1. Environmental factors
Jorge Redmond is visionary in understanding that a global sophisticated and educated customer base who appreciates the single origin, Gout de terroir-individual flavour characteristics created by local soil and climate through â€œchocolate appellation controleâ€ would appreciate the origin of El Rey chocolates. To have the means to appreciate good wine and food the consumer would need to have high disposable income.
Premium chocolate is viewed as affordable luxury by developed economy consumers such as in the US. El Rey will be able to price and sell premium goods at a higher margin compared to Venezuela where customer ...view middle of the document...
To ensure that El Rey have access to fermented cocoa beans in the way they want, farmers should be trained and certified and incentivised to sell the beans to the not for profit organisation such as Aprocao.
This is similar to the milk road in China where farmers were encouraged to sell milk to a collection system which paid them cash, road were build by Nestle and it increased the milk production in rural China, out of that they were rewarded exclusive rights to produce powdered milk in China.
Venezuela was once the leader in cocoa production, if El Rey is going to use only single origin cocoa beans, they need to build up the infrastructure so that the country has the capacity.
2. Organisational factors
El Rey is a small company with 200 staff with 8 staff dedicated to domestic sales and sales overseas sales representative in Japan and United States. This means unless they grow the marketing department, there will not be accountability and dedication in growing the international business.
The company is relatively small with sales of around $14 million, initially started out as a family business which has expanded in Venezuela market. They will not be able to run large and expensive marketing campaigns overseas.
The international experience has been limited to the food service markets with unsolicited request from overseas distributors. El Rey would have limited control from Venezuela thus they need to be relatively selective in who they pick as the major distributor.
The following factors are the competitive advantage that El Rey has over its competitors
The use of fair trade cocoa beans that have been fermented and been viewed by industry as the premium beans in the chocolate making process. El Rey has a strong control over the supply of the beans through leading the formation of Aprocao. Being a first mover in this they have the advantage over the control of raw material which makes for bulk of the costs.
3. Management Factors
El Rey has limited international experience; they have been relying on international distributor to sell their products overseas. Jorge Redmond being educated overseas, who has the knowledge, is one of the main drivers in pushing for international expansion. Being the CEO, he has more confidence and mandate to drive this expansion.
With limited resources, EI Rey targeted the international food service markets with the universal global segment of top chefs and restaurants around the world as their segment target. This allows for economies of scale as these groups are the influencers on the consumer on what they buy and use in cooking through endorsement in cooking recipe and word of mouth online.
Chocolate is viewed as affordable luxury in countries such as US, where people appreciate small producer,...