Del Monte
February 5, 2008
BUS 4633 Homework
Industry Analysis
Do-Over
Del Monte Foods is part of an industry that manufactures and wholesales processed and packaged foods. For comparison purposes, the focus of this assessment will be on the portion of Del Monte's business that concentrates on canned fruit, vegetable, and tomato products, which makes up 63% of the company's production. Del Monte's main competitors are companies such as Dole Food Company, Inc., General Mills, Con Agra Foods, Inc., and Campbell Soup Company that also process and package foods, specifically in canned form. Among the non-competitors are firms that deliver fresh produce and firms that provide frozen produce; other non-competitors are restaurants and fast-food chains. These businesses are excluded from the comparison because the final consumer would have a different meal preparation approach and a different lifestyle. These firms, however, could be considered substitutes if necessary for the consumer.
Considering competitive rivalry, this is a moderate threat to businesses in this industry. The industry is already mature and stabilized, but products are intensely similar and the customer can easily switch with very little consequence. Although the year-round sales are stable due to the nature of the products themselves, firms struggle with each other to steal customers away. This industry is attractive due to strong loyalty to particular brands, however advertising expense is high in the effort to gain new customers and to build/maintain strong brand images.
The outlook is quite favorable with respect to the bargaining power of suppliers. Industry inputs are certainly not unique: produce is produce. The relationships between the suppliers and the manufacturing firms is most likely strong and long-term, however, should this change, switching costs would be minimal. The suppliers depend upon the processing industry to get a vast amount...
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