Café de Colombia

Nick Kordesch

Christina Rosa

Jennifer Su

Rebecca Wang

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Oversupply of coffee caused prices to drop 35%

Current Situation

Need to increase sales volume while using a lower advertising budget

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Target European consumers

Decision in Brief

Form strategic alliances with well known restaurants

Use emotional ads to position Café de Colombia’s company and product quality

$15 million advertising budget

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Coffee Market Trends

Coffee is consumed 66% of the time in the morning

In the 1980s Pepsi Generation, coffee was losing popularity

Gourmet coffee consumption is increasing

Traditional coffee consumption is decreasing

Economy is in a downturn

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Market Expectations

Younger people are expected to increase coffee consumption

gourmet coffee drinking becomes “hip”

100% Colombian share in U.S. grocery segment is expected to increase

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Goals

To produce high quality coffee at a competitive price to consumers

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Products

Our Mild Washed Arabica Coffee is known for its low caffeine content and full bodied sharp taste

Each bean is handpicked to ensure only high quality coffee is sold

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

3 Intangible Assets we’ve acquired over the years

Juan Valdez

100% Café de Colombia Logo

Café de Colombia “Country of Origin

Descriptor”

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Brand Recognition

Best Coffee Producer Rating

85% Logo Association

Juan Valdez awareness increases in USA

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Best Coffee Producer Rating

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Percentage of Logo Recognition

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Increase of Juan Valdez Awareness

Increased 45% in 20 years

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Problem Analysis

International market prices dropped 35% from 1995-2000

Global coffee prices are expected to be only $.80 per lb but it costs $.80 per lb to grow high quality coffee

Investment companies are beginning to support other countries

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

European Market Opportunity

Europe consumes 42% of world’s coffee

Europe coffee consumption makes up 40% of Columbia’s exports

Café de Colombia currently spends 17% of its advertising budget in Europe

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Target European Consumers Previous strategy: advertise to roasting

companies (Push)

New strategy: Target end consumers (Pull)

Recommendation: Increase advertising budget to $9 Million (60% of budget)

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Target European Consumers Tactics: Train posters, signs in cafes,

magazines advertising quality

We want consumers to look for the Colombian logo in cafes and link it with high quality

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Strategic Alliances

Team up with a well known company to promote products for both parties

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Strategic Alliances

Target Markets

High quality donuts teamed with high quality coffee

Sell 100% Colombian Coffee with Krispy Kreme

Introduce seasonal recipes using Café de Colombia

Incentive based contract between: Krispy Kreme, Folger’s, and Café de Colombia growers

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Seasonal Recipes

100% Iced Colombian Coffee

Coffee Velvet Drink

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Target Markets

Young Adults: continuous growth of consumption of high quality coffee drinks by young female consumers

Traditional coffee consumers want high quality coffee

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Emotional Advertising

Café de Colombia benefits from a better Colombia

Spend 6 Million on “Emotional Ads”

Pamphlets

Posters

Café de Colombia supports “Fair Trade”

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Emotional Advertising

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Global Market Global Consumption = 105,932,000 bags

Colombia Production = 12,385,605 bags

Colombia’s Global Market Share = 11.69%

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

European Market 40% of Colombia’s total exports

Export Volume = 3,752,955 bags

Market Share = 8.507%

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

US Market 60% of Colombia’s total exports

Volume = 5,629,433 bags

Market Share = 30.10%

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Break-Even Analysis

0.9653 price-0.8000 cost-0.0965 sales cost (10%)

0.0688 unit contribution ($ per lb)

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Break-Even Analysis

Fixed Cost

Unit Contribution

$15 M

0.0688=

1,648,245 bags

1.5% world market share

=

=

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

From 1994 to 1995, we increased advertising by $2.47 mill in the US

US volume exports increased by 10.53%.

An increase of $9 mill in Europe will increase sales by 38.35% (assuming advertising in Europe is as effective as it is in the U.S.)

Europe market share will become 11.77%

Expected Sales

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Future Prospects

Pre-packaged coffee or pre-packaged mixes

Ready-to-drink bottled coffee

Develop the website www.JuanValdez.com

Improve internal road system to reduce production costs

DDB Introduction Current Situation Decision in BriefCoffee Market    Trends    ExpectationsCafe de Colombia     Goals     Products     Problem AnalysisRecommendation     European Market     Strategic Alliances     Emotional AdsFinancial Analysis    European Market    U.S. MarketFuture ProspectsConclusion

Conclusion

Expanding into different age groups, cultural groups, and seasons based on current market trends

Leave open future opportunities