Super Project Summary
General Foods “Super” was a new instant desert being targeted for introduction in the late 1960’s. The chocolate flavor was estimated to account for 80% of total sales of the new product. Presumably, this means “Super” would have been “Jello Pudding” in reality.
The project request consisted included a $200,000 request, consisting of $80,000 for building modifications and $120,000 for machinery and equipment; presumed to be entirely additional packaging machinery as available agglomerator capacity would be used.
Jell-O was 19% of the total market in August-Spetember 1996. Super was anticipated to capture 10% going forward, with 80% of that growth in market share and/or powdered mixes versus other types of deserts, while 20% would come from eroding Jell-O sales.
Production was anticipated to increase to 1.9M units from the projected 1.1M given two-shift, five-day workweek. This still represented considerable excess capacity.
General Foods Accounting and Financial Manual identified four categories of capital investment proposals: (1) safety and convenience; (2) quality; (3) increase profit; and (4) other. Super was targeted at the third category. Estimates for payback and return were required for any project requiring more than $50,000 in capital and expense before taxes. In calculating the repayment period, only incremental income and expenses related to the project were used.
The desire was to show continuous growth. However, the nature of the food industry is cyclical. Given the size and breadth of General Foods, they desired to introduce new products without showing a loss when doing so. The target was to expand faster than GNP.
Costs related to the initial test market were included as “Other” in the first period so that the project paid for these costs rather than considering them sunk. “Adjustments” indicated represented the erosion of the Jell-O market. No indication of costs for use of the existing agglomerator is indicated in the
The project request consisted included a $200,000 request, consisting of $80,000 for building modifications and $120,000 for machinery and equipment; presumed to be entirely additional packaging machinery as available agglomerator capacity would be used.
Jell-O was 19% of the total market in August-Spetember 1996. Super was anticipated to capture 10% going forward, with 80% of that growth in market share and/or powdered mixes versus other types of deserts, while 20% would come from eroding Jell-O sales.
Production was anticipated to increase to 1.9M units from the projected 1.1M given two-shift, five-day workweek. This still represented considerable excess capacity.
General Foods Accounting and Financial Manual identified four categories of capital investment proposals: (1) safety and convenience; (2) quality; (3) increase profit; and (4) other. Super was targeted at the third category. Estimates for payback and return were required for any project requiring more than $50,000 in capital and expense before taxes. In calculating the repayment period, only incremental income and expenses related to the project were used.
The desire was to show continuous growth. However, the nature of the food industry is cyclical. Given the size and breadth of General Foods, they desired to introduce new products without showing a loss when doing so. The target was to expand faster than GNP.
Costs related to the initial test market were included as “Other” in the first period so that the project paid for these costs rather than considering them sunk. “Adjustments” indicated represented the erosion of the Jell-O market. No indication of costs for use of the existing agglomerator is indicated in the