Nutrasweet case

• Step 1
  • Nutrasweet
    • Monsantos brandname for the chemical aspartame
    • 70% margin
    • Patent from 1987 - 1992
• Step 2
  • Challenger: Holland Sweetener Company
  • Building an aspartame plant in 1985
  • Anticipated patent expiration
• Step 3
  • Monsanto's reponse
    • Deep price cuts
    • Contractual relations with customers
• Step 4
  • HSC goes to court and force access to the customers
  • Word war: "We are going to extend this fight to the US"
• Step 6
  • Monsanto's position before and after competition
    • Before
      • No alterantive to Nutrasweet
    • After
      • Nutrasweet advantage greatly reduced
      • What left was brand value and cost advantage
• Step 5
  • Coke and Pepsi signed new long term contracts with Monsanto
  • There seemed to be an opportunity for competition: why blow it?
  • Why?
    • Don't want to create perception that it is fooling around with the recipe
    • Monsanto already had gone through the learning curve for making aspertame and had a cost advantage
    • The just where after a 'price advantage'
• Step 6
  • Consequence for HSC:
    • There was value for Coke and Pepsi
    • HSC could have demanded compensation for creating the competition
    • Once compensate it was more difficult for them to make money
    • Too quick to become a player
    • Should have captured what Coke and Pepsi could do for them upfront
• Step 7
  • Monsanto position
    • Cost advantage and brand awareness was a great asset
• Step 8
  • Coke and Pepsi position
    • Reduced dependency on single player
    • Savings of $200M$