Krispy Kreme- DNUT

MGT 4230 Fall 2023

Zach Tuttle, Taylor Walters, Isabella Williams, Clark Young, Jack Zenkert & Sarah Wilson

Brief History of Krispy Kreme

• Vernon Rudolph opened its doors on July 13^th 1937
• In the 40s and 50s Rudolph and his equipment engineers invented and built Krispy Kreme's own donut making equipment
• In 1982 the hot doughnut experience became a priority for the company. In the 80s and 90s, opened first store in New York and California- national expansion was well on its way
• In 2000, first international location was opened in Canada. International expansion is still continuing today

Political and Legal Risks

Brazil

• Political Risks
• High public debt
• Corruption score 38
• History of political instability
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• Legal Risks
• Inadequate intellectual property rights
• Complicated tax system
• Stringent regulatory compliance laws
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• Specific Risks for Foreign Firms
• Existing Competition Ex: Dunkin Donuts
• Cultural differences

Norway

• Political Risks
• Scandinavian work values
• Sovereign Work Fund Loss
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• Legal Risks
• Inflexible labor laws
• High corporate taxes

Political and Legal Risks

Spain

• Political Risks
• 17 regional governments to navigate
• Strong cultural identity
• Navigating 6 key regional trade agreements
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• Legal Risks
• Strict Import Regulations
• Common Law Legal System
• Ban on advertising sweets to children
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• Specific Risks for Foreign Firms
• High unemployment rate of 11.8%

Potential Demand

Brazil

• Overall population: 216 million
• Cepal estimates that our target market includes around 60% of the population
• GDP per capita (2023): 20.08 thousand
• Services sector is the largest, followed by agriculture and industry
• Significant cultural values in family, community, celebrations
• Competition: Total of 65 dunkin donuts
• Donut varieties present in Brazilian culture: brazilian cream doughnuts, Bolinhos De Chuva, etc.
• Krispy Kreme enters the market with strong brand image, a familiar yet different than Brazil’s traditional donut style, Dunkin’s presence may increase consumer familiarity with american donuts
• Clear competitor in Dunkin’ Donuts, Dunkin’ likely to be threatened by the entry
• “Mom and pop” shops likely to be threatened

Spain

• Overall population: 47.5 million
• GDP per capita (2023): 50.47 thousand
• Have their own type of donut similar to ones in the U.S. called Rosquillas, as well as churros
• Cultural values: Value quality time, cuisine, group affiliation, celebrations
• Consumer tastes: Spanish cuisine (common ingredients: olive oil, tomatoes, peppers, or seafood)
• Level of competition: Duffin Bagels present, numerous stand alone bagel/donut shops
• Essential segments: automotive industry, medical technology, chemicals, tourism
• Pastries market size reached 1,153.31 million (USD) in 2023
• Krispy Kreme enters the market with a strong brand image, a familiar yet different flavor than Spain’s traditional style of donut, and a clear product provided that will be easy for customers to connect with the company
• One chain present, potential to target Duffin’s market share
• “Mom and pop” shops are likely to be threatened by the entry as well as Duffin
• Potential for healthy competition

Potential Demand

Norway

• Overall population: 5.408 million
• GDP per capita (2023): $89,154
• Oil sector is the largest, followed by hydropower and fish farms
• Significant cultural values in tolerance, heritage and respect
• U.S. / Norway diplomatic relations
• Competition: many stand-alone stores, only 1 Dunkin Donuts
• Donut varieties present in culture already - smultringer

• Creating a strong brand image, selling cultural favorites, partnering with other businesses, and using pricing strategies are major components
• Events can create a sense of community and could lead to a larger customer base.
• “Mom and pop” style shops have a community advantage
• Only 1 big chain in Norway, Dunkin Donuts (1 location)
• Should easily be able to compete with them
• Do not have a large market share
• Their reaction of our new entry might cause them to compete
• Could create some healthy competition

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Resources and Infrastructure

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• Norway

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• The agriculture presence in norway is very high with many resources

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• Advertisement within Norway is a huge thing and these uses are very similar to advertisement in the United States

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• Most people in Norway support the Americans culture as far as tv shows and movies

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• There are many different modes of transportation within Norway from trains to personal vehicles

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• The language that is used most amongst norwegians is english

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Spain

• Agriculture in Spain has been around for many years and the land for it has increased since the 1990s

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• Spain does a lot of foreign trade and the United States is one of the main ones outside of Europe

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• Since 1990s infrastructure and manufacturing have become very important to spain and they keep expanding it

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• The culture in Spain has been influenced heavily by the American Culture

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• Besides Spanish, English is also a very commonly used language in Spain

Resources and Infrastructure

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• Brazil is known as having some of the most renewable resources with there agricultural land and mineral reserves

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• The service sector in Brazil is the largest growing employer and accounts for half the labor force

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• The transportation factor of Brazil is very good and since the 1950s they have been trying to expand and create more roads for travel

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• By 1970 Brazil had the world's third largest commercial air fleet

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• People in Brazil speak many languages including some speaking english and english is the most common language learned in an language class in school

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Brazil

Strategic Importance

• Brazil
• Market size: 3.1 Trillion
• Large consumer economy with a growing middle class
• Geographic location provides access to a vast market and is a gateway to neighboring countries

• Spain
• Market size: 1.7 Trillion
• Moderate sized market with a stable economy
• Location in Europe can help spread business into the European Union

• Norway
• Market size: 368 Billion
• Relatively small market that could make it challenging to scale operations
• Location is not as crucial to helping with the EU as Spain

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Final Recommendation

We recommend that Krispy Kreme enters Brazil’s market by doing a joint venture with a local partner. Because of Brazil’s complicated tax system, stringent regulatory compliance laws, and existing competition, a local partner can help Krispy Kreme succeed in multiple ways:

1. Navigating complex business regulations
2. Connect with influential politicians
3. Adapt marketing strategies to brazilian consumers

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