Grenadier Chocolate Company Ltd - the Milk Mate Decision

GRENADIER CHOCOLATE

COMPANY LIMITED:

The Milk Mate Decision

Robert E. M. Nourse

"I've gotten into this for several reasons," explained Mr. Ronald Begg, president and founder of Grenadier Chocolate Company. "The potential of financial reward is one of them, although it will likely be some time before we begin to show a profit. I also wanted, however, to be in a position where I would make my own decisions. Procter & Gamble, where I spent seven years, provides great sales training. But as you develop you begin to want to flex your muscles. There are layers of managers up there above you, and they don't end in Canada. They go on and on. Finally, I have five children and, when they grow up, they're going to ask me where I was in the 1960s and 1970s when Canada was being sold out to the U.S. I don't want to have to say to them that I was there, helping the Americans take over."

Ronald Begg, 34, quietly explained his reasons for leaving a promising career with a large multinational food company. His background in sales, mass merchandising and promotion was extensive. For seven years, Mr. Begg had been a Proctor & Gamble brand manager for products such as Duncan Hines cake mix, Secret deodorant and Crisco shortening. Subsequently, he had become national sales manager of Frito-Lay, a division of PepsiCo with the objective of forming his own company.

The first task had been to find a suitable product. Dozens of product categories were systematically examined and a "hundred-odd" product concepts were reviewed. Each was assessed against a set of criteria that attempted to recognize market opportunities while, at the same time, taking into account the limited financial resources at Mr. Begg's disposal. The criteria, for example, included market size, growth rate, competitors active in the category, their costs, degree of consumer satisfaction with existing products, feasibility of new product development, ease of product formulations and suitability for custom packaging by an outside source. Of the original product concepts three were selected for intensive study. Formulations were prepared, and small-scale consumer testing was undertaken. The eventual choice was a new, milk modifying, instant chocolate syrup for household use. Subsequently, the product was given the name Milk Mate.

By November 1974, the formulation of Milk Mate had been improved to a point where extensive consumer testing yielded highly satisfactory results. Arrangements with ingredient suppliers had been finalized. An outside blender had been contracted to manufacture the Milk Mate concentrate, and a similar contract with a custom packer was approved for the final addition of bulk ingredients and packaging. Several