Delissa
in Japan
CASE STUDY OF AN INTERNATIONALIZATION OF A
SWEDISH COMPANY INTO THE JAPANESE MARKET
TEAM R.A.M.
Rita.Anja.Michel

Rita Chen
MA1N0103

Anja Išek
MA1N0206

Michel Sung
MA1N0245
AGENDA



INTRODUCTION

History

Abstract
CASE DESCRIPTION AND ANALYSIS

Proposal for entry into Japanese market

SWOT analysis based on pre- launch data

Entry strategy

Situation after 3 years and leading up to 2001
RECOMMENDATION AND ANALYSIS

Mangers point of views

Questions and recommendations

Conclusion
INTRODUCTION
•
ABSTRACT
•
HISTORY OF AGRIA
ABSTRACT

AGRIA, a Swedish milk products cooperative launches
its Delissa yogurt in Japan through a joint
venture/franchise agreement

At launch in 1991, AGRIA expected to reach between
10% and 15% of the total Japanese yogurt market.

Despite repeated surveys and visits from AGRIA market
specialists, Delissa fails to reach 3% of the market in
Japan after 10 years of operation.

Disappointed by Delissa's poor results, the Swedish
management begins to wonder whether they should
continue in Japan, change franchisee or pull out.
HISTORY OF AGRIA

1973 : founded by Swedish dairy cooperatives

1980 : Delissa line was launched

1981 : USA launch
12,5 % (MS in 2001)

1984 : Germany launch
14%

1986 : UK launch
13,8%

1987 : France launch
9,5%

1991 : Japanese launch
2%~3%

2000 : 2,9 billion sales / 4,400 employees
CASE DESCRIPTION
AND ANALYSIS
•
PROPOSAL FOR ENTRY INTO JAPANESE MARKET
•
SWOT ANALYSIS BASE ON PRE- LAUNCH DATA
•
ENTRY STRATEGY
•
SITUATION AFTER 3 YEARS AND LEADING UP TO 2001
PROPOSAL
FOR ENTRY INTO THE JAPANESE MARKET
OBJECTIVES

Expected growth rate : 10% or 15% total market

5 % first year

10% in 3 years

Positioning : high quality range of yogurts

Target areas : TOKYO, OSAKA , NAGOYA in 2 years

Rest of the country within 3 years
SWOT ANALYSIS
based on pre-launch data
STRENGTHS

Worldwide presence : 13 foreign countries

Worldwide known brand

Partnership : Nikko

2nd largest association agriculture cooperative

Leader various/food product

Strong supermarket distribution system
SWOT ANALYSIS
based on pre-launch data
WEAKNESSES

Dependency on local partner : since the
franchisee doesn't master very well other
languages but their own one (Japanese),
Franchiser have to trust and count on locals.

Communication between both companies

Language barrier

Cultural barrier
SWOT ANALYSIS
based on pre-launch data
OPPORTUNITIES

30% household budget allocated to food

In 1990, total yogurt market : 600 million cups

Westernization of society : interest to western
products

Income is high

Culture and distribution of wealth is homogeneous
SWOT ANALYSIS
based on pre-launch data
TREATS

Low consumption of dairy products

Substitute : Yakult Honsha / local desserts

Urban lifestyle => shop daily => expect freshness

Distribution system is complex and expensive

Competition

Japanese manufacturers :
Snow Brand Milk Products : Largest manufacturer of dairy product : 25% MS
Meiji Milk products : Alliance with Bulgaria government : 2nd largest : 19 %MS
Morinaga Milk Industry : third largest, JV with Kraft US for cheeses : 10% MS

European brands : DANONE /Yoplait
THE ENTRY STRATEGY



Segmentation

Drinking milk

Eating milk product
Targeting

housewives => purchasers

Core target : families with babies

Young children to high school students
Positioning

Luxurious mass communication product

« Refreshing nature of Delissa Swedish yogurt; it’s fresh when
it’s made at the farm »
THE ENTRY STRATEGY


Advertising

Intensive / short period of time

High budget, almost equal to launch in U.S.

Channels : TV ads / Newspaper/magazine
Pricing


15% above competitive products
Launch

March 1, 1991 => Tokyo

May 1, 1991 => Osaka and Nagoya

3 types of products

Plain / Plain with sugar / Flavored
1994
DELISSA AFTER 3 YEARS
Positive
• Strong « fashionable » Image
Negative
•
2% of the Japanese yogurt market
•
Distribution should be improved
•
Ordering system is overcomplicated and
slow and is cause of delivery bottlenecks
•
Delivery procedure is too long
•
Observed that small streets and
identification system affect deliveries
•
Small outlets => small storage => more visit
from wholesalers
•
Weak support of sales force : 5% of their
time
•
Advertising is not successful : messages are
too cluttered => low brand awareness
•
Delissa has not so much differentiation in
terms of taste
DELISSA IN JAPAN
SITUATION IN AND LEADING UP TO 2001
Positive
• Market is large
Negative
•
Less than 3% MS after 10 years
•
Low coverage in small cities
•
1998 : Consumer’s brand loyalty is low
•
Lack of real marketing function in Nikko
•
Distribution : cost are high and excessive
compare to competition
• 2001 : Segment of plain yogurt
grown by almost 50% in the past 3
years
•
Low distribution levels
•
1999 : Positioning mistake : “Freshness”
concept is wrong
• Yogurt with jelly and Plain yogurt
drink segment are selling well
•
Low results in Fruit segment, custard and
chocolate pudding
•
Unreliable information from Nikko
•
Product return is high
• High potential among young
population
• Nikko has the size and manpower
to increase penetration by 2000
DELISSA IN JAPAN
SITUATION IN AND LEADING UP TO 2001
MARKETING SITUATION

Media planning

Wrong media planning : target doesn’t match with the
broadcasting hours


Advertising rates are more expensive compared with Europe
Positioning : 3 segments

Plain yogurt : marginal profits on this segment. Advertising
concentration with existing brand image would differentiate the
product and increase sales, reduce costs and increase profit

Flavored : periodic spot

Fruit : periodic spot, new commercial to stress the fashion
concept.
DELISSA IN JAPAN
SITUATION IN AND LEADING UP TO 2001
Brand awareness
Yoplait Danone Delissa
Bulgaria
Unaided
4%
4%
3%
27%
Recall
14%
16%
16%
47%

Photo aided
Fruit yogourt : Bulgaria > Yoplait > Delissa 71% > Danone
Yogourt drink : Delissa – 44 % close to Bulgaria

Brand Image : Delissa is less desirable than Meiji Bulgaria
except fashionability
DELISSA IN JAPAN
SITUATION IN AND LEADING UP TO 2001
Advertising awareness
Brand
%
Channel
%
Bifidus
Bulgaria
Delissa
Danone
Yoplait
43%
41%
36%
28%
26%
TV
In-store
promotion
94%
6%
newspaper magazines
4%

65% could recall something about current ads

9% could recalled previous ads

55% didn’t know what the company was trying to say
4%
DELISSA IN JAPAN
SITUATION IN AND LEADING UP TO 2001
Consumption follow-up

77% had consumed plain yogurt within the past
month
Consumption of plain yogurt
Bulgaria
Bifidus
Yoplait
Danone
Delissa
DELISSA IN JAPAN
SITUATION IN AND LEADING UP TO 2001
Consumption follow-up

22 % had at least tried Delissa - 66 % for Bulgaria

Plain category, mainly consumed :

First : Bulgaria, second : Bifidus, third : Delissa
Fruit segment
Rank
Brand
% Consumed
1th
Yoplait
10%
2nd
Bulgaria
8%
3rd
Delissa
5%
4th
Danone
3%
CONCLUSION and
RECOMMENDATIONS
•
MANGERS POINT OF VIEWS
•
QUESTIONS AND RECOMMENDATIONS
•
CONCLUSION
POINTS OF VIEWS
BORG
• Language problem
create frustration
•
•
•
•
GUSTAFFSON
KARLSSON
• Lack of knowledge • Poor
about eating milk
communication led
and yogurt business
to mass conflict
NIKKO was not
data
committed to the
• Autonomy issue
development of
• Frequent turnover
• Accept and trust
the Delissa brand in
of managers
NIKKO
Japan
responsible
• Keep the JV and
Joint-Venture
• Paradoxes :
give more time
misrepresented the
Westernization but
situation to AGRIA
local taste
predominate
Confusion in
positioning and
• Taste adaptation :
advertising
European flavors
don’t succeed
Leaving Japanese
market
RECOMMENDATIONS

Almost ten years after launching Delissa with Nikko, should Agria cancel
its contract and find another distributor ?
Considering all the huge previous investments in terms of capital, time,
partnership, training, distribution and the existing relationship, Delissa
shouldn’t cancel it’s contract.
Indeed, the cost of changing distributor would be very high. Rebuilding a
partnership with a distributor takes time and considerable amount of
money. Training the new team is expensive and take time. It will be mortal,
weakened the brand and competition will take advantage of the situation
In addition, considering the weight of the actual partner, it would be hard to
find another partnership with the same size. Finally, the problem of
language and cultural barriers would remain the same.
RECOMMENDATIONS

Should Agria renew the arrangement with Nikko and
continue to try to gain market share ?
Agria should renew the arrangement with Nikko. However
internal issues must be handle with negotiations and
communication because the market potential is there to be
taken.
The autonomy of the franchisee must be controlled. Strategies
must be applied with cooperation. Data conflicts has affect
on the effectiveness of action. Terms of arrangement should
be redefine and must be clear.
RECOMMENDATIONS

Should Agria admit defeat and withdraw from Japan
completely ? Or…was it, in fact, defeat at all ?
Agria shouldn’t withdraw from Japan. The opportunities and
prospects of the market are promising.
The reasons of their “defeat” are organizational and internal
issues but also a lack of understanding and adaptation to the
Japanese market which led to unfit marketing actions.
Indeed, the targeting and positiong were confusing, not clear
and not suitable. Many wrong marketing moves were done.
However, Agria must learn from experience and corrections can
be taken.
Finally, the benchmark with the competition shows that Agria is
not doing so bad compare to Yoplait and Danone.
CONCLUSION

AGRIA enter Japanese market in 1991. They thought that they would succeed
as they did in other foreign countries. They might have underestimate the
complexity of the market and didn’t take enough time to prepare their entry.

Despite the fact that AGRIA haven’t reach their objectives, they should keep
trying to gain market share in Japan with the NIKKO partnership.

If their advertisements (advertisement awareness) were somehow effective,
there were a important gap between what they wanted to communicate and
what Japanese really perceived (brand awareness). The message and their
positioning was confusing. With their “fashionable” image they would rather
target Young adult rather than housewives or children. Finally, flavors must be
adapt to local taste.

The internal issues between the both companies created frustration in both
sides. In order to solve the problem, they must be courageous and face the
issues trough clear negotiations. Effective Information system must be rethink to
improve data sharing.
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Tack för er uppmärksamhet
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