Table of Contents
Couture Coffee Inc. is an American corporation specializing in packaged coffee. Since its foundation in 1997, the organization operates in numerous reportable segments which comprise: retail, commercial, and franchise businesses. Retail division is made of about 200 of the entire coffee establishment and concentrates on the United States domestic market. These crucial stores are based in Wisconsin and over 30 other stores in key states where Couture operates. Commercial division centers on mass products while the franchise business which comprises of about 26% of the total coffee houses targets the Brazilian and Canadian markets. Couture Inc. operates in the American markets, as well with approximately 310 coffeehouses. Furthermore, the organization supplies its products to various groups of clients which include; grocery stores, airlines, hotels, entertainment venues, mass merchandisers, colleges and offices among other customers. Nonetheless, as the world recuperates from the financial recession and developing nations’ populaces having more disposable income (Siebert, 2015), Couture Coffee grasps this as a potential opportunity for growth beyond the Americas. This paper seeks to identify and recommend the best market for Couture Coffee Inc. as well as market strategic plans that will help the firm penetrate the new market.
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The appropriate market
The global coffee fair continues to grow day after the other, and Asia has been playing a major role in its growth. A recent research from Mintel (2017) dictates that three out of five firmest and fastest growing coffee markets retail wise are found in Asia. Additionally, Indonesia currently stands as the fastest growing in regard to packaged retail coffee market in conjunction with a CAGR of about 19.6% for the past five years. India, on the other hand, has had a CAGR of approximately 15.1%, while Vietnam stands at 14.9% as figure 1.1 illustrates. Generally, this trend indicates that the global coffee market keeps growing steadily, with anticipated retail volume growth of about 2.7% in 2016, following a 2.5% increase in 2015. Asian markets presently make up the highest percentage of the world’s wildest growing coffee markets. As this is the case, Australia and European markets are amongst the slowest markets. From Mintel research, Finland’s mature coffee industry deteriorated the most with a CAGR of -3.7% between 2011 and 2016. Australia followed at 0%, Belgium at 0.5% then the Netherlands at 0.5%.
The fast growth in Asia’s coffee market has been driven specifically by a surge in the innovation of coffee products. As declared by the Mintel’s Global New Products Database, GNPD, the number of new coffee types and products launched in Asia between 2011 and 2016 has gone up by 95%. In the same period, the numeral of tea products launched has gone up by comparatively low 55% when compared. From this illustration, Indonesia has been identified as the best opportunity for Couture to go Global because of the wide open nature of its market and the big population which is growing fast (Mintel, 2017).
Cultural information to consider
The study by Mintel (2017) further points out that the Indonesian metro users believe that the quality of coffee is more vital than how easy it is prepared, while 22% consider themselves informed about coffee and over half (53%) say it is essential for them to acquire more knowledge about coffee. The ‘third wave’ coffee crusade is taking appreciation of coffee a step further, concentrating hugely on where beans are obtained and how they are roasted, with a transformed emphasis on brewing techniques. Fortunately for Couture, America is currently leading this crusade, accounting for over 27% of all worldwide ‘third wave’ coffee merchandising launches. However, it is critical to consider the different logistics the company will be dealing with in this new market. There are 10 national languages in Indonesia and about 748 vernacular languages that are in use. For the company to sustain high-quality production, it will be compulsory for stakeholders to converse across both cultures and languages. At the same time, there are approximately 922 permanently occupied islands. This means that Couture should be prepared to face transportation problems since shipping and moving across a series of islands can be a logistics nightmare.
Indonesia continues to be an open economy but recently there has been an escalation in regulations and government guidelines that place restrictions on foreign imports and investments, the majority of which are non-tariff barricades (Nurcahyo, 2015). The latest resolution has been increasing foreign ownership in various industries and to open up industries formerly closed to foreign investors. This has sent an optimistic indication for greater openness in the imminent years. Nevertheless, an intricate and vibrant legal and regulatory atmosphere can present various challenges for trade in Indonesia. Conversely, reforms are in place to mend the business setting, registration of property, obtaining finance, tax payment, establishing contracts, access to electricity, and cross-border trade. Structural transformations and firm macro economic rudiments will see Indonesia continue its encouraging development trajectory in 2017 (Rakhmani, 2016). Rivalry from emerging nation firms such as Korea, Singapore, China, Australia, Japan and other regional actors is extreme, and thus Couture has to significantly acclimatize its business model and pricing structure to compete effectually. Marketing in the local newspapers and media is recommended for Couture to introduce its new products (Pehrsson, 2014), predominantly in regions of purchasing power concentration, like West Java and Jakarta. One crucial aspect that will ensure the product’s effective launch and sustainability will be after-sales service and customer support. Irrespective Couture’s global reputation, Indonesian consumers will value an organization that can offer on-the-ground customer support. They anticipate having their customer service issues addressed domestically and in shorter times.
Couture should deliberate pursuing global openings and especially in Indonesia so as to counter the stiff competition domestically and possibly increase in profitability. However, in order to avert rivalry, the firm ought to constantly progress on current product chains and improve brand extension processes. The firm should increase their investment in existing assets to improve the firm’s financial position. As megatrends continue shaping the new world; those corporations that market their product efficiently globally will benefit from the huge growth prospect that global markets now offer. As indicated in this paper, in order to market Couture’s product globally, there are numerous elements that their business and marketing team must contemplate before entering the Indonesian market.
- Mintel. (2017). Coffee brews up success in Asia: Indonesia, India and Vietnam among the fastest growing coffee markets globally. Retrieved September 04, 2017, from http://www.mintel.com/press-centre/food-and-drink/coffee-brews-up-success-in-asia
- Nurcahyo, B. (2015). The Influence of Macroeconomics Variables on Foreign Direct Investment (Empirical Study From Indonesia). Archives of Business Research, 3(1). doi:10.14738/abr.49.697
- Pehrsson, A. (2014). Foreign value-adding of industrial firms. Journal of Strategy and Management, 7(2), 155-171. doi:10.1108/jsma-08-2013-0047
- Rakhmani, I. (2016). Market-Compatible Developmentalism. Mainstreaming Islam in Indonesia, 133-161. doi:10.1057/978-1-137-54880-1_5
- Siebert, R. (2015). Entering New Markets in the Presence of Competition: Price Discrimination versus Cannibalization. Journal of Economics & Management Strategy, 24(2), 369-389. doi:10.1111/jems.12091