El Rey Chocolate

El Rey Chocolate

Question 1

1. Environmental factors


Jorge Redmond is visionary in understanding that a global sophisticated and educated customer base who appreciates the single origin, Gout de terroir-individual flavour characteristics created by local soil and climate through “chocolate appellation controle” would appreciate the origin of El Rey chocolates. To have the means to appreciate good wine and food the consumer would need to have high disposable income.


Premium chocolate is viewed as affordable luxury by developed economy consumers such as in the US. El Rey will be able to price and sell premium goods at a higher margin compared to Venezuela where customer are more price sensitive due to high inflation brought on by political instability.


El Rey lead the formation of a not for profit association (Aprocao) with the farmer and cocoa traders in Venezuela means stronger lobby body to enable to better industry-government working relationship. This is due to bad experience from joint venture Palmaco, a subsidiary of national oil company, depending on who is in power, could severely affect the joint venture once there is a change of power, it is best not to have direct working relationship with the government due to frequent change of power in Venezuela.


Currency exchange transactions controlled by CADIVI (Foreign Exchange Management Commission) is a risk to El Rey who exports; this will eat into their profit when they earn foreign currencies.


Most cocoa plantations have been ignored due to focus on oil industry, means the industry as a whole is under invested, and hence there is low volume in terms of production. The cocoa variety Criollo have little resistant to disease, research is needed on how to increase the yield if El Rey is to expand.

El Rey needs to invest in machinery and technology rivalling the ones used by other European chocolate manufacturer which seems to command the most...

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