A1 Steak Sauce: Lawry's Defense

Steak Sauce: Lawry's Defense

Overview:

The steak sauce market is a $300 million-dollar industry and had continuously expanding its revenue its dollar sales in the recent years by keeping the unit and volume sales flat and increasing the selling price. The brand loyalty in steak sauce is extremely high because beef consumption, the primary reason for steak sauce, has thrived over the years. The most popular steak sauce belongs to A1. A1 Steak Sauce was created in 1830 by Henderson William Brand, chef for King George of England. The sauce tasted extremely terrific hence the King named it “A1”. The sauce was first sold in North America in the early 1900s. The sauce became a premier brand after Kraft food acquired it from Nabisco in 2002. A1
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A1 Steak Sauce currently holds 46% of the volume share and 54% of the dollar shares within the steak sauce market. The revenue in 2002 was $150 million, with an operating profit of almost $60 million. They also relaunched A1 marinades line that same year to compete in the marinades market because it was one that was quickly growing. Their revenue was $15 million but experiences a loss of $10 million in operating profit. They currently hold 10% of the market one year since the relaunch. A1 currently holds 48% of steak sauce shelf spacing at retail stores, selling the most during Memorial Day and July 4th, and receiving 10% of its profit during that time. Thirty percent of A1’s revenue was spent on promotion, including 15% on advertising, 10% on in store and trade promotions, and 5% on consumer promotions. In 2003, their promotions included costing $1,000,000 per quarter, a $50 coupon for the steak sauce, and a potential of reaching 50 million households in the
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They have a high brand awareness, history of product excellence, high contribution margin, and customer loyalty. They hold 50% of the market share on steak sauce as well as 10% of the market share on marinades after only one year. Their downfalls as a product are that they are a small niche market, meaning they are limited to only steak.

The steak sauce market division is mature, and there is an operating loss from marinades. Along with their downfalls, they also faced threats like the flat unit sales in the steak sauce industry, and potential brands offering cheaper prices. Despite of the downfalls and threats, they do have a few opportunities for growth. There is room for rapid growth in the marinades market. They can offer a partnership with beef producers for even more growth. Because steak consumption has recently stabilized after a period of decline, they can increase dollar sales for the steak sauce industry.

The Situation