Holland Sweetener Case Write Up
1.How should Holland Sweetener expect NutraSweet to respond to its entry into Europe and Canada?
Ultimately Holland Sweetener should expect NutraSweet to aggressively defend the entry into Europe and Canada. This defense is based primarily on the fact that this entrance will give NutraSweet the ability to show Holland Sweetener how it plans to subsequently defend the US Market.
In 1986 Canada and Europe combined made up 550 tonnes of demand for aspartame. While this certainly was growing (expected to be 1,800 tons by 1991) it paled in comparison to the current demand in the United States market of 5,100 tonnes (expect to be 8,000) tonnes in 1991. ...view middle of the document...
Lodged a complaint with the European Commission. They lodged this complaint that the multi-year contracts are not competitive. Long term this won’t get Holland results as they scale and staying power of Monsanto is too great, even if one year max contracts were put in place.
Should Take2.Communicate the desire to keep prices high. Prior to launch, Holland Sweetener should do everything in their power to publically signal the desire to keep pricing as high as possible. They should launch a trade focused PR campaign talking about this being a premium product and the incredibly high cost of manufacturing.
3.Communicate the desire to expand the aspartame pie. In addition, potentially they should signal going after the sugar based product market, attempting to expand the overall pie. Monsanto during this period (1892-1986) was averaging nearly $300 Million in net income with sales nearly $7 Billion. It had the cash and horsepower to bury Holland Sweetener. If Holland Sweetener instead was focused on expanding the pie they may be seen as less of a threat.
4.Communicate their focus on the niches. Try to signal a focus on underserved areas of the trade. If NutraSweet owned Coke and Pepsi then focus on filling the Holland Sweetener capacity with smaller, more boutique 1-2 ton customers that aren’t as meaningful for NutraSweet.
5.Signal no interest in going to the United States. Again, the real prize for NutraSweet is the United States. Don’t threaten this, in fact run from this. Similar to a “Made in the USA” campaign, develop a “Made in Europe, for Europe” campaign to engender loyalty from that consumer base and signal, at least publicly, no intention to go the United States aspartame market.
6.Work on building a branded table top business. Absolute profit dollars per pound of aspartame would likely be higher in a vertically integrated aspartame market. Potentially leveraging the “Made in Europe” campaign, focus on building a niche business (at first) line of products to be sold through grocers and develop a consumer brand that will start to be of value when...