Porter's Five Forces Analysis Of Coffee

GMCR’s warns of the potential impact of the price of coffee on the gross profit margin. To combat this, GMCR had made a number of purchase commitments to ensure an adequate supply of coffee (GMCR Annual Report, 2010). The market price for coffee is impacted by numerous factors including weather, economy, and competition. It is vital that GMCR continue to take proactive measures to secure against unforeseen spikes in coffee prices. The price of coffee does not only impact GMCR’s ability produce coffee for the Keurig brewer under its namesake but impacts their partner suppliers as well. GMCR purchases coffee from brokers, farms, estates, and cooperative groups and essentially diversifies its coffee supply, reducing some supply risk (GMCR Annual Report, 2010).

Coffee had lots of demand, but little supply. The country that could grow and export the most coffee had a substantial economic advantage over other countries in terms of commerce.

Almost everyone drinks coffee. Most people view it as part of their basic needs. It is normally the first to be consumed whenever a day starts. It is commonly believed that a cup of coffee makes someone brighter and so able to perform his or her duties actively. This is therefore my chosen product. The following sections describes the path the product takes from the producer to reach me as well as to another consumer in another country which will be Brazil in this case.

According to statistics, Finland is the country with the highest per capita consumption of coffee, and China is the lowest one, but in Finland there are nearly five million residents only, which means Finland will consume a million bags of coffee every year, but the 1.3 billion residents of China will provide approximately 200 million potential coffee consumers, and this will make China becomes a major coffee market. On the other hand, under the same culture background, compare to Japan and Korea, Chinese average annual per capita consumption is only around 20 Cups, but this also means Chinese consumer coffee market has a big room for future growth.

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.

30 3.2.6. Five Forces Analysis ......................................................................................................................... 31 Diagram 3: Five Competitive Forces in the Coffee Industry .................................................................. 32 3.2.6.1. Threat of New Entrants .................................................................................................................. 32

Costa Rica now provided raw material for Starbucks which accounted for about 15 percent of the total coffee beans Starbucks needed every year. Costa Rica as one of the raw material suppliers plays an important role in global value chain. Coffee has played a pivotal role in the development of Costa Rica. It has shaped social, cultural and political institutions and is still one of country’s major agricultural exports. (Anywhere, 2016) The global value chain in this coffee industry can be described that Starbucks, the centre in this coffee global value chain, purchasing raw materials (coffee beans) from coffee farms in Costa Rica, reprocessing and reproducing in retail shops, selling the finished products (various kinds of coffee) to customers in the world.

1. Coffee is one of the most common breakfast items found on any table in the morning and now sold all throughout the day. Coffee is grown and exported from places like Columbia and the Asian Pacific, to anywhere like Hawaii and the biggest producer, Brazil. 1/3 of the world 's coffee supply comes from Brazil, because of the nations tropical climate it is able to grow coffee very easily and plentiful. Brazil had many other types of climates but the hot and tropical one is great for the production of coffee.

The Keurig Green Mountain Coffee Company focuses on the consumer and improving their coffee experience. Keurig has a variety of products including brewing systems and the beverages that are brewed in these systems. In my argument, I will be focusing mainly on the brewing systems alone. Keurig Company has recently began expanding their business in international markets. I will be evaluating Brazil as a possible country for growth. I will then discuss the potential success and failures of the Keurig product entering the Brazilian market. This will be followed by an argument on whether Keurig should or should not pursue expanding into Brazil.

Costa Rica had the perfect conditions of soil and climate for coffee to flourish. In the 1800s, coffee production was encouraged by the government. Coffee became an important crop to the region. It became the biggest export and overtook other crops in 1829. The money made off of coffee plantations were a big part in the countries development. The profits were used to build Costa Rica’s first railroad. The “Ferrocarril al Atlántico” transported coffee beans to the Atlantic Coast, which would then be transported to

There are many sellers in the market heating up pricing competition. Competitors like McDonald’s, Dunkin Donuts, Peet’s Coffee and other specialty coffee companies incentivize price wars. Furthermore, coffee’s demand is elastic which makes it difficult to increase prices without greatly reducing the demand. This makes differentiation and positioning very important. Also, it is easy for customers to switch from coffee vendors. Whichever company is most convenient for the customer will likely win the business. Competition is a top priority in the industry.

During the time of the coffee boom, another industry was beginning to rise. By the late 1930s, agricultural industries began to take a back seat to industrialization of the cities. Even as times were changing however, Brazil remained one of the world’s top coffee producers.

There’s not clear information about how coffee arrived in Colombia. The historic archive says that the Jesuits brought the seeds around 1730. The tradition says that the seeds arrived threw the east of the country, and the harvest where registries in Giron, Santander and Muzo, Boyacá. In 1835 the first commercial production produced 2560 bags and they were exported from Cucuta’s custom. Then the coffee extended to the center and west of the country in the departments of Cundinamarca, Antioquia and the zone of old Caldas. The consolidation of coffee as a product for exportation was from the second half of XIX century. The great expansion of the world economy in that period made that the Colombian peasants find an attractive opportunities in the International market. Between the end of 70s of the XIX century and the start of the XX century the annual production of coffee passed from 60.000 bags to 600.000 bags, this was made in the main big farms of the departments of Santander and Cundinamarca, having at the end of XIX century, 80 percent of the total coffee national production. There was a decline in the international prices in the first years of the XX century; this made a big change in the Colombian coffee cultivation. It can be concluded that in the period between

The demand for coffee shops is born from the increased number of individuals seeking coffee brewed outside of the home. This creates a larger market for coffee shops. An increased amount of people are starting their mornings off by purchasing breakfast and a cup of coffee away from home (Tuttle 2014), more people are enjoying gourmet coffee (NCA National Coffee Drinking Trends 2015 Infographic), and younger generations are demanding more coffee and coffee drinks from coffee shops (Tuttle 2014, S&D Coffee and Tea inc. 2014, Statista 2015). Coffee shops must compete with at home coffee, work place coffee, and teas for the caffeinated beverage markets (LN 2015). Demand for coffee within different markets varies, and provides competition for coffee shops. Single cup coffee makers, increasingly qualitative instant coffees, and gourmet beans are all sources of competition that could satisfy the demand for coffee. However, coffee shops are becoming more ingrained in social

The non-alcoholic beverages industry requires significant levels of infrastructure and technology, as well as large capital investments, in order to successfully compete in the market. As a result, it is considered as an industry with high barriers to entry that are difficult to overcome for new entrants. Additionally, the dominant position of the industry’s key players - Coca Cola and Pepsi - lower the threat of entry on the market as new entrants do not have the resources or capabilities to compete with these