Tutorial Case Tilda Rice

The Marketing Environment: Case Study: The World of
Rice: External Challenges for Tilda's Marketers

Known as the ‘Prince of Rice’, basmati can only be grown in one place on earth – at the
foothills of the Himalayas. It is here where the combination of unique climate and soil
conditions allow basmati to truly flourish. We select the highest quality pure basmati from
over 10 000 independent farmers, all of whom we know by name.
www.tilda.com , February, 2011
Tilda is rightly proud of basmati rice, which it is largely responsible for introducing to the
UK and many other markets. Today, basmati accounts for 46 per cent of all UK rice sales, or
around £72m, much of which comes from Tilda. Something of a ‘supergrain’, being gluten-
free and low in fat, basmati is a delicate, light, fluffy grain with a wonderful aroma, literally
translated it is ‘the fragrant one’. However, with the need to help protect the single annual
harvest, a fairplay buying policy with farmers, storing grains until they are suitably mature,
and Tilda's long-held belief in providing consistency to the consumer's experience with
extensive and fastidious milling techniques, comes a high price. Compared with many other
rices, basmati is far from cheap and Tilda's is premium-priced to reflect the quality of its
famously blue-bagged basmati.
A difficulty of premium-pricing is that if external factors force changes to supply costs or to

the availability of quality rice, there are difficulties in raising further retail prices or in
maintaining such prices, especially if the harvest leads to inferior grains in a particular
season. In recent years, Tilda's marketers have faced a number of challenges, none of which
has been in their control or a result of Tilda's decisions.
A couple of years ago, the world's rice harvest was poor, with basmati badly affected. Tilda
has no control over the rains and climatic conditions necessary for a good harvest. The
quality of the grain was poorer, but there was also much lower volume available to purchase
from the farmers. Inevitably, raw material prices soared. Tilda had to almost double its retail
prices in order to cover the costs of acquiring adequate tonnages and for the extra milling
activities required to provide discerning consumers with an appropriate cooking and taste
experience. Sales dropped, as many consumers were priced out of buying this ‘Prince of
Rice’. No-one could have predicted the poor harvest and huge rise in world rice prices.
Owing to rice shortages, largely caused by poor harvests, the Indian Government had to
protect supplies of this staple food for its own population. As basmati in its purest form
comes only from the foothills of the Himalayas, any ban on exports from India would
catastrophically impact on the basmati part of Tilda's rice business. Tilda's stock pile of
reserves was just adequate to cover the period of the ban, but the company's marketers and
executives felt significant pressure from this regulatory pressure thousands of miles from its
Essex milling base.
Tilda's sourcing of basmati, from farmers the company knows and who nurture their rice
using traditional methods, precludes the use of GM rices. However, a leading competitor
allowed GM grains to enter its supply chain, causing negative publicity for rice in the press
and in Government circles, not only for its own brand but for rice in general. Although Tilda
had no link with this adulterated rice, the company had to invest significant time and
resources to explaining this and to reassuring its retail stockists.
The global economic meltdown has caused many consumers to revaluate their consumption
patterns and spending priorities. Tilda has many ranges and brands, catering for most rice-
eating communities and consumer segments, but its flagship brand, Tilda basmati, is
premium priced and branded to reflect its status amongst rices. Few observers predicted the
credit crunch or its longer-term implications on global finances and consumer priorities. Most
premium brands, such as BMW or John Lewis, have worked very hard to re-engineer the
propositions to provide relevance and value for target consumers. Upmarket grocer Waitrose
is now well-known for its Essentials range and competitive pricing comparison for 1000
brands versus Tesco. Tilda's marketers also had to come up with a value-based proposition,
launching its Everyday Rice range.
The above examples are aspects of Tilda's macro marketing environment, but micro
marketing environmental forces are also important for Tilda's marketers. The economic crisis
has forced retailers to re-think their strategies and merchandising, putting pressure on
suppliers such as Tilda to reduce prices and margins offered to trade customers, the major
supermarkets. Many retailers are seeking ways for reducing their carbon footprints to reflect
social and regulatory pressures, in turn demanding lower delivery miles, environmentally
responsible packaging and altered manufacturing processes from their suppliers, such as
Tilda. Such buyer pressures are commonplace for marketers examining the micro
environment. The rise of own label has been an issue for Tilda and its leading branded
competitors such as Uncle Ben's, Veetee or
Kohinoor, and is an example of the competitive forces within the micro marketing
environment.
Readers should not think that the marketing environment brings little good news to a
company's marketers. The increased attention by Government, nutritionists, medics,
educationalists, the media and many food producers to healthier eating presents an
opportunity for Tilda, as many health experts and nutritionists believe rice to be preferable to
other carbs such as potatoes and pasta. Within the rice arena, basmati has specific health-
attributes, being gluten-free, low in fat, very low in sodium, with no cholesterol and
containing all eight essential amino acids. Perfect for diabetic sufferers and very useful in
many diets as an alternative to chips or butter-filled jacket potatoes, there is a window of
opportunity for rice producers such as Tilda caused by obesity scares and healthier eating
social marketing initiatives from various state bodies, medics and the media.
These are just a few examples of how external forces impact on one large food company, but
Tilda is far from being alone in facing such a diverse and never-ending set of externally-
derived challenges, many of which flair up unexpectedly. The demands on marketers in such
companies are to identify such issues and raise awareness of their concerns, where possible in
advance of any negative impact on customer demand, performance or brands; and, to provide
suggestions for how best to navigate such market conditions. Inevitably, even the most tuned-
in marketers on occasion are caught out by surprising events. In such circumstances, the
expectation is that marketers will quickly evaluate and propose a plan for addressing the issue
in question. All organizations face a myriad of challenges from their marketing environments.
It should be the onus of marketers to be the ‘eyes and ears’ for their organizations, so as to
foster an understanding of the issues and their implications.
Questions for discussion
1 Which of the issues faced by Tilda's marketers would cause them the most concern
and why?
The unavalability of rice and that the fact they couldn’t control the weather are some
problems.
2 What approaches could a company such as Tilda adopt in order to develop a sound
appreciation of changes to its marketing environment?
Advertising non GM rice and health benefits.
3 Why might marketers struggle to gain appropriate insights into aspects of their
marketing environments?
External factors from marketing are unpredictable and hard to manage.
Sources: http://www.tilda.com , February 2011;

http://www.waitrose.com/footer/corporateinformation , February, 2011;
http://www.riceassociation.org.uk , 20 February 2011; http://www.rice-trade.com/rice-
nutritional-facts , 20 February 2011.

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The Marketing Environment: Case Study: The World of

Rice: External Challenges for Tilda's Marketers

www.tilda.com , February, 2011

A difficulty of premium-pricing is that if external factors force changes to supply costs or to

Questions for discussion

Advertising non GM rice and health benefits.

External factors from marketing are unpredictable and hard to manage.

Sources: http://www.tilda.com , February 2011;

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