Café de Colombia

Case Discussion for Session #6

The following report analyses the marketing strategy of Café de Colombia, analyses how they positioned themselves as premium coffee brand and which other strategies could be used to ensure a sustainable market position especially in the U.S. market. The suggestions are based on predominant conditions in the case from 2004.

Ignacio Peluffo
Dominique-Cristian Baumann
Christian Albrecht
Linda Koenig
Octhavio Martins
Marius Roder November 11th, 2013 1. What value has FNC created with its Café de Colombia Brand?
Coffee is de facto a commodity like any other agricultural good. As such, coffee prices are derived from global supply and demand and are subject to heavy fluctuation, depending on weather conditions and the quantity of supply in producing countries. The coffee market is thus characterized by long periods of oversupply and low prices and relatively short periods of scarcity and high prices. Especially in the 1950’s Colombian coffee producers were confronted with a worldwide oversupply and had to manage price drops from USD 0.62/ lb to USD 0.52/ lb. Due to the country’s dependency on coffee, Colombia had to think about how to manage these price deteriorations and recognized that it had to access new markets and to create a stronger global brand image to increase revenues. Thus, the Federación Nacional de Cafeteros de Colombia (FNC) decided to differentiate Café de Colombia as a product of higher value. The United States, represented 77% of Café de Colombia exports, but only 4% of all US consumers knew that Colombia is producing coffee at all. Whilst this is partly attributable to the overall consumption driven and ignorant American mindset, it offers reasonable doubt on whether the company has managed its brand value effectively.
With the creation of the Café de Colombia and the