Raisio Group and the Benecol Launch Case Analysis
Benecol was launched in 1955 by the company Raisio in Finland (“Benecol,” 2010). Benecol has become a successful additive to multiple product lines due to its unique ingredient of plant stanol ester. The ingredient has been proven to reduce cholesterol levels and can easily be added to any food (Grant, 2010). Raisio, up until 1997, produced much of the plant stanol it needed and was self-sufficient in its exploitation of stanol ester technology (Grant, 2010). Raisio then made the decision to become part of Johnson & Johnson in order to gain global marketing, manufacturing, and distribution capabilities. Through this partnership, Benecol has maintained its position well within a very diverse group of products. Benecol has stood out with its competitive advantage and its differentiation advantage by having products that contain cost premiums, but that are unique in the way they help lower cholesterol
Synopsis of Benecol
Benecol became very popular in the 1990’s when people had a growing concern over cholesterol levels and how to control them (Grant, 2010). When a group of scientists in Finland determined that plant stanol ester could lower cholesterol levels, they created margarine to incorporate the ingredient (Grant, 2010). Raisio put systems in place and established technology to make it one of the few companies that could produce its own plant stanol ester. Benecol is now the world market leader in cholesterol reduction and is a forerunner in the innovation of new products that can incorporate the ingredient, plant stanol ester (“Benecol,” 2010). Hey have a great reputation and have had numbers of success with trials and food authority exams to show that the plant stanol ester does indeed lower cholesterol. Just this past year, Europe acknowledged that Benecol is proven to lower cholesterol (“Benecol,” 2010). Benecol is international and has products in over 30 countries, with the newest market control being in Columbia.
Relevant Factual Information about the Problem or Decision the Organization Faced
Raisio as a company faced many challenges while developing Benecol. While the company had a great product that it knew would be a great seller, it also realized that it would have a hard time just being a supplier of the ingredient and not having a great networking, marketing, or distribution outlet. The Johnson & Johnson merger seemed to be the best option for the company to allow for mass marketing and distribution. Benecol also faced numerous competitors, such as Unilever, who also believed they had found a way to incorporate plant stanol into its foods (Grant, 2010). Aside from direct competitors, there were also many competitors in the ways to reduce cholesterol. While Raisio believed it owned the process to extract plant stenol ester, the company realized there were many other additives to food that could make it be lower in cholesterol levels. There were other statins such as Zocor and an atorvastin named Lipitor (Grant, 2010). All of these alternatives were FDA approved pills that worked by slowing down the production of cholesterol. In addition to the medicine options, there were also many natural additives such as fish oil and flax seed oil in the market. Benecol had to prove why its product was better and worth the price compared to other alternatives. Benecol also faced a hard look from the FDA. It is what the market considers a “functional food,” meaning it has a beneficial functional effect on the body. The FDA had first suggested that Benecol was not safe to use for lowering cholesterol and therefore, they could not claim it did so. Benecol then chose to market the item without health claims, until the FDA approved the item in 1999 (Grant, 2010).
Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials
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