Question

Case: Schwartz Yellow Mustard – What Would You Do?

The Mustard Category

In 1992 Schwartz Mustard was manufactured by Daltons (1834) Inc. the oldest food processing / consumer packaged goods company in Canada. The mustard was manufactured at a plant located in Candiac, outside of Montreal, Quebec.

The mustard was manufactured by combining mustard seed, vinegar, spices, colour and a few preservatives in large ‘brewing’ vats. The mustard was then piped into a filling machine where it was packed into 125 ml, 250 ml, 750 ml, and 1 litre glass jars. The jars were all packed 12 units per case and sold through grocery chains mostly in Canada and limited sales into the USA.

The largest competitor was French’s, a brand owned by Fleishman’s Yeast at that time. French’s dominated the category with over a 65% market share. The balance of sales were split between Schwartz – mostly an Atlantic Canada and Quebec brand, and grocery retailers private label brands – most of which were packed by Dalton’s (1834) Inc. at the same plant using the same or very similar formula to the Schwartz brand.

In the summer of 1992 radical, new technology in plastic bottles came available that would revolutionize the consumer packaged goods industry. Until that time glass was the only packaging that had the ability to act as a non- permeable membrane and offer a visual of the product. Plastic bottles were safer and more convenient for the consumer, easier to fill and lighter to ship. This was a radical move that ‘swept’ the food industry and almost every product category was affected. Ketchup and other condiments started to switch from glass bottles to plastic bottles.

French’s followed the trend and launched a new plastic ‘squeeze’ bottle in a 250 ml size in all markets in Canada. Schwartz Mustard had to react or continue to lose market share to French’s who also activated an advertising campaign highlighting their new plastic ‘squeeze’ bottle.

Schwartz Mustard acted by designing a new ‘squeeze’ bottle of its own. The marketing position was to launch a 375 ml bottle for the same wholesale and ultimately the same retail selling price as French’s 250 ml. The consumer would receive better value by buying Schwartz Mustard over French’s. The trade accepted this strategy and arrangements were made with every major grocery chain in Canada. Product was shipped, shelves were filled, and the consumer was buying Schwartz Mustard.

2.

The Government Reaction

In September of 1992, Consumer and Corporate Affairs – the government of Canada agency responsible for regulating the manufacturing, packaging, and selling of most products in Canada, advised Daltons (1834) Inc. they had ‘breached’ the size regulations for mustards and that they were required to immediately stop the sale of all product packed in 375 ml bottles and that all product must be removed from the shelves of all grocery stores.

History

When Canada switched from Imperial measurements to metric measurements (eg. ounces to milliliters) in 1975, many food manufacturers worked with the Liberal government of the day to standardize sizes. This was done in an effort to reduce consumer confusion and allow direct price comparisons between brands. Mustard, ketchup, relish, honey, table syrups, and many other product categories volunteered to standardize their sizes. Most opted for ‘hard’ metric – 125 ml, 250 ml, 500 ml, 750 ml and 1 litre sizes. Mustard was one of these categories where   size became ‘regulated’.

Daltons (1834) Inc. – Schwartz Mustard - had launched a size (375 ml) which was not a regulated size and therefore was not allowed to be sold in Canada.

The major cost in launching this new size was the designing and creating the plastic mold which now may not be usable. Daltons had committed to a minimum order of 100,000 bottles and had already packed 1,000 cases. The mustard in the packed bottles was the smallest cost component of each unit.

What Would You Do?

Assume you are the Marketing Manager responsible for this recall.

1. What are the possible alternate solutions to this problem?

2. What would you do with the existing product that was recalled?

3. What would you do with the remaining inventory and bottles?

Analyze each solution, making sure you think through the cost implications, any brand ramifications, and the long term affects of each solution.

Answer 1

1. This problem is about the net quantity which is not a regulated one as per government norms. So there are two options for our company :-

• Either launch same the product as 250 ml + 175 ml as an additional offer package and it can grab the attention of customers because customers are always attracted towards offers, discounts and et al.
• Or fill it up the product to next quantity level that is 500 ml by adjoining a package of 125ml in addition to the same 325ml package.

2. As mentioned above company would choose one among that option and will go forward with that. And it is the only way to save the recalled product from throwing out of the market. Otherwise the 375 ml package bottle will go waste.

3. If we follow a remedy like the above there's no question about remaining inventory and bottles.

With regards to the cost implications these 1000 containers can't bring any profit to the company and can drop the profit margin to net loss figures. but it can make a lot of customer with such a great offer of additional quantity at same price of 250ml and it will bring our brand ahead of the competition and once we are able to gain attention of customers i am sure that those customers will turn to be our regular ones expecting more offers from our side and this will grab us alot of advantage in thr near future of fighting with 250ml containers of competitors.

Hence, the long term benefit will be with schwartz brand with a large pool of customers for our product at present and to future also.so the wise and feasible solution for us is to opt one among the above choice in order to maintain the goodwill of our brand in the market.