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	<title>Comments on: Callebaut buy Chocovic</title>
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	<description>Changing the way we eat chocolate</description>
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		<title>By: Alexander Rast</title>
		<link>http://www.seventypercent.com/2009/11/callebaut-buy-chocovic/#comment-3978</link>
		<dc:creator>Alexander Rast</dc:creator>
		<pubDate>Mon, 16 Nov 2009 00:33:10 +0000</pubDate>
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		<description><![CDATA[Many years ago, GM was formed by one car company successively buying up various other car manufacturers. Then, in a stroke of marketing genius, they decided not to amalgamate all the cars under a generic GM banner, but keep separate companies with very distinct market positions. Thus they had an escalating scale: Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac. Each one was clearly segmented and offered clear car choices in their market segment. We might hope Callebaut adopts a similar strategy. One might then think of the Callebaut brand as the &quot;Pontiac&quot; of chocolate, Barry as the &quot;Oldsmobile&quot;, and Chocovic could be the &quot;Buick&quot;. Then to complete the stable they could buy one consumer company like Cadbury&#039;s or Hershey - to be the &quot;Chevrolet&quot;, and one high-end company like Valrhona to be the &quot;Cadillac&quot;. As long as clear segmentation and management were maintained, that would leave the central office only with the job of managing overall strategy.

However, as we know GM went terribly wrong, because at some critical point they decided to &quot;extend&quot; their ranges, with Chevrolet gaining models more aimed at a higher-end clientele, like the Corvette, and Cadillac descending somewhat into a more consumer-orientated market. It didn&#039;t take long to decide thereafter that by standardising components, frames, etc. they could build what was basically the same car using different external bodywork and brand it as a separate model, saving in their view manufacturing costs while maintaining the illusion of separate brands. This effectively blurred everything, and buyers weren&#039;t fooled: it didn&#039;t take long for most people to realise there wasn&#039;t much point in buying, say, a Buick when you could get the exact same car as a Chevrolet for less money. Those who were more discriminating, meanwhile, equally well understood that a name like Cadillac now meant nothing, that if they wanted real luxury they needed to look to companies like Mercedes or BMW who had at least maintained a high-end manufacturing tradition. This is the risk that I think we all fear with Callebaut, that they may decide that in the interests of better economies of scale they ought to centralise bean buying, roasting, etc. As the GM case shows, this entirely misses the point: economies of scale are only relevant if the product in concern is undifferentiated. When clear differentiation exists, you have a different economy: the economy of market position. And unfortunately, once market position is given away, it is very, very difficult to recover. So let us hope Callebaut can see what is probably in their best interest: to keep the companies distinctly separate in fact as well as on the label, and save their strength for strategic planning rather that trying to manage everything centrally.]]></description>
		<content:encoded><![CDATA[<p>Many years ago, GM was formed by one car company successively buying up various other car manufacturers. Then, in a stroke of marketing genius, they decided not to amalgamate all the cars under a generic GM banner, but keep separate companies with very distinct market positions. Thus they had an escalating scale: Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac. Each one was clearly segmented and offered clear car choices in their market segment. We might hope Callebaut adopts a similar strategy. One might then think of the Callebaut brand as the &#8220;Pontiac&#8221; of chocolate, Barry as the &#8220;Oldsmobile&#8221;, and Chocovic could be the &#8220;Buick&#8221;. Then to complete the stable they could buy one consumer company like Cadbury&#8217;s or Hershey &#8211; to be the &#8220;Chevrolet&#8221;, and one high-end company like Valrhona to be the &#8220;Cadillac&#8221;. As long as clear segmentation and management were maintained, that would leave the central office only with the job of managing overall strategy.</p>
<p>However, as we know GM went terribly wrong, because at some critical point they decided to &#8220;extend&#8221; their ranges, with Chevrolet gaining models more aimed at a higher-end clientele, like the Corvette, and Cadillac descending somewhat into a more consumer-orientated market. It didn&#8217;t take long to decide thereafter that by standardising components, frames, etc. they could build what was basically the same car using different external bodywork and brand it as a separate model, saving in their view manufacturing costs while maintaining the illusion of separate brands. This effectively blurred everything, and buyers weren&#8217;t fooled: it didn&#8217;t take long for most people to realise there wasn&#8217;t much point in buying, say, a Buick when you could get the exact same car as a Chevrolet for less money. Those who were more discriminating, meanwhile, equally well understood that a name like Cadillac now meant nothing, that if they wanted real luxury they needed to look to companies like Mercedes or BMW who had at least maintained a high-end manufacturing tradition. This is the risk that I think we all fear with Callebaut, that they may decide that in the interests of better economies of scale they ought to centralise bean buying, roasting, etc. As the GM case shows, this entirely misses the point: economies of scale are only relevant if the product in concern is undifferentiated. When clear differentiation exists, you have a different economy: the economy of market position. And unfortunately, once market position is given away, it is very, very difficult to recover. So let us hope Callebaut can see what is probably in their best interest: to keep the companies distinctly separate in fact as well as on the label, and save their strength for strategic planning rather that trying to manage everything centrally.</p>
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