Strategy, Brand and Product Development for a Chilean cooperative of sea salt producers

Abstract

In a laguna a few kilometres out of the coast, wind and solar power are used to evaporate ocean water. Hardworking men (salineros) manage the current of the water trough a complex system of pools and channels by hand. The water travels for three weeks trough various pools until the percentage of salt is so high that it crystallizes. In the last decades the production and the price of salt decreased year after year. Once the salinas were the main salt source for the country and the main economic activity of the region. When the situation changed, the salineros did not adapt and continued working with the same methods as many generations did. The majority of the production of the cooperative in Chile is not being sold for human consumption. Salt alone can no longer generate sufficient income for the families of the salineros, younger generations abandon the salinas. The salinas date back to the 17th century; the Spanish conquistadores brought the European technique of harvesting sea salt to South America. The exact same technique, first used by the Phoenicians in 700 BC, is still being used in all the South European countries. In the seventies the tradition of harvesting salt by hand almost disappeared. French chefs started to prefer the natural sea salt above industrial mine salt, they claimed that the high percentage of different minerals gives the salt its better and more natural taste. Because of the appreciation from the culinary market, the price of sea salt rose and in France, Spain, Portugal and Italy salinas have been restored. Regular table salt is industrially mined, during the extensive processing it looses al the minerals and only NatriumChloride remains. Salinas in Europe not only offer sea salt in varies grains, they also produce the more exclusive fleur de sel. During the process of evaporation a thin layer of salt comes to the surface of the water. This type of salt has the highest concentration of minerals possible, the crystals are naturally homogeneous, the salt maintains its humidity long after it is harvested. For the commercialization of the regular salt a small processing facility is needed, the grain size needs to be selected and the packaging process should be organized professionally to achieve a sufficient volume. The cooperative has a rural mentality and is used to sell in bulk, just as they would do with other agricultural products. The first step was the understanding that a transition is needed from selling 50 kg bags to selling products instead. In Chile sea salt is produced in two lagunas that lay 30 km apart. In the first weeks in Chile, the company mentor and the author advised the two cooperatives to work together enter the consumer market under the same brand name. They were convinced by the argument that, when the consumer perception towards sea salt changes, the market is big enough for both. Competition between the cooperatives would be counter productive at this moment. Based on the brand literature a project model and a brand model were created. First step of the project model is the analysis of the company, second the world around the company is studied. This internal and external analysis conclude that there is an enormous gap between what the potential of the cooperative is and what possible for them to do. Their products are on the top of the salt hierarchy and the high price of flor de sal offers unique opportunities. The esthetical appearance of the salinas, the production in harmony with nature and the history are ingredients to build a great brand. The capacities are limited; the cooperative has no money and no people to fulfil the potential. By developing products for the gourmet market, a way is found to combine the potential and the limited capacities in a positive way. The high margins for gourmet products make it possible to make profits with a limited sales volume. The current capacities limit the cooperative to professionally produce process, package and distribute products. The analysis part shows that the gourmet market is growing in Chile and specifically in certain areas of Santiago, many new shops opened the last 2 years. The supply is limited; most shops offer the same products. By using the gourmet market the brand will be positioned as a luxury and culinary product. In this channel the presentation might be as important as the product itself, a packaging form is chosen that adds value for consumers and that needs limited investments. The result is a rustic ceramic pot with flor de sal closed by a cork lid. An elegant etiquette seals the pot and attaches a handmade spoon. A small folder visualizes the salinas and the salineros and explains the product, the salinas and the cooperative. For tourist that visit or pass the salinas a cotton bag with 250 grams of coarse salt is developed, this product can entirely made by the cooperativa itself. Both products are results of brand driven product development. These products should make create brand awareness under consumers and give a direction for future product development. Main results of this project are that the two cooperatives decided to join their forces. Salineros started to produce large amounts of flor de sal. The cooperative became convinced of its own potential. A strategy is determined in which step by step the cooperative grows to company that has a 5-10% share of the Chilean market of human consumption. A brand is developed which can be used for all future products and is used in the development of two products that are ready to profitably be commercialized. In the future a situation has to be created that the salineros can focus on the production and that the cooperative can hire employees that do the sales and organization.