Case Study Analysis on Euroland Foods S.A.

Euroland Foods S.A.

Introduction:

Euroland Foods S.A, a multi-national producer of high quality ice-cream, yogurt, bottled water and fruit juices was founded in 1924 by Theo Verdin. It is headquartered in Brussels, Belgium and the products are sold throughout Scandinavia, Britain, Belgium, the Netherlands, Luxembourg, western Germany and northern France. Euroland Foods S.A. has four main product category, which are as follows: Ice-cream, Yogurt, Bottled Water and Fresh Juice. Out of this four product category ice-cream is the dominant product category contributing 60% of the company revenues. It has a flagship brand name ‘Rolly’, which was represented by fat dancing bear in farmers clothing. Ice-cream has a very loyal customer base who sought out its high butterfat content, large chunks of chocolate, fruit, nuts, and wide range of original flavors. The other revenue drivers are shown in Exhibit 1, which states that Yogurt contributes 20% of revenues and, Bottled Water and Fresh Juice combines equally remaining 20%. Euroland Foods S.A. had sales of almost EUR 1.6 billion in the year 2000 and is listed for trading on London, Frankfurt and Brussels exchanges.

Euroland Foods S.A. board consists of twelve directors, of which three members belong to Verdin family, four members from management and five independent directors who are prominent managers or public figure in northern Europe. Exhibit 2 shows the shareholding pattern of Euroland Foods S.A., Verdin Family owns 20% stake, Venus Asset Management – a mutual fund management company based in London owns 12%, Company executives owns 10%, Banque du Bruges et des Pays Bas owns 9% stake and rest of the 49% stake is widely held by public.

Revenues of Euroland Foods S.A. have remained constant since 1998, which management attributed to low population growth in northern European and market saturation in some areas. But other stakeholders believed that this slackening in growth is due to faulted recent failures in new product lines. Most board members wanted to expand the company’s market presence and introduce more products to boost sales. Company has several suggestions from board members to expand their business. But Euroland can go ahead with only few projects due to budget constraint. Euroland also have a committee of senior managers, who prepare capital budget and present it to board members for approval. This committee consisted of five managing directors, the president directeur-general (PDG) and Finance Director. Typically, the PDG solicited the investment proposals from managing directors which included brief project description, a financial analysis, and a discussion of strategic or qualitative considerations.