INDIAN INSTITUTE OF FOREIGN TRADE (IIFT)

GODIVA EUROPE

S. Name Roll Role

No. No.
1 Rajat Khullar 63 Group Leader &
Member
2 Nitin Nangia 52 Member
3 Rashu Bhalla 66 Member
4 Nitin Mathur 51 Member
5 Neeraj Shukla 48 Member
Presented By: Group 8
Section B
MBA (IB) | 2010 – 13
 HISTORY / BACKGROUND
• Godiva was founded in 1920 and was into the business of making
prestigious delicate flavored chocolates.
• It was purchased by multinational Campbell Soup Company in 1974
under which it had 3 decision centers.
- Europe
- Japan
- USA
• It has its headquarter in Brussels, Belgium where in the Company
Factory has an annual production capacity of 3000 tons catering to
needs of more than 20 countries.
• Godiva Europe has an annual sales of 926 million. Belgium Francs
and has its presence in countries like Francs, Great Britain, Germany,
Spain Portugal.
• Amongst all Japan is an important market for Godiva because of price
of 4000 Bf/ Kg compared to 2000 Bf elsewhere.
• Main reference market for Godiva international consists of Triad
Nations.
 WORLD CHOCOLATE MARKET
 Chocolate has been divided into 4 categories
 Bars of chocolate that are filled
 Bars of chocolate not filled
 Chocolate candies or chocolates (called “pralines” in Belgium)
such as Godiva’s chocolates
 Other chocolate preparations.

Two varities of Chocolates produced as per packing

1) Industrial Chocolates which are sold in pre-wrapped generic
boxes without brand names.
2) Chocolate pralines which are handmade chocolates with
delicate flavour and are packed in branded boxes (luxurious
packing).
 GODIVA CHOCOLATES IN WORLD
Country Categorization & Preference Pralines, Selling
Usage Bars Medium Used
Belgium Gifts & Self Assorted High end stores
Consumption & Boutiques
Germany Not very fond of Classic, Chocolate Bars Franchised
Chocolates & Pralines dealer
France Gifts on special Drier, bitter chocolates Boutiques
occasion
Holland & Not very fond of Pralines not preferred -
Italy Chocolates
United Not a luxury product Assortment of Upscale
Kingdom confectionery products retailers (Marks
& Spencer)
Spain & Luxury product, gift Pralines Upscale Stores,
Portugal Franchisees
USA Birthdays, Valentine All types Upscale Stores
Days & Christmas in Shopping
Malls
Japan Gifts on Occasion All types -
Duty free For all kinds of All types Duty free shops
usage
 CHOCOLATE CONFECTIONERY CONSUMPTION PER COUNTRY

Per Capita Consumption in Kilograms in

1989 Share of
Chocolates in
Country
Chocolate Chocolate Confectionery
Candies Confectionery Chocolate

Belgium 2.65 6.09 43.5%

Denmark 1.17 5.61 20.9%
France 1.69 4.59 36.8%
Spain 0.14 1.21 11.6%
Italy 0.65 1.84 35.3%
Japan 0.44 1.59 27.8%
German Federal
1.64 6.81 24.1%
Republic
Switzerland 3.17 9.41 33.9%

United Kingdom 2.96 7.15 41.4%

United States 1.14 4.77 23.9%

EVOLUTION OF CHOCOLATE CONFECTIONERY CONSUMPTION:
AVERAGE YEARLY GROWTH RATES, 1980 – 1989

Consumption
Average Growth
(Kilograms per Person)
Country
Average
1980 1989 1980 - 100
Growth Rate
Belgium 6.04 6.09 100.8 1.76%
Denmark 4.80 5.61 116.9 1.79%
France 3.96 4.59 115.9 1.65%
Spain Nd 1.21 Nd -
Italy 0.92 1.84 200.0 8.00%
Japan 1.09 1.59 145.9 4.28%

German Federal Republic 6.56 6.81 103.8 0.42%

Switzerland 8.44 9.41 111.5 1.22%

United Kingdom 5.48 7.15 130.5 3.00%

United States 3.69 4.77 129.3 2.89%

MARKETING STRATEGIES

 As has been seen with the country wide distribution and target
markets, Godiva has spread its wings in major parts of Europe

 Main objective pursued by Godiva was to cover as much European

market as they could and to improve upon the sales of Godiva
pralines and bring a balance to the profitability in increasing
share of the handmade chocolates

 They took Belgium consumer as a reference point which were

considered to be fine Connoisseur of chocolates and tested all
new flavours on them. If it succeeded with them, then obviously
its success was assured through out the world.
PACKAGING STRATEGY

 Packaging is one thing that distinguishes one country from

another in order to meet the chocolate consumption habits, for
example in Japan chocolates are purchased in small quantities
(price factor), wherein beauty of packaging becomes pre-
dominant whereas the case is totally different in US.

 Keeping this thing in mind packaging in Godiva is by themes

called “collections”, wherein beautiful handcrafted fabric boxes
were used illustrating different occasions like Valentine Day,
Easter, Mother’s Day, Christmas .

 These boxes were priced on a higher side hence were used for in
house storage rather than for sales.
 WHY GODIVA COULD NOT PENETRATE IN BELGIUM

 High Labor Cost

 High margins on Rate of Return of Capital

 No Standardization in Rate, boutiques/stores

 Variation in Price regime resulting in loss of volumes

 Poor distribution network

 Competitors selling at low price like LEONIDAS.

Retail Price Comparison among Brands
Belgium France United Kingdom
Brands Brands Brands
Price Price Price
(bf/kg) (ff/kg) (£/kg)
Godiva 1080 Godiva 320 Godiva 13.50
Gerard
Neuhaus 980 Hediard 640 20.00
Ronay

Corne PR 880 Fauchon 430 Valrhona 16.80

Charbon
Corne TO 870 Maison ch. 390 14.00
el

Daskalide
680 Le Notre 345 Neuhaus 12.00
s

Jeff de Fountaine
595 327 Leonidas 6.75
Bruges ch.
Leonidas 360 Leonidas 120 Thorton’s 5.80
Measures Taken

 The design of boutiques have been revamped

 The distribution strategy has been redesigned adding

various networks

 Changes in packaging making it attractive and eye catching

The Godiva Distribution Netowork
Company- Franchised Department Stores Total
Country
Owned Stores Dealers & Others outlets

Belgium 3 54 - 57

France 1 19 - 20

Spain - 6 18 24

United
2 - 15 17
Kingdom

Italy - 2 - 2

Holland - 2 - 2

Germany - 4 1 5

Portugal - 3 7 10

Total Europe 6 90 41 137

United States 95 - 800 895

Japan - 22 67 89
PRICE COMPARISION OF GODIVA PRALINES IN THE WORLD

Price of One Kilo of Godiva Pralines (bf)

Price to Retail Price
Country VAT (%)
Franchisees (VAT Included)
Belgium 640 1080 6.0
France 763 1920 18.6
Spain 640 2145 6.0
United Kingdom 757 1782 17.5
Italy 640 2009 9.0
Holland 640 1261 6.0

Germany 640 1641 7.0

Portugal 640 2408 16.0

United States Na 2040 -

Japan Na 4000 -
Advertising Strategy
Strategy for Advertising
 Current Positioning

 Consumer Benefit

 Promise

 Psychographic Characteristics

 Competitive Frame

 Target Audience

 Advertising Objective

 Message

 Tone & Manner

BUSINESS MANAGERS PERSPECTIVE

 As Business Manager, this case gives us an in sight two

brainstorm on strategies applicable for expansion and
entry in foreign markets, but also on how to tap the
domestic market.

 Keeping in mind the facts given in case it can be well

understood that the Godiva being a high-end brand with
specialization in hand-crafted chocolates faced a price
crunch in Belgium which led to bottlenecks in growth.

 It becomes imperative that while expansion is on, one

takes into account not only the PESTEL dynamics of
environment but also understand to use the resources
available in hand for penetration in market.