In this section we will introduce the history of the brand Juan Valdez and the corporation as a whole. This background information is necessary for the reader in order to understand the purposes of the analyses that follow throughout our project. Using the brand’s history as our point of departure, will lead us to better understand the brand’s current position and contemporary challenges. Ever since 1959, the fictional Juan Valdez has been the brand symbol of the National Federation of Coffee Growers of Colombia (FNC) representing the coffee beans of Colombian coffee farmers, who grow and harvest their beans entirely within the country.
Ever since its foundation, coffee producers from all regions in Colombia have benefited from NFC’s activities. Later on, the Juan Valdez icon was re-launched in 2002 as a brand name for the Juan Valdez Coffee Shops. The FNC established their first own Juan Valdez coffee house in Bogota, and the brand has expanded ever since. The Juan Valdez coffee shops sell 100% Colombian coffee in all sorts of varieties, a rather similar concept to the Starbucks chain. The Juan Valdez brand coffee beans are also being sold at grocery stores.
Moreover, Juan Valdez is the only international coffeehouse authorized to officially sell Colombian coffee, which is a clear competitive advantage due to the good reputation worldwide of Colombian coffee. One of the main purposes of establishing the Juan Valdez cafes was for the FNC to promote fair trade coffee. The customers automatically support the Colombian coffee farmers which is part of their marketing strategy. In Colombia the coffee sector is essential for the national economic health and accounts for over 8% of the total GDP.
For decades, the coffee market has experienced an international crisis of price instability with significant negative consequences for the quality of life of coffee producers and their families. Colombian producers have received multiple benefits from FNC, being the major shareholder of the company. The company initiated their international expansion in 2005 in the US and later on they have opened stores in Spain as well as in other South American countries.
Between 2006 and 2007 the expansion was particularly rapid as the number of stores more than doubled to 125. However, the expansion pace decelerated in 2009 due to the global crisis, and Juan Valdez has been forced to close some stores in 2009, one of them being their flagship store on Times Square, New York City. In spite of deceleration throughout the crisis, Juan Valdez has gained growth rates in the fiscal year of 2010 and currently has 147 coffee shops in Colombia and abroad. The company is planning on expanding to Chile, Ecuador, Russia and Scandinavia.
Their strategy currently is to rely on franchises in an attempt to keep expanding globally with less investments and lower risks. Juan Valdez is also relying on growth of coffee bean sales at supermarkets, particularly in the US to offset the closures of some shops in the US. The Juan Valdez premium coffee is being sold at Wal-mart stores and is growing more rapidly than most of its coffee houses in the US. In this case, Juan Valdez is also planning on its presence in more supermarket chains and is at the moment negotiating.