Tuesday, January 25, 2011

"Why You Aren’t Buying Venezuelan Chocolate"

No it's not because Hugo Chavez has expropriated the means of production.
Here's the Harvard Business Review:
Chocolates El Rey is a proud, old company that processes some of the best cacao beans in the world. El Rey commands a 30% price premium for its cacao—the key raw ingredient in chocolate—which is bought by the great chocolate houses in Switzerland and Belgium for use in products that are sometimes more expensive than caviar.

El Rey also makes its own brand of excellent chocolate, which it’s trying to sell globally. But so far, El Rey chocolate is relatively hard to find outside its home market, and people aren’t willing to pay a price comparable with that of, say, Godiva or Lindt. That’s because El Rey is from Venezuela, not Belgium or Switzerland, and consumers have been conditioned to believe that great chocolate comes from Europe, not South America.

This is the provenance paradox. A product’s country of origin establishes its authenticity. Consumers associate certain geographies with the best products: French wine, Italian sports cars, Swiss watches. Competing products from other countries—especially developing markets—are perceived as less authentic. Even when their quality is on par with that of established players, the developing-market firms can’t command a fair price. The lower price, in turn, reinforces the idea that the offering isn’t as good and that the region doesn’t make premium products....MUCH MORE