Importing Coffee from Costa Rica to Canada
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Importing Coffee 1
Importing Coffee from Costa Rica to Canada
Mandeep Kaur (20000793)
Acsenda School Of Management
BIBM 432
Professor: - Mr. Au, Mike
December 20, 2023
Importing Coffee 2
Importing Coffee from Costa Rica to Canada
1. Product Overview
The selected product for importation into Canada is "ICE Arabica," a premium coffee
beverage sourced from Costa Rica, Kenya, and Brazil. The vendor responsible for supplying this
product is Volcafe Costa Rica, a prominent coffee exporter in Costa Rica, holding a significant
share of up to 35% of the country's annual coffee exports (Volcafe, 2023b). The product is a
blend of Arabica beans from these diverse regions, promising Canadian consumers a rich and
distinctive coffee experience.
ICE Arabica presents a lucrative opportunity in the Canadian market due to consumers'
growing interest in high-quality coffee. While exploring potential sales opportunities, it's
essential to note that certain commodities, including food and beverages, are subject to
regulations by federal or provincial government agencies. Therefore, thorough research is
required to identify any necessary permits for importing coffee into Canada.
2. Customs Requirements & Importation Controls
The Harmonized System (HS) Classification Code for ICE Arabica is Chapter 09, falling
under the sub-heading 09.01 for Coffee, Tea, Maté, and Spices. The specific HS Code is
0901.11.00, indicating that the product is unroasted coffee and it is not decaffeinated (World
Customs Organization, 2022). The applicable duty rate for this product is 0%, with the
preferential tariff treatment being the Goods and Services Tax (Government of Canada, 2023).
While coffee itself doesn't face severe restrictions, it is crucial to adhere to labeling
requirements set by the Canadian government. The label must include the commodity (coffee
Importing Coffee 3
beans), manufacturer details, net quantity, and country of origin (P. S. and P. C. Government of
Canada, 2023).
3. Transportation & Freight
ICE Arabica is packaged in jute bags, with each bag weighing 59 kg and having
dimensions of 30cm x 45cm x 76cm. The total importation quantity is 325 jute bags, resulting in
a total weight of 2925 kgs. The product will be transported in 20 containers, each with external
dimensions of 6.06m x 2.44m x 2.59m (length x width x height). Sea transport is chosen as the
mode of transportation, with the shipment originating from Puerto de Puntarenas and destined for
the Port of Vancouver. The freight rate for this transportation is 2500 CAD per container.
Landed Cost Calculation & Pricing Decision
The landed cost calculation involves considering the transportation cost, unit price, and
total purchase price. In this case, the transportation cost is 2500 CAD, and the unit price is set at
10 CAD. The total purchase price sums up to 29,250 CAD. Adding the transportation cost, the
total landed cost is 31,750 CAD.
The markup is determined as 25447.5 CAD per container, providing a comprehensive
understanding of the financial implications of the importation.
Sales Decision: In setting a selling price for ICE Arabica, a competitive approach is adopted.
Comparisons with similar products reveal that ICE Arabica is competitively priced at 18.7 CAD,
offering a favorable balance between quality and affordability. Two comparable products in the
market are ICE Robusta, priced at 20 CAD, and Arbitrage Arabica, priced at 8 CAD (Volcafe,
2023b). The decision to sell directly to both consumers (B2C) and businesses (B2B) through
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