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Café de Colombia

Professor Carl Mela Marketing 460 Product Management Fuqua School of Business. Brand Management System On Building A Brand Price Product Place Promotion Managing Across Brands. Café de Colombia. What Happened. World price of coffee falls to .68/lb by ‘03

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Café de Colombia

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  1. Professor Carl Mela Marketing 460 Product Management Fuqua School of Business Brand Management System On Building A Brand Price Product Place Promotion Managing Across Brands Café de Colombia

  2. What Happened • World price of coffee falls to .68/lb by ‘03 • FNC slashes Juan Valdez budget by 95% • 2003-4 Budget $9MM • Spends only on event promotion (e.g., French Open) • Major roasters switch to Vietnamese • Quality suffers – up to 30% unripe or moldy beans, gravel, and other • Juan Valdez appears in Jim Carrey’s “Bruce Almighty” movie, cost $1.5 MM • As of 3/24/06 futures are at $1.05

  3. What Happened • Vertical Integration • Plans to open 300 Coffee Houses in US and Latin America, $350MM in revenue by 2010 • 4-5 cents per cup for grower v. 1 cent from Starbucks

  4. Currently • In NYC • Two Juan Valdez Cafes • 57 and Lexington, Times Sq. • Only muffins and bagles – but will add Latin fare • Fair trade coffee (v. 3% Starbuck’s) • ‘Authenticity’ over ‘experience’ • 179 Starbuck’s • Good strategy? • Distribution as “promotion.”

  5. New ad campaign of $9MM in 2004 Rolling Stone, People, Entertainment Weekly, Food and Wine, Gourmet, InStyle, US Weekly 18-35 Currently [3658 miles from the coffee fields of the Colombian Andes. But still the perfect climate for Colombian Coffee.]

  6. Currently • Product Innovation • http://www.juanvaldezcafe.us/products.asp?dept=1124 • Direct approach (“from tree to cup”) circumvents channel and designed to attract young professionals

  7. Currently • International • 2006: Open 1st European Café in Madrid • Targeting Russia • Sales up 4x in the last 4 years • Penetration at 23%

  8. Café de Colombia Wrap Up • Role of Distribution in Brand Equity • Interface to firm • Who owns the customer (Starbuck’s or Juan Valdez) • In grocery, it was Juan • Other Class Themes • Valuing Brands • Ingredient Branding • Brand Elements (Juan Valdez) • Leveraging Secondary Brand Associations (Point of Origin) • Effect of Ads on Equity (Sales and Price Premium)

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