Nestle (Philippines)

In early 1996, the vice president of the instant drinks department of Nestle (Philippines), had to decide how to respond to a major change in Nestle's environment. Until January 1996, imports of coffee in any form - green beans, roasted, or ground and processed - were prohibited. As of January 1996, however, coffee within a specified quota could be imported over a 30 per cent tariff. Nestle was the only foreign-owned producer of coffee in the Philippines and had over 60 per cent of the market, up from 52 per cent seven years before. Over the same period, total coffee consumption in the Philippines doubled. Nestle produced its coffee from Philippine-grown robusta beans, since Philippine arabica beans were of inferior quality. Outside the Philippines, however, usually a mixture of robusta and arabica beans were used. There were rumors that both Procter and Gamble (Folgers) and Kraft General Goods (Maxwell House) were planning to enter the Philippine market, initially via imports, but possibly in the future with production facilities.

This case could be used in several courses:<ul><li>International Business - in the section of the course devoted to on-going operations</li><li>Market and International Marketing - in the sections of the course on branding and maintaining brand equity</li><li>Environmental Analysis - in the section of the course on responding to changes in the competitive environment</li></ul>

• Branding
• International Marketing