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Case1 Name

Givaudan Flavors Case Study

Customer Value Driver Discovery

January 12, 2005

BACKGROUND:

When Geoff Morales’ assistant told him Susan Chaliss was on the phone, he thought “Finally.” Geoff had been waiting for two weeks to hear from Tastyco on a long term Strategic Supplier Agreement (SSA) and he was starting to worry…

Geoff was Givaudan’s account manager for Tastyco and the assignment had been a good one for Geoff. In the three years he handled the account, Geoff rarely ever had to compete with any other flavor supplier and he was generally able to get premium prices for both basic and custom flavor products. Tastyco flavor purchases had been growing steadily over the past three years because of the success they were having with some innovative beverage brands, and they were becoming a leader in the market for non-carbonated, nutritional beverages. The increasing volume growth and high prices had made Geoff a perennial hero at Givaudan’s National Sales Conferences, and Geoff’s sales bonuses had allowed him to finally purchase a new home for his family last year.

Tastyco was one of Givaudan’s largest customers. As a diversified global corporation, Tastyco’s Beverage Category was best known for its traditional carbonated beverages, but it had recently introduced some very successful non-carbonated, nutritional drinks. While most of Geoff’s sales volume was still for the carbonated beverages, Givaudan flavorists had worked closely with Tastyco’s Beverage R&D Group on some new products, and these brands were taking off in the market. As a result, Geoff had predicted to his boss, Michael Alpharo, that Tastyco would be buying a lot more volume this year!

But lately, things at Tastyco were changing. A few weeks ago, Geoff was surprised to get a call from Tastyco’s new Purchasing Manager, Susan Challis. Susan told Geoff that Tastyco had decided to implement...