Chupa Chups’ success is an inspiring story and an interesting case study. Many good lessons in International expansion and global strategies emerged.

The case was presented today by a keen and spirited group of the Strategic Management Class of Tasmac. I wish to share the essence of their analysis. We had fun we had learning! So what did Chupa Chups do?

Presentation Group

Spain is renowned for its sunshine, beaches and tapas which attract millions of tourists. But depite being Europe’s fifth largest economy it not known for its MNCs. One exception being – S.A. Chupa Chups founded in 1957 in Barcelona, Spain. All activities developed around an empire built on a ‘one product’. Chupa Chups are sold in 170 different countries.

Earlier Enrique Bernat’s was a GM in S.A. Granja Asturias (a company experiencing financial difficulties), a sweets manufacturer in Asturias Spain. Bernat chose the moment to propose a radical change in strategy from concentrating on selling hundreds of sweets products in just one market to concentrating only on producing one product but for several markets. It was necessary to find an innovative product for the Spanish market that would add something new to end customer (the child) and principally to the buyer (the mother). He remembered how children were admonished as they stained their hands, faces and clothes with their sweets. He proposed the idea of a sweet with a stick – what is now known around the world as a lollipop.

Cheerful class – lollipop in hand

The board took a skeptical view of this plan, judging it to be the madness of an ambitious

Shweta makes a spirited start

youngster. Enrique Bernat had faith in his idea, so progressively he bought the shares of the  company and in 1957 took over as the sole shareholder. Chupa Chups (pronounced ‘shoopa shoop’ – comes from Spanish verb ‘chupar,’ to lick) introduced its first lollipop in 1958.

Process Technologies

Bernat first developed the product Bernat decided to develop company’s own process technology in Spain. The unit was called Confipack. It developed first the machinery to produce spherical sweets , later ‘hole punchers’ to introduce the stick, and  last the paper wrapping machines that enabled production capacity to expand from 500 to 4800 units per hour.

Marketing and Distribution

Gaurav emphasizes

Started advertising very early through radio & TV campaign and intensive use of point of sale publicity. In 1969 Catalan (Politically autonomous area in Spain) artist Salvador Dali designed the brilliant red and yellow wrapper.

Children remained the primary customers, so product packaging innovation was seen as a critical success factor in maintaining customer interest. Enrique himself would sit behind counters in small stores observing and listening to customer reactions to new product.

Given the nature of the product and the vision of Enrique Bernat, to have the brand name Chupa Chups etched in peoples mind, the product had to be displayed on as many shelves as possible.

We luv Chupa Chups in Russia”

A TV campaign in Russia was a big hit  – genuine footage of Russian cosmonauts sucking on Chupa Chups (Cigarettes were forbidden) while on duty in the Mir Space Station.

International expansion

In 1960 to 67, Chupa Chups’ followed and expansion plan in Spain, France, Germany and The US, replicating the formula of a single appealing, top quality product distribution by its own sales force.

In 1968 Japan’s manufacturers and distributers were surprised to meet a Spaniard selling sweets on a ‘chop stick’. It took a long time and persistence before the Japanese overcame their initial revulsion to sucking in public to become one of Chupa Chups’ biggest customers.

Export to France (‘70s) by replicating its successful distribution system built in partnership with a French manufacturer.

Logo-Wikipedia

Visionary leadership with Bold Strategic Intent – Taking on the World

Following success in developed countries they began to target lesser developed countries during 1980s Bernat stated – “In this period we began to attack the world”.

Huge opportunity in China liberalization started in 1979.

Russia allowed foreign investment in 1987 stipulating the need to have a Soviet partner. Commenting on reported Mafia problems in the Russian Market Enrique Bernat stated –

“Problems are everywhere, and the Mafia may be everywhere. But consumers are everywhere, also, and they eat every day”.

International Strategies

Chupa Chups managed to achieve Global Efficiency and National Responsiveness the two conflicting demands simultaneously.

Global efficiency by having a standardized product that was easy to handle and transport

Mustakim explains

worldwide. Economies of scale by producing Classic Chupa Chups in plants located in different country. But only Spanish plants and the plant in Southern France produced the sophisticated lollipops (Melody Pops, Fantasy Balls, Tattoo Pops, and Wind Bali etc) and shipped to other markets. Centralized purchasing for all items except sugar and glucose.

National Responsiveness

Changing flavors for different countries.

(A) Japan – Green Tea (B) Mexico – Spicy (C) China  – Light colors (D) Finland – Salted (E) Scandinavia a region in northern Europe that includes Denmark, Norway, and Sweden. (F) Japan – Green Tea

Heman makes a point

Changing wrappers colors as per country. Staff selection was based on multiple nationalities who understood the importance of diversity. Partner selection was important for success in strategic alliances.

People in Chupa Chups take pride in saying  – “I am a Chupa Chups boy” This happens with a great leadership .

“I have always taken care of that people feel good about working with us. It is vitally important that they feel happy at work; that they like the job. Enrique Bernat

Thank you folks for your spontaneous participation and cooperation.

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About dilipnaidu

An open mind! Love to share my thoughts and a keenness to learn. An engineer and a MBA I had a wonderful innings in the Army and later moved to consultancy and teaching. My current interests are reading, music, growing culinary herbs, playing golf and yoga. I am serious on "Living life less seriously". A warm welcome to you be well and be cheerful always.

16 responses »

  1. Venkatesh says:

    Hello Sir This is Venkatesh from TASMAC 2nd Sem. Ur Student. Iam very thankful to you making a part of this case. Because this case is very impartant to know the global efficiency.In my opinion the best tasting lollipops I’ve found in a long time. Several “creamy” varieties along with the more traditional. My favorite being the choco-vanilla. However, these are “mini-pops”…..

    Like

  2. Ekaterina says:

    Hi Sir !

    Realy it was nice to get chance tell everybody How Chupa -Chups entered to Russia ….. because i remember that time very well. It happened when boarders were open and all stuff as Lollipop, Snikers, Mars, Kindeer -Surprice became available in shops …. all children was crazy about it, specially were cool walking and sucking the Chupa -chups, it was distinctive sign of new generation in new country!!!!

    With Regards Your Russian Friend Ekaterina!

    Like

    • Dilip says:

      Welcome Ekaterina.

      I am delighted to read your comments. Lovely to know the children in Russia enjoyed Chupa Chups. Children are children all over the world 

      It was nice having you in our class. I was happy to see your interest and keenness to learn strategy. Please do remain in touch and hope you send me some great pictures from Russia when you get back. Wish you success and happiness.

      With my many thanks in Russian – ‘Bal’shoye spaseeba’.

      Regards,
      Dilip Naidu

      Like

  3. Dilip says:

    Hi Akash,

    I am so happy to read your thoughts on Chupa Chups. You have correctly identified the key strategies that the company used to achieve their objectives.

    Another good observation that you made was on how Chupa Chups created an organizational and worldwide culture by the exchange of people between subsidiaries and also HQ.

    Well done and keep it up. BTW I will be happy to read your views on Marks and Spencer too.

    Thanks and regards.

    Like

  4. akash says:

    Respected Sir,
    Good Morning ………….!!!!!!!!!!!

    Dynamic leadership, Competitive advantage, Single Product strategy, Marketing Strategies are some of the vital strategies which make Chupa Chup successful in the long run.

    Enrique Bernat attributed the company’s success to its ability to recruit talented staff and admitted to paying above average salaries.

    The exchange of staff between headquarters and subsidiaries ,
    as well as between subsidiaries, facilitated the transfer of the chupa chup culture thus making Chupa Chup successful.

    Thank you Sir for your loving support and HELP. We indeed are very lucky to have you as our faculty.

    Best Regards,

    Akash

    Like

  5. Mustakim says:

    If I understand this case study , I found very very strong leadership ,particularly decision making when they are going for internationalize particularly when they are entered in Russia ,as the diversity grows ,these organisation are faces few confronted ,however there is no hesitate to say they are captured all triad countries as well .And also marketing strategies of chupa chups that was tremendous . it is an opportunity that sir give us which I really appreciate and once again thank you very much sir , it was really great learning case study out of five cases .

    Like

    • Dilip says:

      Hi Mustakim,

      I am happy to read your comments. You are perfectly right – Enrique Bernat’s leadership was strong in his commitment to the vision. The Russian entry did pose a formidable challenge especially the Red Mafia. I agree one of Chupa Chup’s key success factor was their belief and practice of diversity.

      I thank you for taking part in the presentation and for posting this comment.

      My regards and best wishes

      Like

  6. Gaurav R Arora says:

    I found a lots of similarity between Chupa Chups and Southwest airline. Dynamic leadership, Competitive advantage, Single Product strategy, Marketing Strategies. I am very glad our group was given a chance presenting Chupa Chups.

    Thank you Sir for your loving support.
    We indeed are very lucky to have you as our faculty.

    Regard,

    Gaurav R Arora

    Like

    • Dilip says:

      Gaurav … you guys volunteered to present this case even when under pressure of your mid-terms exams… this speaks a lot on you and your groups keenness to draw maximum value from the MBA program …keep it up

      BTW its me who is lucky to be accepted by you guys and for all your support ..

      thanks and good wishes for your exams …

      Like

  7. Manish says:

    I still so vividly remember the session on same topic that we had with you ..now around two years back.

    Thanks for all that you r doing! great!!!

    Like

    • Dilip says:

      Manish … so nice of you remember this Case Study … yes we did learn a lot from this one in our GBS sessions a couple of years back ..

      the expressions of these awesome people in the current Strategy module says they enjoyed too ..

      Thanks for calling on!

      Like

  8. Geetha says:

    “Enrique Bernat desire to help children and mothers has a slightly different meaning for me. I believe great companies have something in common. And that is an organizational purpose that extended beyond profits.”

    Very true, Sir. In fact, this is what Bo Burlingham’s “Small Giants” is all about.

    Please do check this out also if possible:

    http://business.in.com/article/exlibris/think-great-not-big/9902/1

    http://www.smallgiants.org/home.php

    Thanks and regards,

    Geetha

    Like

    • dilipnaidu says:

      ‘It’s not what we do, It’s who we are’ – “Small Giants” is a great learning place. I will surely visit their site often.

      Thanks for providing this learning resource to all of us here.

      Best Regards.

      Like

  9. Geetha says:

    “He remembered how children were admonished as they stained their hands, faces and clothes with their sweets. He proposed the idea of a sweet with a stick – what is now known around the world as a lollipop.”

    Sir, it is such an amazing coincidence that only this afternoon I read about how Heinz came up with EZ Squirt ketchup bottles for children to use ketchup by themselves without parental supervision/intervention (quite interesting to read in Malcolm Gladwell’s book, “What The Dog Saw”). Just goes to prove that Necessity is indeed the Mother of Invention!
    (http://www.gladwell.com/2004/2004_09_06_a_ketchup.html)

    Reading about ‘Chupa Chups’ is as interesting as learning about ‘Dippin’ Dots ice cream’ was in your blog. So many lessons in this particular piece on Chupa Chups – geography, etymology, art, packaging, display, sales and marketing, CRM, Management lessons like Strategy…. you name it… it is all there! Thank you for all the fun-learning that happens here.

    It is ‘World Book Day’ today and on behalf of all your readers and students (how I wish I was one of them!), I would like to earnestly request you to give us “your book” in the very near future. That would indeed be something to look forward to!

    Thanks and regards,

    Geetha

    Like

    • Dilip says:

      Hi Geetha,

      Nice of you take interest and contribute you insights. Heinz’s EZ Squirt ketchup is a fine example of ‘Necessity is the Mother of Invention’. Gladwell’s link too is apt.

      Enrique Bernat desire to help children and mothers has a slightly different meaning for me. I believe great companies have something in common. And that is an organizational purpose that extended beyond profits.

      They believed in progress and development of society and the well-being of people, thereby contributing to the growth of human civilization.

      Companies like Matsushita (now Panasonic), GE, Cargill, Unilever, and the Tata Group and some others are more than 100 years old. Their vision, value system and cultures are built on these tenets.

      Thank you for your thoughtful wishes. Regards.

      Like

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