The launch of Benecol , its cholesterol-lowing margarine , at the end of 1995 had attracted the interest of food processors and supermarket groups throughout the world and fueled a surge of investor interest . Demand for the product had outstripped Raisio’s capability to produce the active ingredient in Benecol , stanol ester .
On the Helsinki stock market , foreign demand pushed Raisio’s share price from FIM61 at the beginning of the year to FIM 288 at the end (after touching FIM322 during the summer ).
CEO Matti salminen commented : 1996 will go down in the Raisio Group’s history as the Benecol year such was the role of this new cholesterol-reducing margarine in increasing the Group’s visibility and raising its profile in all our sectors of operations. Although we have not been able to meet even the domestic demand for Benecol margarine so far , the product is already known worldwide and great expectations are attached to it .
The Benecol phenomenon quintupled the value of our shares , increasing the Group’s capitalization by billions of Finnish marks . It was the international prospects for Benecol margarine (and potentially other food products incorporating stanol ester ) that had drawn a bevy of stock analysts and portfolio managers to Raisio’s headquarters . Not only was the potential market for Benecol considered huge the US alone was seen as having a multi-billion market potential but the profit opportunities also appeared excellent .
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In Finland , Benecol was selling at about six times the price of regular margarine . In addition to being first to market , Raisio ‘ had the ability to sustain its market leadership through its patents relating to the production and use of the active ingredient , stanol ester, and recognition of its Benecol brand name . However , within Raisio a vigorous debate had broken out as to the best strategy for exploiting the vast commercial potential that Raisio’s innovation offered . This debate focused around two issues.
The first was whether Raisio’s emphasis should be on supplying its Benecol margarine or its active ingredient, stanol ester. Despite the phenomenal success of Benecol margarine in Finland , margarine was only one of a number of potential food and drink products to which stanol ester could be added. Several Raisio managers argued that the company could exploit its innovation more widely if it supplied stanol ester to a number of food and drink companies . A second issue concerned the means by which Raisio would exploit the international potential of its innovation.
Although Raisio was a significant margarine manufacturer in Finland , it possessed few facilities and limited experience outside its home market . A number of multinational food companies and leading food retailers had approached Raisio expressing interest in licensing agreements , joint ventures and supply agreements for Benecol margarine , for stanol ester , or for both. Should Raisio license its intellectual property to other firms , create joint-ventures with foreign companies , or should it keep its technology in-house and use it to build a multinational presence for Raisio ?
The industry that has been chosen for this report id the fast moving consumer goods (FMCG) industry in which the household and personal products have been chosen. The three companies that have been chosen for the analysis are Unilever, Procter & Gamble and Johnson & Johnson. The purpose of the report is to identify the best company out of the three based on various factors which includes ...