Cherry Lady Company Case Analysis

Hershey’s and Cadburys are moving towards the premium chocolate market through the acquisition or upmarket launches (Zietsma, 2007). The profit potential present in this sector supported by its 20% annual growth rate make it very attractive for large organizations to come forward and avail this opportunity. There is a low threat of new entrants prevailing in this chocolate industry because of the high capital requirements and expected retaliation by current manufacturers. Current players in the industry also possess some barriers to entry for new entrants by maintaining economies of scales with their large production capacity and keeping their product differentiation with their specialized and novelty chocolate products. Even though there are low switching costs and easy access to distribution channels, but still the brand loyalty of the customers including the Rogers’ Chocolate itself make it harder for new firms to come into the competition.

A hundred years ago, Richard Purdy set off a shop named Purdys in the center of downtown in Vancouver. Purdys has been hand down to second generation of Flavelle family, which purchased Purdys since 1963 from Mr.Forroster. Purdy’s chocolate has became the leader of confectionery in Canada in the past 60 years with over 10 million dollars revenue per year. What makes Purdy’s position today? The key competitiveness of Purdy is quality, which is based on best ingredient and delicate

The premium chocolate industry is a large market in the United States and continues to grow around 10% annually. It is also populated with very strong

The premium chocolate market has been growing at 20% annually, showing that buyers are willing to pay more for a better tasting and better quality chocolate. The declining growth of the overall chocolate market and rapid growth of the premium chocolate market is positive for current producers of premium chocolates in that the decline

Clare’s Chocolate Cafes has always used good quality cocoa to make their chocolate products. This is, in itself, an amazing marketing product because customers know that while they may be paying a little bit more, the product is worth it. As well, the organization makes a wise customer draw when each hot beverage is served with a high quality chocolate product. The early practice of making chocolate products by hand and providing individual or pre-packaged products, of all sizes, for the customer to select, was

The following statistics stated in the case indicate that “23% of respondents would definitely buy the Montreaux dark chocolate with fruit product and 40% would probably buy the product.” These average ratings strongly suggest that this product should be introduced into the market very gradually. This strategy would enable the company to evaluate consumer buying patterns so that the company could determine future production levels and future marketing strategies that benefit both the company and the consumer. Financial information given in the case also indicates that the company needs to introduce this product very conservatively. Exhibit 1 informs that with 5.98 million total purchases, low awareness, low ACV and mediocre product, Montreaux would gross $17.44 million. Exhibit 2 shows that with medium awareness, medium ACV and an average product Montreaux would gross $25.1 million. These figures do not meet Montreaux’s objective of earning at least $30 million in its first year. Exhibit 3 shows a slightly improved situation: with high awareness, high ACV, and an excellent product, Montreaux would gross

Its value is that they will be caring and considerate of their employees, customers, suppliers, shareholders, the community and the environment by showing respect to each other and valuing diversity, working together to achieve a safe, friendly and positive working environment, setting clear expectations, recognising contribution and developing their people, leading by example and taking responsibility for their actions, communicating clearly, inclusively, honestly and in a timely manner, having pride in their product and passion for the business, its heritage and its future and contributing to the community through corporate benevolence and environmentally sustainable practices (Haigh's Chocolates).

Industry Analysis: Cadbury Schweppes (CS) is comprised of a global confectionery and beverage company. For the purpose of this case we will maintain our focus on the confectionery business and the assessment of adding to their sugar confectionery portfolio. CS is number three in the beverage business but see the opportunity to become the largest confectionery in the world. The categories are chocolates, sugar and chewing gum. At this time Adams is the number two sized in the gum business. This industry operates on “bigger is better in confectionery”. Their strategic discussions and ambitions appear to stay true, in mentality, to this mantra. This mantra could be potentially dangerous to the business. CS had a presence in over 70

The premium chocolate industry is having an intensive competition in Canada with the strong growth potential. Industry growth opportunity imposes increasing competition from rivals and threats of new entrance that adds pressure on overall profitability. Even though Roger’s has been able to establish its place in the chocolate industry with its strong brand recognition and products’ quality, it still needs to be on top of ever- going market changes, by continuously

Dream Chocolate (D.C.) is a small company trying to survive in an industry with many competitors. The competitive environment comes from some factors. Firstly, D.C. bars are sold in specialty markets, fine gift stores and also available online. However, the competitive companies can also provide various chocolate bars for customers with the low price on the Internet. Secondly, comparing to the big chocolate company like Mars, D.C. is a small company that has the lower brand reputation. Therefore, there may be not many people would trust their products.

Despite a decline in annual growth in the recent past (-1.9%), the chocolate industry alone is still making an estimated $1.8 billion dollar profit. With the help of the estimated $1.3 billion dollars in exports and the improvement in the economic landscape, the industry is expected to grow an annual 3.4% in the years 2011-2015. The total number of companies is expected to fluctuate from the 1,039 that are currently in business (IBIS World, 2011). Considering many candies sell for less than one dollar, a billion dollars in profit is an amazing fete.

At Scharffen Berger Chocolate Maker, Jim Harris was the COO (chief operation officer) and was with the company for about 18 months and was observing the increased demand for their chocolate. “America’s finest dark chocolate” company wanted to increase production by equipping factories with new machineries and equipment but did not want any difference in the taste of the chocolates they produced. As the company totally agrees on not compromising the taste of chocolates and increase the production in order to meet the rising demand for their chocolates they should probably get into customizing chocolates blend for the mass-market retailer in order to grab huge market share, increase accessibility of the chocolate to customers and provide variety of choice to the customers by maintaining the taste they are known for. As the demand is increasing from 50%, 100%, to 150% by the start of 2006, Harris has to make a significant decision in order to invest Scharffen’s capital budget in expansion of the Company. Harris is recommended to acquire the required machinery in order to fasten the production and increase the capacity of the plant and should be careful about the quantity to be produced as the acquiring of machinery will increase productivity multiple times but the initial demand for

The chocolate industry operates in an oligopoly market. An oligopoly is when a small number of firms dominate the market. While not a quite a monopoly, an oligopoly market is still controlled by a select number of companies and the market can be directly impacted by one or two major firms (Oligopoly Investopedia). Hershey’s has control of the largest market share, holding 44.4% (U.S Market Share). Mars Incorporated follows behind in second by holding 28.9%. While these two companies hold much of the control and power within the industry, LIndt/Ghirardelli and Nestlé maintain a combined share of 15.1% of the industry’s market. This means that four companies hold a combined 88.4% of the market, with two of them holding a combined 73.3%. The market was not always this way however. Up through the 1960s many candy suppliers were regional.

After a thorough analysis of Apollo Foods business situation, a decision plan regarding the launch of a new chocolate product for its new branch acquisition Montreaux Chocolate USA has become clear. This decision plan is based on the following key challenges and marketing issues that need to be addressed. These challenges and marketing issues can be best summed up by a decision on what brand the product will be home to, whom the product will be marketed to, the ingredients and formulation of the product, the packaging of the product, can the product perform well enough in a sales forecast plan to exceed a $30 million dollar hurdle rate, and finally to launch or to test market the product. After reviewing Apollo Food’s data, their market research findings, and sales forecasts. A decision plan that addresses all of the key issues and marketing points has been created and will be

Jorge’s dream can definitely be a reality with the use of the proper tools that will differentiate him from his competitors. Jorge needs to position Chocolates El Rey in the proper market by conducting research and analyzing who his exact target market is. He needs to display the key attributes about his chocolates in order to build brand awareness and gain new customers. The chocolate industry is a huge industry which entails a large market to which Venezuela could penetrate. Venezuela has some of the best cocoa in the world, and this is exactly what consumers’ need think of when they hear the name “Chocolates El Rey”.