Coffee In Canada Case Study Essay

The coffee served in Second Cup is also high quality and the drinks available strongly rival those in Starbucks. In the past decade there has been an explosive growth of 157% in the area of coffee shop market. Canadian coffee market share, new companies have limited to no space for growth in North America. Second Cup’s market share at the Canadian market is about 8%.Upon these facts and analysis there is an unlimited growth possibilities in the coffee market in Canada. There are different factors that do influence in the purchase of coffee from these outlets and the the way these coffees are priced. Customers are reluctant to get coffee from these outlets as the prices are too high than the coffees that could be made at home. There is a huge conflict between the pricing of coffees at these places and homemade ones. Coffee shops are determined to serve the best quality coffees which are been imported from South America and Africa, due to the rise in oil prices transportation charges have also been increased. And also due to different global climatic conditions the prices of these gourmet coffee beans have been increased.

A recent primary research survey has found that 70% of occasional coffee drinkers view the Mr. Coffee brand as an inferior or budget coffee brewing device that does not make a superior cup of coffee (Appendix, Opinion survey). Brands such as Keurig, Cuisinart, and DeLonghi inspire more thoughts of quality coffee than Mr. Coffee. Other consumers are opting to spend several dollars per cup of coffee at coffee houses such as Starbucks, Caribou Coffee, Dunkin Donuts, and even McDonalds (Appendix, Opinion survey).

Many people continue to drink coffee on a daily basis. Per capita coffee consumption is expected to increase at an annual rate of 0.9% in the next five years to 2020. The industry revenue is anticipated to grow at an annual rate of 2.3% to $40.1 billion within the same period. The total revenue

Coffee is a beverage that is globally consumed, but also a product that has different values in different parts of the world. The role coffee plays in society differs around the world, from the farmers who grew the crops to the people who constantly consume them. Social theoretical perspectives are capable of showing the different roles coffee has in different societies. Symbolic interactionism, functionalism, and Marxism are three theories which show coffee’s role sociologically. These theories show how coffee affects people physically, how it affects them emotionally, how it leads them to have interactions, how it connects different parts of society, and how it’s economically controlled by a select few.

A commodity is a raw material or primary agricultural product that can be bought and sold. The market treats it as equipment or nearly so with no regard to who produced it. The original producer does not make the “big” money from the good that has become a commodity demanded by consumers. A commodity’s supply and demand is part of one universal market like corn, or wheat. A stereo is something that would not be considered a commodity. Other things are important about a stereo not that it is just a stereo but what brand and quality is in consideration when purchasing a stereo. Demand for one type might be much larger than the demand for another. This is not the case with commodities; they lose differentiation across their supply base. An

Sales from restaurants—including Starbucks, Dunkin' Donuts, and McDonald's, which carry premium brews—grew at a compound annual rate of 15.2% from 2001 to 2006, as supermarket sales rose only marginally. Activist investor Nelson Peltz is pressuring Kraft to divest slow-growing Maxwell House. But Kraft vows to stick with the $1 billion-a-year brand. Another worry: Only 37% of 18- to 24-year-olds drink coffee, reports the National Coffee Assn., vs. 60% of those 40 to 59 and 74% of folks over 60. (Crown, 2007)

The hot drinks market consists of the retail sales of coffee, tea and other hot drinks (including chocolate-based hot drinks, malt-based hot drinks, etc.). Growth within the Canadian hot drinks market has broadly decelerated in recent years, experiencing moderate growth overall. This trend is set to continue over the forecast period with further deceleration in growth to 2018. The global coffee growing region sits within a 'bean belt' between the Tropics of Cancer and Capricorn. The two main commercial types of coffee bean, Arabica and Robusta, account for approximately 70% and 30% of harvests, respectively (Marketline - Canada, 2014, p1). The Canadian hot drinks market had total revenues of $1,120.0m in 2013, representing a compound annual

Canadians drink coffee every day and with 67% of the adult population coffee drinkers, the demand is there if a business can capitalize on it.

Coffee, Tim Hortons most significant source of income, is produced in more than fifty developing countries, including Latin America, Africa, and Asia. Understanding the importance of keeping costs low, Tim Hortons has strategically chosen to develop their coffee in these regions. Keeping costs low means an increase in profitability, appealing stakeholders. However, The roasting and branding of coffee is more capital intensive, subsequently relocating that aspect of their business to northern industrialized countries ( COFFEE VALUE CHAIN & P3G ANALYSIS, n.d).

Seeing that many people drink a great amount of coffee daily all over the United States. In the U.S total number of coffee drinkers are 100 million, according to the coffee drinking statistics. Most likely there will be potential for the market to grow for Sorensen’s product line. The main concern is with the chance of larger competitors coming into the market and taking business away from Sorenson.

Buckstar Coffee has accumulated excess capital over the past five years, which has led to the consideration of an expansion project. The two alternatives are between expanding product offerings and services or expanding the company’s footprint in Canada. The CEO’s goal is to execute a plan that will increase profits and maintain a workable supply chain. After conducting my analysis, I have to come to the decision that the first alternative, expanding product offerings and services, will be more efficient in achieving the ultimate goal.

As for other coffee consumption facts, brewing coffee at home declined from 2006-2011 with 75% of total coffee sales made “away from home” (High Beam Business, 2012). Furthermore, an interesting study revealed the growth in this target market: “another new and large growing target market within the coffee industry is college-age students and post graduate individuals residing in urban areas. These two segments account for the largest portion of coffee drinkers” (Scribd, 2012, Marketing

Fair Trade Coffee Fair Trade promotes socially and environmentally sustainable techniques and long-term relationships between producers, traders and consumers The world coffee industry is in crisis. A flood of cheap, lower-quality coffee beans have pushed world market prices down to a 30-year low. Many now earn less for their crop than it cost them to grow. Many coffee farmers around the world receive market payments that are lower than the costs of production, forcing them into a cycle of poverty and debtWithout urgent action, 25 million coffee growers' face ruin.

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

India, like many other Asian countries, has a tea drinking culture, but the coffee market is catching up and growing fast. This case talked about the stories of Café Coffee Day (CCD), the Indian coffee industry market leader, along with its competitor Starbucks from USA. CCD was founded in 1996 and by April 2013 it had around 3,000 stores within the Indian market. CCD had not faced any severe threat up till 2012 when Starbucks made its entry into the Indian market through a joint venture with Tata. As the world’s largest coffee chain company, Starbucks wanted to get a slice of the cake. In 2013, it opened 11 stores in Delhi and Mumbai.