ChocolatesEIRey

CaseReport

Submittedby

LalithaGunnam
GraceFang

Oct15th,2015

1. IsJorgeRedmonddreamofmakingVenezuelancocoabeansandchocolateworldfamous
realisticandachievablewhy?
JorgeRedmondsdreamofmakingVenezuelancocoabeansandchocolateworldfamous
canberealisticandachievablewithproperbrandpositioning,largemarketdemandandeffective
marketingprograms.Firstly,RedmondcouldpositionChocolatesElReyinawaythatdifferentiate
from other chocolates, such as its singleorigin premium cocoa ingredient, combined taste and
specialaroma.Also,theexistingbrandimageintheglobalmarketwithincreasedinternationalsales
createdabetteropportunityforChocolatesEIReytoreinforceitsuniqueandhighqualitybrand
image.
Secondly,thechocolateindustryisahugeindustrythatentailsalargemarketpotentialthat
Venezuelacouldpenetrateto.Itisnotonlyaboutthefinishedchocolatetoretailmarket,butalsoas
rawmaterialtofoodservices,beverages,andindustrial.In1995,EIReyopenedanewplantwhich
producedmorechocolatetypestosatisfymorecustomerswithdiversedemands.Moreover,inorder
forRedmondtofulfillhisambition,heshouldunderstandthevaluethatVenezuelancocoabeans
hadforChocolateEIReyandthevaluethatchocolatehadfortheconsumers,whichwasseenas
decadent,possessingasensualityandseductiveness.
Thirdly,RedmondhadsuccessfullypitchedEIReychocolatestotopchefsandrestaurants
allovertheworldwhileexpandingintotheinternationalfoodservicemarkets.Redmondinvitedtop
chefsandwritersofgourmetmagazinestovisitCacaoRoute,witnessinghowcocoawasplanted,

harvested and processed, as well as EI Reys plant, where chocolate was produced from the
beginningtotheend.ThesevisitsnotonlysellEIReychocolatebutalsoVenezuela,acountrywith
anexquisitecocoabeanproduction.Inaddition,EIReyheldannualtastingsatinternationalfood
fairtodemonstrateitshighqualityandtoincreasebrandawareness.
However,Jorgeshouldalsoconsidertheunstablepoliticalconditionsandhighinflationrate
inVenezuelaandtrytocontrolthenegativeimpactsonhischocolatebusiness.
2. Whataretheprosandconsofusingcountryoforiginaspartofhisbrandingstrategy?
Pros:

Venezuelahasidealcombinationoftemperature,soil,andrainfallforcultivatingcocoa,andits
entirecocoaproductionwaseitherCriolloorTrinitariowhichwerebothconsideredtobe
premiumcocoabeans.

Venezuelacocoabeansnotonlyhavehighquality,butalsohaveamoreuniqueandcombined
flavorandafloweryaroma,whichothercocoabeansdonthave.Thiscanbeagreatpointin
advertisingtoincreasepositivebrandawareness.

Thevarietyandcountryoforiginofcocoabeansisveryimportanttotheflavoroffinished
chocolate.Somepremiumbrandsalsobegantoadvertisethetypeororiginofthecocoabeans
usedintheirproduction.

ChocolateEIRaywastheonlychocolateproducerwhousedonlysingleoriginbeansofthe
finestqualitiesavailable.Thisisangreatopportunitytoapplyahungrymarketingstrategy,
whichallowsthecompanytoachievecontrolofsupplyanddemandwhilemaintainingahigh
commoditypriceandprofitpurpose.

Cons:

Venezuelascocoaproductiononlyaccountsfor0.5%ofworldproduction,whichmeansvey

limitedsupplyoftopqualitycocoabeans.Thiscannotbeeasilyresolvedsincecocoaharvesting
isalongterminvestment,whilemostpeopledontwanttotaketherisktowaitsevenyearsto
getbenefitsfrominvestmentsunderVenezuelasunstablepolitics.

Unlikeacompanysbrandimage,themanagementofacompanycannotcontrolacountrys
image.Therefore,suddenoccurrencesinthecountrycouldbeharmfultothecompany'sbrand
image.Thecloserelationshipbetweenbrandandcountrycreatesassociationsinconsumers
minds,whichcandamageChocolateEIReysimageduetoVenezuelasunstablepoliticspoor
economicconditions.

3.Whichsegmentsshouldbetargetedinwhatpriority?Consumer?Retail?Foodservices?
By2005,theUS chocolatemarketrepresented$14.9billionsales.Themajorchallenge
facedbytheUSchocolateindustrywasfindinghighqualityrawmaterials.AccordingtotheMintel
survey,62%ofAmericansprefertobuyspecialtyorpremiumchocolate.SinceElReywastheonly
chocolateproducertouseonlysingleoriginbeansofthefinestqualities,enteringUSchocolate
marketisagoodwaytoimproveElReysgrowth.
IbelievethatElReyshouldfirstentertheUSfirstintheretailsegment.Thisisbecause
there is major shift in brand preferences among American consumers. The smaller premium
chocolatebrands,whichareavailableatfood,drugstores,werebeingpreferredthanthelarge
premiumchocolatebrandslikeHersheys,Kraft,etc.Asaresultofincreasingdemand,smaller
premium chocolatebrands are receivingmore shelf spacein mainstreamfood,drug,and mass
merchantoutlets,whichisagoodopportunityforChocolateEIReytoincreaseitsretailsalesin
the US as a small foreign premium chocolate brand. This would require some expenditure on
marketingandadvertisingaswell.
Secondly,ElReyshouldfocusonthefoodservicessegment.ElReyhasthecapacityto
increaseproductioninthesamelines.Inthefoodserviceindustry,EIReymainlyprovidesits

chocolateasrawmaterials.ThecompanyhadsuccessfullypitchedEIReychocolatestotopchefs
andrestaurantsallovertheworldwhileexpandingintotheinternationalfoodservicemarkets.So,
EIReyshouldtakethisadvantageandcontinuetoworkonfoodservicessegmentintheUSmarket
astheir2ndpriority.Oneofthedisadvantagewouldbeifdifferentproductswereneededadditional
machinerywouldhavetobeboughtwhichwouldcostoflotofmoneyforElRey
Thirdly,ElReyshouldentertheconsumersegment.Thisisbecausemostchocolateinthe
USwasconsumedinthewinterandonholidayssuchasEaster,Christmas,ValentinesDayand
Halloween and the US consumers have strong palate for more and more refined chocolate.
Premiumchocolatesalesdifferedbygender.89%ofmenmostlybuychocolatetogiveasgifts
duringChristmasorValentinesDaycomparedto69%ofwomen.