The United Kingdom

1. The United Kingdom Country Market Analysis: Smucker’s Uncrustables Lauren Colvin Brandon Kraft CJ Strah Kate Turkcan

2. The United Kingdom • Great Britain (England, Scotland, Wales) • Northern Ireland • Channel Islands • Isle of Man

3. Population 60,095,000 people Age Distribution 0-9: 11.7% 10-19: 12.9% 20-29: 12.6% 30-39: 15.3% 40-49: 14.2% 50+: 33.3% GNP: $1,290,000,000 5% unemployment rate Most families in urban areas live in apartments, but living in larger homes in the suburbs is becoming more popular. Demographics

4. Sex Men: 49.4% Average Age: 37.6 yrs. Women: 50.6% Average Age: 39.8 yrs. Language English (official) Various accents Welsh Scottish form of Gaelic Geography 90% of the population lives in urban areas. England: 82.9% Scotland: 8.4% N. Ireland: 2.8% Wales: 4.9% Demographics

5. Competition • Supermarket private labels dominate the frozen food market in the UK. • The frozen food industry is growing due to people spending an increasing amount of time outside the home.

6. Direct Competition in the UK • Unilever Bestfoods • Bird’s Eye Hamburgers: largest single frozen food brand sold in UK supermarkets • Kraft Foods, Inc • Lunchables • Instant Cheesy Pasta • Nestlé Group • Cereals: shredded wheat, Cheerios, Golden Grahams, Cinnamon Grahams • Herta Salami Sticks/Frankfurters • Soups • Walkers Snack Foods, Ltd • Potato chips

7. Consumer Demand • As the market for frozen foods in the UK continues to grow, people generally look for and try products that are on sale. • The UK is one of Europe’s highest per capita frozen food consumers. • The average Briton spends $ 144 (£75) annually on frozen food products. • More than 90% of people in the UK own a freezer. • Due to small freezer sizes, most consumers go shopping more often in order to buy a lesser amount of smaller products to fit in their appliances. • Almost 50% own a microwave.

8. Consumer Demand • Frozen foods are most frequently consumed by people ages 20-29. • Peanut butter is not a popular food item in the UK. • 87% of children’s lunches include a sandwich made from white bread and chicken, cheese, ham or a meat paste. • Most also include chips (71%), cookies (60%) and a dairy product (48%). • Less than 50% contain fruit. • Meals served at school must contain at least one serving of a fruit or vegetable, a milk or dairy product, meat/fish or a protein source and a starch. • Less than 50% of children purchase their lunch at school.

9. Distribution • Uncrustables are produced in Scottsville, Kentucky. • The J.M. Smucker Co. produces all of its products itself.

10. Distribution • Smucker’s products currently in The UK • Simply Nutritious (fruit juice) • Santa Cruz (organic soft drink) • Both produced in the Livingston, Scotland plant. • Smucker’s owns a plant in Livingston, Scotland. • Also produces fruit filling for Kellogg Nurtigrain Bars for distribution in the UK.

11. Distribution • The UK does not require approval for foreign investment. • Businesses have to register at the Registrar of Companies. • There is a fee of $38 (£20) in order to obtain the required certificate of incorporation, which takes a few weeks. • There are no formal local content requirements in the UK.

12. Distribution • Most regulations on foreign companies in the UK come from Brussels, not London. • These generally involve anti-trust laws and practices that interfere with intra-EU trade. • Companies in the UK are taxed at 30% of their corporate profits. • They are also taxed at 22% for holding UK real estate as an investment. • In regards to tariffs on imports, most foods have a zero rating.

13. Distribution • Transportation • The quality of land transportation, in certain areas, is not up to most developed countries’ standards. • Current Labor government has a 10 year, £180 billion ($270 billion) plan to improve conditions. • 230,914 miles of paved highways. • 2,052 miles of express motorways. • 10,488 miles of railway. • 1,988 miles of navigable inland waterways. • 300 ports • The port of London is one of the largest in the world • Other major ports: Liverpool, Southampton, Hull, Clydeport, Manchester, Bristol • Folkestone, England and Calais, France are linked through the high-speed rail tunnels under the English Channel.

14. Targeting and Positioning • In the US, Smucker’s targets parents. • Especially focus on mothers who are too busy in the morning to prepare school lunches, but want their child to have a nutritious lunch. • They also target parents on a budget. • Uncrustables cost less than $0.65 per sandwich, compared to Lunchables, their main competition in the US, which cost $3.00 each. • Smucker’s also targets school lunch programs that buy packaged food to serve to students.

15. Targeting and Positioning • Smucker’s has a policy of being a family-friendly company and consequently does not target children. • They do not occupy television spots during children’s shows or shows deemed inappropriate for children. • They generally advertise during shows watched by parents or by parents and children together, but the ads are clearly directed towards parents.

16. Product • Size • Come in boxes of 4,10, or 18 in retail stores. • Average UK freezer size: 1825mm x 590mm • Sold in cases of 72 for schools

17. Product • Brand • 2004 J.M. Smucker Co. Total Sales: $1,417,000,000 • $138,800,000 in international markets (10% of total) • Uncrustables accounted for 4% of Smucker’s total US sales: $51,128,000 • Total units sold in 2004: 19,740,540 • There is currently no brand equity in the UK for Smucker’s or Uncrustables. • Flavor and Product Design • Two round pieces of white bread without crust filled with an inner layer of strawberry or grape jelly surrounded by peanut butter. • Two round pieces of white bread without crust filled with American cheese. • Both are sealed around the edges, creating ridges and ensuring that the inner ingredients will not leak out.

18. Product • Labeling Regulations • Packages cannot include pictures of food if that flavor is created using artificial flavoring. • Packages cannot be misleading with phrases such as “reduced”, “low” and “high.” • Official language is English and the UK uses metric units of measurement.

19. Product • Labeling Regulations (cont.) • Food Label Regulation 1996 – EU law • Name of product • Ingredient list • Durability indicated by “use by” or “best before” • Storage instructions • Name and address of producer • Place of origin • Cooking and/or defrosting instructions • Nutrition information • An indication of any additives such as color, flavor enhancers, preservatives and sweeteners

20. Price • Retail Price • The currency of The UK is the Pound (£) • Although The UK is in the EU, it does not use the Euro. • Uncrustables sell for $2.39-$2.59 a box at retail outlets in the US.

21. Placement • Storage and Distribution • 91% of frozen foods bought in The UK are purchased at supermarkets and hypermarkets. • 73% of households have one or more car, which enables consumers to drive to retail outlets. • Car ownership has decreased in London due to a congestion charge aimed at reducing traffic, and officials are looking to extend the charge to other cities.

22. Promotion • Media Availability • Television • 94% of the population has at least one television. • No advertising on the BBC • The Independent Television Commission has strict rules about ads aimed at children and using child actors/ models. • A commercial featuring an actor may not be shown during a program in which the actor appears. • The Broadcast Advertising Clearance Centre examines scripts and videotapes at no charge, before shown on TV, to ensure they meet the requirements of the ITC codes.

23. Promotion • Media Availability (cont.) • Mobile text messaging • 52,638,000 cell phone users • Radio • 91% of UK population, ages 15+, listens to the radio on a weekly basis. • Radio scripts are checked before they are aired by the Radio Advertising Clearance Centre. • Direct Marketing • 68% of direct mail is opened, while 43% is actually read. • Over 40% of consumers acknowledge that their buying decisions are affected by direct mailings.

24. Promotion • Media Availability (cont.) • Internet • 30 million internet users. • Print • 41 million regional newspapers are paid for every day. • 29 million free newspapers are delivered each week. • 14,394,000 magazines are sold each year. • Advertising can cost between $ 960 - $9,600 (£ 500 - £ 5000) depending on size.

25. Promotion • Media Availability (cont.) • Billboards/Outdoor advertising • Ambient Media • Metro terminals/ Trains • 6.4% of total passenger-km traveled on public transportation in the UK is by train. • The Tube is very popular in London. • Buses and Taxis • 6.3% of total passenger-km traveled on public transportation in the UK is by bus and 85% is by taxi. • Bus use is decreasing in suburban areas but has increased in London due to subsidies and congestion charges on personal automobiles.

27. Daily Mail (full page, color): $87,550 Daily Telegraph (full page, color): $110,840 Yorkshire Post (full page, black and white): $15,776 Carlton TV (30 second spot, 7:26 pm -11:30 pm): $58,539 Odeon Leicester Square, London (movie theater) (30 second spot each day for a week): $2,226 BRMB (Birmingham Radio) (30 second spot, Wed. – Fri. 4:00pm – 7:00pm): $383 Virgin FM (London) (30 second spot, Thursday 4:00pm – 7:00pm): $2,111 Virgin Radio (AM/National) (30 second spot, Thursday 4:00pm – 7:00pm): $1,631 Promotion Costs

28. Conclusion • 40% of all US investments in EU member nations are in the United Kingdom. • There is no language barrier and also many cultural similarities that would make it easy for Smucker’s to assimilate Uncrustables into the UK. • The existence of the Smucker’s plant in Scotland would provide a solution to production concerns. • Peanut butter is not very common or popular anywhere in the UK and as a result it may be difficult to convince consumers to try this American classic.