Nestlé Spain: The Red Box

Up to 1988, Nestlé España, S.A. had a 45% market share in boxed chocolates in Spain. This leadership position was reinforced in 1988 with the acquisition of Rowntree ("After Eight" and "Quality Street") and Perugina ("Baci"). But it was subsequently strongly challenged when, in September 1989, Ferrero aggressively launched Ferrero Rocher in Spain. In spite of Nestlé's marketing efforts, Ferrero made strong gains in market share. At the end of 1992, total market shares for all brands and varieties of boxed chocolates sold in Spain by the two companies were: Ferrero 32%; Nestlé 31%. Having lost the leadership position, what should Nestlé España do? The case includes detailed information, including a summary P&L, breakdown of advertising expenses, and A.C. Nielsen data.