Engro Foods Limited is a subsidy of Engro, and it was launched in 2004. The company has established processing dairy products (Engro Foods, 2017). Its top quality brands like Olwell, Olper’s, Tarang, Owsum, and Omore are successfully running under the company’s dairy products. Engro has invested tremendously in building the milk collection and milk processing infrastructure. Naturally, Engro Foods is likely to expand and venture beyond the dairy sector. Engro Foods have also launched its fruit juice brand. “Elevating Consumer Delight Worldwide,” is Engro Food’s vision. The company aims to produce revenue from international operations as well.
Cash Cow
Olper’s milk is the cash cow of Engro foods. It has a large market share but without growth. It only has a substantial source of income for the business and generates a fair amount of sales in the local market. Before Olper’s milk came into play, other brands like Nurpur, Good Milk gained success in the markets. Today, Olper’s milk has a fairly high market share, and it is the third largest milk producer across Pakistan (Gul, 2015). Both Olper milk and cream fall under the same brand name. Olper can milk the cow with a strategic placement it the market, and it can give a strict competition to brands such as Tarang and Omore. Olper may also increase its current market share in the process. While Olper milk and cream do generate cash for Engro foods, the market is not yet mature. The sales are not constant of Olper milk, and this can be a cause of setback for Engro Foods. Engro Foods have been expanding its products and boosting its sales with products in Pakistan. Recently it made its expansion in North America, with targeting 7 million Muslims.
As we analyze the milk market share the statistics are as follows:
1. Milk Pak: – 45%
2. Haleeb: – 34%
3. Olper: – 21%
The growth rate is +4.
Stars
In the BCG matrix, One can place two products. These are Omore and Tarang. These products have a comparatively high market share in the growing industry. The market share is increasing for both Omore and Tarang. The products are comparatively new in the market, and the market share is not so well established yet. We do see a lot of potential in the two products. An investment in these two products will be of use in the future. An adequate investing strategy is to be used for constant growth, and the company should invest in the product to grow the present level of market share. As the want for tea-whiteners and ice cream increases, it will lead to more growth opportunities for Engro Foods. One should keep in mind that the company is not immune to competition from Walls, Yummy or every day. The star products of Engro foods offer an expanding market share and opportunities to get ahold of the ice cream and tea whitener market. One concern for the management of Engro foods and representatives of Omore and Tarang is to make sure the two products will be a source of strong sales, as the fluctuating number of sales can impact the revenues.
Ice Cream Market Share
1. Omore: – 38%
2. Walls: – 45%
3. Yummy: – 17%
The growth rate is 5%.
Tea Whitener Market Share
1. Tarang: – 51%
2. Every day: – 27%
3. Tea Max: – 22%
The growth rate is 8%.
Question Marks
At the end of 2010, Engro Foods debuted the product Olfrute and launched the first juice brand. Olfrute does have a low market share, but the potential is quite high. Against the monopolist and strong brand name, Nestle, Olfrute is facing tough competition. The sales and promotion of Olfrute show us that it can be a successful product, but the product is yet to evolve. Since 2010, Engro Foods has launched flavored milk as well, with the name Owsum. The experiences of Haleeb were better in this department. Engro Foods still have a long way to go to succeed in the juice and flavored milk departments. The juice and flavored milk market in Pakistan do not have too much competition other than nestle. When Owsum was released in Pakistan, it had favorable responses, but recently the sales are below average. With so many children forming part of the flavored milk industry, there is a very high potential. Owsum and Olfrute have not been able to maintain their position and gain revenues.
Juice Market Share
1. Nestle: – 49%
2. Olfrute: – 13%
3. Country: 25%
4. Haleeb: – 13%
The growth rate is 2%.
Dogs
Engro debuted a brand with the name Olwell, that had low fat and high calcium. The main competitor Nesvita, by Nestle, was the main competitor and Olwell has not managed to have a great run in the market. The sales have decreased even more in the last three years. The strategic placement to promote sales of the product is highly unlikely to work. Olwell has not gained its reputation in the market. Perhaps, extreme marketing and discounts can boost the sales for a short period. The revenue that Olwell gained for Engro foods is questionable. The outlook is mostly dull, and the target market did not accept the product.
The Milk Market Share
1. Dairy Omang: – 10%
2. Milk Pak: – 45%
3. Dairy Queen: – 38%
4. Halla: – 7%
Conclusion
1. Star products of Engro Foods is Omore and Tarang, and these are the leaders of the business.
2. The Cash Cow Engro foods are Olper’s milk, which functions as the foundation of the company.
3. The Question Marks of Engro foods are Olfrute and Owsum, and the investment is high on these products. The
4. The Dog of Engro Foods is Olwell that is the cash traps of the company.
Star Strategy: Engro Foods should consider investing more in Omore and Tarang for boosting the profits in future growth, and to earn more market share and profits.
Cash Cow Strategy: Engro Foods can use the profits to finance new growth and products in more industries. The company has expanded its name to Engro Fertilizers in the past (Hussain, 2016).
Question Mark Strategy: Engro foods should investing heavily on Olfrute and Owsum to push them to the star status, and avoid becoming a dog.
Dog Strategy: For Engro foods, the retraction of Olwell from the market is a valuable step. The investment may be stopped.
The BCG matrix is one of the best methods for a business portfolio analysis and can help Engro foods in implementing the right investment actions.
References
Engro Foods, 2017. Engro Foods. [Online]
Available at: http://www.engrofoods.com/
[Accessed 24 February 2017].
Burki, A.A. and Khan, M.A., 2008. Milk supply chain and efficiency of smallholder dairy producers in Pakistan. Lahore University of Management Sciences.
Gul, I. and Hasan, S.F., 2015. Effect of Organizational Work Climate on Job Satisfaction: An Empirical Study of Engro Foods Ltd Pakistan. Global Journals Inc, 15(11), pp.41-50.
Hussain, D., 2016. Engro sells fertilizer stake for Rs19.3bn. [Online]
Available at: https://www.dawn.com/news/1263580/engro-sells-fertiliser-stake-for-rs193bn
[Accessed 24 February 2017].
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