HBS classrooms have a system of voting through which every individual in the class can take a stance on a particular topic under discussion. The picture below shows a ‘vote in progress’. The discussion was around Nutrasweet and HSC (continuation of the case on Sweetener wars from yesterday). The vote was for the location of the new Nutrasweet plant – US or Europe. There was very healthy discussion on various viewpoints.
Learning in David Yoffie’s class today: When you have a competitor entering the market, there are various strategies which can be employed by the incumbent. There was a lot that happened between Nutrasweet and HSC over a period of ~5 years. In the end however, neither one of them ‘won’. Nutrasweet’s revenue dropped from $1B to $400M due to the price war that ensued. HSC on the other hand was an even bigger loser because they withdrew from the market after investing millions of dollars and not making a single $ in revenue.
The winner in this war was the duopoly of Coke and Pepsi. Diet soft drinks were the primary consumers of aspartame. In 1983, Coke and Pepsi paid $85-$90/lb of Nutrasweet. This was a huge premium over saccharine ($3/lb). In 1993, after the sweetener wars, the price dropped to $18/lb.
Michael, Alfonso and I went to see the pre-season Celtics – Knicks game tonight. As you can see from the picture below, we had excellent seats! Here we are in the order of receding hairlines (Alfonso, Samvit & Michael).
By the way what do you make of the Nobel Peace Prize for Obama?? I thought the prize was for ‘accomplishments’ and not ‘hope of accomplishments’. Very surprised! I am all for the President and voted for him but let us get real here… Enough with the infatuation, Nobel Committee: Please don’t setup my President for failure!
Please take a second or two to vote: