Celestial Seasonings: More Tastefully Done
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- Date Submitted: 05/17/2016 09:11 AM
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Celestial Seasonings: More tastefully Done
Summary of the case:
With his tea company Celestial Seasonings, Mo Siegel has managed to disrupt the tea business while growing a $100m sales firm from scratch, and the largest herbal tea manufacturer in the US (in 1991).
External context analysis:
Social: Increasing health concern about caffeine effect
Technological: Technological innovations in edible and safer bag papers
Market analysis:
Market size: Tea market: $1 billion, In volume, 3,5 billions gallons in 1990
Herbal tea: (+4,8% cagr in volume 1987-90); $77 millions for the specialty tea market.
Growth : (6.5 gallon per capita in 1990, CAGR of 7% between 1965 and 1976, stable since then). In value, growing market at +30% p.a. in 1978-83, in line with the market’s profitability growth.
Competition: Lipton (52,9% m.s.), Bigelow (13% m.s.), Traditional Medicinals
Attractiveness: Slowing consumption, High competitiveness, seasonal/cyclical market, substitution by canned and bottled iced tea, high brand loyalty,
Firm analysis:
Quality of the resources: high standard manufacturing process, in-house R&D division, efficient marketing campain
Financial situation: ca. $55m sales in 1992 (+12.5% p.a in 1981-92), 15% EBITDA margin
Financing: first auto-financed, private-owned and ESOP, then briefly through IPO, and finally sold to Kraft in 1984 which sold it back by MLBO in 1987
Products: 3 ranges of teas: herbals, flavored, traditional, and diversification into Mountain Herbery herbal care products (eventually sold)
Competitive advantage: packaging for the product line differentiation, safety of bags
Geographical expansion: local (Aspen, Colorado), then is other states in the US, and then internationally
Distribution network: mainly in supermarkets health food stores, and owned retails
Diagnosis: (SWOT, facteurs clés de success a/p ana de la concu vs. firme)
Strenghts: Positioning, Product Image and quality, efficient manufacturing, Social...
Summary of the case:
With his tea company Celestial Seasonings, Mo Siegel has managed to disrupt the tea business while growing a $100m sales firm from scratch, and the largest herbal tea manufacturer in the US (in 1991).
External context analysis:
Social: Increasing health concern about caffeine effect
Technological: Technological innovations in edible and safer bag papers
Market analysis:
Market size: Tea market: $1 billion, In volume, 3,5 billions gallons in 1990
Herbal tea: (+4,8% cagr in volume 1987-90); $77 millions for the specialty tea market.
Growth : (6.5 gallon per capita in 1990, CAGR of 7% between 1965 and 1976, stable since then). In value, growing market at +30% p.a. in 1978-83, in line with the market’s profitability growth.
Competition: Lipton (52,9% m.s.), Bigelow (13% m.s.), Traditional Medicinals
Attractiveness: Slowing consumption, High competitiveness, seasonal/cyclical market, substitution by canned and bottled iced tea, high brand loyalty,
Firm analysis:
Quality of the resources: high standard manufacturing process, in-house R&D division, efficient marketing campain
Financial situation: ca. $55m sales in 1992 (+12.5% p.a in 1981-92), 15% EBITDA margin
Financing: first auto-financed, private-owned and ESOP, then briefly through IPO, and finally sold to Kraft in 1984 which sold it back by MLBO in 1987
Products: 3 ranges of teas: herbals, flavored, traditional, and diversification into Mountain Herbery herbal care products (eventually sold)
Competitive advantage: packaging for the product line differentiation, safety of bags
Geographical expansion: local (Aspen, Colorado), then is other states in the US, and then internationally
Distribution network: mainly in supermarkets health food stores, and owned retails
Diagnosis: (SWOT, facteurs clés de success a/p ana de la concu vs. firme)
Strenghts: Positioning, Product Image and quality, efficient manufacturing, Social...