Case 1 Columbo Soft Serve Frozen Yogurt
Case 5-2 Columbo Soft-Serve Frozen Yogurt
In 1994 General Mills Incorporated (GMI) acquired Columbo Frozen Yogurt in an attempt to expand their existing product lineup as well as increase net sales while keeping marking costs relatively the same. Colombo Yogurt Company has a long history of producing frozen yogurt having been in the business since the early 1980’s. Sales of their frozen yogurt is typically sold through two separate and distinct segments, independent shops that cater specifically to consumers looking to buy frozen yogurt, and impulse shops such as cafeterias, colleges, and buffets.
Competition in the frozen yogurt industry has been rising since the early 90’s with new entrants into the market such as TCBY and Freshens. However, the bulk of demand in the market comes not from these shops who focus solely on frozen yogurt to make a profit, but rather from the impulse locations who occupy more storefronts than the traditional frozen yogurt shops alone. Being the case the bulk of demand in the market came from these impulse locations, GMI focused much of its sales force on the impulse segment in an attempt to capitalize on the larger share of the frozen yogurt market. In the process, GMI merged their Foodservice salesforce with Colombo’s salesforce and preexisting customers were reassigned to salespeople who already had business in that specific geographical location.
ABC Analysis Findings
The ABC analysis focused on three main categories for GMI to assess:
1. Costs of Goods Sold
2. Merchandising
3. Selling, General and Administrative
Costs of Goods Sold
Costs of goods sold for the period totaled $17,250,000; $14,250,000 of the total includes ingredients, packaging, and storage while the remaining $3,000,000 consists of pick/pack and shipping. Costs for ingredients, packing and storage stay the same throughout the process since the end product is the same, however, pick/pack and shipping costs vary due to whether or not the buyer wants to order a
In 1994 General Mills Incorporated (GMI) acquired Columbo Frozen Yogurt in an attempt to expand their existing product lineup as well as increase net sales while keeping marking costs relatively the same. Colombo Yogurt Company has a long history of producing frozen yogurt having been in the business since the early 1980’s. Sales of their frozen yogurt is typically sold through two separate and distinct segments, independent shops that cater specifically to consumers looking to buy frozen yogurt, and impulse shops such as cafeterias, colleges, and buffets.
Competition in the frozen yogurt industry has been rising since the early 90’s with new entrants into the market such as TCBY and Freshens. However, the bulk of demand in the market comes not from these shops who focus solely on frozen yogurt to make a profit, but rather from the impulse locations who occupy more storefronts than the traditional frozen yogurt shops alone. Being the case the bulk of demand in the market came from these impulse locations, GMI focused much of its sales force on the impulse segment in an attempt to capitalize on the larger share of the frozen yogurt market. In the process, GMI merged their Foodservice salesforce with Colombo’s salesforce and preexisting customers were reassigned to salespeople who already had business in that specific geographical location.
ABC Analysis Findings
The ABC analysis focused on three main categories for GMI to assess:
1. Costs of Goods Sold
2. Merchandising
3. Selling, General and Administrative
Costs of Goods Sold
Costs of goods sold for the period totaled $17,250,000; $14,250,000 of the total includes ingredients, packaging, and storage while the remaining $3,000,000 consists of pick/pack and shipping. Costs for ingredients, packing and storage stay the same throughout the process since the end product is the same, however, pick/pack and shipping costs vary due to whether or not the buyer wants to order a