Free Essay

Chiquita China

In: Business and Management

Submitted By Hariton
Words 2470
Pages 10
Chinas banana Industry

Analysis of Chinas banana Industry
Marketing strategy of a foreign Company in China

Marketing Strategy
Prof. Shui

This essay describes the current situation of the banana Industry in China, as well as the factors which influences the change of the National and International market situation based on latest examples. As the Chinese Market supplied an enormous amount of bananas every year, numerous importers need to comply with the demand. How the situation in China has changed in recent years, what role plays Chiquita in this strongly growing industry and which marketing strategies are being implemented. All of the mentioned before will be analysed and evaluated on the following pages.

Bananas are the most traded fruit worldwide and the fifth most traded agricultural product. In China bananas are the fourth fruit listed as the most important in the tropical corps industry.

The Banana is a perennial plant that replaces itself. Bananas do not grow from a seed but from a bulb or rhizome. The time between planting a banana plant and the harvest of the banana bunch is from 9 to 12 months. The flower appears in the sixth or seventh month. Bananas are available throughout the year, they do not have a growing season.
Bananas are grown in tropical regions where the average temperature is 80 F and the yearly rainfall is between 78 and 98 inches.
In fact , most bananas exported are grown within 30 degrees either side of the equator.
Plantations are predominant in Latin America and they require huge investment in infrastructure and technology for transport, irrigation and packing facilities. Smallholder production is less capital intensive and more labour intensive. High present is this system mainly in the Eastern Caribbean because, due to some factors, it is not possible to use the plantation system.
Banana growing is very labour intensive, involving clearing of jungle growth, propping of the plants to counter bending from the weight of the growing fruit. As well as an intensive use of pesticides , the product process involves covering banana bunches with polyethylene bags to protect them from wind and to maintain optimum temperatures.
After nine months the bananas are still green. The bananas are inspected and sorted at the packhorse. The standards, quality and maturity are dependent on the country their exported too. If bananas do not meet these standards they are usually sold locally at a much lower price.

China is the second larges producer of Bananas. The worlds leader in producing bananas is India. Around 413,000 hectares of land were cultivates with bananas in 2010. The productions was about 9.885 MT, according to FAO provider by the Hainan Institute of tropical Agriculture.
This number is every year differently to regarded, because of the natural causes (frost, cyclones and disease). The banana production in China has grown rapidly since the 1980s with the area cultivated more than tripling 1990 to 2012 and production more than quadrupling in the same period.
In China are five provinces account for the vast majority of production with:

Guangdong producing 2.8 MT
Guangxi 1.9 MT islands of Hainan 1.5 MT
Yunnan 1.2 MT
Fujian 0.7 MT

The perennial danger of damage from low temperatures means that producers on the mainland have to time their crops to minimize the risk of damage. this means that, although there is some variation , different regions aim to harvest at particular times to meet seasonal markets.
Through the large consumption of bananas and the restive increasing population, China hast to import bananas from other countries. The main importing countries to China are> Ecuador, Costa Rica, Philippines.
The majority of imported goods arrive at the port of Shanghai. From there the bananas are transported to many other areas of the country. Not only big markets and bulk purchaser but also small shops and privet purchaser obtain the goods from the Shanghai port. The fact that Shanghai has an enormous number of residents ,over 20 Million people, makes the city itself becomes a main consumer of the imported bananas.
In cities like Shanghai there are many ways to sell bananas. There are the Wholesalers which supply restaurants, supermarkets and shops. There are also the private supplier which purvey small shops and private customers and there are the small street vendors, which also take their bananas even direct from the port from Shanghai or from private dealers. The Quality depends from where you buy the bananas. However the quality of bananas in China are very high. This is based on the high demands of costumers. Chinese people insist on good looking and perfect tasting vegetables and fruits.

Chinese imports of Ecuadorian bananas surged by 541% in the first five months of 2014, and the supplier continues to gain momentum in the wake of typhoons that have hit the key southern growing regions. Domestic prices have shot up, leading to favourable conditions for the South American fruit. local banana prices have been spiking since March 2014, as a result of adverse weather conditions and lower production in Hainan and Yunnan, the two of China’s major growing regions. In addition, Philippine banana production has also been hit by typhoons.
All these factors have contributed to the rise in banana imports from Ecuador.

The Philippines exports a stable amount of bananas to Korea, Japan and the Middle East annually. This is because importers in these countries have all signed long-term agreements with Philippine exporters.
However, this is not the case with Chinese private importers, who have only signed short-term agreements. So there’s a degree of volatility with Sino-Philippine banana trade. Short-term agreements create more risk for private importers.
As soon as the bananas arrive at the shore, they can only stay in cold storage for a maximum of a month. So the ordering and pricing of Philippine bananas in China are done on a weekly basis, which further introduces fluctuations into the market.
Although it takes 30 to 40 days to ship bananas from Ecuador to China, the Ecuadorian bananas’ competitive pricing versus Philippine bananas has led many importers to make the switch.
Another important reason for understanding the high decrease of bananas from the Philippines are the dispute between Philippines over the resource rich Scarborough Shoal, which is claimed by both countries. The two countries are in a standoff over some contested territory of the South China Sea. They have been locked in a standoff since April, 2012 after a Philippine warship confronted Chinese fishermen near the Shoal.
As a result, China has refused to import bananas and other fruits from the Philippines, claiming to find bugs in shipments. The Philippines, relies on exports to China, has much to lose if its relations with China go sour. The Philippine government has been hesitant to link growing military tensions in the South Sea to the freeze on exports.
A large number of workers have to suffer now by these disputes and enormous amounts of crop have to be destroyed or otherwise sold.

Chiquita Brands International Inc. is an American producer and distributor of bananas and other produce. The company operates under a number of subsidiary brand names, including the flagship Chiquita brand and Fresh Express salads. Chiquita is the leading distributor of bananas in the United States.
Chiquita Brands International's history began in 1870 when ship's captain Lorenzo Dow Baker purchased 160 bunches of bananas in Jamaica and resold them in Jersey City eleven days later. In 1873 Central American railroad developer Minor C. Keith began to experiment with banana production in Costa Rica. Later, he planted bananas alongside a Costa Rican railroad track to provide revenue for the railroad. Since he needed cargo and passengers for the railroad, he planted bananas alongside the tracks to provide paying fares both inland and back to the sea.
In 1899 Keith and his railroad companies merged with the Boston Fruit Company to create the United Fruit Company on March 30, 1899.
Also in 1988 the Fruit Dispatch Company was formed to distribute bananas throughout the United States.
By using refrigerated vessels the United Fruit Company revolutionized ocean transportation in 1903. The food was also kept longer fresh and a longer transportation time was possible. In the further course the Company initiated the first banana research in Latin America to develop new disease-resistant varieties.
The Second World War brought the Industry to a virtual standstill. Many oft he Company ships were requisitioned by British and American governments to aid in the war effort.
In 1944 was the name Chiquita and the Miss Chiquita character , Jingle introduced.
Also three years later „Chiquita“ was registered as a trademark in the United States.
The largest branding program ever began in 1963 undertaken by a produce marketer, accompanied by record-breaking ad campaign which included affixing the trademark blue sticker to bananas „ This seal outside means the best inside“. Three years later the Chiquita brand was introduced in Europe. In the next years Chiquita shipped more then 4 billion pounds of bananas every year worldwide. They also improved their packaging methods for a better product transfer.
As sponsor and supplier of bananas to the Winter Olympic Games in Lake Placid, New York, Chiquita used for he first time this type of marketing strategy.
In 1989 th Company established another slogan: „ Chiquita. Quite Possibly, The World´s Perfect food.“ With this new Marketing slogan the company tried to highlight the quality and the brand strength.
The Company changed officially ist name in 1990 to Chiquita Brands International, Inc. To take advantage of global brand name recognition. Furthermore, we must not forget that Chiquita improved perennially their shipping and packaging methods.
In the last 15 years Chiquita has closed numerous alliances with many partners so that they could established itself successfully in numerous countries.

Chiquita Brands International operates in 70 countries and employs approximately 20,000 people until 2014. The company sells a variety of fresh products, including bananas, ready-made salads, and healthy foods. The company's Fresh Express brand has approximately $1 billion of annual sales and a 40% market share in the United States.

Chiquita entered the Chinese market in … Aug. 26. They entered into a joint venture with Haitong Food Group Co. Ltd. for the processing, sale and marketing of value-added fresh produce in China, marking the companies initial entry into an important emerging market. This strategic step was very important in order to become a global leader in branded, healthy, fresh food. The Haitong Food Group Co. Ltd. is also known for high quality, fresh food. This opportunity to work together enables the two companies to forge a common vision.
The agreement contains that Chiquita will provide limited capital investment and the majority ownership of the joint venture company.
“Zheijiang Chiquita-Haitong Food Company Limited” which operate processing operations in Cixi, China.
The aim of this company is, to market and sell value/added products, such as fresh packaged salads, fresh cut fruits and vegetables and fresh chilled beverages in China.

At this point I will talk about Chiquita’s Marketing strategies and how this company has entered successfully the Chinese market. Chiquita Brands International Inc.’s ability to find and reach their target market has never been a difficult feat. They were the first fruit company to successfully bring bananas from the Caribbean and South America region. Thus the coupling of both longevity and innovation has provided them a heavy presence in the minds of their target consumers.
It was in the 1940 and all over again in the late 1980's that they cemented their position as Banana Kings when they chose to place the yellow silhouette of a woman against a blue backdrop in sticker form on their bananas. Chiquita provides its customers two forms of utility: both Form and Time. With their products (bananas and ready to eat salads) in grocery stores which buyers have ready and easy access. Furthermore, the growing health consciences of people in the world enables Chiquita to continue its success in providing a good that promotes such a lifestyle. For this reason Chiquita satisfies form utility. While they are not transforming their main products into something different, their salads and juices are changed and manipulated into ready to use food and drink.
The marketing mix of Product Strategy, Pricing Strategy, Promotion Strategy and Distribution Strategy for Chiquita Banana has mainly focused on keeping their image fresh and new in the minds of their market base and expanding where possible. Their Product Strategy includes their branching out and creating readymade salads, fruit snacks and juice products. Chiquita sells these products where there is not a great demand for their bananas as well, as where there is a great demand. In focusing their efforts however on the former rather than the latter.
Their pricing strategy differs depending on the good being sold and the location. Bananas in China is one of the most sold grocery store food item and one of the cheapest. Their readymade products however (along with the higher cost of production) are priced higher. The challenge of entering the Chinese market has made pricing difficult. China uses only import duties on bananas, 25-40 %. That fact is important fort he price definition. The Promotion Strategy for the company is changing! They hold sticker competitions around the globe. Involving children and adults alike to send in new and creative designs to be used on their bananas. They also take part in community based health awareness programs that promote good health and their products alike. One of the Distribution Strategy for Chiquita Brands International the currently selling of their goods in approximately seventy different countries. They grow and produce these products and distribute them world wide. The majority of their food products are grown in the Caribbean and South America and sent out from their own distribution centres.

The Chinese banana import market was dominated by three major importers- Chiquita, Del Monte and Dole. There was almost no room for small players

The Chiquita company has the challenge to continuously offer a good looking and perfect tasting products for the Chinese market as the demand has been increasing in the last years. They need to evaluate and analyse the trends and changes in the market as well as their competitors in order to maintain a successful and higher profit in the emerging market. As suggestion for a better performance of Chiquita in the Chinese market, I would create a marketing strategy to reach more people and especially target groups such as sporty people who place their value on healthy and protein rich diet. Outpointing the best nutrients and recipe suggestions. They also can create a complete package of fresh food, where are combined the most popular goods to satisfy nearly all the need of Chinese costumers.…...

Similar Documents

Premium Essay


...There were several reasons visible from the Balance Sheets & Income Statements that reflect errors in judgement from the management. Most notable reasons are: 1. Lack of Product Diversification Compared to its competitors, Chiquita had close to 60% of sales linked to bananas as compared to other companies with exposures closer to 40%. The chart below illustrates this: While trying to save its banana business, it should have hedged its risks and diversified in different businesses. Despite a company strategy devised in the 1980’s to convert some banana fields to other crops, Chiquita did not adhere to that policy and invested in more banana fields in 1991. Instead it should also have bolstered its presence in European markets by acquiring controlling stake in European suppliers and gaining control of traditional suppliers in EU or by partnerships with ACP region producers. 2. Lack of Market Diversification As mentioned, EU accounted for close to 40% of Chiquita’s sales. This meant that it exposed a significant chunk (25%) of Chiquita’s sales to vagaries in just one region. Chiquita did not put any effort to develop other markets. The US & EU were Chiquita’s main markets. Unfortunately, the regulated EU market pushed a lot of the unused banana supply to the US market rendering it unattractive. Even though Asia was an attractive market, Chiquita’s presence there was negligible. Other markets in Soviet Union and Eastern Europe were significantly under developed. Even......

Words: 951 - Pages: 4

Premium Essay

Chiquita Banana Case

...Chiquita’s Core Values: “Our Core Values of Integrity, Respect, Opportunity and Responsibility form the basis of our business performance and guide our everyday activities, including our giving programs. As part of our Core Values, Chiquita maintains a solid commitment to conducting business ethically, morally and in accordance with the law.” Short-term: 1. Agree to pay the AUC until a long-term strategic plan can be developed a. However unethical, it is not illegal, as the AUC had not been designated a Foreign Terrorist Organization by the U.S. State Department b. Chiquita employees would receive protection c. Time frame: 2 months 2. Refuse to pay the AUC and start a widespread campaign highlighting the positive impact Banadex has on Columbia a. Display American diplomatic strategy by refusing to negotiate with terrorists and forcing the Columbian government to provide military assistance. b. Chiquita contributed 70 million annually to the Columbian economy, something the Columbian government should make a point to protect. A widespread campaign highlighting the negative impact of Chiquita leaving the country would garner public support for government intervention. c. Time frame: 3 months Long-term 1. Sell off the Banadex subsidiary in Columbia a. This would keep the company from being at legal risk b. Chiquita’s employees would still be employed by the acquiring company – who may or may not choose to do business with the AUC c. Time frame: 1......

Words: 364 - Pages: 2

Free Essay


...Chiquita Brands International, Inc. and its subsidiaries operate as a leading international marketer and distributor of high-quality fresh and value-added produce which is sold under the premium Chiquita and Fresh Express brands and other trademarks. They are one of the largest banana distributors in the world and a major supplier of bananas in Europe and North America. In Europe, they are a market leader and obtain a price premium for their Chiquita bananas, and they hold the No.2 market position in North America for bananas. In North America, they are a market segment leader and obtain a price premium with their Fresh Express brand of value-added salads. In 2011, their banana business performed significantly better than in 2010 particularly in North America, where both pricing and volume were higher, and a force majeure surcharge in place for most of the first half helped us to recover significantly higher sourcing costs that began in late 2010 and continued throughout the first half of 2011. While the banana business as a whole is seasonal, this is most pronounced in Europe where weekly local currency pricing is significantly affected by variations of supply and demand in the market, with prices typically weaker in the third and fourth quarters than in the first half. In Europe, trading conditions continued to be challenging throughout 2010 and 2011. Industry supplies were low during the first half of 2011, and pricing improved during this period in comparison to the......

Words: 429 - Pages: 2

Premium Essay

Chiquita Banana

...Analysis Chiquita had been doing well since its inception and had created a place for itself as a leader in the banana industry. Confident about its political connections and standing, Chiquita believed it could fight the EU policy. The company launched an aggressive and costly lobbying campaign in Washington denouncing the EU policy. Chiquita spent time and money trying to regain their power rather than looking for alternatives. Given the unpredictable politics that drive trade disputes, and the uncertain influence of arbitration institutions like the WTO, betting on a legal battle can be highly risky. They failed to realize that sometimes it is smarter to maneuver around a barrier than to try to tear it down. Under pressure from the United States, the World Trade Organization ruled that the policy was discriminatory and ordered that it be dismantled .But the Europeans were slow to comply, and so “began the "banana war"-the worst transatlantic economic dispute since World War II. With a limited ability to export AGP bananas, Chiquita lost a third of its European Market share between 1992 and 1995” (Marcelo, 2005, 24).Determined to regain its position, Chiquita continued to fight the EU policy, increasing its debt as its hold in Europe kept slipping. Analysis of international challenges faced by Chiquita (4 C’s) Country risk/Political risk – Chiquita was facing major political risks after the introduction of the new banana trade policy. The new policy restricted......

Words: 905 - Pages: 4

Premium Essay

Case Report: Blood Bananas: Chiquita in Colombia

...Summer 2013 Summer 2013 Case Report: Blood Bananas: Chiquita in Colombia BUSA 4980 Chiquita Brands international was founded in 1899 after the merger of United Fruit Company and the Boston Fruit Company. As bananas be came more of a staple in every home so do Chiquita Bananas. Bananas are know to mainly grown in tropical places like Central America, Africa and Southeast Asia. Chiquita decided to have operations out of Colombia. During this time there was turmoil in Colombia and different terror groups form “against the government” & other wealthy people in the country. Some of these groups settled in the areas where Chiquita had facilities. Chiquita run into problems with theses groups around 1997, mainly with FARC (Revolution Armed Forced of Columbia) and AUC. They began to kidnap and kill employees of this company. The terrorist groups began asking for money in turn they would stop harming their employees. For Chiquita this decision to pay the AUC seem to be an easy one because or the lack for government and the lack of laws in place. There are many key issues that lead Chiquita Banana’s decision to pay the terrorist groups the FARC & the AUC. One key issues the increasing demand for bananas in new countries like Russia, China and other countries in the Middle East. Chiquita felt as if it had pressure to obtain and grow in these markets. Along with those new markets, Chiquita had their current demand in established markets like the United States......

Words: 818 - Pages: 4

Premium Essay

Chiquita Brands International

...Lindner has some problems. What are they ? A1] Chiquita brand was the leading company in the banana sector which had capture the global market. Chiquita was under a mist of serious and unprecedented downturn there income became less and there shares too in 1991 its was 40$ and in 1994 it came down to 13.63$ the reason was that the EU started a series of import restriction and EU completion of its single market and member states also adopted and this topple Chiquita from its leading position in the banana market and the EU import was effective on the 1993 july 1 and ended in 1994 by then the Chiquita market shares in the Europe slided significantly. Q2] exactly what is the EU policy ? A2] in the 1975 with the adoption of the APC-EEC convention of Lome most member of the EC provided preferential access to banana imports from developing countries in the APC region (Africa, Caribbean, and the pacific), which were essentially the former colonies of britain and france were granted tariff-free access to the EC market, while banana imports from other regions including latin America, faced a variety of restraints that differed widely across each of the countries in the community. Imports from EC territories like ( Martinique, Guadeloupe, canary islands, crete and madeira ) like imports from ACP countries were given duty-free access to all the markets with the community. Q3] and how does it promise to affected Chiquita ? A3] Chiquita had watched the formation of the EU’s......

Words: 532 - Pages: 3

Premium Essay

Chiquita Case

...Question 1 The level of market concentration is quite high which is proved using the HHI as shown below. (Considering the banana sales of 1994 as given in the case) Brand Banana Sales Market Share % Chiquita 2,377,032 48 Dole 960,400 19 Fyffes 563,324 11 Geest 528,719 11 Noboa 280,000 6 Del Monte Produce 240,000 5 TOTAL 4,949,475 100 Because there are few players in the industry, comparatively less competition and high concentration in the market, we consider the banana industry to be an Oligopoly market, which has high barriers to entry. The barriers to entry are: • High start up cost: A new firm entering the banana market will need to have huge capital to make banana production feasible. Banana production requires vast amounts of lands to grow the banana trees. Bananas are also a perishable item which increases their maintenance cost. • Economies of scale: Banana Industries have significant economies of scale where minimum efficient scales occur at high input levels. Thus a new entrant must produce high volume to reduce the cost and make profits. If a new entrant with vast land produces fewer bananas then it will be very costly to maintain the banana production. • Licenses: The government regulations may be very stringent requiring various licenses to trade banana in the world market. The licenses would be very expensive to own which is a barrier to new entrants. • Distribution channels: It is required to have a strong distribution system globally to......

Words: 3044 - Pages: 13

Premium Essay

Chiquita Banana

...[Name] | International Marketing Cases | October 20, 2013 [Name] | International Marketing Cases | October 20, 2013 Chiquita Banana Chiquita Banana Contents Chiquita Banana Overview 2 PESTEL analysis for the European Union 2 Political: 2 Economic: 3 Sociocultural Factors: 3 Technological: 4 Legal: 4 Environmental: 5 Marketing Mix 6 Product: 6 Price: 6 Place: 7 Promotion: 7 SWOT Analysis 8 Strengths: 8 Weaknesses: 8 Opportunities: 9 Threats: 9 Internationalization Strategy and Viability 10 Chance: 11 Incoterm 12 Possible incoterms for the company 12 Solution 12 Appendix A 14 Works Cited 15 Chiquita Banana Overview Chiquita Brands International, Inc. is one of the most important international marketers and distributors of food products derived from bananas, as well as other fruits and healthy snack products. Chiquita Banana revenues for about $3 billion dollars a year and employs more than 21,000 people and operates in about 70 countries worldwide. Chiquita Banana together with Dole, Del Monte and Fyffes control about 80% of the global banana market. In 1993 the EU created the Common Organization of the Market in Bananas (COMB) to deal with the harsh competition between these companies. They would allow duty free access to the EU but subject to quotas to bananas from the Africa’s, Caribbean and Pacific, while bananas from Latin America were subject to an import tax of 176 Euros per ton and a quota of 2533...

Words: 3742 - Pages: 15

Free Essay

Chiquita Case Study

...eaten routinely in the world. Founded in 1989, Chiquita was the successor of the United Fruit Company. For many years, Chiquita was the largest employer to be located in Latin America. They are known for revolutionizing the banana trade by using refrigerated ships for the first time. Bananas represent a collection of economic, environmental, social, political, and legal hassles. The rewards of doing business abroad are huge, but the risk can be massive. This case study questions the ethics and morals of Chiquita while doing business abroad. For more than a hundred years, the company now known as Chiquita has been paying bribes to Latin American government officials to receive preferential treatment, building an abusive monopoly, encouraging or supporting U.S. coups against smaller nations, exploiting local workers, putting in place dictatorships in Central America’s, and now doing business with terrorists. Doing business in Columbia has proven to be a major hazard since the country is just emerging from a deadly civil war and dealing with the effects of narco-terrorism. From 1997 to 2004, Chiquita made protection payments to the AUC terrorist groups. They were advised in 2003 to stop making protection payments, but continued to make the protection payments to prevent employees from being killed. The company had already lost fifty employees to death at the hands of the terrorist. In the year of 2004, Chiquita admitted to criminal responsibility to the U.S.......

Words: 457 - Pages: 2

Premium Essay


...1. Should Chiquita have agreed to make the payments to the terrorist group to protect its employees? What ethical principles support your opinion. A. Chiquita was asked to make the payements to the terrorist group in 1995 when it was unaware of the actions of the paramaillitary group. It was only human for Chiquita to first think of its employees and protect them. However Chiquita failed to look at the bigger and failed to estimate what the terrorist organization actually did with the money. I believe it was ethically wrong for Chiquita to have involved in this activity, not disclosing it to the US government and also hiding it in its accounting. The best thing to do would have been to withdraw from these markets inspite of its good intensions. 2. Is there anything that Chiquita could have done to protect its employees adequately without paying the terrorists? A. Chiquita should have contacted the US Department of justice earlier and asked for help stating its good intensions to continue its business and also protect its employees. If sufficient help wasn’t available from the government it should have withdrawn from the market. 3. Using the four methods of ethical reasoning see figure 4.6 was it ethical or not for Chiquita to pay the terrorist organization? A. People in business can analyze ethics dilemmas by using four major types of ethics reasoning virtues ethics, utilitarian reasoning, rights reasoning and justice reasoning. The values and......

Words: 996 - Pages: 4

Premium Essay

Chiquita Paper Porter

...Alternative Courses of Action 1. Concentrate on the Americas 2. Diversify Production 3. Expand to Europe More Aggressively 4. Diversify Product Line 1.Concentrate on the Americas Based on our analysis of Chiquita Banana’s financial struggles we have a number of possible solutions for improving the company. Chiquita Bananas had no way of predicting that the European Union would favour its former colonies over Chiquita’s locations in Latin America. After the European Union put quotas and tariffs on Chiquita’s products, Chiquita should have re-evaluated whether or not to continue to export to Europe. Although they would lose a significant amount of business if they stopped exporting to Europe, the reason they were in debt in the first place was because Europe restricted import of their products and this was a problem since Europe was Chiquita’s main market. If the company had concentrated within the Americas then they would not have been forced into so much debt. 2. Diversify Production In order to limit the amount they were affected by natural disasters, the company could have grown bananas in other parts of the world. This would be better for the company because if natural disasters did strike in an area where they grow their products then it would not be such a financial blow as they would have more sources to......

Words: 2161 - Pages: 9

Premium Essay

Chiquita Case

...Theory predicts that protectionism creates a loss to consumer surplus. This loss to consumer surplus is evident in the Chiquita case. With this restrictions on imports outlined in the EU Banana Import Regime, Chiquita had lost 20-50% of their market share in Europe. Under the new laws, Chiquita could only sell up to 2 million metric tons of bananas as imports. If Chiquita were to sell more than their quota they would be dutiable at 850 ECU as a tariff tax, which would be difficult to afford. The new policy had created an artificial shortage of bananas within the EU which drove up prices. The intent of this new policy was to support former EU colonies and territories that were not originally able to compete with the large corporations. The geographical restrictions created by this policy made fulfilling demand difficult for Chiquita. Chiquita driven down their cost and subsequently increased revenues by creating efficient logistics by integrating their supply chain vertically in order to fulfill demand of customers from their plantations in Latin America. With the new impositions by the EU, Chiquita was at a loss of efficiency. Chiquita would have to produce their bananas outside of Latin America to avoid the tariff. This provides a disruption to the cost effective integration that Chiquita had built which would result in higher cost for the company thus passed onto the consumer. European consumers were not only experiencing a shortage in bananas but also increased prices...

Words: 301 - Pages: 2

Premium Essay


...the lower duty of ECU 100 was reserved for European marketing firms, most of which historically had marketed only ACP bananas. Implications on Chiquita Sales Following World War II, Chiquita became Europe’s main banana provider, exporting to Germany (its principal European market), as well as to Great Britain and other countries. While Germany permitted free inflow of Latin American bananas, Great Britain and France gave preference to bananas from their former colonies in Africa, the Caribbean, and the Pacific (the ACP countries). Chiquita provided bananas from both places. But in 1986, confident of its dominance in the European banana market, the company sold its British subsidiary Fyffes, its main marketer of ACP bananas. Chiquita saw the fall of Communism in the late 1980s and the creation of the European Union in the early 1990s as great opportunities to increase sales. Anticipating a growing market, the company invested, with debt, in more production facilities in Latin America. By 1992, Chiquita’s European market share was more than double Dole’s (30% versus 12%), and Chiquita had 40% of the German market. With a limited ability to export ACP bananas, Chiquita lost a third of its European market share between 1992 and 1995 and its stock fell from $40 in 1991 to $13.36 in 1994. Determined to regain its position, Chiquita continued to fight the EU policy, increasing its debt as its hold in Europe kept slipping. Dole, meanwhile, quietly executed an end run around......

Words: 1192 - Pages: 5

Free Essay

Chiquita Bananas

...I. Time Context – 1997 II. Point of View – Fernando Aguirre, CEO III. Statement of the Problem Symptom: Chiquita Brands International was forced to make protection payments to paramilitary groups in Colombia to keep their workers safe from the group’s violence, which later were found illegal under U.S law. Problem: Chiquita workers are saved but the rest of the country is endangered. IV. Objectives 1. To rebuild the company’s image 2. To protect their employee’s lives and at the same time, to not harm the citizens of Colombia by providing funds for terrorism acts V. Areas of Consideration VI. Outline Alternative Courses of Action (ACA) * Exit the country and relocate their operations from Colombia to a nearby country with similar weather but less of a terrorism ridden culture. * Stay in Latin America but fix their public image through sustainable employment and environmental practices in order rebuild a positive image of the brand. * Draw out from Latin America and increase their market share by focusing in other products. VII. Recommendation Since they’ve already sold their Colombian farms, I think it’s time for them to leave Colombia and rebuild their business in another country that is free from terrorism acts that also offer similar weather conditions as Colombia. They should now pay attention on its Marketing Campaign in order to rebuild a positive image of the brand; Focusing on ethical treatment of workers, sustainable......

Words: 385 - Pages: 2

Free Essay

Blood Bananas – Chiquita in Colombia

...Blood Bananas – Chiquita in Colombia Introduction: Banana is a serious and a complicated business when it comes to producing and delivering it to the consumers all around the world. As most of the banana production takes a place in the tropics, the largest consumers are the U.S., the European Union and Japan. Chiquita, Dole and Del Monte who are also known as “the big three” control 60 percent of the global banana trade. Dole was founded in Hawai in 1851 and had reported revenues of US $6.9 billion in 2007, being the largest producer and marketer of high-quality fresh fruits and vegetables. Del Monte is one of the largest and well known producers, distributors and marketers of premium quality, branded food and pert products for U.S. generating US $3.4 billion in net sales in 2007. Chiquita which has been the largest employer in Latin America for many years, was founded 1899 and is known for revolutionizing the banana trade by using refrigerated ships for the first time. In 2007, Chiquita was the leading distributor of bananas In the United States with annual revenues of US $4.7 billion. Chiquita and terrorist ties Chiquita has been known as a rapacious multinational corporation for a long time. Company has been blamed for having farmers work for long hours in dangerous conditions, contaminating water with agrochemicals and harming tropical forests for expansion. Its operations in Colombia have been the most controversial topic for a long time due to the instability...

Words: 1042 - Pages: 5