Summary

Southland was the third largest independent cookie company in USA. A lawyer has sued a
packaged food company for making its client fat. When Peter, the vice-president and the
general counsel to Southland, came to know about this, he went to attend the trial, to
understand the outcomes of the trial, as their business was directly going to be affected by the
decision. When Peter attended the trial, he came to know that almost everyone was trying to
portray packaged food equivalent to tobacco. Suggestions like banning the ads, warning labels
on packing came up. This made Peter very conscious as he feared that such case may be
directed towards them too in the near future as Southland also dealt in packaged foods.
On talking with his colleagues, he came to know that they have come up with a healthy
product, but when it was tested on a sample of kids, none of them liked the cookie. Some
suggested using palm oil or other substitutes but it will add up to the costs of Southland. There
exists a line of options which exists in front of Southland to choose from.
In the meantime, a trial lawyer in West Virginia filed a suit against Southland. Now they have
to choose from the options available to them. The best one will be the one which meets the legal
compliances along with no compromise in taste as its the taste which makes the cookie sell. In
the following section, a detailed analysis is presented of all these options and my suggestions to
them.

Detailed analysis
Introduction
Among the top US cookie companies, Southland was third largest independent company. Its
bestselling product was Mellobar which was introduced as an instant breakfast food but has
over the years been qualified as a snack. Though it was not a huge operation but it was a
profitable one. Through its robust distribution network, one can find Southlands product
everywhere around the country. Recently a lawyer sued a packaged food company for making
its client fat. Peter was the vice-president and the general counsel to Southland. Peter was asked
to attend the trial process, in order to understand the outcomes of the trial. During the trial he
found that except one witness, all compared cookies with tobacco.
It was a situation of great worry for Southland as it was in fast foods business and they feared
that public sentiments may turn against them as they sold cookies which were filled with fats.
He worried that they may be labelled as the latest health hazard in the country. Lou, the
companys vice president of marketing, tested improved Chizzlewits (with fewer fats) on 6
children. The children did not like the product at all and said it looks like Chizzlewits but taste
is not as good as the name. Millie, Southlands dietician proposed to use palm oil or some other
substitutes of hydrogenated oil, but most of the suggested alternatives were discarded by Fred
as they would increase costs; which may evolve negative sentiments in majority of their
customers who were kids.
After few months, Peter comes to know what he feared the most a trial lawyer in West
Virginia filed a suit against Southland.

Situational analysis
During the trial process which was attended by Peter, the president of MOOK (mothers
opposed to obesity in kids) made very critical remarks. She said that fast food is growing at a
very fast pace. Parents are busy with their jobs and dont find time to cook food at home. The
only option from where a child can get healthy food is schools, and these days schools also offer
vending machines which are donated to them by fast food companies. She suggested
mandating warning labels on high sugar and fat products and stopping advertising on children
TV channels. Her concern was that eating habits gets established early and so it has to be
improved at the kids level. In the trial, only one person supported it by saying that the
companies cannot turn to mommies for kids.
Later when Peter explained his concern to Lou, Lou said that they are planning to launch a new
low fat product and he welcomed Peter to accompany in the market study. During the study, 6
children were offered the new Chizzlewits but they did not like it. When Fred said that

switching to polyunsaturated oils will be costly, Millie pointed out that this was a real concern
as the partial hydrogenation process produces oil which has zero nutritional value. They also
elevate the LDL levels in the blood and increase the HDL levels. She suggested the use of palm
oil which Fred countered by saying that they are imported from Malaysia, which is during
massive deforestation for palm cultivation. Millie hence suggested use of dried plum powder.
Naomi prepared a document listing the cons of a lawsuit filed against the company. She
mentioned that even if they are sued, it will be very hard to prove which single company is
responsible for obesity in a child. If a mandate is passed by law then even the competitors will
have to follow the suite.

Obvious problems

Warning labels will definitely have a consequence on their sales. Kids may dont buy
stuff on which it is written in bold letters Dont buy; it may be injurious to your
health.
If government mandates a particular level of fat content in the cookies, the taste of
cookies will be lost.
Switching to honey over sugar will also increase the costs for the company; the
competitors will definitely take advantage of this move.
Switching to other healthy oils will impact the profit margins of the company. They will
not be able to increase the prices as competitors will continue using cheaper oils.
The legal matters were piling up for Southland.

Options and criteria

Warning labels on cookie cartons if the government mandates the use of warning
labels on cookie packing, then Southland can go with this option, because as the law will
mandate it, it will be a compulsion for competitors too and they will follow the suite.
Product line extension- Southland can introduce a new product line for health
conscious customers. This will give option to the customers to choose between the
alternatives.
Usage of palm oil or other substitutes the company may consider switching to palm
oil or other substitutes, but as per the case, doing so will increase their costs when their
margins are already shrinking.
Fight the case South land can fight the case and upon winning, it can ask the court not
to consider such cases in future as cookies as a health hazard is a laughable fact.

Recommendations

Money spent on the ad campaigns could be cut-down, as this is a well-established firm,

and the same money can be used to invest in alternative oil as suggested by Millie which
was dried plum powder with sorbitol and mastic acid.
Considering the current situation Southland will be better off by introducing new
healthy product line. Many multinational companies have adopted this strategy, in
which they have launched sugar-free/healthy variants of their big brands. Few
examples include Coca Colas Diet Coke, Pepsis Diet Pepsi, etc. Coca Colas mainstream
product coke is overloaded with sugar, so they launched diet coke for their health
conscious customers. This will strengthen their case as they may suggest that those who
are health conscious can go for diet cookies (less fats), in fact along with the warning
labels they can mention like want to stay fit and consume less fays, then try our diet
cookies. This is a two pronged strategy, which will make sure that Southland complies
with government norms and does an inexpensive ad campaign for its fat free cookies.
This will be a win-win situation for Southland. This strategy was also adopted by
Sweetena; one of the rivals of Southland.