COMPETENCES IN COFFEE INDUSTRY

COMPETITIVE LANDSCAPE


Consumer taste and personal income drive demand. The profitability of individual companies depends on the ability to secure prime locations, drive store traffic, and deliver high-quality products. Large companies have advantages in purchasing, finance, and marketing. Small companies can compete effectively by offering specialized products, serving a local market, or providing superior customer service. The industry is labor-intensive: average annual revenue per worker is about $50,000.

Coffee shops compete with businesses such as convenience stores, gas stations, quick service and fast food restaurants, gourmet food shops, and donut shops. Store format and size vary depending on locations, for small spaces like airports and grocery stores, some chains offer a kiosk format and without seating.

Coffee shops depend greatly on customer traffic and are most often located in areas with convenient access for pedestrians or drivers. Typical locations include downtown or suburban retail centers, shopping malls, office buildings, and university campuses.


PRODUCTS, OPERATIONS & TECHNOLOGY


Major products include beverages and food. Beverages include brewed coffee and tea; espresso drinks (cappuccinos, café lattes); cold blended beverages; bottled water; soft drinks; and juices. Food includes pastries, bakery items, desserts, sandwiches, and candy. Many coffee shops sell whole or ground coffee beans for home consumption. Some coffee shops sell coffee or espresso-making equipment, grinders, mugs, and other accessories. Most coffee shops serve high-quality, premium products, and for recently years, coffee shops starts to incorporate the brand management concepts along with selling coffee products.

COFFEE INDUSTRY & CUSTOMERS

CHARACTERISTICS OF COFFEE BREWING INDUSTRY

Coffee brewing industry is becoming more and more popular nowadays, due to the fact that coffee is a popular beverage. Over 2.25 billion cups of coffee are consumed in the world every day. Over 90% of coffee production takes place in developing countries, while consumption happens mainly in the industrialized economies. Worldwide, 25 million small producers rely on coffee for a living^. For instance, in Brazil alone, where almost a third of all the world's coffee is produced, over 5 million people are employed in the cultivation and harvesting of over 3 billion coffee plants^, it is a much more labor- intensive culture than alternative cultures of the same regions as sugar cane or cattle, as it is not subject to automation and requires constant attention.

THE WORLD COFFEE MARKET

Experts on the world coffee market often make reference to the “coffee paradox”.
A coffee crisis in producing countries with a trend towards lower prices, declining producer incomes and profits with important consequences for the export revenues of leading coffee exporting countries and the living standards of millions of people in developing nations
A coffee ‘boom’ in consuming countries with rising retail sales and profits for coffee retailers
A widening gap between producer and consumer prices

The World Bank estimates that out of the total 141 developing countries, 95 depend on exports of commodities for at least 50 percent of their total export earnings. Coffee is a very good example of such “commodity-dependency” representing, for example, 75% of the total exports of Burundi and 54% in Uganda, and about 22% in the case of Honduras. About 20 to 25 million families produce and sell coffee for their livelihood and most of them are small-scale farmers with limited financial resources and scope to diversify out of coffee production.

COFFEE PRODUCTION

Globally, coffee sales each year exceed $70 billion, but coffee producing countries only capture $5 billion of this value, with the bulk of revenues from the coffee trade retained by developed countries. Coffee farmers in producing countries only obtain a fraction of the final retail price of coffee. A recent Oxfam research report showed that Ugandan coffee farmers only get about 2.5 percent of the final retail price of their coffee in the UK market. One strongly positive sign has been the surge in demand for FairTrade coffee in the UK and other countries. The FairTrade organisation claimed in July 2006 that one in five cups of filter coffee drunk in the UK are now being supplied from a "fair" source. Sales of Fairtrade coffee in the UK totalled £65.8m on 2005, up from £34.3m in 2003 (5 % of the UK market) although FairTrade coffee sales account for only 0.5% of the global market.

COFFEE PRICES

There have been no price controls in the global coffee trade since 1989, when the buffer-stock system run by the Internationak Coffee Agreement broke down. The main reason for the decline in prices in the early years of the current decade was a gradual and continuous increase in coffee production throughout the world, particularly the new coffee exporting countries entering the international market, a good example being Vietnam. Global coffee production grew faster than demand leading to large surpluses of production. Our chart below shows the average monthly price for coffee in the world markets. The price chart shows a composite price for the different grades of coffee such as Robusta and Arabica beans. From the second half of 1997 through to the trough of prices in 2001, the average price of coffee collapsed from $180 per lb to less than $40 per lb. Prices remained very low until 2004 since when there has been some recovery in prices, but they remain well below the levels witnessed in the mid 1990s.

Sources:

[1] First Research Industry Profile, http://www.firstresearch.com/

[2] http://findarticles.com/p/articles/mi_m4021/is_2001_June_1/ai_76579399

[3] First Research Industry Profile, http://www.firstresearch.com

[4] First Research Industry Profile: Coffee Industry

[5] http://www.espressobusiness.com

[6] http://en.wikipedia.org/wiki/Economics_of_coffee

[7] Mergent Coffee Industry

other CAFE STORES

CAFEE NERO


Caffè Nero was founded in London, in 1997 by Gerry Ford, who was looking to bring a premium, continental-style Cafè to Great Britain, but keeping the authentically Italian style serving premium espresso based coffee, fresh high quality food and to become a neighbourhood gathering spot

In March 2001, Caffè Nero joined the London Stock Exchange and subsequently became the largest publicly listed coffee house company in the UK.

In October 2005, Caffè Nero was named the 20th fastest growing company in Europe by Business Week magazine. That same year, Caffè Nero retained the number one position in Allegra’s UK coffee rankings marking its fifth consecutive win and Gerry was named "UK Entrepreneur of the Year" by the Financial Times and the London Stock Exchange. A good year!

REPUBLIC COFFEE

Coffee Republic was founded in 1995 by Bobby and Sahar Hashemi who opened their first store in Fashionable South Molton Street, London, UK.

Since then, The Coffee Republic has grown to one of the best known and acclaimed coffee chains in the UK, have sites in Scotland, Cyprus, Ireland, Jersey, Devon, Romania, Saudi Arabia, Jordan and Kuwait.

Coffee Republic has 99 Concessions operated by 7 partners: Greene King, Cineworld, Travelodge, Shell, Enterprise Inns, Ealing Londis, London Town Hotels

Their products are: coffee, panini, hot chocolate, chai latte, mince crowns, spiced muffin, gingerbread, etc.

And the secret of their coffee: it is source from many countries and roasted to the highest standard at our roasters in Milan.

Today.. Caffè Nero has over 500 stores globally with more than 4,000 employees. Caffè Nero has been part of the coffee culture revolution and has helped to raise the bar on the coffee quality available to consumers through the introduction of hand-crafted artisan coffee in hundreds of towns and cities. Through this, Caffè Nero has become one of the best recognised and most admired coffee house brands in the world. Gerry is as much a part of the company today as he was in 1997.

COSTA COFFEE

Costa Coffee is a British coffeehouse company founded in 1971 by italian brothers Sergio and Bruno Costa, as a wholesale operation supplying roasted coffee to caterers and specialist Italian coffee shops.

Costa Coffee operates 1175 outlets in the United Kingdom as of January 2011, making it the largest British chain in terms of stores. Internationally it operates 442 stores throughout the world in 28 countries.

2010 was the year that Costa became the nation’s favourite coffee store. It is the largest coffeehouse chain in the United Kingdom and second-largest in the world. 

In a market where purchase has historically been driven by convenience rather than quality, Costa has challenged the way we think, buy and consume coffee.




PRESENTATION, PACKAGE, SIZE....

Costa use recycleable cups printing with certified sustainable pulp and vegetable, instead of oil-based, ink.


Their presentation is in all red recycle cup with "Costa EXPRESS" printing in white ink: this gives to the consumer the experience of have a real coffee.. strong. 

Their packages are eco-friendly but colorful... they offer also Healthy food, Fresh food, fruits, Pastries, cakes and snack.
And their products to drink in COSTA COFFE store are served in glass or mugs different presentations and sizes.

 COSTA COFFE likes to conserve the traditional coffee store offering to customers the real taste of coffee.

STARBUCKS the Green Coffee

Starbucks was found in 1971.

At the beginning was just a roaster and retailer of whole bean and ground coffee, tea and spices with a single store in Seattle's Pike Place Market, US.

Was named after the first mate in Herman Melville's Mobby Dick and also their logo is inspired by the sea-featuring a twin-tailed siren from Greek Mythology.

Thanks to the mission of inspire and nurture the human spirit - "one person, one cup and one neighborhood at a time"-, the total stores of Starbucks are about 17,018 !!! (as of july 3, 2011).

STARBUCKS VIDEO: http://bcove.me/mikuudf0

PRESENTATION, SIZE, PACKAGE...

The presentation of Starbucks Coffee is very different because as you see it has a lot of products:

From Fresh-made coffee serving in Small, Medium, Large and EXTRA-large size, serving in carton white glass with simple printing in black and Starbucks logo in the front: offering a clean image - pure coffee.



Starbucks also offers Coffee Grains in colored packages, some Merchandise (coffee and tea equipment, mugs, etc), Fresh Food and Consumer Products like Coffee and Tea, Ready-to-Drink (bottled Cappuccino, espresso shots, in aluminum or glass presentation) and Starbucks Ice Cream with original, controversial and dynamic package presentation.

For us, Starbucks is in continue evolving: INNOVATION

BIG BRANDS - COFFEE STORES

In the last five years, the coffee brewing industry has seen so much activity in terms of massive changes in the landscape of coffee brewing companies. 


These changes range from mergers and acquisitions to changing consumer tastes and finally, to different branding strategies, and thanks to these changes... today we have many coffee stores: 


STARBUCKS, COSTA, NERO, REPUBLIC and other INDEPENDENTS COFFEE SHOPS

The activities of each coffee store, are expected to continue over the course of the next ten years, involving themselves in a competition for the coffee market.


In this blog we are going to focus more in Starbucks and Costa Coffee, because they are the principals competitors in this fragmented market.

COFFEE CONCEPT

PLEASE WATCH THIS VIDEO....  :D

http://www.youtube.com/watch?v=OTVE5iPMKLg