Link to teaching case:
In early 1996, Mr. Mascenon, vice president of the instant drinks department of Nestle (Philippines), had to decide how to respond to a major change in Nestle's environment. Until January 1996, imports of coffee in any form--green beans, roasted, or ground and processed--were prohibited. As of January 1996, however, coffee within a specified quota could be imported over a 30% tariff. Nestle was the only foreign-owned producer of coffee in the Philippines and had over 60% of the market, up from 52% seven years before. Over the same period, total coffee consumption in the Philippines doubled. Nestle produced its coffee from Philippine-grown robusta beans, since Philippine arabica beans were of inferior quality. Outside the Philippines, however, a mixture of robusta and arabica beans was usually used. There were rumors that both Procter & Gamble (Folgers) and Kraft General Foods (Maxwell House) were planning to enter the Philippine market, initially via imports, but possibly in the future with production facilities.