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Marketing Strategy of Cremonini S.p.A.

Marketing Strategy of Cremonini S.p.A.

Discuss Marketing Strategy of Cremonini S.p.A. within the Marketing Management forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; Statistics: Public Company Incorporated: 1966 as Inalca S.p.A. Employees: 4,850 Sales: EUR 1.59 billion ($1.6 billion) (2002) Stock Exchanges: Milan ...

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Anjali Khurana
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Marketing Strategy of Cremonini S.p.A. - December 16th, 2010

Statistics:
Public Company
Incorporated: 1966 as Inalca S.p.A.
Employees: 4,850
Sales: EUR 1.59 billion ($1.6 billion) (2002)
Stock Exchanges: Milan
Ticker Symbol: CRM
NAIC: 311611 Animal (Except Poultry) Slaughtering; 424470 Meat and Meat Product Merchant Wholesalers; 722110 Full-Service Restaurants


Company Perspectives:
Today, the Cremonini Group is at the forefront of technological innovation and in the standard of quality of its products and services.


Key Dates:
1963: Luigi Cremonini establishes a small slaughterhouse with brother Guiseppe and friend Luciano Brandolini.
1966: The business is incorporated as Inalca and begins establishing an industrialized meat processing group.
1976: The company establishes Corte Buona and begins production of cured meats.
1979: The company acquires Marr and enters the catering sector.
1982: The company acquires Agape and enters the restaurant sector.
1985: The company acquires six Burghy's fast-food restaurants and builds the chain into 96 stores nationwide.
1990: Spice and flavorings production begins.
1991: The company acquires majority control of Quinta Stagione, a frozen foods door-to-door business.
1996: Burghy's chain is sold to McDonald's Corporation.
1998: The company changes its name to Cremonini S.p.A. and goes public on the Milan Stock Exchange; the company acquires Discom, Adria, and 76 percent of Copea.
1999: The company acquires Guardamiglio Carni.
2000: In partnership with Granada, the company wins the Eurostar rail link catering concession; the company signs a joint venture agreement with Roadhouse Grill.
2001: The company opens the first Roadhouse Grill in Italy.
2002: The company sells its spice and flavorings business to Kerry Group; the company sets up a Marr subsidiary in Spain.
2003: The company acquires cold meat specialist Ibis; the company sets up a Moto joint venture with Compass to enter the roadside catering sector.


Company History:

Cremonini S.p.A. is Italy's largest meat products group, with vertically integrated operations spanning slaughtering, processing, packaging, and distribution, including in the catering and restaurant sectors. Cremonini is also one of the leading European meat processing specialists. The company's Production division, which accounted for 45 percent of the company's nearly EUR 1.6 billion in sales in 2002, includes its Inalca beef slaughtering and processing operations--the company's historic core, which also operates the largest slaughtering facility in Europe--and Montana Alimentaria S.p.A., which embraces the group's cured meat and snacks operations. Inalca's brands include Montana and Montana Fresco and Hamby, while Montana Alimentaria includes the Montana, Corte Buona, Hot One, Spanino, and Harry's Bar brands. At 42 percent of sales in 2002, the Distribution division operates primarily through Marr S.p.A., which is active in both the catering and door-to-door markets, and includes frozen foods and ice cream specialist Quinta Sagione. Cremonini, which had been one of the first groups to introduce fast-food dining to Italy in the early 1980s, remains present in the restaurant sector, which accounted for 12 percent of its sales in 2002. The company's restaurant operations include Agape, which operates a variety of restaurants and food services in Italy's train stations and other public facilities; Chef Express, which provides on-board dining for trains and ferries in Italy and elsewhere in Europe; and Roadhouse Grill, under a joint venture agreement that gives Cremonini the right to exploit that restaurant brand in Italy and Europe. Although most of the company's revenues come from Italy, the company has begun a push to internationalize its operations, including the establishment of new operations, through Marr, in Spain in 2002. Listed on the Milan stock exchange, Cremonini remains controlled at more than 57 percent by company founder and Chairman Luigi Cremonini, who is seconded by son and CEO Vincenzo Cremonini.

Founding Italy's Beef Leader in the 1960s

The origins of Cremonini can be traced back to the early 1960s and the Castelvetro region of Italy, where the Cremonini family operated a small cattle farm. Luigi Cremonini, born in 1939, left home to study farming in Bologna, and then began an apprenticeship at a slaughtering cooperative. Cremonini's first attempt to enter business on his own ended in disaster, when the herd of pigs he had purchased contracted swine cholera and had to be slaughtered. Instead, in 1962, Cremonini returned to the beef sector. Setting up a new company, Cremonini was joined by brother Guiseppe and family friend Luciano Brandoli, and the partners rented a shed and began processing beef.

Italy's postwar economic growth had sparked a boom in meat consumption, especially beef, which came to be equated with a higher social standing. The country's slaughterhouses remained for the most part local, small-scale operations similar to Cremonini's. Yet Cremonini and his partners quickly recognized that by adopting modern slaughtering and processing techniques found elsewhere in Europe and establishing a brand name, they would be able to expand to a national scale. In 1966, the three partners created Inalca S.p.A. and began slaughtering, processing, and marketing an expanding line of fresh and frozen beef products.

Over the next several years, Inalca added a number of new production sites, including cold-room and freezer facilities, allowing the company to launch industrialized beef slaughtering and processing. By the mid-1970s, Inalca had become Italy's foremost beef products producer, processing more than 120,000 tons of beef per year.

Inalca initially limited its production to cuts of beef; in the mid-1970s, however, the company became interested in diversifying its activities. In 1976, the company created subsidiary Corte Buona and launched its first cold-cut products, including salami and other cured meats.

The success of Corte Buona encouraged Inalca to seek further areas for diversification. In 1979, the company moved toward vertical integration with the purchase of Marr S.p.A. That company, founded as the cash-and-carry firm Magazzini Alimentari Riuniti Riminesi in 1972, had developed into the broader catering sector as a supplier of food products to restaurant and hotel markets. The company's next acquisition, of Agape in 1982, gave it its first taste of the restaurant sector. Agape specialized in the collective restaurant sector, and built up a strong business as an operator of restaurants in Italy's train stations. By then, the company had restructured under the holding company Castelvetro Finanziaria, or Cafin, but was best known as Gruppo Cremonini.

Diversified Italian Foods Leader in the 1990s

The year 1982 was to see a revolution in Italian dining--which tended to traditional, drawn-out meals--when the country's first American-style fast-food restaurant, called Burghy's, opened in Milan. The new concept, centered around hamburgers, appeared to be a natural extension for Cremonini's existing beef-based and catering operations, and in 1985, the company purchased Burghy's, which by then had grown to a chain of six restaurants, from the SME foods group, later taken over by Buitoni. Under Cremonini, the Burghy's chain grew strongly, building up a network of some 96 restaurants throughout Italy by the mid-1990s. The success of the Burghy's chain led Cremonini to launch a second fast-food chain, called Italy & Italy.

Cremonini continued to look for opportunities to diversify. In 1988, it began extending its catering division in a new direction, with a purchase of a stake in a door-to-door delivery group, Islandia, and its Quinta Stagione frozen foods delivery service. By the beginning of the 1990s, Cremonini had stepped up its interest in that group, gaining control in 1991. Cremonini had also expanded elsewhere, adding a unit producing spices and flavorings, and expanding into various other foods categories, such as mineral water, oil, and even wine.

By the mid-1990s, Cremonini had developed into one of Italy's most prominent food businesses, dominating most of its markets. The company's foodservices division, grouped under Agape, had developed a number of successful restaurants and foodservices concepts, a branch that grew further in 1995 when the company acquired the famed Harry's Bar Roma brand. The company also had developed an on-board dining business, called Chef Express, that gained the concession to the Italian railroad system.

By the middle of the decade, Cremonini had begun to eye the public offering of at least part of its diversified empire. As part of the run-up to a public listing, the company restructured, cutting out a number of noncore operations, including its wine and oil operations. The company also decided to exit the fast-food market at this time, unloading its Italy & Italy restaurants and finding a ready buyer for its Burghy's chain in McDonald's Corporation. Long unable to crack the Italian fast-food market, McDonald's offered some $200 million to acquire the Burghy's chain. As part of the acquisition, McDonald's also agreed to give Inalca a five-year supply contract, positioning the company to become a prime supplier for McDonald's entire European operations.

The U.K. outbreak of BSE (bovine spongiform encephalopathy, more popularly known as "mad cow disease") put a damper on Cremonini's public offering plans that year. Instead, Luigi Cremonini bought up brother Guiseppe's 33 percent share in the company. The company continued to seek a public listing, now announcing its intention to list Marr on the NASDAQ. Ongoing consumer fears spurred by the BSE crisis forced the company to show losses for the first time in its history in that year. Instead, Luigi Cremonini bought out founding partner Luciano Bandolini, gaining full control of the company.

International Expansion for the New Century

Cremonini changed the company's name to Cremonini S.p.A. in October 1998. In December of that year, the company finally achieved its public offering, listing on the Milan exchange. Luigi Cremonini and his family nonetheless maintained control of the company's stock. The company also bought back the shares in Marr that had been sold on the NASDAQ.

In 1999, Cremonini moved to solidify its position in Italy, buying up its main beef processing rival, Guardamiglio Carni, in 1999. That acquisition was followed with two food distribution specialists, Discom and Adria Food, and a 76 percent stake in catering and distribution specialist Copea, all of which were acquired in 1998.

Cremonini now began to look beyond Italy for its future growth. In the late 1990s, the company began setting up a number of joint ventures in order to take it into foreign markets, including Argentina and Brazil. In Canada, the company formed a joint venture with Santamaria Foods to produce cured meats for the Canadian, Japanese, and--in a move to skirt restrictions on European meat imports--the U.S. markets as well. In October 1999, the company bought up a 25 percent stake in Stavropol, one of the largest producers of tinned meats for the Russian market. The company also formed a joint venture, Inalca Angora, taking it into Angola. By 2000, some 30 percent of Cremonini's sales were generated internationally.

That same year, Cremonini's international ambitions received a boost when the company teamed up with the United Kingdom's Granada to win the contract to supply catering services for the Eurostar rail link between France and the United Kingdom. In March of that year, Cremonini acquired a 51 percent stake in Frimo, an international meat trading group. The company also extended its catering operations in 2000 with the award of the catering contract for the Moby Vincent ferry between Olbia and Civitavecchia. Meanwhile, the company prepared to broach another frontier, setting up an e-commerce-capable web site for its frozen foods, ice cream, and ready meals.

The company also marked its return to restaurant operations in 2000, when it signed a joint venture agreement with U.S.-based Roadhouse Grill (owned by Malaysia's Berjaya Group) to introduce the Roadhouse Grill restaurant format into Italy and the rest of Europe. Cremonini began plans to introduce as many as 40 Roadhouse Grill restaurants in Italy by 2003, and as many as 20 more in Europe by 2004. The first Italian Roadhouse Grill opened in 2001.

Cremonini was hit hard by a new BSE crisis, when the disease, initially thought to be confined to the United Kingdom, began appearing on the European continent. Cremonini's stock price slumped as a result of the new drop in consumer confidence--and the company itself came under scrutiny after shipping beef from a cow suspected of being infected with BSE to McDonald's. In response, Cremonini launched a public relations campaign to reassure the consumer public over the safety of its meat.

By 2003, Cremonini had weathered the worst of the BSE crisis, as the beef market recovered to its pre-BSE levels. By then, Cremonini had sold off its spices and flavorings unit to Ireland's Kerry Group for EUR 3 million. The company also moved to enter Spain in 2002, setting up a subsidiary of Marr on the island of Majorca in order to tap into the tourist market there.

Cremonini's expansion continued into 2003, with the acquisition of Italian cold meat specialist Ibis, for EUR 7.5 million. In that year, the company created a joint venture with the United Kingdom's Compass Group in a push to enter the highway foodservice market. The joint venture then took over Compass's existing roadside service operations in Italy and Austria, Moto S.p.A. and Autoplose Ges.mbH, and adopted the name Moto S.p.A. Cremonini appeared set to repeat its successful growth on the international food and catering markets in the new decade.

Principal Subsidiaries: Marr S.p.A.; Islandia S.p.A.; Montana Inalca S.p.A.; Montana Alimentari S.p.A.; Agape S.p.A.; Roadhouse Grill Italia S.r.l.

Principal Competitors: Orkla ASA; DANISH CROWN AmbA; Royal Cebeco Group Cooperative UA; Kerry Group PLC; Glanbia PLC; SOCOPA S.A.; Autogrill S.p.A.

Last edited by anjalicutek; December 16th, 2010 at 01:36 PM..
   
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