Case Study: Café Juan Valdez Juan Valdez: how a Federation developed an international strategy to make its brand an icon in order to defend its members interests. ʼ
Most of you have seen the representation of a Colombian coffee grower, wearing his traditional poncho and hat, walking aside his donkey, selling his coffee production to a « gringo » for over 20 years now. This man, called Juan Valdez, is nowadays the most famous Colombian and Latin American commercial commercial icon in the world. The use of the commercial potential of this icon is, since 2002, the heart of a unique commercial development strategy.
1/ Origin A Federation Inside the brand In 1927 the National Federation of Coffee Growers of Colombia (FNC) was created to help the Colombian coffee growers on structuring a very traditional and atomized sector. sector. In 1959, during a crisis that came about due to instability of the coffee trading price, the FNC decided to work with Doyle Bernback, an advertising agency (ex DDB) with the goal of building a strong symbol, highly identifiable, that would allow them to promote the specificities of the Colombian Coffee and sell the production at a higher price than the current market price.
A personified brand since its creation Following the advice of the advertising agency, an actor personified Juan Valdez since its creation. He would be the symbol of a Colombian coffee grower worldwide. 6 months after the launch of the campaign, 87% of the American people were associating Juan Valdez with Colombian coffee. In 1961, Juan Valdez was launched on the European market with the same success. Since then, a limited number numb er of actors have personified the emblematic coffee grower focused on protecting the traditions that make his coffee the “best in the world”. Between 1959 and 2000 more than 750 million dollars were allocated to develop the image of Juan Valdez and to promote the Colombian coffee.
2/ How to transform a symbol into a commercial icon Social values as a source of strategic development After a really difficult political and social period it was really important for the FNC to help the Colombian coffee growers in both economic and social aspects. In November 2002 the FNC and Procafecol SA reached an agreement where Procafecol SA could use the Juan Valdez® brand in a coffee houses chain, giving the FNC a percentage of its turnover. In a coffee market where prices and margins are really low, a diversification strategy is indeed really pertinent considering the gross margins of gourmet coffee houses (Illy, Starbucks, Colombus Café...) and even more if we consider its direct relation with coffee growers as a strong competitive advantage.
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Positioned as Gourmet Since the beginning of the project it was made clear that the Tiendas Juan Valdez® are Valdez® are a chain of coffee houses focused on selling coffee products to the consumers. These coffee houses were created to be a part of the coffee supply-chain and to strengthen the awareness of the Colombian coffee. This would gradually increase the incomes of Colombian coffee growers, historical mission of the FNC.
Since their launch, the Tiendas Juan Valdez® were Valdez® were designed to reach the up-market, with an ambiance mixing the Starbucks standards and the touch of a Lounge coffee shop of Barcelona. The warm colours symbolize South American tradition, however they also exhibit luxury and a calm atmosphere. The first Tiendas were Tiendas were opened near business centers, high-end malls and trendy sectors of the cities. Since its creation, this ambitious project based its expansion on a 3 step strategy: 1. Colombian Pilot (2003-2006) (2003-2006) 2. International Pilot (2004-2007) (2004-2007) 3. International Development (2006 -…) -…) In 2003, year that the project was launched, 10 coffee houses were opened in Colombia. Since 2004, this international expansion made possible the creation of 10 coffee houses in the USA (Washington, New York, Seattle, Philadelphia) and 2 in Spain (Madrid).
3/ Strengthening the brand image and the commercial development Renewing the icon, not the values In order to sustain the international development of the project it was considered as important to renew the image of the Juan Valdez person, taking care of preserving its historical values. Since 1994, according to the recommendations of the DDB agency, a new advertising campaign was created to conquer the youth segment. Juan Valdez was acting in different TV commercials and Out Of Home formats where his codes (hat, poncho, moustache) were shown in extreme situations (surfing, snowboarding, hang-gliding…), with the strong presence of the historical logo, seal of authenticity and quality for the consumer. This innovative mix had enormous success in the USA and was awarded in 2005, during the New York AdWeek, it was named as top icon of the year in the USA, even before Ronald McDonald or the Nike Swoosh. S woosh.
From coffee to fashion Propelled by the commercial success of the Tiendas Juan Valdez® , Procafecol decided to develop a line of alternative products around the authentic image of Juan Valdez. From coffee mugs to umbrellas, more than 50 products were created and sold to consumers. In 2006, the first clothing collection based on the historical icon was launched. In trendy neighbourhoods of Bogotá you may find executives with a Juan Valdez jacket or women with the latest model of a leather handbag.
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Norms and Labels as key success factors to conquer the European market When considering the conquest of the European market, the FNC analysed the last trends in consumption. Two figures impacted the directors of the Federation: European consumers are willing will ing to pay 10% more for a product with a European Europea n Label and 73,9% of them consider it as a quality seal. In September 2007, after 33 months of legal procedure, Colombian coffee became the first non-European product to obtain the PGI European Label (Protected Geographical Indication). Juan Valdez could now develop its commercial commercial strategy and think of opening new coffee houses. Two Two were just created in Madrid while Paris and Moscow are now on the list of the international expansion plan of the t he Colombian Federation.
By the end of 2007, the FNC and Procafecol were running more than 100 coffee houses in Colombia, 10 in the USA and 2 in Europe. They are now launching a new coffee house per month and want to make 2008 the year of their European expansion.
http://www.juanvaldez.com/ and http://www.juanvaldezcafe.com/
This Case Study was written by Jerome Sutter, graduated from SKEMA Business School Sophia Antipolis, Marketing teacher at EAN Bogotá and Jorge Tadeo Lozano University, CEO of SonidoLocal.com and Consultant Co nsultant in Strategy and Entrepreneurship Entrepreneurship in the Multimedia sector. sector.
It is based on the observation of a real situation and was published with authorization. E-mail:
[email protected] - Blog: http://www.jeromesutter.net
Questions: 1- What is the strategy used by the FNC to launch the European development of the Juan Valdez brand? 2- Do you think the image of the coffee grower with his donkey is suitable for the European development of the Juan Valdez brand? 3- What values are expressed by the design of the Tiendas Juan Valdez ? Do they correspond to your own perception of the Colombian Coffee? 4- What is the positioning of the Tiendas Juan Valdez ? Do you think it is the best strategy for its European development? 5- How are the Tiendas Juan Valdez helping Valdez helping the whole supply chain of the Colombian coffee?
This Case Study was written in French by Jerome Sutter for the Brand Design book, published in March 2008 by De Boeck (ISBN-13: 978-2804154899). 978-2804154899). Translation by Jerome Sutter.
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