Poore Brothers Essay, Research Paper

Poore Brothers

Brothers Don and Jay Poore had worked on potato chip packaging equipment and thought they would strike out on their own. While servicing packaging machines in Pennsylvania, Don and Jay had met a gentleman who knew a lot about making potato chips in small kettles One Batch at a Time and he helped them get started. By cutting their chips a little thicker and cooking them in kettles, their product had a serious crunch that no other chip had. In 1983, they started a small chip manufacturing operation outside of Houston with a brand called Groff’s of Texas. They sold their Texas business after a few years and decided to move to the Valley of the Sun. In 1986 the brothers founded Poore Brothers in Goodyear, Arizona. They started with one kettle, one delivery truck, and one store that sold their chips, Mayfair, across from the Wigwam. They didn’t have a marketing budget, so they relied on sampling and word of mouth advertisement. It wasn t long before the large grocery stores in the valley began to authorize sale of their products. It was also right around this time they had a couple of bold flavors that were real winners, Salt & Vinegar and Jalape o. Soon, all of Arizona could buy their products. In order to serve all their Arizona customers they started a distribution company. Today Poore Brothers Distributing is the premier snack food distributor in the State of Arizona.

It was only a matter of time until the products found their way across the Arizona border into California and other states. Eventually Don and Jay licensed the brand and manufacturing process to companies in Minnesota and Tennessee. In the early 1990’s, the snack food business began to change with the addition of low fat and baked snack products. So they changed too. They began cooking their product in Sunflower Oil. This oil is low in saturated fat and tastes just as good as their original product that was produced with peanut oil.

In the mid 1990s, the company was getting larger and harder to manage in the hands-on way Don and Jay liked to manage it, so in 1994, they decided to sell Poore Brothers. Since then the owners have taken the company public and opened a new state of the art manufacturing facility in Goodyear, Arizona. Jay still works at the Goodyear plant and takes great pride in making sure the manufacturing equipment runs smooth and that the new owners make the best products possible.

Poore Brothers has since stopped the manufacture of its product in Minnesota and Tennessee. The facility in Goodyear, Arizona, is currently the only Poore Brothers facility in the world. They do all manufacturing and shipping from there. Poore Brothers currently distributes to California, Colorado, Hawaii, Ohio, Illinois, and New Mexico, with the goal of eventually reaching every state. The company that started out with about 40 employees now has 80.

Product:

Mission-Win the hearts of their consumers, the trust of retailers and distributors, and the confidence of investors.

Poore Brothers products have four things in common:

Hand Crafted, Cooked One Batch at a Time-All their products are made in kettles. Potatoes are sliced only minutes before they are dropped into oil. The potatoes are then stirred and the temperature is varied to achieve the unique product texture. The product is done only when the temperature of the oil reaches a certain point. Kettle cooking is more costly and time consuming, but the result is worth the wait.

Bold Flavors-They are not afraid to create intense and unique flavors. They currently produce ten bold flavors to choose from.

Serious Crunch-Kettle cooking creates the crunch. Regular chips can’t match Poore Brothers crunch. Poore Brothers products are the crunchiest, compared to any national brands.

Low in Saturated Fat-They use the most expensive and highest quality oil to manufacture their product. Their chips have only one gram of saturated fat. They are able to achieve this small amount of fat by using a variety of sunflower oil that is low in saturated fat and high in monounsaturates (the good stuff).

Promotion:

Invest in brand equity building marketing programs-They support their brand with radio advertising, outdoor billboards, FSI couponing and are currently executing a consumer promotion with the Arizona Diamondbacks. Given key learnings from each of these vehicles they now believe they have a “recipe” for future brand development.

Headlines:

Phoenix, AZ, March 17, 1999 – Poore Brothers, Inc. (Nasdaq: POOR) announced today that the Company is pleased to continue its sponsorship of the Arizona Diamondbacks during the 1999 baseball season. The sponsorship includes Poore Brothers launching a commemorative package of 6 oz. Original Potato Chips, honoring the Arizona Diamondbacks.

Sponsor of the 1999 Phoenix Open

New Products-The Poore Brothers Brand has been an innovator of unique and different flavors. Constant attention to introducing new flavors has fueled growth and kept their brand fresh. In June of 1998 they introduced a line of dips and tortilla chips. In the future, the brand will be leveraged in other snack categories where they believe their product has something unique and different to add.

Headlines:

Goodyear, AZ, May 14, 1998 – Poore Brothers, Inc. (NASDAQ: POOR) is pleased to announce the introduction of two “intensely different” product lines: Poore Brothers Tortilla Chips and Poore Brothers Premium Dips. Poore Brothers new tortilla chips were developed to extend Poore Brothers “intensely different taste” brand equity into the $3.4 billion tortilla chip category. To ensure that the Company’s new tortilla chips offer consumers the same superior taste, texture and flavor variety as Poore Brothers Potato Chips, the Company utilized an innovative process to bake real ingredients like roasted red peppers into the tortilla chips. The process creates a unique tortilla chip with a robust, south-of-the-border flavor and texture. The Company will introduce four new flavors, including Roasted Red Pepper, Jalapeno, Sun-Dried Tomato, and Original. To ensure that the tortilla chips offer consumers a unique texture, Poore Brothers Tortilla Chips are made with only 100% stone ground corn and are produced one batch at a time. In addition to adding real ingredients, Poore Brothers Tortilla Chips are seasoned on the outside to ensure an “intensely different taste.” Like Poore Brothers Potato Chips, the Company’s new tortilla chips are low in saturated fat because they are cooked in premium sunflower oil. The Company is also introducing Poore Brothers Premium Dips to complement its new line of tortilla chips. The dips will be offered in three flavors, including Roasted Red Pepper Salsa, Santa Fe Black Bean Dip, and Sour Cream & Jalapeno Dip.

Pricing:

Continue to improve margins and reduce cost of goods-Their new facility has allowed them to become more efficient and reduce costs. However, many other programs and adjustments can be made to drive even more costs out of their system. Furthermore, they must make sure that their prices reflect premium positioning and make adjustments when applicable.

Modernize Business Practices-Although the facility is modern, the systems are not. They must improve and invest time and money in their systems and people.

Distribution:

Grow Distribution Revenue in Arizona-As the premier distributor in the state of Arizona they have the opportunity to add complementary product lines to their distribution company.

Pursue Strategic Acquisitions-While the Company expects to deliver improved earnings from its current businesses in 1999, management will be exploring opportunities to grow revenue and profits through acquisition. As such, the company will search for strategic acquisitions that leverage the company’s efficient new manufacturing operation and modern infrastructure.

Headlines:

Goodyear, AZ, November 5, 1998 – Poore Brothers, Inc. (NASDAQ: POOR) is pleased to announce it has signed a definitive purchase agreement to acquire the Bob’s Texas Style Potato Chips.

Further Develop Their Private Label Potato Chip Business-Poore Brothers provides private label potato chips to key retailers in Arizona and California. Continued growth will come from those retailers who demand good product quality at a reasonable price. The Company’s private label revenues grew 18% in 1997 and we expect this positive growth trend to continue.

Headlines:

Goodyear, AZ, June 9, 1998 – Poore Brothers, Inc. (NASDAQ: POOR) announced today the introduction of the Company’s new interactive web-site and electronic company store located at www.poorebrothers.com.

Other Facts:

The Company reported that its net sales for the quarter ended December 31, 1998 increased 20% to $3,692,036, versus net sales in the fourth quarter of 1997 of $3,072,894. As expected, this growth was primarily attributable to the November 1998 acquisition of Bob’s Texas Style Potato Chips. Poore Brothers’ fourth quarter 1998 gross profit increased 74% to a record $876,756, versus fourth quarter 1997 gross profit of $502,497.