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Question:

Discuss about the Business And Strategy of Hubbard’s Food Ltd.
 
 

Answer:

Introduction

Breakfast cereals and food products are important component in Fast Moving Consumer Goods industry reflecting greater demand basket of core population. Manufacturing of food products in scientific method and deliverance ensure quality and quantity to serve mass with the core necessity of life (West, Ford and Ibrahim 2015). Discussion is presented in report format on how the company, Hubbard’s Food Ltd. came into existence and thrived sustainably over years.

Discussion And Anlysis Of Growth  

Hubbard’s Food Ltd. is an eminent brand for manufacturing of breakfast cereals in New Zealand.  Specifically Auckland based, the company started off the remarkable journey of food supply business in the year of 1988 with the name Winner Foods founded by Dick Hubbard. Within 20 years of inception, the company managed a turnover of NZ$38 million with third highest market place after the brands like Sanitariums and Kellogg’s. The products of the company solely concentrate in ready to eat breakfast cereal items.  Popular items among consumers include Fruitful Lite, Berry berry Nice, Berry Berry Lite, Amazing Muesli and Light & Right available in range of flavours (Rosenbaum-Elliott Percy and Pervan 2015). The manufacturing process has conferred employment to 128 people by the end of 2008 (James 2015). The founder, the long term work experience of Dick Hubbard who started as food technologist at a tropical fruit factory on a Pacific island and later as general manager of local food manufacturer encouraged him for the start up in food industry generally aimed to produce bulk of cereals for supermarket sale. The initial years till 1992 financial hardship has been part and parcel and the destiny took turn with introduction of muesli that helped the company gain much popularity with huge amount of sale at supermarkets. From 1993 the growth of the company was visible in form of the outlet expansion and stuff recruitments to assist the business. The expanding demand created impetus to set up new factory at Mangere, Auckland. In the year 2001, the company had board of directors to consider and deal with the interests of stakeholders. The production strategy that was undertaken by Hubbard’s was focused on technology mostly operated by human than totally depending on machineries (Armstrong et al. 2014). The morale behind such decision was to perform social responsibility towards local people creating and encouraging employment.

 

Business Environment And Impact

From the very beginning the company faced challenges mostly financial and problems of brand recognition among the already established brands taking over the chunk of market share. The products having the root in fast moving consumer goods (FMCG) industry encountered much of local as well as global threats from the advent of 2000.  The structure of FMCG market in New Zealand is highly erratic and competitive within the sub domain of breakfast cereal markets having low margins that is offset by prodigious supply chain. Moreover the taste and preference of consumers differ based on seasonality which predicts demands to be high by 10% in summer than in winter. Moreover the existence of rival brands like Kellogg’s, Sanitarium and Uncle Tobys who also acquires top position in market creates much more market competition for Hubbard’s. Sanitarium is New Zealand based company having existence of 100 years so far (Hinton and Hamilton 2013). Their products include cornflake, weet-bix which have strong focus on philosophies of healthy living and vegetarianism that enable it to capture huge market share both in cereals bar market as well as breakfast-in-drink market.

Sanitarium and Hubbard’s almost have same production inputs that can be used as perfect substitute of each other in cases of emergency or shocks in availability that further creates a competitive atmosphere between the entities. Other two brands have their roots in Australia. Kellogg’s originated in 1920 and has large market power in both Australia and New Zealand where it gives competition to popular brands like Coco Pops, Special K and Nutri-Grain. Uncle Tobys on the other hand specializes more on breakfast cereals and some the products like Vita Brits; Fruity Bites have greater influence in cereal bar market (Devi et al. 2014). The company now offers 12 kinds of different toasted muesli once started only with simple oat bran muesli. Other than muesli, product lines include bran flakes and oats cereals. The products are gluten free, includes flavour of fruits that are grown both in New Zealand and tropical countries. The brand provides manufacturing and supply to few super market private brands that offers rice puffs and cornflakes at low price and such is excluded from their competition scale. The maintenance of quality along with variety in list of items that Hubbard’s produce, help the brand gain consistent differentiation in the products compared to the established competitors. This further consolidated the brand among consumers creating popularity and brand faith.

 

Business Strategy

To survive and sustain, Hubbard’s continued the core strategy of providing higher quality of goods without any compromise along with promoting and maintaining corporate social responsibilities. Dick Hubbard initiated New Zealand Business for Social Responsibility (NZBSR) in the year 1998 which is one of the founding members of New Zealand Business Council for Sustainable Development (NZBCSD). The company focused on evoking sustenance of mind, body soul among the people associated with the brand. It successfully conducted campaigns that call for waste management and eradication enlightening both employees and consumers as whole. It involves in recycling of papers, aluminium and plastic containers, plastic wraps, cardboards toner cartridges and so on.. Another remarkable strategy adopted by the brand is vast base of shareholders that include employees, customers and wider community along with various financial investors. The authority keeps the shareholders base intact as well as growing by sharing the profits among them and also local schools, non profit organisation and community organizations. The informal communication atmosphere within employees and between management and employee prevents collision and conflictions of perception (Kumar and Reinartz 2012).

This consolidated and growing faith upon the brand can further be taken into new level in form of higher growth and expansion of the business if the company adopts diversification of the products line it currently has (Grunert and Traill 2012). The popularity it has already earned by providing quality in breakfast cereals can now be channelized into creating new business in the market. It can introduce various other FMCG food items like dried fruits, fruit juice, bakery and confectionary products, biscuit, cookies and chocolates (Thain and Bradley 2014).

SWOT Anaysis

SWOT analysis describes the strengths, weaknesses, opportunities and threats to assess the business as a whole. Thus, the SWOT analysis of Hubbard is as follows:-

Strengths-

  • The product highly delivers brand recognition and its innate quality provides it some greatest advantage.
  • Based on the benefits of the cereals they sell their strength is its nutritional value.

Weaknesses-

As we know in these types of food related companies any strength can be its biggest weakness. However, its main weaknesses are those areas of the product that the company need to address properly and work on that part to get it eliminated as soon as possible. Thus, with the growing competitions and different tasty cereals in the market, Hubbard should come up with more tasty and variety of cereals.

Opportunities-

  • Change in consumer’s preferences can be its weaknesses. They must keep a tract that how customers are consuming their products.
  • The competitor’s weakness also adds as an opportunity in these kinds of businesses.

Threats-

  • The external markets are its biggest threats that can possibly harm the demand of the product of this company.
  • The change in the preferences of the customers, the growing strengths of the competitors and chance in the economy can all be threats to this business.

PESTEL Anaysis

PESTEL analysis is used to analyse the external marketing environment that has an impact on the organization. However, P denotes the political, E denotes economic, S for social, T for technological, E for environmental and lastly, L for legal factors affecting the business. Thus, the PESTEL analysis of Hubbard is as follows –

 

Political factors-

Political factors are basically those were the influences on the business. Therefore for this particular industry-

  • Free trade arrangement
  • The standards of the labours in the developing countries
  • Regulations on the organic and genetically modified organisms

(GMO) food

Economic factors-

  • Stability of the economic condition of the country
  • Higher rate of employment
  • The increasing cost of labours in the counties those are developing

Social factors-

  • The growing emphasis on the healthy lifestyles of the population in New Zealand
  • Expansion of cultural diversity in the country
  • Enlarging gap in wealth among the people

Technological factors-

  • There is an expansion in the automation in this business
  • With the growing time there is an increase in the usage of the mobile technology
  • An invention of GMOs

Environmental factors-

  • Global warming or any changes in the climate
  • Waste disposal
  • More emphasis on the business sustainability
 

Legal factors-

  • Environmental protection law
  • Antitrust law
  • Insufficient laws of labour.

Conclusion

Tracking the timeline of Hubbard’s existence it is evident that the company underwent different stages in the business life cycle through past 29 years. The company has been able to achieve huge market share in the breakfast cereal market even amidst the presence of numerous competitors due to the adopted business strategies combined with philosophies catering to social responsibilities

 

References

Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson Australia.

De Mooij, M., 2013. Global marketing and advertising: Understanding cultural paradoxes. Sage Publications.

Devi, A., Eyles, H., Rayner, M., Mhurchu, C.N., Swinburn, B., Lonsdale-Cooper, E. and Vandevijvere, S., 2014. Nutritional quality, labelling and promotion of breakfast cereals on the New Zealand market. Appetite, 81, pp.253-260.

Grunert, K.G. and Traill, B., 2012. Products and process innovation in the food industry. Springer Science & Business Media.

Hinton, M. and Hamilton, R.T., 2013. Characterizing high-growth firms in New Zealand. The International Journal of Entrepreneurship and Innovation, 14(1), pp.39-48.

Hjort, K., Lantz, B., Ericsson, D. and Gattorna, J., 2013. Customer segmentation based on buying and returning behaviour. International Journal of Physical Distribution & Logistics Management, 43(10), pp.852-865.

James, C., 2015. New Territory: The Transformation of New Zealand, 1984–92. Bridget Williams Books.

Kumar, V. and Reinartz, W., 2012. Customer relationship management: Concept, strategy, and tools. Springer Science & Business Media.

Rosenbaum-Elliott, R., Percy, L. and Pervan, S., 2015. Strategic brand management. Oxford University Press, USA.

Thain, G. and Bradley, J., 2014. FMCG: The power of fast-moving consumer goods. First Edition Design Pub..

West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage. Oxford University Press.

OR

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