ConAgra Foods’ snack category is currently fourth in terms of total revenue and market
share in the snack foods manufacturing industry. (See Figure 2 for snack food manufacturing
industry market share and net sales) ConAgra Foods’ snack net revenues in the last 3 years
are as follows:
Figure 4ConAgra Foods Snack Net Sales
(in Millions)ConAgra Foods 2010 2009 2008Net Sales $ 1,289 $ 1,321 $ 1,200
The Coca Cola Company and ConAgra Foods joint venture will be very beneficial
to both companies. The Coca Cola Company will increase its efforts in the snack foods
manufacturing industry by obtaining ConAgra Foods’ $1.2 billion snack brands. With ConAgra
Foods’ snack brands The Coca Cola Company will be able to help ConAgra Foods increase net
sales both in the US and internationally. The Coca Cola Company currently operates in over 150
countries and offers over 200 different types of brands. The Coca Cola Company also has a very
strong infrastructure that will help market ConAgra Foods snack products. Increasing ConAgra
Foods’ snack products on a global scale, with the help from The Coca Cola Company’s should
increase ConAgra Foods’ net sales and market share, which will be beneficial to both The Coca
Cola Company and to ConAgra Foods. With The Coca Cola Company already partnered with
Procter and Gamble’s snack brands and partnering with ConAgra Foods and their snack brands,
will give The Coca Cola Company close to 20% of the total $24 billion US snack foods
manufacturing industry. This will help The Coca Cola Company’s efforts in becoming the global
leader in innovative snacks and nutritional beverages.
Peltier 11
Competition
The Coca Cola Company and ConAgra Foods’ competitors include PepsiCo Frito Lay,
Kraft Foods, and B & G Foods. The Coca Cola Company and ConAgra Foods biggest
competitor is PepsiCo Frito Lay. PepsiCo Frito Lay currently owns 55% of the $24 billion snack
foods manufacturing industry (See Figure 2 for details). The Coca Cola Company and ConAgra
Foods’ efforts will be focused on being able to compete competitively with the leading
companies in the snack foods manufacturing industry. The Coca Cola Company wants to be able
to outperform PepsiCo in all areas and does not want PepsiCo to continue to grow and dominate
in the snack foods manufacturing industry. Kraft Foods is a main competitor as well considering
they own 25% of the $24 billion dollar industry. Kraft Foods is the largest confectionery, food,
and beverage provider in the United States producing a net revenue of $49.2 billion in 2010
(Mergent Online). The Coca Cola Company and ConAgra Foods will need to pay close attention
to both PepsiCo and Kraft Foods if they are to out perform these two leading competitors.
Customer
The Coca Cola Company and ConAgra Foods snack products will be distributed through
ConAgra’s current system. ConAgra currently uses 39 domestic manufacturing facilities and 41
domestic production facilities all across the United States to distribute their products (ConAgra
Foods). ConAgra Foods also has many stand-alone distributors all across the United States. The
Coca Cola Company and ConAgra foods will be able to use these facilities to distribute their
snack products to their customers. Currently The Coca Cola Company and ConAgra products are
currently sold in all 50 states. They are sold in grocery stores, drug stores, and mass merchandise
stores. Positioning and marketing The Coca Cola Company and ConAgra products at these
Peltier 12
locations will allow for them to have the greatest opportunity to increase net sales and market
share.
Segmentation
The consumers will be segmented into three different categories: on-the-move,
multitasking, and leisure consumers. On-the-move consumers are considered consumers that are
in a hurry and need something quick and convenient to eat. Multitasking consumers are
considered, for example, a consumer who is eating while working or talking on the phone.
Leisure consumers are considered consumers that will consume the snacks during times of down
time, for example a consumer who is watching TV may have a snack.
Target Market
Based on these segmentations mothers and college students seem most appealing to
target. ConAgra Foods products are already targeted towards mothers and college students,
however with The Coca Cola Company’s help allows for these target markets to be further
targeted and increase the potential total purchases. The mothers that will be targeted are mothers
aged 20-40 years old. According to Cencus.gov there are currently 18.112 million mothers
between the ages of 20-40 years of age. The reason mothers are being targeted is because they
are seen as the consumer who regularly goes grocery shopping for a family, quite possibly
consisting of numerous children. Snacks are a convenient way to feed children quickly. This is
why The Coca Cola Company and ConAgra Foods will market The Coca Cola Company and
ConAgra Foods’ snack products as easy and quick to consume products. This target market
should cover more than half the consumers that consume snacks, which makes it a highly
appealing number of potential consumers. Another ideal target market to address will be the
Peltier 13
college students. According to the National Center for Educational Statistics there are currently
18.2 million students attending college. College students are a target market because college
students are generally on their own and have to provide for themselves. Many college students
are looking for a quick and easy meal. The Coca Cola Company and ConAgra Foods’ snacks
will be marketed as quick and easy to consume products for college students.
The Coca Cola Company and ConAgra Foods’ snack products will be sold in stores
where current Coca Cola and ConAgra Foods’ brands are sold. These products are currently sold
in all 50 states. The Coca Cola Company and ConAgra Foods products are sold in grocery stores,
drug stores, and mass merchandise stores. Positioning the snack products in all these locations
will allow consumers to purchase Coca Cola and ConAgra Foods’ snack products at any location
they go to.
Positioning
The Coca Cola Company and ConAgra Foods’ snacks will be positioned as quick and
convenient to use. This positioning will allow for the snacks to be appealing to the target market.
The Coca Cola Company and ConAgra Foods’ can market their snacks to go well with The Coca
Cola Company’s many different types of beverages. This will allow for potential consumers to
purchase both The Coca Cola Company’s products and ConAgra Foods’ snacks. Following The
Coca Cola’s mission statement will allow for the snacks to be positioned properly. As mentioned
before The Coca Cola Company’s mission statement is to refresh the world, to inspire moments
of optimism and happiness, and to create value and make a difference. By staying on track with
this mission statement gives The Coca Cola Company and ConAgra foods the best chance to be
successful.
Peltier 14
Conclusion
PepsiCo has been taking great strides in trying to outperform The Coca Cola Company.
PepsiCo has managed to place themselves atop of the snack foods manufacturing industry by
owning 55% of the $24 billion industry. The Coca Cola Company has shifted its perspectives not
only to dominate the beverage industry but it also wants to dominate the snack foods
manufacturing industry as well. To do this they need to partner with a leading company in the
industry. The Coca Cola Company has already partnered with Procter and Gamble, which
allowed them to enter into the snack foods manufacturing industry. Procter and Gamble currently
ranks third in terms of net sales and market share in the snack foods manufacturing industry. The
Coca Cola needs to take one step further to continue to increase its market share in the industry
and become the leading company. The Coca Cola Company should form a joint venture with
ConAgra Foods. The Coca Cola Company would get 50% of ConAgra’s total sales. ConAgra
Foods currently ranks fourth in terms of net revenue and market share in the snack foods
manufacturing industry. With The Coca Cola Company’s strong infrastructure and ConAgra
Foods’ experience in the snack foods manufacturing industry, both companies could benefit from
each other. ConAgra would get The Coca Cola Company’s strong infrastructure that should
allow for ConAgra Foods to increase their market share and net revenues while The Coca Cola
Company will be able to further its presence in the snack foods manufacturing industry and give
them the chance to continue to compete with their main competitor PepsiCo.
Peltier 15
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Peltier 16
Appendices
Appendix 1 The Coca Cola Company SWOT Analysis
Strengths WeaknessesInternal -Popularity
-well known-branding obvious and easily recognized-A lot of finance-customer loyalty-International Trade
-Word of mouth-lack of popularity of many Coca Cola’s brands-Most unknown and rarely seen-result of low profile or non-existent advertising-health issues
Threats OpportunitiesExternal -changing health-consciousness
attitude-legal issues-Health ministers-competition (Pepsi)
-many successful brands to pursue-advertise its less popular products-buy out competition.-More Brand recognition
Figure 1The Coca Cola Company Net Sales
(in Thousands)
Report Date 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006Currency USD USD USD USD USDScale Thousands Thousands Thousands Thousands Thousands
Net operating revenues $ 35,119,000
$ 30,990,000
$ 31,944,000
$ 28,857,000
$ 24,088,000
Cost of goods sold $ 12,693,000
$ 11,088,000
$ 11,374,000
$ 10,406,000
$ 8,164,000
Gross profit $ 22,426,000
$ 19,902,000
$ 20,570,000
$ 18,451,000
$ 15,924,000
Income before income taxes $ 14,243,000
$ 8,946,000
$ 7,439,000
$ 7,873,000
$ 6,578,000
Net Income $ 11,859,000
$ 6,906,000
$ 5,874,000
$ 5,981,000
$ 5,080,000
(Mergent Online)
Figure 2
Peltier 17
Snack Food Manufacturing Top 5 Companies Revenues and Sales(in Millions)
Company Sales Revenue Market Share Total Market SalesPepsiCo Frito-Lay $ 13,224 55.10% $ 24,000Kraft Nabisco $ 6,001 25.00% $ 24,000Procter and Gamble $ 3,135 13.06% $ 24,000ConAgra Foods $ 1,289 5.37% $ 24,000B & G Foods $ 487 2.03% $ 24,000
(Mergent Online)
Figure 3Snack Food Manufacturing To 5 Companies Sales Revenue Past 3 years
(in Millions)
Company 2010 2009 2008PepsiCo Frito-Lay $ 13,224 $ 12,507 $ 11,856Kraft Nabisco $ 6,001 $ 4,964 $ 5,025Procter and Gamble $ 3,135 $ 3,114 $ 3,204ConAgra Foods $ 1,289 $ 1,300 $ 1,200B & G Foods $ 487 $ 471 $ 411
(Mergent Online)
Figure 4ConAgra Foods Snack Net Sales
(in Millions)ConAgra Foods 2010 2009 2008
Net Sales $ 1,289 $ 1,321 $ 1,200(Mergent Online)
Peltier 18
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