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AMC33
Muñoz Group is a successful company operating in a competitive market. It seeks to promote growth, diversification, and sustainability through short, middle, and long term solutions. This includes developing protected citrus varieties, using wireless sensors to track fruit production data in real-time, and investing in non-melting ice cream and edible insects to diversify and gain competitive advantages.
AMC33
- 1. 1 Muñoz Group « Sustaining GlobalVertical Integration through Innovation » - UNICC Case Competition - nçois Caprasse ien Gennatas hony Varisano tina Witt
- 2. 218th of March2016UNICC Executive Summary Situationoup is a successfull company with a big innovation cul Problem Solution petes in a highly competitive market and seek for con d improvement developped : short term solution that promotes growth middle term solution that promotes diversification long term solution that promotes sustainability
- 3. 3 1. BOM BOMBOM 1. Middle term 2. Long term 1. Short term
- 4. 418th of March2016UNICC Competition keeps everyone motivated Better produ Excitment mpetitiveness e of the entire group It takes TIME but… Keeps everyone thrilled s extra security against unlincesed Patents Sensors Retailing strategy
- 5. 518th of March2016UNICC Producing protected citrus varieties is the only solution for growers n costs haven risen significantly ng traditional varieties is not able anymore Focus on new cultivars o More productive o Easier Cheaper to produceLimit production to : o maximize grower’s profits o Keep exclusivity Returns can be up to 10 higher Protected citrus varieties is to improve profitability of p Patents Sensors Retailing strategy
- 6. 618th of March2016UNICC Consumers are willing to pay more for a better quality umber of w varieties Years • Out of the 19 new citrus variet 0 were protected • Out of 180 new varieties in 2014 were registered Protected varieties may account for 75-80 of the market share in a few years Patents Sensors Retailing strategy
- 7. 718th of March2016UNICC Muñoz must use wireless sensors to track real-time data or labeled ruit and flowers • Information not fast enough • Lack of information • Wireless sensor Patents Sensors Retailing strategy
- 8. 818th of March2016UNICC Muñoz will be able to have live data information Real time data Information more precize & complete Wireless sensor tag Humidity: 46% Temperature: 3,5° Production date : 11.9.14 Product number: 3ESP3-2J Country : SPAIN Patents Sensors Retailing strategy
- 9. 918th of March2016UNICC Citrus & flowers’ revenues will increase by 8% by 2020 Million € Citrus Grape Juice Flower total Revenues 2014 334 102 61 56 553 2015 with 5% augmentation (thankts to IoT*) 351 107 64 59 581 Augmentation of production 0,05% 352 107 64 59 583 Revenues 2020 361 110 66 61 598 ternet of Things 45M (8%) s will allow a decrease in the loss of products n Total cost of sensors over a 5 years period: €4.5M Patents Sensors Retailing strategy
- 10. 1018th of March2016UNICC Current market penetration is a key variable in sourcing new partnerships and markets Patents Sensors Retailing Strategy # Growers Projected Fruit Market Growth (2015-2020) 10 20 30 40 50 Brazil China 5 1 0 USA
- 11. 1118th of March2016UNICC Integration with POS retailing will increase the value added in consumer transactions Client o Sales history o Location o Size Partner o Origin o Specific details on all varieties o Seasonal best o Performance Communication o GIS o Queries o Delivery dates o Work in conjunction with POS software in use • Consumer Communication o Drives website traffic Consumer Patents Sensors Retailing Strategy
- 12. 1218th of March2016UNICC Based on performance feedback, Muñdoz will select high performing, consistent brands for new markets Products • Customer recognition o Mandarins represent 32% of the US citrus market • Customer feedback • Measurement of sales, growth, desired qualities and customer satisfaction Partnerships • Supermarkets/Retailers with a strong online presence o Online grocery valued at $6.5 billion in 2013 • Growth via breeding and joint- ventures with growers o California & Washington Patents Sensors Retailing Strategy
- 13. 13 1. Short term 1.Mid term 2. Long term 2. Middle term
- 14. 1418th of March2016UNICC Muñoz must seeze the opportunity to invest in a revolutionnary ice cream • Ice cream that does not melt • Special protein naturally occurs in Japanese breakfast food called 'natto’ • Molecule binds together air, fat and water, helping scoops to stay intact • Could also stop ice cream from crystallising, leaving smooth consistency HowWhere WhyWhat
- 15. 1518th of March2016UNICC USA, UK and Spain are the most attractive markets CAGR Likelihood of success 0% High Low Size of the market in million litters UK 5% 10%2,5% 7,5% Germany Spain Russia Japan USA China HowWhere WhyWhat
- 16. 1618th of March2016UNICC HowWhere WhyWhat Why should invest in ice creams that do not melt ? It is profitable It answers customers’ needs It is competitive advantageous • Higher margin • Pioneer on the market • Healthier (less fat & calories) • Environment al friendly • Same smoothness & taste • Innovation • Diversificati on • Big market Ice cream that does not melt has incredible benefits
- 17. 1718th of March2016UNICC The NPV for the non-melting ice cream will be of 93,5 M€ after 5 years 2014 2015 2016 2017 2018 2019 2020 Net Income after taxes (M€) -15 -36 26 41 48 59 68 Depreciation (M€) 5 6 6 6 6 2 2 WCR (M€) - - 10 1 1 1 2 ICF (M€) 30 10 - - - - - FCF (M€) -40 -40 23 46 53 59 68 WACC (M€) 1,09 Discount Factor 1 0,92 0,84 0,77 0,70 0,64 0,59 NPV 93,5 How Where Why How
- 18. 1818th of March2016UNICC The majority of ice cream sales go through modern grocers • The favoured format (take home ice creams) is typically sold through such channels HowWhere WhyWhat
- 19. 19 1. Short term 1.Middle term 3. Long term
- 20. 2018th of March2016UNICC You should invest in edible insects Consumer EU: bio willing to reduce their footprint Proteins for animals + humans o Animal : already in use, reduce importation o Humans : next step, changing mentality in UE • 2billiards daily users • Greatest share of the population do not have access to meat Protect the production, lower pes Lifestock responsible for 1 Global green house emission market size is estimated to be $33 bill Benefits Finance Conclusion
- 21. 2118th of March2016UNICC One unit of production will generate €213m The actual protein market in France is 65m tones If we grab 0,00002% => 139K Kg With an average price of €70/kg Then for the next 10 years : o Cost of production : 30m € Benefits Finance Conclusion
- 22. 2218th of March2016UNICC Three majors inovations within 10 years will give long lasting competitive advantage 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 20 24 20 25 Paten t Sensors Non- melting ice cream Insects R&D R&D Benefits Finance Conclusion
- 23. 23 Muñoz Group « Sustaining GlobalVertical Integration through Innovation » - UNICC Case Competition - Thank you for attention! Questions? NPV detailsFinancial report ice creamSpain R&CUK R&C USA R&C Fixes and variablCompetitiv Leading ice cream beandsSize ice cream marketLeading format ice creamGrowth of traditional retailersInsect market sizeLoss in the suppInsect re Wacc Competitive Environment F&D Internet Retailing Online Growth USA Multichannel Website current Pricing Jaffa Tesco Fruit market growth Consumers : UK & US Multichannel consumers Breeding partnerships China Mobile growth S-commerce Int’ l consideration Issue Priority Average working capital requireme
- 24. 2418th of March2016UNICC NPV details
- 25. 2518th of March2016UNICC Financial report for ice cream MESURE CETTE ANNÉE (2017) ANNÉE DERNIÈRE (2016) VARIATION EN % REVENUS (M€ ) 136,82 € 122,16 € 12 % 54,73 € 48,86 € 12 % 82,09 € 73,30 € 12 % Depreciat ion 6,00 € 6,00 € 0 % St ruct ural Cost s 17,00 € 30,00 € -43 % RÉSULTAT NET 59,09 € 37,30 € 58 % IMPÔTS (30%) 17,73 € 11,19 € 58 % BÉNÉFICES APRÈS IMPOSITION 41,37 € 26,11 € 58 % Net Income aft er t axes 41,37 € 26,11 € 58 % Depreciat ion 6,00 € 6,00 € 0 % WCR 1,14 € 9,53 € -88 % ICF 0,00 € 0,00 € FCF 46,22 € 22,58 € 105 % WACC $0,00 $1,09 -100 % Discount Fact or $0,77 $0,84 -8 % NPV $0,00 $0,00 TENDANCE SUR 5 ANS Cost s of Goods Sold (M€ ) Gross Profit (M€ )
- 26. 2618th of March2016UNICC Spain revenues and costs
- 27. 2718th of March2016UNICC UK revenues and costs
- 28. 2818th of March2016UNICC USA revenues and costs
- 29. 2918th of March2016UNICC Fixed and variables costs
- 30. 30 Market share:9% 2010-2015 Retail Value CAGR growth: 4% (US$ 2015 fixed exchange) Top 5 markets: 1)US 4) Spain 2)Germany 5) France 3)UK • Market share: 3% • 2010-2015 Retail Value CAGR growth: 6% (US$ 2015 fixed exchange) • Top 5 brands: 1) Häagen-Dazs • Market share: 23% • 2010-2015 Retail Value CAGR growth: 8% (US$ 2015 fixed exchange) • Top 5 brands: 1) Magnum 4) Breyers 2) Cornetto 5) Carte d’Or 3) Ben & Jerry’s • Market share: 11% • 2010-2015 Retail Value CAGR growth: 1% (US$ 2015 fixed exchange) • Top 5 brands: 1) Dreyer's/Edy's 4) Outshine 2) Drumstick 5) Extrême 3) Nestlé # 1 Unilever Group # 2 Nestlé SA # 3 General Mills Inc Private Label Competitive state of the ice cream world 2015 Further Consolidation in Ice Cream
- 31. 3118th of March2016UNICC ice
- 32. 3218th of March2016UNICC
- 33. 3318th of March2016UNICC Retail Value Size of Ice Cream Categories 2005/2015 The leading formats in ice cream have not changed in 10 years
- 34. 3418th of March2016UNICC Growth of traditional retailers in emerging markets a challenge
- 35. 3518th of March2016UNICC Insect market size /fr.slideshare.net/quocngoc111/33-billion
- 36. 3618th of March2016UNICC Loss in the supply chain
- 37. 3718th of March2016UNICC Insect revenues details R&D water nutriment elecricity budling marketing KG prod Prix KG Revenues reduction costs pesticides Year 2015 10.000 35.100.000 260.000 1.804 10.833 100.000 130.000 70 9.100.000 179.400 Year 2016 10.000 40.365.000 299.000 2.038 12.458 100.000 149.500 70 10.390.250 179.400 Year 2017 10.000 46.419.750 343.850 2.303 14.327 100.000 171.925 69 11.902.368 179.400 Year 2018 10.000 53.382.713 395.428 2.602 16.476 100.000 197.714 69 13.604.024 179.400 Year 2019 10.000 61.390.119 454.742 2.941 18.948 50.000 227.371 68 15.557.090 179.400 Year 2020 10.000 70.598.637 522.953 3.323 21.790 50.000 261.476 68 17.789.985 179.400 Year 2021 10.000 81.188.433 601.396 3.755 25.058 50.000 300.698 68 20.342.714 179.400 Year 2022 10.000 93.366.698 691.605 4.243 28.817 50.000 345.803 67 23.260.987 179.400 Year 2023 10.000 107.371.702 795.346 4.795 33.139 20.000 397.673 67 26.597.031 179.400 Year 2024 10.000 123.477.458 914.648 5.418 38.110 20.000 457.324 66 30.410.516 179.400 Year 2025 10.000 141.999.077 1.051.845 6.122 43.827 20.000 525.923 66 34.769.613 179.400 110.000 854.659.587 6.330.812 39.344 17.530.750 660.000 3.165.406 213.724.579 1.973.400 total 1.704.191 9.496.218 29.540.503 R&D since 2015 €300k
- 38. 3818th of March2016UNICC WACC Source: www.waccexpert
- 39. 39 Industry Name AccPay/ Sales Non-cash WC/ Sales Electronics (Consumer & Office) 12.93% 18.81% Electronics (General) 12.11% 21.07% Engineering/Construction 8.15% 15.00% Entertainment 8.50% 12.06% Environmental & Waste Services 5.79% 11.04% Farming/Agriculture 9.21% 12.09% Financial Svcs. (Non-bank & Insurance) NA NA Food Processing 8.70% 8.71% Food Wholesalers 5.98% 7.79% Furn/Home Furnishings 13.90% 13.85% Average working capital requirement
- 40. 4018th of March2016UNICC Competitive environment Global presence Likelihood of Competition Fontestad Martinavaro Biogold Competitors (USA- Commodity) •Dole •Del Monte •Fresh Del Monte Competitors (USA- Patented) •True Citrus
- 41. 41 Food & DrinkInternet Retailing Population density is a key factor in making home delivery profitable High sales and population density Low sales and population density Source:
- 42. 42 Online grocery retailingis positioned for growth Source: McKinsey
- 43. 43 USA: Multichannel ExportingConsiderations • Munoz is currently “doing business with 7/10 leading supermarket chains” • California is largest fruit-producing state, accounting for over 50% of acreage • 2013 draught impacted • 3rd party providers • Peapod • Deliv • PrimeNow (Amazon) • Google Express • Instacart • Fresh Direct • Increasing blurred line between retailing and supplying
- 44. 44 Muñoz: Current websiterestructuring plans • Site(s) eventually including automatic payment services, financing options, growing advice and other services • Other services: complete brand portfolio (seasonality coverage, dynamic map of production facilities) retailer portals, • Four member team working in IT + R&D
- 45. 45 Muñoz: Pricing strategy Whenthe price premium was… 10% 50-80% 190-250% Recall of label information was… Decent Excellent Minimal Sense of personal relevance was… Noticed Pronounced Noticed Willingness to pay was… Moderate Greatest Moderate Source: Harvard *Based on a sample of graduate students examining supermarket items Demonstration of value-add: Shared costs + benefits of the co-ownership strategy, superior quality, reliability and performance/ethical feedback of partners
- 46. 46 What went rightwith the Jaffa brand? Jaffa • Unique proposition in exclusive Tesco sales deal • Strong customer recognition & loyalty • Maturity of brand (over 50 years since market launch)
- 47. 47 What went rightwith Tesco? Tesco • Simplify supplier relations + 3rd parties • Exclusive business rights • Developing category management relationship • Efficient produce model Muñoz Group • Leading retailer • Brand visibility • Logistics excellence AMT Fruit
- 48. 48 Predicted market sizegrowth: Fruit Industry (2015-2020) Source:
- 49. 49 Consumer Profiles UK • Lowimpact in produce branding • Price-conscious consumers • Spend less than 10% of income on food • 44% spend more time looking at ingredient labels USA • Low impact in produce branding • Consumers fixated on price
- 50. 50 Retail Consumers oftoday • Key Purchase Factors • Convenience/on-demand • Low/no cost • Transparity • Millennials and urbanisation • Google and Amazon are likely to drive out smaller-scale competition because of delivery costs • “Buy online, pick up in store” • Almost 30% difference in margin, easy entrance into the market Source:
- 51. 51 Existing breeding partnerships Direct •Spain • Morocco • Israel • Australia • RSA • Peru (Oranges) • Brazil (Grapes) Indirect • Chile • California • Florida • Italy • Japan
- 52. 52 China: Exporting Considerations •Imported premium fruits are more acceptable by consumers due to promotion via internet retailing and increasing disposable incomes • Fruits expected to see 3% volume CAGR over forecast period, with over 171 million tonnes in 2019 • Considerable production of grapes and citrus in combination with limited market presence makes it a very competitive landscape for Muñdoz
- 53. 53 Mobile Internet retailingis projected to experience almost 60% growth by 2020 Source:
- 54. 54 S-commerce is thebusiness model of choice in emerging markets Source: • An average of 40% of shoppers have bought something via a social media platform, versus 12% in developed markets • More reliance on mobile devices for internet connectivity
- 55. 55 Further international considerations •Developing markets: smaller, privately funded delivery services (low infrastructure + low labor costs = less efficiency, but more space in the market) • Young population, growing spending power, busy lifestyles • Developed markets: Ageing populations, relative wealth, high health awareness Source:
- 56. 56 Prioritizing issues How shouldwe use multichannel distribution? How should we innovate? Should we continue breeding and retaining rights to IP? Should we invest in gene sequencing? What will the consumer of the future want? How do we grow? How to increase cash flows? How to improve the export model between hemispheres? How can we attract the best talent? How to mitigate the risk from seasonal supply? Is vertical integration the only solution? Which model should be used for advertising?