New Product Development at Schwan Food Company- Innovation through Communication

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Case Details:

Case Code : MKTG082
Case Length : 17 Pages
Period : 1952-2003
Pub Date : 2004
Teaching Note : Available
Organization : Schwan Food Company
Industry : Food & Beverages
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"One of the first things we did was arrive at a process that would allow us to develop world-class products through cross-functional teams."¹

- Joe Gruber, New Product Development Manager, Schwan Food Company, in April 2003.

"This patent-pending technology, proprietary crust, triangular shape and microwave susceptor make it the only retail product of its kind."²

- David Rettey, Senior Product Development Technologist, Schwan Food Company, in October 2003.

An Effort Well-Rewarded

In October 2003, Prepared Foods³ declared the US-based snack foods company Schwan Food Company (Schwan), as the winner of the '2003 Spirit of Innovation Awards.'

Schwan was given this award in the retail category for its newly launched product, Red Baron Stuffed Pizza Slices.

Another leading industry publication, Stagnito's New Products Magazine⁴ too adjudged this product as the best new product of the year. To top all these achievements, the renowned publication, Refrigerated & Frozen Foods named Schwan the '2003 Processor of the Year.'

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For the year 2002, Schwan also led the entire US food industry in terms of the maximum increase in the number of new products launched. The company was way ahead of seasoned food giants such as Kraft Foods, PepsiCo and Unilever (Refer Table I).

Interestingly, it was the only brand among the top nine rank holders that was not popular at the global level. These developments meant a lot to Schwan since it had reportedly been working hard for over two years towards introducing Red Baron Stuffed Pizza Slices.

Thanks to these awards and recognitions, the $3 billion, privately-held company established itself firmly as one of the most innovative players in the intensely competitive US frozen foods business.

In mid 2003, the company was the world's largest frozen pizza processor, and in terms of market shares, was next only to the country's largest food company, Kraft Foods.

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1] 'Red Baron Soars with Teamwork,' www.foodprocessing.com, April 2003.

2] 'The Slice of Life,' www.preparedfoods.com, October 2003. A susceptor refers to a metallic patch that is attached to microwaveable food packages.

3] Prepared Foods is a US-based business-to-business publication that tracks companies/organizations involved in developing, manufacturing, processing, packaging and marketing of prepared foods. Every year, it sponsors the 'Spirit of Innovation' awards for the most innovative food products launched in the retail and food service businesses. These awards are highly regarded by players in the foods business (Refer Exhibit I for the criteria on which the competing entries were judged).

4] Another respected publication in the food and beverages industry devoted exclusively to new product related issues, Stagnito's New Products Magazine is a tabloid published by the US-based Stagnito Communications Inc. The magazine Refrigerated & Frozen Foods is also published by the same company, focusing on the latest developments in the refrigerated and frozen food industry.