GODIVA CHOCOLATIER AND GODIVA GEMS

Godiva Chocolatier, the Belgium chocolate manufacturer renowned for its premium-quality handcrafted chocolates, was founded in 1926 in Brussels by the master chocolatier Joseph Draps. The company makes and sells premium chocolate delights, including bonbons, truffles, flavored coffee, cocoa mixes, cookies, ice cream, and liqueurs. Supported by its golden boxes, Godiva has always been an admired brand with upscale market appeal.

Once Godiva achieved success in Belgium, it expanded into international markets. Its first open exclusive Godiva store in Paris, France, in 1958, and then moved into the United Kingdom, Germany, Italy and many other European countries. The Godiva brand expanded into the North America in 1966 as an importer and distributor of Godiva chocolates from Belgium in one of the most elegant department stores in Philadelphia. The first Godiva store opened on New Yorks Fifth Avenue in 1972. Expansion then continued into Asia with the opening of a corner shop in one of Tokyos most prestigious department store in 1972. In 1988, the first Godiva store opened in Hong Kong, followed by store openings in Taiwan and Singapore.

Presently, Godivas products are available worldwide in over 80 countries at 450 exclusive Godiva stores as well as mail-order catalogs in North America and accepts phone and internet orders.

Godiva: A Turkish Company?

In 1967, the New Jersey-based Campbell Soup Company acquired Godiva Chocolatier and invested heavily to turn it into a worldwide brand. However, in August 2007 Campbell Soup Company announced that it was looking for strategic alternatives for Godiva business. The company decided to sell Godiva when a strategic review reported that luxuries like chocolates were strategically a poor fit for Campbell Soup Company, which was focusing on simple meals and mass-market products. The company decided to focus more on its tradition business of soups, backed snacks, and vegetable-based beverages, which are increasingly being marketed as part of a healthy lifestyle.

Major international food giants and conglomerates such as Hershey, Mars, Nestle, and Lindt made bids for Godiva. On December 20, 2007, Campbell announced that it had entered into an agreement to sell Godiva to Ulker Group, one of the largest consumer goods companies in the Turkish food industry. The acquisition was completed on March 18, 2008, and Godiva was officially sold to Yildiz Holding, the owner of Ulker Group for $850 million. The 61-year-old Ulker Group is a conglomerate that offers a wide assortment of biscuits, cookies, chocolates, confectioneries, beverage, and dairy products to its customers. Ulker Group has a solid position in the local food market with its high profitability, strong financial metrics, and adequate liquidity position. The company is reported to be the market leader in the Turkish chocolate industry, holding a market share of 60 percent in 2009.

The acquisition of Godiva is a definite an achievement for Ulker Group and is a logical strategic fit with its brand portfolio. The purchase of Godiva is expected to help the company diversify its product offerings by enabling to enter the premium-luxury chocolates markets and is in line with its business strategies of expanding vertically through mergers and acquisitions.

The company aims to position its brand image through an international name in the regional and global markets. Ulkers Biscuits, Chocolates, and Cake Division President Ali Ulker reported that the purchase of the world-renowned Godiva brand was a step toward the company becoming a regional power. The company already dominates the Turkish market and exports its products internationally to 95 countries, it has strong roots and brand presence in the Middle East and Turkey. The Godiva takeover will enable the Ulker Group to enter into global markets and take a serious step in its attempt to be a global company. The deal is also being viewed as a success story for the Turkish economy, $850 million is the most money a Turkish firm has ever paid to acquire a foreign firm.

Godiva Gems: A Little Taste of Godiva Anytime and Anywhere

The acquisition has worked out well, and Godiva has grown into a $500 million business. its upscale products are sold at more than 10,400 stores world-wide. In fall 2009, Godiva decided to go mass market, introducing a lower-priced line named Godiva Gems. The goal is to help consumers perceive the premium Godiva brand as being more affordable or accessible. Gems are market as ideal for enjoying a little taste of Godiva chocolate anytime and anywhere. Perfect for consumers who appreciate the highest quality chocolate at an affordable price, the launch of Godiva Gems is defined as a groundbreaking moment in the worlds leading premium chocolate producers history.

Godiva Gems are individually wrapped packages of smaller pieces of chocolates so that they can be shared. The collection features three varieties Solid Gems, Caramel Gems and Truffle Gems that are available in rich milk or dark chocolates. Made with fines cocoa and in keeping with Godivas Belgian heritage. Solid Gems are a treat for any chocolate lover, Caramel Gems are soft chewy centers of caramel enrobed in chocolate, and Truffle Gems feature a smooth filling crafted in the tradition of Godivas world-renowned truffles. Godiva Gems are available in packages containing a single variety of truffles, caramel and solids. Consumers can purchase Gems bags for as low as$4.99 for 12 to 18 chocolate or 9.99 for a bag of 20 to 29 chocolates. The Gems are offered in Godiva stores as well as at newsstands, duty-free shops, and selected premium grocers such as Safeways, Publix, and Wegmans, making it possible for consumers to easily obtain these chocolates.

Although some might wonder whether Gems could damage Godivas premium-chocolate brand image, this move actually seen by most experts as an excellent adaptation to the challenges in the current marketing environment. Jim Goldman, president and CEO of Godiva Chocolatier Worldwide, states that Godiva Chocolatier has been known for over 80 years as the leader in the premium chocolate category. He asserted that Godivas delicious chocolates have traditionally been packaged and sold primarily as gifts and have been available only in exclusive stores and department stores. With the launch of the new Godiva Gems, the chocolatier has broadened the availability and accessibility of its high-quality chocolate. This exciting move for Godiva and its consumers is in line with the changes in consumer behavior brought on by the sluggish economy. Goldman, who have managed Godiva since 2004, also asserts that the expansion become possible only with the support of the new owner, Ulker Group. He further states that this new down-market move aims to meet the need of todays consumers who have given up many luxury goods but are still treating themselves with lower-priced impulse purchases like chocolates. Since their September 2009 introduction, Gems now account for 10 percent of sale in Godivas 423 company stores. The company also forecasts that Gems will soon be available in 2,000 supermarkets.

Some might think that this new product introduction decision is risky, if Godivas widely available Gems are as good as its golden boxed chocolates, it could lead to cannibalization. Others question whether the company is risking the luxury aspect of Godivas brand. Goldman states that the company is not compromising the quality of its chocolates and with the introduction of Godiva Gems the company aims to appeal to more consumers who will consume just more Godiva every day.

Godiva is not abandoning the high-end market. In addition to the Gems selling on supermarket shelves, the company has also introduced Legacy Truffles which retail for $54 for 20 pieces. Godiva executives also report that baked goods such as cakes will soon be available from the companys web site. These new product offerings are forecasted to help double the companys revenue of $500 million revenue. Finally, Yildiz Holding, the parent company of Godiva, continues investments to grow the Godiva brand in different markets. The company is preparing to enter China with two new stores and is also planning to open two stores in its home country Turkey.

QUESTIONS:

1. Analyze Turkeys economic environment using any three robust criteria that you learned in the course (STRATEGIC GLOBAL MARKETING) give more explanations.