Gallo Rice
Essay Preview: Gallo Rice
Report this essay
1. What is special (different) about F&P Gruppo? Why has the company been successful?
First of all, F&P Gruppo describing itself as “the rice specialist” was exceptional, because it was one of few companies in the world so vertically integrated, involved in entire process of growing, milling, packaging and marketing rice. The advantage of such organization was control of the quality and the ability to react quickly according to market changes. The company decided to trade off other products than rice appointing itself as a goal achieving market share leadership through bringing differentiated, higher margin products. F&P Gruppo was investing heavily in Research and Development, because new products were supposed to derive 35% – 40% of total gross margin. Although successful in 8 countries, the company didnt fall into trap of complacency, it always saw room for improvement constantly searching for new strains of high-quality rice and looking for new markets and opportunities. F&P Gruppo was incredibly consistent with its Gallo brand name and Gallo rooster logo, and this consistency resulted in high brand awareness across the countries the company operated in. What is more, as an undeniable production innovation leader the company consistently earned the highest of six quality grades.

Asses Gallos market position and opportunities in Italy, Argentina and Poland.
Italy
With its brand present for over a century and 21% of volume share Gallo had definitely strong and stable position on Italian market. Rice was a very popular element of Italian diet and consumers perceived it as quick and easy to prepare, healthy alternative to pasta. That was definitely an opportunity for Gallo Rice producer, who didnt have to spend as much money on advertising campaigns convincing people to eat more rice as it would be necessary in Poland (described below). Widely recognized Gallos logo symbolized a trustworthy, good quality and somewhat traditional brand and this recognition strengthened Gallos market position even further. F&P Gruppos competition was fragmented and generally speaking didnt pose thread to Gallo rice. Important is fact, that Gallo products had a higher turnover than many other food products, which only confirms the conclusion, that its inventory management was efficient, there was a high demand for company products, and therefore F&P Gruppos market position in Italy was sustainable.

Argentina
Gallo was established in Argentina in 1905, held 17.5% volume share and 23% value share of the total retail rice market. In addition to that, Gallo held 48% share in Buenos Aires, which accounted for impressive 30% of the countrys population. Therefore, its easy to notice, that numbers speak for themselves – F&P Gruppo (actually its subsidiary – Arrocera Argentina) was a market leader in Argentina. The consumption of rice in Argentina was high enough to create an attractive market for rice producers. As a matter of fact, Gallo was one of the only companies selling rice packaged in cardboard boxes, convenience of which added to competitive advantage of Gallo over its competitors. Since Argentine retail rice market was fragmented and regional, Gallo faced almost no serious competition. Nevertheless, the company was alert all the time and actively responded to moves of competitors (like in case of Maximo rice). Despite difficult economic climate and high product prices Arrocera Argentina had strong market position in Argentina.

Poland
Gallos market position was completely different in Poland than in Italy and Argentina because of few aspects. First, until 1989 because of Communist regime Polish market was dominated by commodities, where brand didnt have any meaning. Because market forces didnt work, there was no competition, and prices were fixed, therefore producers didnt care about quality of the products and packaging. That is why, rice in Poland had a low quality image and people didnt eat much of it. In fact, because of lack of suitable climate conditions, there were no rice plantations in Poland, so there was no tradition and culture of eating rice. Nevertheless, it doesnt mean that there was no potential for changing eating habits. Second, Arrocera Argentina, exporting rice to Poland had small volume share (less than 1%) because it just started its operations on Polish market three years ago. In 1991 Polish retail market was still underdeveloped and private food retail outlets were just emerging. Third, during communism imported food as rice had been subsidized, but after 1989 lack of subsidies caused price increases and thus lower demand. The hyperinflation was making the situation even worse. In addition, Poland at that time after opening its market was flooded by imported goods of all kinds, so there was a serious competition for Gallo rice. Main thread posed Uncle Bens rice, which had penetrated 90% of the supermarket and grocery outlets in Warsaw. Also, because of poor choice of products while the Polish economy was still centrally planned, people didnt know other varieties of rice than white one, so thats why they were sceptical while offered brown one. Taking into consideration all these reasons listed above one can understand why Gallos market position was comparatively weak. However, such unattractive business environment was temporary and on the basis on all its constraints one shouldnt imply that there were no opportunities for a long term.

What similarities and differences do you see in the tree markets and in Gallos approach to them?
Markets described above were generally fragmented and regional with no established leading companies. Both Italian and Argentine market can be characterized as markets with well rooted culture of rice consumption, which cant be said about Polish Market. Also, both these markets were pretty saturated with different varieties of rice products, which again is not the issue in case of Poland. Polish underdeveloped retail sector, infrastructure and distribution channels were definitely weak points and mayor differences as compared to ones existing in Italy and Argentina. While in Poland there was low per capita consumption of rice (2.3 kg per annum in 1991) Italy and Argentina had the same, much higher per capita consumption level (8 kg per annum in 1991).

Gallo Rice producer established a subsidiary in Argentina and approximately 90% of sales were made through a company sales force, while 10% was sold through agents serving remote areas. Completely different system was used by F&P

Get Your Essay

Cite this page

Rice Specialist And Gallo Brand Name. (July 3, 2021). Retrieved from https://www.freeessays.education/rice-specialist-and-gallo-brand-name-essay/