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Thursday, May 30, 2013

Tayto Ireland and Walkers UK - Crisp Wars

Case 2 Tayto Ireland and Wa l kers UK - Crisp Wars
I reland's lea d i n g bra n d of crisps (or ' potato chips' as they are cal led in some countries),
'Tayto' , has dominated the Irish savoury snack market for 40 years. Every week the Tayto
G ro u p produces and sells eight m i l l ion packets of crisps and snacks in a cou ntry with a
popu lation of less than fou r m i l l i o n . This means that, on average, every Irish person consumes
a lmost 1 00 packets a year.
However, Tayto's position is now un der threat. British company Wal kers, backed by
the m u scle of its parent company Frito Lay and Frito Lay's owner, the giant Pepsico corporation,
lau nched the U K 's most popular brand of crisps in the Republic of Ireland on
1 7 M a rch 2000 (St Patrick's Day). According to Andrew Hartshorn, Walkers' brand
manager for I reland, Walkers i ntends to capture a 'substa ntial share of the [Irish] ma rket
quickly. ' Indeed, Walkers a ppear to not only want to eat up ma rket share, but to change
the way Irish consumers see crisps. While Taytos genera l ly come i n d i n ky 2 5 gram bags
a n d are replete with the skin shavings and blemishes of the potatoes they once were,
Wal kers is a crisp without blemish. They come with a m i n i m a l trace of vegeta ble oil i n
bigger servings with a modern foil b a g decorated i n t h e global Frito Lay format.
While Wa l kers is now backed by a n American pa rent, Tayto has recently gone the
other way, ret u r n i n g to I rish ownership after U S fi rm TLC Beatrice sold it to the Irish
d ri n ks com pany C antrell & Cochrane.
All of Irela n d 's crisps were i mported from the U K u ntil M r Joe M urphy from Dona bate,
Cou nty D u b l i n fou nded the Tayto Compa ny in 1 954. M u rphy, an enthusiastic crisp-eater,
fou n d the crisps available in h i s day to be bland and i nsipid (the only flavouring option
available a mou nted to a little bag of salt contai ned in each packet for 'self-spri n k l i n g ' ) .
He lau nched his crisp company on O ' Ra h i l ly Parade in D u b l i n with one va n a n d eight
e m ployees, some of whom were to work for him for over 30 years.
M u rphy's biggest claim to fame was his i nvention of cheese a n d onion flavoured
crisps - a flavour perfected by one of those original eig ht, Sea mus Burke, on what was
effectively nothing more sophisticated than a kitchen table. C heese-and-onion is now
the top sel l i n g flavour in I reland and in the UK where Murphy's i n n ovation was q u ickly
copied.
Origina lly Tayto's were produced by hand using two sets of deep-fat fryers. But the
com pa ny g rew q u ickly, a ided by the financial association with Beatrice who fi rst
acq u i red a stake i n the company i n 1 96 5 . Factories were built i n Rath m i nes, Harold's
C ross and Coolock, a l l in the D u b l i n a rea . Tayto now employs over 2 50 people and
boasts a low staff tu rnover as testi mony to the family atmosphere of the company.
304 Cases a n d Furth er Source Ma terial
Tayto's s u p ply and distribution chains go deep i nto the I rish fabric. It only uses Irish
potatoes g rown u nder contract by farmers with whom Tayto have been associated for
many years, and it has developed an i ntricate distribution network. Tayto's distr i butes its
crisps through one of the l a rgest d irect van sales operations in the country, with 1 0
reg ional depots located through Ireland serviced by a roving fleet of 3 5 Tayto's vans. This
provides a 99 per cent domestic distri bution level - a q u ite rem a rkable feat given the sti l l
r u ra l nature o f l a rge pa rts o f I relan d .
To f u rther consolidate these channels a central distribution centre was created i n
1 996 i n Ballymou nt, D u b l i n . T h e centre is fully a utomated and contains 1 0 automated
loading bays, with the capacity to hold in excess of 1 50 000 cartons of crisps. All types
of outlets a re serviced by this system : s u permarket chains, pu bs, newsagents, g a ra ge
forecou rts, off-licenses and i n dependent owner-operator stores, a n d Tayto g ua ra ntees
that each customer receives fresh product t h roug h weekly service calls.
The result: al most every shop i n I reland - from the biggest supermarket to the smallest
i ndependent corner g rocer to the most remote petrol station - promi nently displays
Tayto crisps, a big factor in a m arket where it is estimated that a p p roximately half of a l l
sales a re i mp ulse p u rchases. F i n d i ng a n I rish person, or a nybody with a connection to
Irelan d , who is u naware of the brand is a difficult task. Indeed, the way in which some
Irish speak of Tayto crisps seems to i n dicate a kind of spiritual attachment. In a recent
su rvey of brands, Tayto was rated the third biggest Irish brand a n d first in the g rocery
sector.
While Tayto holds a domestic ma rket position enjoyed by few i ndigenous consumer
brands (in 1 999, it held 60 per cent of I relan d 's crisp ma rket, a n d the second h i g hest
sel l i n g brand, ' King C risps', is also owned by Tayto), it has no official export busi ness i n
a n i ncreasingly global savoury snack market. However, there a re what cou ld b e called
' i n dependent i n itiatives' that bring Tayto crisps to the world. It is often clai med that
there a re more I rish living outside of I reland than wit h i n , and packets of Tayto a re regul
a rly dispatched to Irish emigra nts from friends a n d fa mily at home. M a rtin McElroy, a n
Irishman now living in P h i ladelphia, h a s developed an agency that now orders over
1 00 000 bags of Tayto a week which he sel l s throug h local wholesalers: ' It's wonderf u l
t o see t h e reaction o f a l l t h e I r i s h people here w h e n they wa l k i nto a shop and there is
a box of Tayto C heese & O n i o n , ' claims McElroy. 'But the Americans a re rea l ly developing
a taste for them too. In fact, I can see that Tayto will be regarded as the l ux u ry i mport
in the same way that many American products such as Nachos a re regarded at home
[ I relan d ] . ' The crisps a re reta i l i n g for $1 a pack, twice what they sell for i n Irish stores.
Wal kers can also trace its h istory back 500 years. As a local pork butcher in Leicester i n
t h e E n g l i s h mid lands, Walkers began prod ucing crisps as a way o f utilizing staff a n d
facil ities i n its s m a l l factory w h i l e meat was heavily rationed after World W a r I I . It began
to expand i nto other B ritish regions a round 20 years ago. In recent years, with the backing
of it's new parents and the hel p of a big ma rketing budget wisely spent, particula rly
on television advertisements featuring B ritish soccer stars, it has become the U K 's second
most powerful grocery brand after C oca-C o l a . Wa l kers now boasts a n n ua l sales of wel l
over £300 m i l l ion and 65 p e r cent share o f t h e U K crisp sector.
Walkers/Frito-Lay/Pepsico are taking the Irish launch of its products very seriously. It has
given away more than a million free packets of crisps and made a n I rish variation on its
theme of soccer-sta r television advertisements staring Roy Keane, a n Irish midfielder who
now plays for Manchester U n ited and is one of the highest paid players i n the English
footba l l league. Andrew H a rtshorn explains that the h uge marketing budget that Walkers
is currently using to push its crisps in Ireland is a 'long term investment' - a strategy which
Cases 305
is part of a bigger global picture. Success i n Ireland, E u rope's fastest growing economy
and Wal kers fi rst overseas target, will help the com pa ny develop the k nowledge, experience
and confidence necessary to lau nch i nto other E u ropean countries.
Evidence from N o rthern I reland does not bode wel l for Tayto. W h i le the Tayto
bra n d (owned by a d i fferent company in the North) is sti l l widely reg a rded, Wa lkers
rep l a ced it as the best-se l l i n g crisp in j ust t h ree yea rs. However, there a re many
cultural a n d busi ness factors that make the Repu b l i c a different m a rket - not least of
which is the clout of the myriad of smaller i n dependent stores who sti l l contr i b ute a
m uch h i g her percentage of sa les than in Brita i n or the US a n d with whom Tayto's has
long sta n d i n g re lati o n s h i ps. Tayto's m a n a g i n g d i rector, Vi ncent O ' S u l l i va n , su bseq
u ently believes that Tayto ca n com pete a g a i nst the m i g ht of the m u ltinational
threat: 'We ' re not g o i n g to g ive away ma rket s h a re to a nyone: i n sists O ' S u l l iva n .
'What [Wa l kers] are g o i n g t o f i n d out i s that it's a very com petitive m arket with
stro n g local bra n d s . '
C a n Tayto survive i n t h e face o f t h e th reat from Walkers a n d t h e global brands l i ke
Pringles that a re sure to fol l ow?
2 Develop a strategy for Tayto built a round what you believe to be the ethos of the
company.
Sources: This case draws from www.taytocrisps and 'The Crisp Wars', Cara Magazine
Postscript: Joe 'Spud' M urphy died in November 2001 . Many obituaries were published in the
newspapers of Ireland and Britain expressing the individuality and kindness of the man and hailing
him as the very acme of the Irish entrepreneurial spirit
Case

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