Café de Colombia Nick Kordesch Christina Rosa Jennifer Su Rebecca Wang

Current Situation Oversupply of coffee caused prices to drop 35% DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Current Situation Oversupply of coffee caused prices to drop 35% Need to increase sales volume while using a lower advertising budget

Decision in Brief $15 million advertising budget DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Decision in Brief $15 million advertising budget Target European consumers Form strategic alliances with well known restaurants Use emotional ads to position Café de Colombia’s company and product quality

Coffee Market Trends Coffee is consumed 66% of the time in the morning DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion 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 Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion 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 Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Goals To produce high quality coffee at a competitive price to consumers

DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion 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

3 Intangible Assets we’ve acquired over the years DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion 3 Intangible Assets we’ve acquired over the years Juan Valdez 100% Café de Colombia Logo Café de Colombia “Country of Origin Descriptor”

Brand Recognition Best Coffee Producer Rating 85% Logo Association DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Brand Recognition Best Coffee Producer Rating 85% Logo Association Juan Valdez awareness increases in USA

Best Coffee Producer Rating DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Best Coffee Producer Rating

Percentage of Logo Recognition DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Percentage of Logo Recognition

Increase of Juan Valdez Awareness DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Increase of Juan Valdez Awareness Increased 45% in 20 years

DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion 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

European Market Opportunity DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion 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

Target European Consumers DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion 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) -Europeans have a more established taste for quality coffee -The previous method of leaving general advertising to Roasters did not position the product the way we want. Based on US experiences.

Target European Consumers DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion 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 We will give promotional signs to cafes

DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Strategic Alliances Team up with a well known company to promote products for both parties

DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Strategic Alliances High quality donuts teamed with high quality coffee Incentive based contract between: Krispy Kreme, Folger’s, and Café de Colombia growers Sell 100% Colombian Coffee with Krispy Kreme Introduce seasonal recipes using Café de Colombia Target Markets

100% Iced Colombian Coffee DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Seasonal Recipes 100% Iced Colombian Coffee Coffee Velvet Drink

Traditional coffee consumers want high quality coffee DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Target Markets Young Adults: continuous growth of consumption of high quality coffee drinks by young female consumers Traditional coffee consumers want high quality coffee

Emotional Advertising DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Emotional Advertising Café de Colombia benefits from a better Colombia Spend 6 Million on “Emotional Ads” Pamphlets Posters Café de Colombia supports “Fair Trade” -The nature of our company is nationalistic and community based. We want to publicize this existing image advantage! -Consumers should view the “Fair Trade” logo the same way as dolphin safe: worth extra cost -What are we assuming about consumers? We are thinking that consumers of high quality coffee are interested in cultural knowledge- starbucks world music CDs

Emotional Advertising DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Emotional Advertising -The nature of our company is nationalistic and community based. We want to publicize this existing image advantage! -Consumers should view the “Fair Trade” logo the same way as dolphin safe: worth extra cost -What are we assuming about consumers? We are thinking that consumers of high quality coffee are interested in cultural knowledge- starbucks world music CDs

Global Market Global Consumption = 105,932,000 bags DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Global Market Global Consumption = 105,932,000 bags Colombia Production = 12,385,605 bags Colombia’s Global Market Share = 11.69%

European Market 40% of Colombia’s total exports DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion European Market 40% of Colombia’s total exports Export Volume = 3,752,955 bags Market Share = 8.507%

US Market 60% of Colombia’s total exports Volume = 5,629,433 bags DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion US Market 60% of Colombia’s total exports Volume = 5,629,433 bags Market Share = 30.10%

Break-Even Analysis 0.9653 price -0.8000 cost -0.0965 sales cost (10%) DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Break-Even Analysis 0.9653 price -0.8000 cost -0.0965 sales cost (10%) 0.0688 unit contribution ($ per lb)

Break-Even Analysis Fixed Cost $15 M = Unit Contribution 0.0688 = DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Break-Even Analysis Fixed Cost $15 M = Unit Contribution 0.0688 = 1,648,245 bags = 1.5% world market share

Expected Sales US volume exports increased by 10.53%. DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Expected Sales 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%

Future Prospects Pre-packaged coffee or pre-packaged mixes DDB Introduction Current Situation Decision in Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion 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 Brief Coffee Market     Trends     Expectations Cafe de Colombia      Goals      Products      Problem Analysis Recommendation      European Market      Strategic Alliances      Emotional Ads Financial Analysis     European Market     U.S. Market Future Prospects Conclusion Conclusion Expanding into different age groups, cultural groups, and seasons based on current market trends Leave open future opportunities