Barbara Gettel
Augsburg College MBA595
Case Analysis
03/25/2015

Birds Eye and the U.K Frozen Food Industry

Birds Eye and the U.K Frozen Food Industry
INTRODUCTION
Birds Eye Foods Ltd. is a frozen food company, which prepares “Frozen Vegetables that are delicious and ready when you are”. In 1943 Birds Eye Foods was acquired under a parent company named Unilever. The main products for the business are as follows: fish items, chips, beans and peas. At one point Birds Eye was a leader in the market; however, as time as passed they have been losing their market share in the frozen food area. The marketing is expanding and with that brings new demands for products along with the ever growing competition in the frozen food area, coupled with distribution markets that have been riddled with not only challenges but opportunities as well. Birds Eye at one point in time was considered to be revolutionizing the frozen food industry; they used their relationships with their retailers and suppliers but since they have started to lose a foothold on the market things have become more difficult for them.
I - Situation Analysis
The early years of the 1900s began Birds Eyes command of the market in the frozen food area. The United States had created a freezing process that would be used industry wide. By 1939 quick freezing (commercially) was a hit. Retail distribution was now the largest barrier to industry growth. The smaller service shops were unable to facilitate the freezers in their shops so as a compromise the freezers were lent out to the smaller shops to avoid the costs being pushed onto them. The alternative to this would be to production facilities but these also proved to be far too expensive, in some cases costs were doubled.
When Birds Eye decided they would no longer rent out the freezers they were able to develop relationships with a couple refrigerator producers and in doing so convinced them to start manufacturing what they call “open top” display cabinets that were prime for frozen food storage. These would be designed pushed at retailers. This also allowed for a strategic advantage as Birds Eye would only do business with those retailers that had the “open top” freezers. Once these factors were into place the other cards fells nicely. With the freezer in place, demand for frozen food went up, as demand went up, prices fell. By the 1960s frozen food sales were not determined by availability but by customer demand. This caused a shift within retailers; the shift was a move away from counter service to self-service. This would also open up the doors to producers and more opportunities for them to get in on the action.
Around this same time we were introduced to supermarkets, this would expose the consumer to new products and cost savings which in turn would create an increase in demand for the wider variety of goods that were to be made available by the supermarkets. The ever increasing demand for not only space but produced goods and goods sold created the need for larger warehouses where frozen food could be stored and distributed from. Along with all the new changes came new opportunities in the catering sector. More and more catering establishments started popping up; percent consumption of catering companies increased from 16% in 1967 to 30% in 1973 (Exhibit 1b) however this segment was more focused on price than they were with brands.
By the 1950s – 1960s Birds Eye had two competitors in the frozen food business, they were Ross and Findus during this time they were also following a vertical integration strategy. The way the industry was structured around this time forced the businesses to vertically integrate. During this time stores started to create their own brands of food. These businesses were also considered full service, which meant that they not only distributed the goods but they also produced them and marketed them.
There was a lot going on during this time, not only did Birds Eye have to contend