Will Juan Valdez Defeat Starbucks?
Everyone knows Juan Valdez. He’s the friendly Colombian peasant with his mule “Conchita,” who represents Colombian coffee worldwide. We think of him like a kind of human mascot for Colombian coffee. He’s one of those advertising concepts, like the dairy commercials with all the celebrities in milk mustaches, dreamed up not so much to sell a specific product (McDonald’s burgers, Coca-Cola, or Twinning’s Tea) but a commodity: American milk, or in the case of Juan Valdez, Colombian coffee. It was in 1959, that the National Federation of Coffee Growers of Colombia hired U.S. ad agency Doyle Dane Bernbach to dream him up– Valdez is fifty years old this year!
But as it turns out, Juan Valdez has gotten a little aggressive in his middle age. He has become more attuned to the opportunities of the international marketplace. As a globally recognized brand, he knows it’s a missed opportunity to just continue putting his Café colombiano into any old coffee brand around the world. He can keep on with that, but he should also have his own flagship line of coffees, and of course (vertical integration)– a café chain too.
There are now 12 Juan Valdez coffee shops in the United States, including one in Seattle, enemy territory– Starbucks headquarters. Juan Valdez brand coffee is already sold at Wal-Mart and Kroger stores. I noticed one of the cafes at JFK airport a week ago on my way to Europe. I saw that it was exactly the same, with an identical dark red color scheme and design, as the pleasant cafes already to be found in Colombia’s major cities, airports and tourist haunts.
Now, the Financial Times (FT) and consultant Wolff Olins have identified Juan Valdez coffee as one of the five food and drink brands from emerging markets that’s likely to blow up in the next 50 years.
Will we soon find ourselves choosing between Starbucks and Juan Valdez in neighborhoods across the U.S. and Europe? Juan Valdez, besides its charismatic logo, has another advantage over Starbucks. The Colombia coffee growers’ federation that controls the cafe chain, and the Juan Valdez brand, represents roughly 500,000 Colombian coffee-dependent families. It’s a nonprofit organization and makes grand claims of social responsibility, and talks up its innovative trade union type governance structure. Assuming the federation is as great as it sounds, I don’t know if Starbucks, “fair trade” or not, can compete with that.
And the momentum seems to be on the side of emerging market brands like Juan Valdez and ChangYu, China’s biggest wine producer, according to the FT:
US business consultancy Bain & Co … estimated that one-third of the FT Global 500’s companies could come from emerging markets by 2015 thanks to what it calls a “seismic shift” away from developed markets.