THE INTERNATIONAL EXPANSION

OF A FAMILY BUSINESS

Valeriano López Lloret used to buy and sell almonds. However, the year 1881 was not very
favourable for agriculture and D. Valeriano ("Valor", as he was nicknamed in Villajoyosa,
Alicante), seeing his income diminished, decided to follow the example of some friends and
relatives. He set out on the back of a mule to sell chocolate house to house in the Spanish
provinces of Toledo, Cuenca, and Albacete. That was more than 140 years ago and, since
then, successive generations of the same family have made an effort to perpetuate and
improve the idea of their ancestor, although they also have the contribution of professional
managers outside the family, but fully identified with the company. The result has been the
continuity of a family business, Chocolates Valor, which has become a brand of high-quality
chocolates, being the first chocolate company in Spain and enjoying great international
recognition. It was a pioneer in the production of pure chocolate bars, in increasing the
percentage of cocoa, in making chocolates without added sugars, and in creating a network
of chocolate shops.

As a family business, the level of motivation and involvement in the implementation of

projects and in the achievement of objectives is very high. This, together with an
entrepreneurial character and a very advanced philosophy on the part of the different family
members in charge of management, has allowed the modernisation of this company, but
without giving up the original traditional methods. Currently, Chocolates Valor has a wide
range of chocolate products (extra-fine, with milk, with milk and hazelnuts, etc.). They have
continued to innovate to adapt to the tastes and needs of consumers, launching new
products on the market such as lactose-free chocolate, chocolate with caramel and salt, with
orange, and sugar-free cocoa.

Once its presence was consolidated throughout Spain, in 1990 it began a careful
internationalisation process, driven by various factors: less dependence on the national
market whose expansion capacity was limited; the creation of a new, much more modern
manufacturing plant in Villajoyosa (which represented the largest investment in Valor’s
history) considerably increased production capacity, thus creating the possibility of
supplying a larger market; and the conviction of its owners that it was necessary to go to
other markets to continue the development of the firm. At first, Valor thought to enter the
European markets that were large consumers of chocolate (Germany or France). However,
a previous study showed that these markets were very saturated and had limited growth
potential. For this reason, the first target market was Portugal. After that, it began to sell its
products in Venezuela and Argentina and, shortly after, in the United Kingdom, the Nordic
countries, Mexico, and Chile. In 1994, the company’s management decided to jump into the
Japanese market, whose per capita consumption of chocolate products was growing
considerably. The introduction process in Japan was slow, due to difficulties in finding the
right intermediary and the slowness of the Japanese authorities in solving bureaucratic
procedures. Finally, thanks to the help of the then known Valencian Export Institute (IVEX),
dependent on the Government of the Valencian Community, they hired a local agent who
would be in charge of distribution. With a similar entry mode, Valor also began to sell its
products in other countries such as the USA, South Korea, South Africa, and India.

The company has had to take into account the regulations specific to each host country. On
the other hand, one of the problems that it faced in non-European markets were the costs
derived from high taxes and transport that, in some cases, such as Venezuela, have reached
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40% of the price of sale. One of the markets that Valor has always considered a priority is
the US, especially Florida (the state with the largest Hispanic roots in the country). It was
precisely there in 2002 that it established its commercial subsidiary Chocolates Valor USA,
in charge of distributing its products in the Central and North American markets.

At present, all the products marketed by the brand continue to be manufactured entirely in
the Spanish manufacturing plants located in Villajoyosa (Alicante) and Ateca (Zaragoza).
Both of them represent more than 65,000 square meters of modern facilities, from which
almost 21,000 tons of chocolate are produced each year. Chocolates and "snacks" that are
exported to more than 60 countries thanks to the company’s commitment to
internationalisation.

A few years ago, Valor considered expanding his network of chocolate shops outside of
Spain. The first step was taken in Andorra, where it has two chocolate shops. To undertake
this expansion, it decided to use the same system that had been successful in Spain: contact
local investors, demanding that they have a central location in their city; impose the type of
decoration on them, emulating the cafeterias of the beginning of the century; and provide
them with the Valor products to sell. This strategy allows the company to reach the consumer
more directly by offering a similar service in all chocolate shops and contributing to develop
and maintain a brand image.

The latter, together with quality, constitutes one of the basic pillars of its formula to conquer
international markets, where it must be extremely competitive to fight against giants such as
Nestlé, Lindt, and Suchard. The penetration of the company in each new market has been
gradual, beginning the introduction with simple products and a limited variety. If they are
accepted, it progressively widens the range. Traditionally, it has not advertised abroad, and
its promotion has been based on attending international fairs, preparing catalogues and
paying special attention to the presentation of its products (packaging, boxes, etc.).

In March 2021, Chocolates Valor tried to reinforce its international strategy with the
acquisition of Imperial, the largest chocolate manufacturer in Portugal, which has well-known
brands in the neighbouring country, such as Regina, Jubileu, Pantagruel, Pintarolas, and
Allegro. Imperial allowed Valor’s business to be complemented by its excellent presence in
Portugal, its solid production capacity, and the breadth of its assortment, since it produces
vegan and gluten-free chocolates, pastries, dragées, etc. In addition, Imperial manufactures
dark chocolate bars for Mercadona and, specifically, 99% extra-fine chocolate, which has
been very successful. The objective of acquiring Imperial was to promote the development
of the businesses of both firms, strengthening their brands and without losing sight of the
synergies that can be established between the two companies. All this, in line with what
already happened when in 2013 Chocolates Valor acquired the chocolate plant in Ateca,
Zaragoza, which produces the well-known brands Huesitos and Tokke. “The acquisition of
Imperial follows a dream we have had for a long time. It is a very thoughtful decision, and it
comes when we have found a company that complements us. For this reason, we have
analysed numerous proposals until we found the perfect travel companion for us”, stated
Pedro López, CEO of Chocolates Valor.

For the managers of Chocolates Valor, its international success is based on the following
basic principles: total certainty of the need to export; patience; humility (even consulting
other companies with previous experience on a specific destination); allocate resources
(human, financial and time) to internationalisation; and involve human resources in the
company’s project, so that it is known and assumed by all. Pedro López summarises the
essence of the company, which has always been characterised by maintaining sustained
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and continued growth: “We have long decided to focus on the adult ‘target’ and we have
always maintained the highest quality, which has led us to promote a range of chocolates”.

A philosophy -that of Chocolates Valor- in which the weight of the tradition of a firm that
exceeds 140 years of history and in which the fifth generation has already joined has not
slowed down its commitment to innovation and internationalisation. What is the key to
achieving a balance between all these factors and that a family business like Valor does not
perish in the attempt? Pedro López is clear about it: “The continuity of a company is only
guaranteed if it is supported on three legs. On the one hand, there must be a component of
esteem towards the shareholders and towards the personnel who work here. On the other,
prudence or financial health is necessary for an obvious reason. Finally, the passion for the
sector and the pride of belonging that it implies is very important, something that in our case
is easier in the case of an industry such as chocolate”.

SOURCES

Alicante Plaza (2021): “Valor crece en el sector vegano y la repostería con la adquisición
de la lusa Imperial”. www.alicanteplaza.es, 25/03/2021.
Calderón, H. y Mollá, A. (2000): “Chocolates Valor”, en García Cruz, R. (2000): Empresas
españolas en los mercados internacionales. ESIC Editorial. Madrid, págs. 185-202.
Información (2021a): “La fábrica del placer más puro”. www.informacion.es, 03/04/2021.
Información (2021b): “Valor refuerza su estrategia internacional: compra al mayor fabricante
de chocolate de Portugal”. www.informacion.es, 24/03/2021.
La Razón (2017): “El dulce sabor del éxito de Chocolates Valor”, www.larazon.es,
23/12/2017.
www.valor.es

CASE DISCUSSION QUESTIONS

1. Are the international strategy decisions adopted by Chocolates Valor deliberate or

emergent? Explain the answer and point out two examples of a deliberate or emergent
strategy that Chocolates Valor has followed.

2. Identify all the entry modes that Chocolates Valor has used in its international expansion,
indicating the specific modality in each case.

3. Can Chocolates Valor be considered a multinational company? Give reasons for the
answer and, if so, indicate which decision led it to become a multinational.

4. How could Chocolates Valor avoid the costs of entering countries like Venezuela? Point
out two entry modes that would allow Chocolates Valor to avoid these costs.

5. Identify the main characteristics of Chocolates Valor’s international competitive strategy,

according to the three basic dimensions: global efficiency, local adaptation, and
knowledge development and transfer between countries.

6. What factors that facilitate the internationalisation of a family firm are present in the case
of Chocolates Valor? Explain your answer.