According to Mr. Méndez Juan Valdez Café’s value proposition is to “create well-being, emotions, and satisfaction around the best coffee in the world”. The brand’s vision is “to be the premium Colombian coffee brand preferred globally by its quality and the well-being that generates around it.”
Hernán Méndez (below), CEO of Procafecol S.A., agreed to fly to San Diego from Colombia on September 23, 2014 exclusively to present to the USD community on the story of how Juan Valdez Café centered its branding strategy on quality and its ethics on the small Colombian coffee growers producing it. This presentation is part of the Ahlers Center 20th Anniversary International Speakers Series, which is highlighting the positive impact of businesses on society.
Mr. Méndez began his presentation by speaking of the grassroots organization of the Colombian coffee-making machine: the coffee growers. Because of Colombia’s diverse Andean terrain, the country is able to grow mild-washed, Arabica coffee year-round. Coffee production has become a “socially-stable income source” throughout the entire country, with over 500,000 small Colombian families growing coffee. Mr. Mendez, then, broke down the evolution of the Juan Valdez brand into four sections: the creation of the National Federation of Coffee Growers of Colombia in 1927; the differentiation strategy of the 1960´s of creating the Juan Valdez character for marketing and advertising in the United States; the 1982 ingredient brand strategy and logo creation; and the 2002 inclusive business and international projection.
In 1927, Colombia’s coffee producers founded the National Federation of Coffee Growers of Colombia (FNC), which is a non-profit organization that actively represents the interests of the small coffee producers of Colombia. Its tasks include: guaranteeing open-market floor prices based on international markets and the dollar-peso exchange rate, scientific research and strategies to adapt to climate change, technical assistance to growers, quality control checks for all exported coffee, and promotional and advertising efforts.
The late 1950’s saw the international price inflation of Colombian coffee, low country-of-origin knowledge by customers, and other factors impeding the growth and success of Colombian coffee sales abroad. To combat this, the FNC, and Colombian growers in general, created a differentiation strategy to show how Colombian coffee is a better quality of product than other mass-producing countries, such as Brazil, who had an advantage of lower costs of production due to various geographical differences. The brainchild of this strategy was the creation of the Juan Valdez character in 1960 to put a face to the quality-first, hard-working and family-oriented brand Colombian coffee growers were portraying their product to be. The United States, where a large portion of Colombian coffee has always been sold, saw a strong influx of modern marketing and advertising campaigns with this character through all media outlets to promote “100% Colombian coffee” brands and the notion that “only with hard work makes the best coffee.”
Denise Dimon, Director of Ahlers Center for International Business with Mr. Hernán Mendez
In the 1980’s, the trend in customer preferences became geared towards the ingredients of their purchased products, and so the FNC and Colombian coffee growers shifted the focus of their marketing from the Juan Valdez character to how the quality of Colombian coffee warranted a higher cost than competing brands. This culminated in a successful “push-pull” strategy and the creation of a universal “Café de Colombia” logo (featuring the face of Juan Valdez). This also including a monstrous advertising campaign costing upwards of $600 million.
The new millennium brought both new challenges and new successes for Colombian coffee. With international popular culture suddenly so focused on expanding the facets of coffee-drinking, such as the emergence of multinational chain coffee shops and single-serve coffee brands, Colombian coffee growers had to once again evolve their strategies. In 2001, the FNC recommended Procafecolto to move their coffee in the value chain by taking advantage of the available brand equity and opening coffee shops around the world. This would, in turn, create profits that would be distributed by the FNC to improve the standard of living for its growers. Thus, the overall goals were: share profits (with growers), increase international demand with a better price and increase the visibility of Colombian coffee as a brand.
Juan Valdez Café came about because, in order to increase brand visibility, the FNC had to forgo the Café de Colombia logo in favor of a unitarily-structured single brand. This resulted in a licensing agreement between the FNC and Procafecol with the National Coffee Fund and Juan Valdez Café. Thus, the Juan Valdez Café is the product of a joint collaboration of public and private management, with most of the legal ownership going to the FNC, but with good portion going to the International Finance Corporation (a World Bank group), and over 18,600 shareholders being actual Colombian coffee growers.
Hernán Méndez said that Juan Valdez Café’s value proposition is to “create well-being, emotions, and satisfaction around the best coffee in the world” and that the brand’s vision is “to be the premium Colombian coffee brand preferred globally by its quality and the well-being that generates around it.”
The new frontier for Juan Valdez Café is their ever-expanding number of worldwide coffee stores, currently culminating in over 200 within Colombia and over 99 in 14 other countries. This expansion has been a process of trial-and-error, with some stores in the United States having to close due to being large flagship stores in areas with expensive retail spaces. However, with a Juan Valdez Café on almost every continent, the “authentic premium coffee experience” the brand offers has found success through a myriad of different concept stores that cater to the vast demands of its customers.
If you missed his presentation or would like to watch it again click here.
IMBA students with Mr. Hernan Mendez