Harvard Case - Burlap & Barrel: A Spicy, Single-Origin Supply Chain
"Burlap & Barrel: A Spicy, Single-Origin Supply Chain" Harvard business case study is written by Neha Mittal, Marilyn Anthony. It deals with the challenges in the field of International Business. The case study is 11 page(s) long and it was first published on : Dec 12, 2021
At Fern Fort University, we recommend that Burlap & Barrel focus on a growth strategy that leverages its unique single-origin spice supply chain and strong brand identity to expand into new markets and product categories. This involves a strategic combination of internationalization, global marketing, and strategic alliances to achieve sustainable growth while maintaining its commitment to environmental sustainability and ethical sourcing.
2. Background
Burlap & Barrel is a spice company founded in 2013 by two friends, Ethan Frisch and Matt Wadiak, who were passionate about sourcing high-quality spices directly from farmers in developing countries. Their mission is to bring the world's best spices to consumers while empowering farmers and promoting sustainable agriculture. They achieve this through their single-origin supply chain, which ensures transparency and traceability from farm to table.
The case study focuses on Burlap & Barrel's early success and the challenges they face as they consider expanding their business. They have a strong brand reputation built on quality, sustainability, and ethical sourcing, but they need to navigate the complexities of international business, global supply chain management, and competitive forces in the spice market.
3. Analysis of the Case Study
We can analyze Burlap & Barrel's situation using the Porter's Five Forces framework to understand the competitive landscape and identify opportunities for growth:
- Threat of New Entrants: The spice market is relatively fragmented, with many small players and limited barriers to entry. However, Burlap & Barrel's unique single-origin sourcing model and strong brand reputation create a significant barrier for potential competitors.
- Bargaining Power of Buyers: Consumers have a wide range of choices in the spice market, leading to moderate buyer power. Burlap & Barrel's high-quality spices and ethical sourcing practices differentiate them and give them some pricing power.
- Bargaining Power of Suppliers: Burlap & Barrel's direct relationships with farmers give them strong control over their supply chain. However, they need to ensure fair pricing and sustainable practices to maintain long-term relationships with their suppliers.
- Threat of Substitute Products: Consumers can find substitute products for specific spices, but Burlap & Barrel's focus on quality and flavor profiles reduces this threat.
- Competitive Rivalry: The spice market is competitive, with large multinational corporations and smaller specialty brands. Burlap & Barrel can differentiate themselves through their brand story, ethical sourcing, and unique product offerings.
4. Recommendations
Burlap & Barrel should pursue the following recommendations to achieve sustainable growth:
4.1. International Expansion:
- Target Emerging Markets: Focus on emerging markets with a growing middle class and increasing demand for high-quality food products. This could include countries in Asia, Africa, and Latin America.
- Strategic Market Entry: Utilize a phased approach, starting with smaller-scale market testing before committing significant resources. Consider options like online distribution, partnerships with local retailers, or establishing joint ventures.
- Adapt Products and Marketing: Tailor product offerings and marketing messages to local preferences and cultural sensitivities. Conduct thorough market research and consider collaborating with local experts.
- Manage Cultural Differences: Implement cross-cultural management training for employees involved in international operations. Foster a culture of respect and understanding to build strong relationships with partners and customers.
4.2. Product Diversification:
- Expand Product Range: Introduce new spice blends, spice-infused products (e.g., salts, sugars, oils), and other culinary ingredients that complement their existing offerings.
- Develop Value-Added Products: Explore opportunities for creating ready-to-use spice mixes, gourmet food products, or even spice-themed cooking kits. This can cater to a wider audience and increase revenue streams.
- Focus on Niche Markets: Target specific niche markets with specialized product offerings. Examples include organic spices, gluten-free options, or spices tailored for specific cuisines.
4.3. Strategic Alliances:
- Partner with Retailers: Build relationships with high-end grocery stores, specialty food retailers, and online marketplaces to expand distribution channels.
- Collaborate with Chefs and Restaurants: Partner with renowned chefs and restaurants to promote their spices and create unique culinary experiences. This can generate brand awareness and drive sales.
- Engage in Joint Ventures: Explore joint ventures with local businesses in target markets to leverage their expertise and market access. This can reduce entry barriers and facilitate faster growth.
4.4. Strengthen Brand Identity:
- Develop a Global Branding Strategy: Create a consistent brand message and visual identity that resonates with a global audience. This will help build brand recognition and loyalty across different markets.
- Leverage Digital Marketing: Utilize social media, content marketing, and online advertising to reach a wider audience and engage with potential customers.
- Tell the Story: Continue to highlight their commitment to ethical sourcing, sustainability, and farmer empowerment through storytelling and engaging content.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: Burlap & Barrel's core competency is their single-origin spice supply chain and their commitment to ethical sourcing and sustainability. The recommendations align with their mission by expanding their reach and impact while maintaining their core values.
- External Customers and Internal Clients: The recommendations cater to the needs of both external customers (consumers) and internal clients (farmers). By expanding product offerings and entering new markets, Burlap & Barrel can attract a wider customer base while providing increased opportunities for farmers.
- Competitors: The recommendations address the competitive landscape by leveraging their unique brand identity, ethical sourcing practices, and product quality to differentiate themselves from competitors.
- Attractiveness: The recommendations are financially attractive, as they offer the potential for increased revenue, market share, and profitability. The focus on emerging markets and niche products can lead to higher margins and a more sustainable business model.
- Assumptions: The recommendations assume that Burlap & Barrel can successfully navigate the challenges of international business, including cultural differences, language barriers, and regulatory hurdles. They also assume that they can maintain their commitment to ethical sourcing and sustainability while expanding their operations.
6. Conclusion
Burlap & Barrel has a strong foundation for sustainable growth. By leveraging their unique single-origin supply chain, strong brand identity, and commitment to ethical sourcing, they can successfully expand into new markets and product categories. This will require a strategic approach to internationalization, global marketing, and strategic alliances, while maintaining their core values and commitment to environmental sustainability.
7. Discussion
Other alternatives to the recommendations include:
- Focusing solely on the domestic market: This would limit growth potential and miss out on opportunities in emerging markets.
- Acquiring existing spice companies: This could be a faster way to enter new markets, but it carries higher risk and may not align with Burlap & Barrel's values.
- Licensing their brand to other companies: This could generate revenue, but it would require careful management to ensure brand consistency and quality control.
The key risks associated with the recommendations include:
- Cultural differences: Misunderstanding local customs and preferences could lead to marketing failures and strained relationships.
- Regulatory hurdles: Navigating international trade policies and regulations could be complex and time-consuming.
- Supply chain disruptions: Maintaining a reliable and ethical supply chain in new markets could be challenging.
The key assumptions underlying the recommendations are:
- Burlap & Barrel can successfully navigate the challenges of international business.
- They can maintain their commitment to ethical sourcing and sustainability while expanding their operations.
- Consumer demand for high-quality, ethically sourced spices will continue to grow.
8. Next Steps
To implement the recommendations, Burlap & Barrel should take the following steps:
- Conduct thorough market research: Identify potential target markets and assess their demand for high-quality spices.
- Develop a detailed internationalization strategy: Define specific market entry strategies, including distribution channels, marketing campaigns, and partnerships.
- Build a strong team with international experience: Recruit individuals with expertise in cross-cultural management, international business, and global supply chain management.
- Establish a dedicated budget for international expansion: Allocate resources for market research, product development, marketing, and logistics.
- Monitor progress and adjust strategies as needed: Continuously evaluate the effectiveness of their internationalization efforts and make necessary adjustments to ensure success.
By following these recommendations and taking a strategic approach to international expansion, Burlap & Barrel can achieve sustainable growth while maintaining its commitment to ethical sourcing and sustainability. They have the potential to become a leading global brand in the spice market, empowering farmers and bringing the world's best spices to consumers.
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Case Description
Burlap & Barrel was an upcoming and successful public benefit corporation based in the Queens borough of New York City that imported spices from foreign farms and sold them to restaurants, gourmet food stores, home cooks, and other food services in the United States and other markets. In March 2020, when COVID-19 gripped the world and forced most food establishments to close down temporarily, the two co-founders of Burlap & Barrel saw an instant drop in their revenues because half of their sales volume normally came from restaurants. To stay afloat in the pandemic, they changed their focus from wholesale channels to a direct-to-consumer business model. Media coverage in major outlets helped demand increase, but the shift from wholesale to direct-to-consumer raised many supply chain inefficiencies in sourcing, storing, packaging, and transportation. In early 2021, as restaurants began gradually reopening, the two B&B co-founders became concerned about meeting the growing demand from both direct-to-consumer and restaurant orders while retaining their core ethical, environmental, and business values.
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