History of Michel et Augustine (Essay Sample)

Michel et Augustine
Introduction
Michel et Augustine is a French food brand that was started in 2005 by Michel de Rovira and Augustine Paluel-Marmont who were alumni from ESCP-Europe. Michel went to HEC and INSEAD Business School. The first products by the brand were flavored cookies and soon afterwards, it was followed by Lassi and Premium yogurt drinks. By 2007, the brand had started to commercializing yogurt ice-creams and two years later they had more than 60 SKU’s. The target for marketing is French and Parisian bobos. Their products are distributed in coffee shops and food stores. The company is an innovative brand of food with activities on various markets including crackers, biscuits, desserts and yoghurts. Starting 2008, the company has started sales abroad in countries like Belgium, Dubai, Switzerland, Russia, USA, Singapore, Honk Kong and Tokyo (Sandwich, 2015).
Since its launch in 2005, the company has recorded over 40% growth each year. Towards the end of 2013, the sale volume was EUR 35 million. (Sandwich, 2015). In the French market, Michel et Augustine is a unique brand with high recognition. The company boasts of 82 healthy and tasty products based on high quality natural ingredients. Assuming that the company wants to expand its business empire to China, this paper looks into preferred modalities in China including the marketing strategies and mix in order to ensure that the market approach is a success.
History of Michel et Augustine
The story of Michael et Augustine is based on childhood friendship, the appeal for entrepreneurship and the passion for food. In 2003, Augustine Paluel-Marmont and Michel de Rovira spent about six months tasting croissants and baguettes in Paris while researching on their book Le Guide des Boulangeries de Paris which was the first guide to Parisian bakeries (Bruno & Plassmann, 2014). While working on their project, they conceptualized on starting their own food brand. They had been inspired by the British entrepreneur Richard Branson (Barabel & Meier, 2012). Michael graduated with a degree in business majoring in Finance from ESCP school in Paris. In 1997, he went to New York to work with Credit Lyonnais and returned to Paris to work with LEK Consulting. A few years later, he joined INSEAD Business School where he graduated with an MBA. Augustine had equally dedicated most of his time in refining and defining the vision and idea of starting a new brand. He held a degree from EAP Business School in Paris and also worked with Air France previously (Carrick, 2010). Because he had been fascinated by branding and marketing right from the beginning, he thought of starting an original graphic identity going by the name Michel et Augustine or simply Michel and Augustine.
The story of the duo began in high school where they spend their times on the delights of boulangeries. Upon eating various baguettes and pain au chocolats, their experiences were published in their book. Apart from getting inspiration from Richard Branson, Augustin had been mulling on the idea of starting his own food company like Ben and Jerry’s in the US (Bruno & Plassmann, 2014). After a lengthy discussion, they came up with a business plan and decided to start with French Petit Sable, a sweet or lightly salted, round dry shortbread deeply rooted in French tradition. At first, they would avail sables in three forms; two classics and poppy vanilla. In the beginning, the duo made the sables themselves while working in their home kitchen. Later, they moved to bakeries after having gained good knowledge of Parisian bakeries. After all, they had made their own recipes after months of experimentation. Their original master plan was to proceed into a rented bakery once per week and sell their products for the rest of the week.
Augustine had obtained a professional qualification in patisserie and baking (Carrick, 2010). However, they had financial problems and didn’t have enough capital so they raised some money from their family and friends in order to launch their first cookie product. The duo went on making cookies themselves but after about nine months, they found a producer who accepted to make them. In 2006, they managed to raise funds via banking acquaintances in London and got 0.5 million Euros which was used to launch a drinking yoghurt resulting in enormous sales. In 2007, the duo launched savory cookies and a year later, it was followed by a fruit drink. This led to increased sales and a wider distribution network. By 2009, the company had penetrated all major food retailers in France. In 2009, the company had achieved sales of about 10 million Euros. Indeed, it had about 60 various products which were sold to almost 3,000 retailers in France (Bruno & Plassmann, 2014).
Chinese Market: External Strengths and Barriers
Michel et Augustin is a young food company launched in 2004 although it has a premium urban positioning. Its values and brand are well embodied by its founders. Since it targets a young, urban and modern clientele, its marketing is based upon innovative campaigns that contribute a new dimension of understanding and partnership in relation to the customer. As from May 2011, the brand spread to fifteen stores in the US as well as fifteen other independent stores in North Africa. In addition, it is also sold in seven other countries mostly in Europe (EU, 2015). As the second most economic power and the most populous country on the planet, China offers a large customer base with a higher demand for confectionary products. Candy is consumed in large amounts in the urban areas partly due to a rapid pace of urbanization. Further, consumers in China are interested in good quality products and not necessarily their place of origin and this offers a pleasant opportunity for the brand Michel et Augustin. In 2011, China became the largest market for grocery and food in the world surpassing the United States. China is the fourth largest food importer in the world after the EU, US and Japan. According to the Chinese Ministry of Commerce, the total retail sales are projected to shoot at 15% per year through 2015. Apart from growing local competition and a weak distribution infrastructure, there are opportunities for European Small and Medium Enterprises (SMEs) to market their products in the country (EU, 2015). This is driven by urbanization and expanding disposable income as well as growing taste for foreign foodstuffs, growing concerns for food safety and improving logistics system (SME, 2015). From 2006 to 2012, the Food & Beverage (F&B) Industry in China grew at a rate of 30%. In addition, the value of annual total production is staggering at USD 1.2 trillion.
As a net importer of F&B, China imported USD 73 billion while exporting USD 53 billion worth of goods. The EU food and beverages exports to China tripled from 0.9 billion to 3.3 Euros between 2006 and 2011. There are a number of key growth drivers that can make the Chinese market ideal for Michel et Augustin. First, a key driver in China’s economy is a sharp rise in the average household incomes. Those with high incomes spend a higher portion of their incomes on high quality food products including confectionary products and dairy products. Rapid improvement in transport accelerates the economy making products arrive quickly in cities (EU, 2015). Second, the Chinese food safety standards are prevalent and ugly incidents like dumping contaminated pigs along the Huangpu River together with the milk scandal have all undermined the trust and confidence in Chinese food standards and processes. In 2012, there were allegations that Chinese KFC suppliers used illegal drugs in fattening their chickens and this made the sales tumble. As a result, a good number of the citizenry have shown preference for imported brands. A survey by Ipsos in 2012 showed that over 60% of the total consumers would prefer foreign brands. Third, the market structure indicates that most imported food is consumed in cafes, bars, hotels and restaurants and most Chinese are preferring Western food when dining out (EU, 2015). Majority of Western-style restaurants that originally targeted expatriates are currently having a predominant Chinese clientele. At the same time, many family celebrations and social occasions take place in Western restaurants.
Fourth, imported beverages and food remain a vital symbol in China because it is perceived to be of high value compared to Chinese goods. For this reason, Western food products are normally packaged as gifts and the gift-giving market in China is an important custom. Fifth, the most common imported retail food products is packaged snacks like biscuits as they are eaten between meals. Western-style dinner parties are uncommon in China and many people prefer snacks than take-away ready foods. Indeed, Chinese consumers have portrayed little interest in taking European food products to their homes because of the abundance of Chinese cuisines and differences in cooking methods (EU, 2015). After all, ovens are not very common and carrying packed lunch would be pointless to many people who would not like to eat cold food. Sixth, the Communist Party in China is committed to foreign investment and major shifts in foreign policy decisions are expected soon.
Legal and Regulatory Barriers
The F&B market in China is laden with several barriers for many European SMEs such as Michel et Augustin. Some of these barriers are both legal and regulatory while others are related to the market characteristics and operating environment. As a result of recent food safety scandals in the market, China has moved swiftly to impose new regulations on certain industries. After joining World Trade Organization (WTO) IN 2001, China went ahead to reduce tariffs on many brands of imported products. Sanitary, phytosanitary and labeling restriction...