Oreo is Childhood Cookies: Product History and Analysis
Product Description
This short graphic organizer will help you introduce Argumentative Writing. I usually do this as an activity with an actual Oreo cookie.
- O- Opinion
- R- Reasons
- E-Evidence/Explanation
- O- Opinion Again
A History of the Oreo Cookie
Most of us have grown up with Oreo cookies. There are photos of us with chocolatey remnants smeared across our faces. They've caused great disputes as to the best way to eat them—dunking them in milk or twisting off one side and eating the middle first.
Besides eating them plain, there are recipes galore on how to use Oreos in cakes, milkshakes, and additional desserts. At some festivals, you can even try deep-fried Oreos. Needless to say, Oreos have become part of the twentieth-century culture.
While most of us have spent a lifetime cherishing Oreo cookies, many don't know that since their introduction in 1912, the Oreo cookie has become the best-selling cookie in the United States.
Oreos Are Introduced
In 1898, several baking companies merged to form the National Biscuit Company (Nabisco), the maker of Oreo cookies. By 1902, Nabisco created Barnum's Animal cookies and made them famous by selling them in a little box designed like a cage with a string attached (to hang on Christmas trees).
In 1912, Nabisco had a new idea for a cookie—two chocolate disks with a creme filling in between. The first Oreo cookie looked very similar to the Oreo cookie of today, with only a slight difference in the design of the chocolate disks. The current design, however, has been around since 1952.
Changes
The shape and design of the Oreo cookie didn't change much until Nabisco began selling various versions of the cookie. In 1975, Nabisco released their DOUBLE STUF Oreos. Nabisco continued to create variations:
- 1987 -- Fudge-covered Oreos introduced
- 1991 -- Halloween Oreos introduced
- 1995 -- Christmas Oreos introduced
The delicious interior filling was created by Nabisco's 'principal scientist,' Sam Porcello, who is often referred to as 'Mr. Oreo.' Porcello is also responsible for creating chocolate-covered Oreos.
The Mysterious Name
When the cookie was first introduced in 1912, it appeared as an Oreo Biscuit, which changed in 1921 to Oreo Sandwich. There was another name change in 1937 to Oreo Creme Sandwich before the modern name was decided upon in 1974: Oreo Chocolate Sandwich Cookie. Despite the official name changes, most people have referred to the cookie simply as an 'Oreo.'
So where did the name 'Oreo' come from? The people at Nabisco aren't quite sure. Some believe that the cookie's name was taken from the French word for gold, 'or' (the main color on early Oreo packages). Others claim the name stemmed from the shape of a hill-shaped test version; thus naming the cookie in Greek for a mountain, 'oreo.'
Still, others believe the name is a combination of taking the 're' from 'cream' and placing it between the two o-shapes in 'chocolate'—making 'o-re-o.' And still, others believe that the cookie was named Oreo because it was short and easy to pronounce. No matter how it got named, over 362 billion Oreo cookies have been sold since it was first introduced in 1912, making it the best selling cookie of the 20th century.
Marketing Profile
Social media
We’ve previously discussed on the blog about how, Oreo is the king of agile marketing and it’s clear that Oreo has a marketing team that not only has a finger tightly on the pulse but who can also react with whip-smart efficiency, humor, and charm.
Truly the home of Oreo’s agile marketing strategy. Twitter is a channel where you can respond to a trend in seconds and Oreo certainly takes this proposition and runs with it.
Check out its Oreo-modified PS4 controller that piggybacks off the launch of Sony’s latest console. Which then prompted Xbox’s jealous response, with its own modified controller for the Xbox One.ng]
Of course, it’s generally hilarious for users to watch brands interact with each other and still remains a novel experience. However, it’s the personal engagement that increases Oreo’s followers and brand loyalty.
This strategy has amassed Oreo 217,052 Twitter followers.
Oreo has a blast on Instagram. It knows exactly what makes its channel attractive for a user to follow. Interesting images are full of delicious-looking food with creative flair and a sense of humor by the bucket load.
The little cookie may have looked the same for 100 years, but the secret to Oreo’s marketing success is using the cookie itself as a blank canvas. A highly adaptable, moldable foodstuff that the brand aren’t afraid to mess with.
From recipe ideas to slightly more bizarre recipe ideas, to old-school adverts from the vaults, Oreo is great entertainment. There’s also a lot of inventive playing around with perspective.
This policy of not taking itself too seriously and having a set rhythm of uploading a couple of Instagrams a week has led to 107,997 followers.
Oreo has also begun using Instagram’s video functionality.
Facebook is home to Oreo’s 34m followers, receiving daily updates from the cookie brand.
Oreo’s biggest success has been its ‘Daily Twist’ campaign. For Oreo’s 100th birthday, every morning for 100 successive days in 2012, Oreo published a brand new picture to celebrate a specific milestone of the day.
This campaign won Oreo two Cyber Grand Prix awards at 2013’s Cannes International Festival of Creativity and led to 433m Facebook views, a 280% increase in shares, and created 231m media impressions overall.
Oreo has only a modest following of 4,212 followers on Pinterest and although most of the images have been shared through its other social channels, Oreo has used the curative appeal of Pinterest to collect all of its campaigns together in one area.
This is the perfect place to check out previous campaigns like ‘Daily Twist’ in all of its epic glory.
It’s also a great way for Oreo to acknowledge the brand’s loyal followers by showcasing their pictures and creativity.
Vine
Finally, Oreo is clearly having a ball on Vine too. Take advantage of every holiday and major calendar event with a well-timed and often hilarious six-second blast of ingenuity.
This is Oreo’s Halloween-based homage to The Shining. Oreo also has a series of Vines called #OreoSnackHacks. These are tiny little videos that display the versatility of the cookie in ever-increasingly bizarre recipes. This is a particularly amusing prod at the belly of Taco Bell.
Market share
Mondelez International, the world's No.2 confectionery company, posted a quarterly profit that beat estimates on Wednesday, benefiting from demand for Cadbury Dairy Milk and Oreo cookies in Europe and growth in emerging markets.
Revenue from Europe, its largest market, rose 5 percent and accounted for nearly 40 percent of total revenue. But revenue from North America fell 0.6 percent, as its biscuit business was affected by malware-related losses. The snack giant was hit by a cyber attack last year that hurt shipment volumes, leading to a US$100 million (S$131.4 million) loss in revenue for the full year.
'Since the malware incident last summer, our supply chain execution has been challenged (in North America),' chief executive Dirk Van de Put said on a post-earnings conference call on Wednesday. 'While we are making progress, returning to normal service levels is taking longer than anticipated.'
The East Hanover, a New Jersey-based company said its net revenue rose to US$6.97 billion, meeting analysts' average estimate of US$6.97 billion. Net income rose to US$802 million, or 53 US cents per share in the fourth quarter ended Dec 31, from US$93 million, or 6 US cents per share, a year earlier. Excluding items, Mondelez earned 57 US cents per share, brushing past estimates of 56 US cents.
Mr. Anthony Riva, an analyst at GlobalData Retail, said: 'Moving forward, we believe that Mondelez needs to find a more permanent solution to their difficulties in North America.'
The company said it expects double-digit adjusted earnings per share growth on a constant currency basis for 2018. It also expects organic net revenue to increase one percent to two percent and an adjusted operating income margin of about 17 percent. Shares were flat in extended trading on Wednesday.
SWOT Analysis
Strengths
- Well-established brand and customers
- Existing channels of distribution, extremely accessible everywhere Strong collaborations with celebrities
- There are no other well-known brands for chocolate sandwich cookies
- Constantly putting out new campaigns for new products
- Owned by a strong and reputable company
Weaknesses
- More expensive compared to other cookies
- Not the healthiest option
- A small amount of cookies in a package
- Because it is “milks favorite cookie” they are leaving out lactose intolerant
- The website is lacking in attractiveness and vibrance
- Not taking on a large enough presence in social media
- Not attractive to chocolate-haters
Opportunities
- International brand
- Younger audience to market
- Untapped TV market
- Primarily sold as a dessert not enough as a snack
Threats
- Competitors offer a more cost-friendly product
- The “health” trend
Strengths
Dominant Brands: Aside from the nine billion-dollar brands mentioned earlier, Mondelez’s product portfolio consists of 53 other labels that each generate annual revenues of more than $100 million. The company’s market dominance appears unlikely to slip, either, given the company’s emphasis on innovation -- it routinely modifies core products when it sells them overseas, so as to make them better fit local tastes -- and distribution growth.
Attractive Categories: Snacks, including cookies, chocolate, gum, and candy, is among the fastest-growing categories in the otherwise-sluggish packaged food industry, notwithstanding the recent slowdown. Additionally, it appears to be a bit more resilient than other food niches, since snack items are often last-minute impulse purchases. This suggests that the snack category can grow in the mid-single digits over the long run, even without a blistering hot global economy.
Robust Free Cash Flow: This, along with a sound balance sheet, should enable Mondelez to reduce its debt-to-capital ratio, repurchase stock, and continue to pay a modest dividend. (The yield tends to hover around 1.5%.) Bolt-on acquisitions are also likely, especially as the company endeavors to broaden its distribution in developing countries.
Weaknesses
Uneven Execution: While Mondelez has a fine management team headed by CEO Irene Rosenfeld, execution has not been great since the company spun out its North American grocery division. In particular, Mondelez has been hampered by capacity constraints in certain overseas markets, such as India. Pricing missteps, most notably in Brazil and Russia, have also been something of a problem. Indeed, in some cases, they enabled low-cost rivals to steal business.
Falling Gum Sales: The gum segment, which together with candy accounts for roughly 15% of the sales mix, has been a persistent weak spot for Mondelez, with the company experiencing big volume declines on both sides of the Atlantic. Furthermore, while declines appear to be diminishing, it is unclear when efforts to reverse market-share losses will begin to pay off.
Opportunities
Emerging Markets: About 40% of the top line comes from developing markets, which puts Mondelez on par with multinational behemoths like The Coca-Cola Company (KO - Free Coca-Cola Stock Report). Moreover, the snack maker continues to invest heavily abroad, with the goal of leveraging its leading brands in countries where powerful, long-term macroeconomic tailwinds are in place. Just last year, the company outlined big investments in the BRIC nations: it announced plans to expand a chocolate factory in Brazil; it committed over $70 million to increase gum production in Russia; it pledged more than $190 million to build a new multicategory manufacturing plant in Sri City, India; and it indicated it would spend $85 million to enlarge a key biscuit facility in China. These efforts should translate to greater sales in the important BRIC geographies as we head toward the late decade. Today, BRIC sales account for about 15% of the revenue mix.
Cost Cutting: Mondelez, more focused on margins these days against a slower sales backdrop, still has lots of opportunities to save money by controlling overhead expenses and boosting efficiencies. In fact, the company, already garnering savings from manufacturing upgrades and a redesign of the supply chain that is expected to make it more competitive in the U.S. and Europe, recently outlined an incremental restructuring plan that will likely yield an extra $1.5 billion-plus in annual savings through the 2017-2019 time frame. The program also aims to boost annual productivity savings to 3% of COGS (cost of goods sold) within the next few years, which should support our view that the share net will exceed $2.50 by the late decade. The $2.50-a-share bottom-line target is conservative, we believe, given the powerful operating leverage that will probably materialize once revenue growth picks up again.
Threats
Commodity Pressures: Rising input costs are a threat to Mondelez, as they are to most food processors. One potential headwind worth watching is coffee prices, which appear set to rise significantly because of drought and fungus in Brazil and large coffee-producing countries. (The tough climate conditions have taken a big toll on this year’s harvest.) The higher bean prices could weigh on margins if they are not effectively passed along to consumers.
Low-Cost Rivals: Price competition from smaller, regional brands and/or private labels is always a cause for concern for market leaders like Mondelez. Thus, it is important for the company to stay innovative, carefully manage price gaps, and maintain a robust advertising budget. Otherwise, share erosion may emerge, as it has, from time to time, in less-stable international markets.
Conclusion
In sum, we think that the positives well outweigh the negatives here. Though the top line has weakened this year, we expect healthy organic growth to return before too long, as Mondelez makes the most of its snacks dominance and vast presence in developing nations. In the meantime, margin expansion ought to lift profits, as the company steps up its restructuring efforts. And shareholder value will likely be enhanced by capital returns (dividends and stock buybacks) and strategic actions on the M&A front.
The issue is best suited for defensive-minded, longer-term investors looking for a little growth and a small income stream. While not cheap at the current quotation, the quality stock should provide decent risk-adjusted returns through the 2017-2019 period.
References
- https://www.slideshare.net/DuduDemiralay/lker-company
- https://www.slideshare.net/kwkhan/pri-of-marketing-presentation-by-khurram-wasim-khan-mba-1-hu
- https://www.scribd.com/doc/28443502/Market-research-on-Oreo
