San miguel

SAN MIGUEL: EXPANDING THE AMARANTH MARKET

Aspen Institute Case

Crummer Graduate School of Business

Team 3 Ruwanthi Herath William Périco Rajshree Singh Aaron Layden

Table of Contents

INTRODUCTION .................................................................................................................................... 2

CURRENT SITUATION ........................................................................................................................... 2

BRANDING ........................................................................................................................................... 2 “THE LOST GRAIN” CAMPAIGN ....................................................................................................................... 2 RENAMING: NUTRI–AMOR ......................................................................................................................... 3

MARKETING POSITIONING STRATEGY: SHORT-­‐TERM ........................................................................... 3 URBAN MARKETS ......................................................................................................................................... 3 RURAL MARKETS .......................................................................................................................................... 5

MARKETING POSITIONING STRATEGY: LONG-­‐TERM ............................................................................. 6 MEXICAN MARKET ....................................................................................................................................... 6 INTERNATIONAL MARKETS ............................................................................................................................. 6

CONCLUSION ....................................................................................................................................... 7

APPENDIX 1 – REBRANDING STRATEGY: RENAMING, LOGO AND NEW PACKAGE DESIGN ..................... 0

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Introduction Our student team is honored to be a part of the Aspen Institute Case Competition. To be involved in a project with the goal of providing helpful consultation to a world-class production company is an opportunity we immensely value.

Dr. Benito Manrique’s humanistic vision to revitalize amaranth as a staple Mexican crop that benefits all those associated with its production, sale, and consumption is an inspiring work in progress.

Our research team hopes to provide pragmatic, cost-effective solutions for the San Miguel production plant to raise public awareness of the benefits of amaranth and responsibly scale its distribution to help counteract obesity and malnutrition in Mexico and beyond.

Current Situation The primary issue in the case of San Miguel revolves around the lack of awareness of amaranth and subsequent low consumer demand in Mexico and abroad. At the present time, San Miguel’s primary customer is the government and the highly capable plant is not producing anywhere near capacity. Until this point, a comprehensive marketing and communications strategy has not been necessary for the company. However, given Manrique’s desired growth for the company, crop, and ultimate health of Mexico, it is imperative to develop an effective strategy rapidly.

Branding “The Lost Grain” Campaign Amaranth is a grain that has excellent nutritional qualities, and was present in the Mexican diet before the Spanish conquest of Central America. With the conquest, however, the crop’s cultivation and consumption was nearly extinguished, removing a substantial source of nutrients from the local population’s diet. More notably, this prevented amaranth from becoming known, cultivated and consumed on in international scale.

Despite the difficulties associated with cultivating the amaranth plant, its tolerance to almost any soil condition and temperature make it ideal for production and sale in international markets. Combining amaranth’s durability with the nutritional properties of the plant gives it a distinct value to countries needing affordable, durable, and healthy crops. For this reason, our research team recommends that San Miguel launch a marketing campaign entitled “The Lost Grain.” The campaign will promote the benefits and potential of amaranth by leveraging the fact that the grain has remained unknown for too long, while reinforcing the association between amaranth products and San Miguel name.

If successful, “The Lost Grain” will increase customer awareness about amaranth in both domestic and international markets, while making the company’s name become a synonymous with

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amaranth products. Moreover, statements endorsed by Dr. Manrique and/or other respected doctors around the world emphasizing the health benefits of amaranth would be included in the packaging of all products and marketing campaigns adopted by the company. Health conscious, first adopter urban citizens often gravitate towards such endorsements and this could represent a potentially powerful tactic for San Miguel.

Renaming: NUTRI–AMOR The second component of our team’s recommendation regarding San Miguel’s branding suggests the company change its name to NUTRI-AMOR. San Miguel was chosen randomly, and consequently has no real meaning. This complicates the messaging of the company’s value proposition and mission to customers. Moreover, San Miguel is not an easily “exportable” name, which makes international expansion even more challenging.

NUTRI-AMOR combines the words Nutrición (Nutrition) and Amor (Love), and even though amor is not an English word, it is widely known internationally. Such a positive, well-being oriented name gives the company a foundation on which to grow the amaranth legacy. Implementing this strategy will require a comprehensive rebranding of products and packages (refer to Appendix 1 for a sample of a new package).

Marketing Positioning Strategy: Short-­‐term Urban Markets In recent years, many citizens have moved from rural areas where farming was prominent, and have migrated into more urban regions for manufacturing jobs. This transition has created a larger population in the urban areas, as well as an emerging middle class. Nutri-Amor will target this population in urban areas with a product specific strategy using “The Lost Grain” campaign.

For the urban regions in Mexico, the team recommends Nutri-Amor select several of the existing amaranth varieties from its product portfolio. For initial introduction into the market, the company will select Amarantojitos to represent popped amaranth, as well as Nutrisol Plus to represent the protein concentrated products. There are lines of flavors and customizations to add variety to these primary offerings, yet the team believes Nutri-Amor should start with a limited amount of product in order to first test the reception in the general urban marketplace.

After careful consideration of distribution channels for the products, the primary channel for urban regions should be the retail giant Wal-Mart. Secondary channels such as kiosks at local malls as well as “mini poppers” at local markets will serve as important ancillary markets, yet Wal-Mart will play an integral role in raising awareness of amaranth. The Walmart locations will provide both the Amarantojitos as well as the Nutrisol Plus initially. (review!)

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An important aspect of branding the products for these new markets will be the packaging used. It is essential that, given limited marketing budget allocation, the packaging convey the value in choosing an amaranth based snack versus a snack made with any other product. The packaging will vividly tell the story of “the Lost Grain”, educating the consumer on the benefits of amaranth and the line of products produced specifically by Nutri-Amor (See appendix 1).

All of the firm’s products are produced with excellent ingredients and are considered to be of premium quality. Pricing these products for urban regions is a delicate process as the quality and value must be relayed without ostracizing price sensitive consumers. By using economies of scale within Walmart’s locations, the firm will be able to utilize a low cost strategy, yet earn high returns due to the quantity that they will be selling. In respect to secondary channels such as mall kiosks and various market locations, the firm can use the appeal of the popped amaranth being fresh and healthy in order to charge a fair price for this quality product.

In order to gain brand loyalty by consumers, it is important that they first learn about the product, and then try it for themselves to experience the associated quality and benefits. On a large-scale promotion plan, “The Lost Grain” campaign will be advertised using billboards. Specifically, the billboards will feature taglines related to “The Lost Grain” campaign to create buzz as well as increased impressions. Once buzz has been created, it is important to relay where the product can be purchased, whether it be advertising distribution at Walmart, the mall, or in the market. Consumers that arrive in the Walmart location will be presented with the answers of “The Lost Grain”, with a display that features the story of amaranth as well as the mission of Nutri-Amor. The mall kiosk and marketplace location will also feature similar displays in order to educate the customer. Samples will be provided in these locations, which grant the opportunity to taste the product and lead to purchasing decisions.

The importance of the mission has been relayed mainly in the packaging by the story and signature of the CEO and founder, Dr. Manrique. Selling the product through a large channel in urban regions will allow the firm to continually support health initiatives as well as the people of Huixcazdha.

The growth of the firm and subsequent increased aid to this region will ensure sustainability of the founding mission for Nutri-Amor.

The benefit of partnering with a large firm such as Walmart is the opportunity to sell a massive amount of product, thus increasing revenues while reducing unit costs through economies of scale. As in any new venture, the firm will be likely to encounter some risk by implementing this strategy. In order to supply a superstore such as Walmart, the firm must be able to fund the initial production. Also, in case that these products do not generate enough revenue to sustain the company, it may lead to more issues in brand development and growth.

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Nutri-Amor has a timely opportunity to enter the urban markets given the emerging middle class as well as the health benefits associated with the amaranth based products they produce. Establishing a brand presence within this market as a producer of raw and finished amaranth goods with a socially responsible business plan will allow the firm to gain a sustainable competitive advantage over second movers.

Rural Markets Initially, amaranth will be marketed to the rural communities of Mexico as popped amaranth. The primary purpose of this initiative will be to overcome the malnutrition problem among the rural communities. The products will be distributed in mobile outlets using food trucks. Each truck will be loaded with a mini popper, which will permit the company to serve their customers with freshly popped amaranth. The mobile service outlet will allow the company to have a lower per customer investment compared to operating permanent stores. The mobility of the trucks will also enable Nutri-Amor products to reach a wider customer base within a short period of time.

The company will follow a low profit margin strategy for the popped amaranth in order to make it affordable for the rural community. The high profit margins earned from the sales in the urban areas will aid the company to offset any losses incurred. This strategy is aligned with the company’s mission of providing “nutritional, economic and social benefits to the population of Mexico.”

The company will implement numerous tactics to promote this product among the rural communities. First, the trucks will be parked close to town centers and markets where people will be able to see and hear the machine popping the amaranth seeds. The truck will be a marketing mechanism also, with the company logo and health benefits of the product displayed on the truck. The employees working in the truck will be able to educate the potential customers on the health benefits of the product and will give away small portions of free samples. A sales discount will be offered to the initial fifty customers in each area. This will stimulate early adopters to try amaranth.

Financing the trucks will be a challenge for Nutri-Amor. The company should seek assistance from the government to either obtain a subsidy or a low interest business loan to help finance the trucks, which will be helping countryside communities fight obesity. In addition, the company will welcome truck owners from around the country who would be willing to join the project. Contracted drivers will be paid a weekly salary and maintenance fees for the truck. In this way, the company is supporting people from various communities as they distribute a healthy product.

The successful implementation of this rural strategy will have multiple benefits to the society and economy. The regular consumption of amaranth will provide beneficial nutrition and simultaneously help minimize malnutrition and obesity. Increased, stable sales will generate demand for amaranth, which will provide farmers the opportunity to sell higher volumes at a competitive price. This strategy will benefit

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the employees of the company who are currently under-utilized and will also create jobs in the food trucks. As a whole, this strategy will aim to gradually raise the living standards of the rural communities of Mexico.

Marketing Positioning Strategy: Long-­‐term Mexican Market Upon establishing awareness of the Nutri-Amore amaranth offerings in both rural and urban markets throughout Mexico, the research team believes new distribution channels and opportunities to reach previously untapped areas of the country will present themselves. Upon the success of the rural truck initiative, envisioned to provide healthy food to malnourished populations, the team would recommend pursuing an agreement with the Mexican government to distribute its products at Diconsa’s.

By this point, awareness of amaranth and its nutritional values would have been established to some degree and the production of Nutri-Amor potentially scaled, which would help the product visibility throughout the country. This type of incremental growth would help facilitate a long-term commitment from the government to distribute the amaranth to the Mexican populations who need healthy, affordable options the most. Although the profit margins would be low, the mission and purpose of the organization would be fulfilled.

From an urban point of view, establishing a relationship with Wal-Mart, the country’s largest retailer, will help Nutri-Amore effectively reach much of the emerging middle classes and establish itself as the preeminent amaranth brand in Mexico. In the long-term, this research team believes increases in healthy eating, buying power, and positive attitudes towards innovative food to be drivers of amaranth’s long-term viability in Mexico. Therefore, the company should seek to further build its channels into specialty food shops, GNC’s, and restaurants to diversify its urban consumer base.

International Markets It is important for Nutri-Amor to closely monitor the demand of amaranth in the short-term so that it does not outstrip supply capacity, which would drive up costs and ultimately derail the company’s mission. Incremental and sustainable growth is an important strategic element for Nutri-Amore and therefore international markets have received a secondary position in this case. The research team believes the franchise model for international markets would overextend the company’s production too early in the product life cycle. Furthermore, it would lose control of the brand and ability to guarantee that all members of the value chain are benefiting. However, upon developing sales channels in both urban and rural markets in Mexico, the company will be in a position to address increasing international demand for amaranth.

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In the long-term, the research team believes that the Mexican government is an important strategic partner to help communicate the usefulness of amaranth to other countries. Helping Nutri-Amor find export countries that not only provide a profit for the company, but help combat health problems and provide community value is of high importance to the firm. Upon fully developing sales channels and achieving consistent results in profits, health reports, and community building, Nutri-Amor should look to take its proven model abroad. Lastly, upon scaling operations and developing a steady supply and demand curve, the research team believes an international franchising model could help bring sustained growth to the company.

Conclusion  The previously discussed strategies will help the Mexican population develop access to and understand the value of amaranth, thereby helping communities combat malnutrition and obesity.

Furthermore, as the positive effects of the crop in Mexico are discussed internationally, the team expects the global demand for the product to gradually rise, giving Nutri-Amor time to scale its operation and assure the fulfillment of its mission domestically and abroad.

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Appendix 1 - Rebranding Strategy: Renaming, Logo and New Package Design Appendix 1 – FRONT Rebranding Strategy: Renaming, Logo and New Package BACK Design

AMARANTH !

THE LOST GRAIN Amaranth is a grain that has great nutritional qualities, and was present in the Mexican diet before the

AMA

S O T I J O T N A R

Spanish conquest of Central America With the conquest, however, the crop’s cultivation and consumption were nearly extinguished, removing a substantial source of nutrients from the local population’s diet. The grain has remained unknown for too long, and now it is time to reintroduce it in global scale to combat hunger and malnutrition.

Dr.$Manrique,$CEO$and$Founder

Nutritional Facts

*All$packages$will$u<lize$eco>friendly$and$recycled$material