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9-502-024
REV: JUNE 30, 2004

ROHIT DESHPANDÉ

Café de Colombia

1

In mid-December 2000, Dr. Jorge Cárdenas Gutiérrez, general manager of the Federación Nacional
de Cafeteros de Colombia (FNC), delivered his annual report to the 59th National Coffee Growers’
Congress. The news was gloomy for the coffee organization. Because of worldwide excess
production, the international marketprices for Colombian coffee had fallen 35% between 1995 and
2000.2 These prices were untenable for Colombian growers3—it cost around $0.80/lb to produce a
pound of high-quality coffee in Colombia,4 while global coffee prices were expected to be just
$0.80/lb by the end of 2001.5 To make matters worse, this price level nevertheless continued to fuel
investment in coffee production in othercountries.
Despite the crisis, the FNC could be proud of its achievements. Over its 73 years of existence, it
had managed to maintain a positive margin in its coffee-trading activity. Indeed, since 1960, the FNC
had managed to assert an historic premium of nearly $0.10/lb for its coffee over coffees from other
countries. It had therefore positively impacted the communities it served. Colombia’scoffee region
was known for its high level of per-capita income, wide range of public services, lower illiteracy
rates, primary education coverage, and political stability. In addition, the worldwide advertising
campaign it had first commissioned in 1960, based on a typical Colombian coffee grower (Juan
Valdez), was credited with turning a commodity product into one of the world’s best-knownbrands.
Surveys revealed that the 100%Café de Colombia6 enjoyed a remarkable 85% logo identification in the
United States, ahead of global brands such as Nike, Michelin, and Prudential. Meanwhile over 40% of

1 Café de Colombia referred to the brand that was developed for coffee exported from Colombia whereas Colombian coffee
refers to the product.
2 In relative terms.
3 FNC New York.
4 Unlessnoted otherwise, currency values in the case are expressed in U.S. dollars.
5 Yadira Ferrer, “Commodities-Colombia: Falling coffee prices slash profits,” Inter Press Service (12/14/2000) at
http://ptg.djnr.com/asp/publib/story.asp (8/12/2001).
6 100%Café de Colombia (100% Colombian Coffee) refers to the logo associated with the “100% Café de Colombia Program”

described in the section entitled“Marketing support for 100% Colombian brands.”
________________________________________________________________________________________________________________
Senior Researcher Alexandra de Royere of HBS Latin America Research Center, prepared this case under the supervision of Professor Rohit
Deshpandé, with the assistance of Professor Jorge Hernán Cardenas, Dean of Universadad de losAndes’s Business School in Bogotá, and
Gustavo Herrero, Executive Director of the HBS Latin America Research Center in Buenos Aires. HBS cases are developed solely as the basis for
class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective
management. Confidential data have been disguised.
Copyright © 2001 President andFellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical,
photocopying, recording,or otherwise—without the permission of Harvard Business School.

502-024

Café de Colombia

the people asked in the United States could identify the Juan Valdez logo with Colombian coffee,
unaided (see Exhibit 1 and Exhibit 2).7
At this stage, Cárdenas and his management team were forced to reconsider the value of their
advertising budget. The FNC was already forecasting a cash...