Bitter Competition The Holland Sweetener Company Versus NutraSweet
Bitter Competition: The Holland Sweetener Company versus NutraSweet
Case Facts
The low-calorie, high-intensity sweetener dominated by NutraSweet, the operating entity of G.D.Searle & Co. NutraSweet had recorded sales of $711 million in 1986.
NutraSweet has monopoly in the market owing to the patents which are about to expire in 1987 in the European and Canadian markets
The Holland Sweetener Company (HSC), a joint venture between Tosoh Corporation and DSM, preparing to enter these markets with low cost patented process for manufacturing aspartame
NutraSweet manufacturing involved high investment as minimum 2000-tonne annual capacity setup required for efficient production
In 1986, HSC began setting up a 500-tonne aspartame production plant in Europe
NutraSweet adopted “branded ingredient” strategy to market aspartame to food and beverage manufacturers, and offered discounts of up to 40% off the list prices to become exclusive worldwide supplier
The soft drink market in U.S., dominated by Coca-Cola and Pepsi, accounted for 80% revenue of NutraSweet. Rest 20% accounted for by tabletop sweeteners, and other food and beverage products
NutraSweet AG, a joint venture between NutraSweet and Ajinomoto, had 60% of soft drink market in Europe (Coca Cola- 50%, Pepsi-10%)
NutraSweet has exclusive, multi-year contracts with Pepsi and Coke, and HSC is planning to lodge a complaint with the EC, claiming contracts to be anti-competitive
Several other high intensity sweeteners poised to enter U.S. and European markets in the coming years
The trend of blending expected to strengthen as it has received consent from researchers and health authorities
Winfried Vermijis, president of HSC, considering two strategies- “normal competition” and “price war” for entering the Canadian and European markets
Porter’s 5-Forces Analysis
Industry under consideration- Aspartame market in Europe and Canada
1. Threat of New Entrants
Barriers to Entry
Incumbency advantage- NutraSweet has patents for
Case Facts
The low-calorie, high-intensity sweetener dominated by NutraSweet, the operating entity of G.D.Searle & Co. NutraSweet had recorded sales of $711 million in 1986.
NutraSweet has monopoly in the market owing to the patents which are about to expire in 1987 in the European and Canadian markets
The Holland Sweetener Company (HSC), a joint venture between Tosoh Corporation and DSM, preparing to enter these markets with low cost patented process for manufacturing aspartame
NutraSweet manufacturing involved high investment as minimum 2000-tonne annual capacity setup required for efficient production
In 1986, HSC began setting up a 500-tonne aspartame production plant in Europe
NutraSweet adopted “branded ingredient” strategy to market aspartame to food and beverage manufacturers, and offered discounts of up to 40% off the list prices to become exclusive worldwide supplier
The soft drink market in U.S., dominated by Coca-Cola and Pepsi, accounted for 80% revenue of NutraSweet. Rest 20% accounted for by tabletop sweeteners, and other food and beverage products
NutraSweet AG, a joint venture between NutraSweet and Ajinomoto, had 60% of soft drink market in Europe (Coca Cola- 50%, Pepsi-10%)
NutraSweet has exclusive, multi-year contracts with Pepsi and Coke, and HSC is planning to lodge a complaint with the EC, claiming contracts to be anti-competitive
Several other high intensity sweeteners poised to enter U.S. and European markets in the coming years
The trend of blending expected to strengthen as it has received consent from researchers and health authorities
Winfried Vermijis, president of HSC, considering two strategies- “normal competition” and “price war” for entering the Canadian and European markets
Porter’s 5-Forces Analysis
Industry under consideration- Aspartame market in Europe and Canada
1. Threat of New Entrants
Barriers to Entry
Incumbency advantage- NutraSweet has patents for