Kaviari: Pure Caviar Case Solution
In 2001, Kaviari was created by Raphael Bouchez – the current chairman of the company in Paris. Kaviari was primarily a family business for the farmed caviar trade and retail. In the 1980s, the first caviar house was opened, which was titled as Astara Caviar, providing the business with real legitimacy and a story. The production of caviar either took place in the Russian side or the Iranian side, followed by an import of around four tons to France per annum, i.e. sourced from the Porimex Company. The mission of the business was based on the certification of the quality of caviar selected by Jacques Ne-bot and Raphael Bouchez. In 2015, Kaviari had around 50 employees and it represented double-digit growth since its establishment.The annual sales were approximately US $29 M with a 35 percent gross margin and 10 percent operating profit. Caviar – being a luxury icon was challenged in the seafood market. (Ronald G. Kamin, 2017)
However Kaviari brand was considered as a valuable asset, and the market dynamics has been relatively changing towards the inexpensive caviar. The French market had experienced the entrance of a caviar producer – Agro It Utica. The concerns were to determine the opportunity beyond the curious or connoisseurs, and should the business take advantage of shift of customers to inexpensive caviars or not.
- The development of personal relationship played a crucial role in the success of the business practices.
- The sales margin on caviar was around 20 percent, 30 percent seafood, and 40 percent or more for hotels and chefs.
- Half of the caviar volume, i.e. 5 tons a year, were sold in France.
- Key success factors of the business included premium service and customized caviar.
- The caviar category was struggling because of high product price offered in a small package.
- Kaviari was mainly focused on quality caviar, but the demand for less-refined product had been enticing.
- The maintenance of current position through enhancement of brand image would allow the business to have an opportunity to sustain itself.
- An increased brand awareness and the possible sales place would assist the consumers in increasing their purchasing power.
- Moving up-market and focusing on connoisseurs would allow Kaviari to retain its position as a premium brand and appeal to the affluent consumers.
- Moving down-market might influence the brand image among the customers, regarding the product’s quality.
- Inability to compete in the French market would result in declined sales.
- Low brand awareness and offering of products at competitive pricing, would increase the threat of competition.
VRIO Analysis is primarily based on the determination of the organization’s competitive advantage. The approach to determine the competitive advantage of Kaviari in the French market of caviar products,was based on the evaluation of resources of four factors,which were:valuable, imitable, rare and organized resources. The resources for the analysis of Kaviari included: brand image, brand awareness, consumer base, distribution, product quality, pricing, and financial stability. The evaluation of these resources would be determined sustainable, temporary, and parity competitive advantage and competitive disadvantage, as shown in Appendix B.
Porter Five Forces:
The competitors in the French market included Petrossian, which offered farmed caviar through its four fine food stores and also had international presence. Other competitors include: Kaspia, Comptoir du Caviar, and the House of Fauchon. Two diversified food organizations – Laberyrie and Delpeyrat also compete in the offering of farmed caviar in the market.
Bargaining Power of supplier:
The base of the competition in the French farmed caviar market was primarily over the distribution contracts specifically with the upscale restaurants and fine food stores. Because the French market was extremely small and tended to be seasonal in terms of advertising. But, the distribution channel was diverse, based on the presence of e-commerce sites, high-end fine food retailers, network of retailers and large retail outlets.
Bargaining Power of Buyer:
Around 84 percent consumers in France had never purchased caviar, and caviar was never consumed by around 59 percent consumers. Average purchase frequency was one per household, because majority of the customer were unaware of the stores that offered caviar. High purchasing power was represented by the insiders as the long-term connoisseurs. Similarly, all the players had the same farms, same origins and sources, and most importantly more or less same pricing strategy……………………..
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