1.

Problem Identification
FNC (Federacion Nacional de Cafeteros de Colombia) is a private legal entity of an
associative in a not-for-profit character whose aim is to promote the coffee business of
Colombia and raise the living standards of the growers. Since 1960 this organization has
accomplished an effective marketing strategy through a well-known copyrighted logo, but
there are new challenges right in front of them. Caf de Columbia needs to reformulate their
marketing and corporate strategy in order to maintain their current market share as well as
increase the perceived image of their brand in the eyes of the US consumers. The available
resources for advertising have dropped recently which requires a more efficient and
innovative marketing strategy. Changing US market and consumer preferences for coffee
and increased global competition increase pressures for alternative corporate solutions which
will open the way ahead.
2. Situation Analysis
In order to differentiate Colombian coffee products from other producers items, in 1960,
FNC introduced a fictitious character of Juan Valdez to represent a typical coffee producer
and trademarked this name. The high quality, mountain-grown coffee beans were easily
recognized through the Caf de Colombia brand. Many of the producers adapted this logo. In
1982, further action was taken with the 100% Caf de Colombia Program which targeted end
consumers in order to create more awareness. Both of these marketing strategies made FNC
successful, increased the sales of Colombian coffee products, and made their products priced
over the average market price.
In todays new global challenges there are a number of issues that FNC should address for.
First of all there are numerous strengths as:
? High quality products and very effective production and quality control monitoring
? Very strong brand image that is 85% logo identification of Juan Valdez in the US and 100%
Caf de Columbia Logo
There are numerous issues that FNC has some problems with. There is a weak regulation of
their brand and logo among roasters, because it is not quite easy to coordinate 586
institutional brands and some of them offer low quality products. There is not any other
diverse product which makes Caf de Colombia more distinguishable.
Promotion of quality over price and peoples preferences for high quality coffee for out-ofhome consumption is an opportunity that may help Caf de Colombia. The increased interest
in Gourmet Coffee Business that is aimed at creating an atmosphere of enjoyment is another
opportunity that lies ahead.
Changing consumer preferences about traditional coffee products among younger
generations is a global challenge to all coffee producers. Coffee price volatility due to lack of
coordination between producing countries is another threat that the sector faces. Lastly
Trickle-down effects of innovative coffee products (like Frappuccino) make the coffee
ingredient less important and it may hamper the business more.
3. Alternative Solutions
Although there are many ideas that FNC may implement, few of them addresses the problem
fully. One example is about increasing the advertisement budget through sharing the brand
with other countries or charging for the use of the logo; however these actions may hamper
the brand and logo and conflict with the existence reason thereof. Here are three
alternatives:
Product Line Extension Strategy
Strategic Alliance and Co-branding Strategy
Vertical integration towards roasting
In the first alternative, FNC can incorporate specific community names like French wines
which should be referred as Columbia specialty products. These products enable further
differentiation through specific geographic areas with certain characteristics (i.e. Ecotopos).
This alternative allows for brand re-invention and it may succeed in the way the first
marketing strategy was successful because the first marketing strategy was based on
differentiation of the product. New products will make Caf de Colombia more refined and
more customer loyalty can be created. However there is a risk that people may not be as
aware of Colombias specific regions so to make the branding successful.
In the Strategic Alliance and Co-branding Strategy, FNC may create establishments such as

partnerships with small coffee chains. Although there is an offer from a leading fast-food
chain restaurant for a strategic partnership, this option has a risk of diluting this successful
brand. So, working with small coffee chains is a good alternative that is expected to create
customer loyalty. Fair Trade label specially for the gourmet coffee business is another
important aspect of this alternative which makes the image of the brand even better. This
may lead to increased sales through more exposure and recognition of moral qualities. There
is the risk of problematic management issues with small coffee chains and risk of trickledown effect if the coffee is not emphasized enough.
In the vertical integration towards roasting alternative FNC may develop a branded specialty
chain through the purchase of roasters. This may increase fluidity between producers and
consumers and control over distribution. However FNC has no experience in distribution and
running specialty stores and a large capital investment is required for this.
4. Recommendation
There are three alternatives that may address our problem fully, and Strategic alliance and
co-branding strategy is recommended. This alternative provides a cost effective solution for
maintaining brand recognition and thus market share. This marketing strategy is expected to
increase customer loyalty where people are willing to pay more for more quality in the outof-home coffee consumption. Also this option appeals to the moral/sustainable outlook of
gourmet coffee shops and their consumers through fair trade label. However this
alternative can be better implemented if a variety of new products can be introduced which
further differentiates Caf de Colombia.