Delissa In Japan
HEG
Hung Duy
Elwin
Kusumaningtyas
Goran Adam
Gasparac
Agenda
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Japan yogurt market
History
Competitors
Franchisee - NIKKO Japan
Strategy
1990: DELISSA AFTER THREE YEARS IN JAPAN
LEADING UP TO 1997
Problems
Solutions
Conclusion
What Agria should do?
Japan yogurt market
• Japan is not a dairy product consumer.
• Urban density naturally affects lifestyle, tastes,
and habits.
• Disposable income is high. The Japanese
spend over 30 percent o their income on food.
• Westernization (goat milk vs cow milk)
• Japanese market has still potential for growth.
Japan yogurt market
• Per capita consumption of yogurt in Japan is
estimated at around 5.3 cups per person per year
in Japan, versus 110 in Sweden and 120
in Finland.
• Seasonal sale is in Japan through March to July.
• The highest sales have been recorded in June so
ideal launch date would be at the end of
February.
• 80 percent of yogurt is sold through
supermarkets.
Japan yogurt market
• Plain yogurt: 39 percent of the market in
volume.
• Flavored yogurt: 45 percent of the market in
volume.
• Fruit yogurt: 16 percent of the market in
volume.
History
• Agria is a leading dairy products cooperative in
Sweden. (Yogurts, Desserts, Fresh cheese and Fresh
cream)
• Sweden’s leading dairy products cooperative, Agria,
Delissa line was launched in 1980, encountered
difficulties in Japan market.
• By 1997, more than 1.1 billion Delissa yogurts and
desserts were being consumed per year worldwide.
• In fiscal year 1996, Delissa had sales of $2.1 billion and
employed 4,400 people in and outside Sweden.
History
• The total yogurt market in Japan for 1986 is approximately
600 million cups.
• Next five years’ expected market grow is at least 8%.
• Company’s launch strategy would be based on expected
growth rate of 10% or 15% for the total market.
• First year, target of market share is 5 percent and 10
percent share of market within three years of launch.
• Company’s plan to cover the three main metropolitan
areas, Tokyo, Osaka, and Nagoya, within two years period
and the rest of the country within the next three years.
• Delissa’s share of the total yogurt market had fallen to 2
percent in 1997.
Competitors
Company
Turn Over (1985)
Snow brand milk products
443.322 million yen
Meiji milk products
410.674 million yen
Morinaga milk industry
301.785 million yen
The Japanese also consume a yogurt drink called ‘Yakult Honsha’ which is often
included in statistics on total yogurt consumption as it competes with normal yogurt.
Franchisee - NIKKO Japan
Distribution
• Using of existing channels of distribution with daily schedules
and enjoy lower
• Distribution costs for new products.
The Japanese retail system :
• Three major metropolitan areas in Japan are; Tokyo 11
million, Osaka 3 million, Nogaya 2 million inhabitants.
• Nikko is dominant in these areas.
• Initial strategy would be to accepts Nikko’s current milk
distribution system as the basic system and at the same time,
adopt shifting distribution routes.
• Japanese complicated street identification system makes great
demand for distribution and drivers.
Franchisee - NIKKO Japan
• Nikko is the price leader for various food
products in Japan.
• Nikko is a significant political force in Japan.
• Nikko is divided into two parts. ( process and
distribution)
• Nikko is the big and its credentials seem
perfect for Agria in JAPAN.
Strategy
Entry Strategy
• The concept is natural dairy food is good to taste is
proposed as the basic message.
• The core target is families with babies. However the
product will be consumed by a wider age bracket from
young children to high school students.
• Advertising and point of sale message will address
housewives, particularly younger ones.
• It is essential that ads be attractive and stand out
strikingly from the others, because
• Nikko is newcomer in this competitive market.
• Delissa should be positioned as a luxurious mass
communication product.
SRT proposal
• SRT proposed that Japanese housewives were
becoming more diet conscious, it might be
advisable to mention the dietary value of
Delissa in the launch rationale.
• The text was ‘refreshing nature of Delissa
Swedish yogurt: it’s so fresh when it’s made at
the farm.’
Launch, product line
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Product line was presented to distributors in 1987 January.
Three different types of yogurt were selected for launch;
Plain; packs of 2 or 4
Plain with sugar; packs 2 or 4
Flavored with vanilla, strawberry and pineapple (packs of
2)
March 1 1987 Tokyo and May 1 1987 Osaka and Nagoya
• All three types were to be sold in 120 ml, cups.
• A major pre-launch promotional campaign was scheduled
for the month before launch with strong TV, newspaper
and magazine support, as well as street shows, in store
promotions, and test trials in and outside retail stores.
1990: DELISSA AFTER THREE YEARS
IN JAPAN
• Distribution system:
It is not satisfied and should be improved. The ordering
system is slow and complicated. The delivery process is
long for dairy products, it takes almost three days after
production of yogurt. This period should be one day.
Distribution costs were at 27% of sales versus
competition at only 19%.
• Advertising:
In an advertising awareness test, half of the
respondents claimed not seeing any yogurtbrand
advertisement. Furthermore, 55% of Delissa
advertisement viewers responded that they did not
know what the message was
LEADING UP TO 1997
• Delissa had only 3 percent of total yogurt market in Japan in 1997.
• 1994; the Japanese market is still tough and competition is very strong.
Consumers brand loyalty seems low. But market is large with high potential.
Lack of a real marketing function in nikko is a great handicap in market as
competitive as Japan.
• Distribution cost is high.
• Distribution level is low.
• 1995; Delissa’s strategy in Japan is being redefined. Ads will now show happy
blonde children eating yogurt. Over time, the product line has grown
significantly and a line of puddings has recently been added.
• 1997; plain yogurt should represent almost half of Dellisa’s Japanese sales and
account for about 43 percent of the total Japanese market. The plain segment
has grown by almost 50% in the past three years. Delissa’s fruit yogurt segment
has been disappointing. New segment, yogurt with jelly, has been selling well,
1.2 million cups in three months.
• Mid-Year results:
Sales as of mid- year 1996 are below forecast.
Target is to reach over 42 million cups by year ed.
Problems
• The core problem for Agria in Japan is that fact
that even after 10 years since the launch of
the Delissa brand yogurt in Tokyo, Osaka and
Nagoya, Delissa only holds less than3% of the
overall yogurt market share in Japan.
Furthermore, by 1991, its market share
dropped further to only 2%.
Solutions
Media Planning
• Delissa’s primary target should be young people between
thirteen and twent-four and its secondary target is children.
• Ads showing time should be arranged according to these
segments.
Positioning
• First largest segment is plain yogurt, second is flavored
yogurt, third is fruit yogurt.
• Ads of plain yogurt should be traditional one and ads of
fruit yogurt should be based on fashionable.
Conclusion (1)
• In January 1987, Delissa’s product line was presented
to distributors prior to launch in Tokyo. Their main goal
was having the %15 of market share on dairy products.
After three year they only had the 2 percent of the
Japanese yogurt market. Results were really
disappointed for the company. In 1997, results were
almost same, they had the 3 percent of total yogurt
market.
• At the beginning SRT helped to developed Delessa’s
entry in to milk related products market in Japan.
Company chooses the Nikko, as a franchisee company
who is the country’s second largest association of
agricultural cooperatives. Also Nikko was the price
leader for various food products in Japan.
Conclusion (2)
• Agria’s executives thought that it was going to be easy
to establish a brand name in Japan like they did
in Thailand and Taiwan. Consumer behaviors were so
different and Japanese consumers don’t consume that
much milk like Scandinavians do. And Also company
was having a lot of problem on their distribution
channels. There are so many retailers inTokyo and they
are small retailers. Routes for their tracks were so
complicated . Consumers in Japan shop daily and
traditionally use the small shops so they had to
negotiate with the small retailers. At the
beginning Nikko’s ordering system was so slow. It takes
4 day to buy Delissa’s products which means loosing
the freshness.
What Agria should do?
• Almost ten years after launching delissa with
nikko, should agria cancel it’s contract and
find another distributor?
• should the company renew the arrangement
with nikko and continue to try to gain market
share?
• should agria admit defect and withdraw from
japan completely?
• Language problem between Delissa and Nikko was one of
the main problem. Dellisa couldn’t establish their company
mentality to Nikko’s workers. There are many
misunderstandings. For example TV ads, Dellisa were
intended for young people in the ads, however Nikko were
running TV spots at late night times. Plain yogurt makes up
the largest segment inJapan . It was therefore
recommended that regular advertising should concentrate
on plain yogurt. However, according to Nikko, the company
makes only a marginal profit on plain yogurt, thus they feel
it would be preferable to advertise fruit yogurt.
• In sum, Agria never controls the business. Their distribution
system is a perfect example. They could never know what
was going on out there because language problems forced
Agria to count on Nikko. Agria’s executives think that the
Japanese will kill Delissa once they’ve mastered the
Swedish technology and they will develop their own brand.
According to us, they have to get out of the venture
agreement with Nikko and they have to get out of
the Japan altogether.
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