Case 2 Bega Cheese: Real Town
In January 2017, Bega Cheese (Bega), a listed dairy manufacturer based in the small country town of Bega, New South Wales, made a major announcement: it had agreed to buy most of the grocery and table spreads business of global snack food and grocery giant Mondelēz for A$460 million. Key to the purchase was seen to be the acquisition of the licence to produce and market Vegemite, Australia’s famous, unique, black, yeast-based breakfast spread. But the purchase included other brands, such as Kraft processed cheese, parmesan cheese, peanut butter, mayonnaise, Dairylea cheese snacks, Bonox health drink and ZoOsh salad dressing. These products had more than 30 per cent of the table spread market in Australia and this represented a significant diversification for Bega.The share market reacted well, jumping 13 per cent in one day. Executive Chair Barry Irvin said that combining Vegemite and Bega cheese would provide the building blocks for a great, fastmoving consumer goods (FMCG) business. Bega intended to keep the Port Melbourne manufacturing site and all the staff. Questioned about the diversification, CEO Aidan Coleman said that dairy was still the heart of Bega as it had the number 1 cheese brand, was the number 1 cream cheese producer and had a large infant formula business:2
Dairy assets are hard to come by … and we are a growth-focused company, but with spreads, whether it’s Vegemite or peanut butter or cheese, there’s a lot of commonality in the consumer base …, so we see it as a development of the business rather than a transformation of the business.
Bega Cheese (Hubbard et al. Case 2)
Read the Case Study and address the following requirements:
1. Identify the key segments of the Industry.
Info: Identification of key market segments (150 words)
2. Comment on Bega Cheese’s current products and markets with emphasis on performance trends.
Info: Analysis of Bega products and performance(250 words)
3. Construct a BCG Growth/Share Matrix for Bega’s products using data from the case to justify your product positioning.
Info: Creation of BCG matrix with justification (250 words)
3.1. Identify any assumptions and limitations in constructing this.
Info: Discussion of constraints and limits in constructing BCG matrix (clearly from the case only,300 words)
4. Given your portfolio, suggest strategies for two of the products.
Info: Identification of strategies for two Bega products.(300 words)