Parmalat's product and brand management in the dairy and packaged food industries

Parmalat’s product and brand management in the dairy and packaged food 
industries: a perspective from the Australian market 
 
 
 
 
implementation of a traditional scheme of review, which adapts a series of 
theoretical models to a concrete context. On the contrary, we decided to set the 
firm as a starting point, and then recall the most fitting links with academic 
literature as the various subjects are under discussion. We opted for such approach 
in line with the undeniable recognition that, at these dimensional levels, the 
influence of companies’ conduct on managerial sciences often overcomes the 
relevance of the opposite flow. Therefore, the thesis proposes an in-depth 
investigation of Parmalat’s approaches to the management of its product 
assortments and brand ranges, both at strategic and operational levels, and through 
a systematic and considerable inside data collection.  
A significant limit of this work is the temporal restriction of its reliability. 
In fact, although strategically it is our purpose to draw some general lines of food-
product management, most of the instruments of analysis utilised (and 
consequently some of the following observations) express the “state of affairs” of 
a given moment in time, and may not be valid any longer in a few years.  
Moreover, and in line with the aforesaid question, the working paper 
does not reflect Parmalat’s underway financial reorganisation following the 
liquidity crisis occurred in November 2003 (we dedicate a postscript at the 
end of the work), after the company deferred a scheduled US$ 150 million 
bond repayment bringing to light an astonishingly disastrous debit-balance 
status. Indeed, we cannot deny that these negative events will strongly affect 
Parmalat’s marketing strategies both globally (downsizing of the company’s 
perspective) and in the under-discussion domestic setting (potential handover 
of the Australian branch). Nevertheless, Parmalat’s restructuring is an 
ongoing process whose final outcome is, to date, far from being exhaustively 
foreseen. Consequently, we believe it would be counterproductive and totally 
deficient to entirely revise the spine of the project at this moment in time, and 
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Introduction 
 
 
 
 
 
decided to stick to the multinational’s strategic standpoint investigated prior 
these problems have become manifest.     
From a “geographical” point of view, the picking of the marketplace has a 
threefold foundation with regards to the objectives of our analysis: 
• the Australian dairy market is an extraordinarily mature setting, where the 
major competitors have been forced to develop a number of marketing tools in 
order to stay afloat. The limited size of the consumer market induces the major 
players to undertake a harsh competition based on product differentiation, 
where brand power and company’s reliability are of paramount importance for 
long-term success; 
• the overseas dairy market is part of a fully deregulated industry, where 
domestic manufacturers as well as foreign entrants compete to share a 
relatively small pie. With reference to that, and in view of the ongoing process 
of liberalisation of the world’s markets under the direction of the World Trade 
Organisation, it will be interesting to take into account some industrial 
mechanisms and marketing practices that will probably become essential 
across Europe in the forthcoming years;  
• the main reason why Parmalat entered the Australian market was to exploit 
Australian managers’ knowledge about the consumption attitudes of the Asian 
consumer. In fact, if apparently nineteen million Australians are not reason 
enough for considerable investments, the preferential access to some of the 
most promising countries in the world in terms of growth in packaged food 
consumption provides the company with an opportunity to further extend its 
international presence.  
Throughout this document, we try to give a fairly detailed picture of what 
are Parmalat’s product and brand policies both globally and locally, and to point 
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Parmalat’s product and brand management in the dairy and packaged food 
industries: a perspective from the Australian market 
 
 
 
 
out little by little strengths and weaknesses, opportunities and threats the 
multinational should dedicate most of its attention to in facing future 
developments.  
The working paper is divided into five parts. In the first chapter we analyse 
the dairy sector. First, we give a general overview of the most important changes 
occurred recently in the world’s dairy industry, especially dwelling on the 
dynamics of production and trade. Second, we point out the characteristics of 
innovation as well as its relevance within the dairy category. Finally, we move to 
the investigation of the Australian environment, with reference to both the 
structure of the dairy sector and the attributes distinguishing the Australian 
consumer. It is worth saying that, notwithstanding a strong focus on dairy, many 
of the observations we will come up with are extendable to the entire packaged 
food market. In fact, although milk and dairy foods represent the bulk of 
Parmalat’s business worldwide, the Italian-based multinational operates also in a 
number of other grocery macro-categories. Particularly, the growing weight of the 
fruit-based beverage brand Santàl within the company’s global portfolio does not 
allow restricting our study to the mere dairy scenario.  
Chapter two focuses on Parmalat’s history and its pathway to international 
expansion, drawing attention towards the company’s responses to the never-
ending academic question concerning standardisation or adaptation of the 
marketing mix when approaching new markets. The overview of the 
multinational’s business takes into consideration primarily the international 
segmentation regarding the core areas of dairy, fruit juices and soy. Moreover, it 
aims at finding out the potential margins of product “globalisation” in the food 
sector as well as the essential adjustments to suit diverse consumers. In the end, 
the development of Parmalat’s brand portfolio is investigated in order to give a 
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Introduction 
 
 
 
 
 
picture of the ongoing process of rationalisation that places Parmalat close to 
many other global groups operating in the agro-industrial market.  
With the third chapter we start to get into the more specific scenery of the 
Australian marketplace, examining Parmalat’s competitive position. After giving 
a brief description of the multinational’s Australian branch and a general idea of 
how they entered the market in 1998, we introduce the “product concept” of the 
company. First of all, we describe how the marketing department of the company 
works and interacts with the other functional areas in order to achieve the desired 
outcomes. Then the analysis shifts towards tactical issues, concerning Parmalat’s 
segmentation activities with reference to the “down-under” consumer and the 
management of the company’s product range in the domestic setting. At last, in 
line with one of the key areas of interest, we examine Parmalat Australia as an 
export hub, trying to determine the expected and actual contribute of the local 
subsidiary to the growth of the group’s business in South-East Asia as well as 
identify the required level of heterogeneity in implementing product/brand 
policies within these countries.  
Chapter four discusses the administration of the company’s Australian 
brand portfolio, both strategically, trying to depict the value of the established 
local brands and their feasible future development (according to the global “brand 
vision”), and tactically, illustrating the mechanisms of brand positioning in a 
mature marketplace. In the end, we dedicate attention to the auxiliary variables, 
namely packaging, design and labelling, and their growing importance in 
launching products successfully as well as in building and maintaining strong 
brands.  
Finally, the fifth chapter moves on to the relationships existing between 
products/brands and the other components of the marketing mix. Particularly, we 
give special consideration to distribution and to the characteristics of the 
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Parmalat’s product and brand management in the dairy and packaged food 
industries: a perspective from the Australian market 
 
 
 
 
producer-retailer rapport within Australian grocery, investigating on how 
Parmalat faces the management of the supply chain in an extraordinarily difficult 
environment, where major supermarket chains dominate and control all aspects of 
the trading system. Then we discuss Parmalat’s pricing strategies and tactics in 
order to comprehend how these factors are relevant in building the most 
appropriate image for premium brands and for products owning recognizable 
advantages over the competition. In conclusion, advertising as well as other 
means of communication are considered so as to set a number of attributes 
specifically relating to the communication of dairy and packaged food 
products/brands, and to the most proper image a food company should spread.  
  
 
 
 
This case study is based on information provided by Parmalat Australia Ltd. 
Their assistance and permission to use this material are greatly appreciated. 
Nonetheless, the author is the one responsible for everything that follows. Some names 
and figures have been disguised to protect company information.      
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