Keurig Green Mountain: Justification & Financing Justification: Financial Impact Expansion An evaluation of Keurig Green Mountain’s financial viability is imperative to the success of expansion efforts to Kuwait. A business is viable if the company is generating enough profit that sufficient enough increase returns. The economy of Kuwait is strong with high purchasing power of consumers so, the expansion of Keurig products to Kuwait is expected to improve revenue. Consumers in Kuwait purchase a cup of specialty coffee in cafés for KD 1.34 which is equal to $4.39 USD. The cost of each cup of Nespresso single-serve capsules in Kuwait range between $0.63 and $0.81 USD. Keurig assumes that K-cups will sell to consumers in the Kuwait coffee market for $.64 USD, just above the price of Nespresso, which is Keurig’s competition in the Kuwait coffee market. The price level is very conservative and will allow Keurig to enter the coffee market with the potential to acquire 7 percent of the coffee market shares in the region. In the U.S. coffee market, Keurig Green Mountain’s revenues have declined due to multiple reasons such as declining sales of K-cups, coffee brewers, and accessories. In addition, the coffee market in the U.S. is reaching market saturation with several competitors in the market …show more content…
In 2001, Keurig entered a joint venture with in Japan with UCC Ueshima Coffee Co. Ltd. The company is the primary roaster and distributors of Keurig’s packaging and machines in Asia. Keurig has developed a product line in several countries throughout Asia to include Vietnam, Japan, China, Taiwan, Korea, Singapore, and Thailand (Pacific Business News, 2001). With support of a local Kuwaiti partnership, Keurig Green Mountain will have valuable insight into the economic conditions and changes, laws, taxation requirements, marketing strategy, political system, and culture of the
The founders of Keurig Inc. created the company to develop an innovative technique which allows customers to brew one perfect cup of gourmet coffee at a time. In this case, the CEO Nick Lazaris along with the other leaders of Keurig Inc. must determine how to successfully enter the at-home-market for use at customers’ homes, while maintaining a healthy relationship with Green Mountain Coffee Roasters, Inc. (GMCR) and Van Houtte. GMCR and Van Houtte are two of the company’s main roaster partners that own a 70% stake in Keurig, so they want the business to succeed but are a little apprehensive about the company’s marketing and pricing strategies.
A business strategy that centers on differentiation will generally have products or services that offer unique attributes that a consumer will value over competitors. Because of the novelty surrounding the product or service in question, the idea for these businesses is to be perceived at a higher quality when compared to other competitors.
The standard large container of Folgers regular classic roast coffee will brew 270 cups for $17.00. The average pack of 54 k-cups can cost anywhere from $30.00- $40.00 and will only brew 1 cup per k-cup. If someone were to buy 5 of these packs (which would be equivalent to the 270 cups worth of coffee in the Folgers container), it would cost them about $200.00, which is a striking difference. Because the k-cup options may be easier and more convenient to make, the traditional way of brewing Folgers coffee may soon become obsolete. Folgers dominated the home coffee market prior to the boost in popularity of K-cups, but since then, they seem to have a lot more competition in the coffee market. While Folgers has made their own line of K-cups and generally continued to do well, they would prefer if consumer habits retreated back to traditional home brewing, where they had more market dominance. According to the Seattle Times, “By 2018, market-research firm Mintel expects consumers to spend nearly as much on coffee pods as they do on bulk coffee.” This is potentially damaging to the traditional brewed Folgers brand because traditionally brewed coffee is going to diminish in popularity over time. Our message is to emphasize the price difference to customers and show them that the classic container of c...
Keurig Inc has been founded on an amazing idea that coffee making systems that uses individual portion packs of freshly roasted and ground coffee with unique coffee maker designed to brew perfect cup of coffee at a time. At that time there are already established gourmet coffee houses like Starbucks, which is making coffee consumers to spend more money with an average of $ 1.50 or more for a cup of gourmet coffee. This change is consumer behavior created opportunity to Keurig to offer gourmet coffees by a single-cup in offices in 1998. Within a span of four years (1996-2000), Keurig have noticed sales increased by 40% in US at home coffee market. With these facts Keurig´s management got convinced, to develop an at home one-cup coffee brewer especially for gourmet coffee lovers.
The Keurig Green Mountain Coffee Company is a leader in specialty coffee, coffee maker, teas and other beverages. They have provided the means for brewing a single cup of coffee from the comfort of your home or workplace. The Keurig green Mountain Coffee Company focuses on the consumer and improving their coffee experience. As a company, they are emphasizing the importance of social responsibility. They claim that 85% of the waste from coffee is diverted from landfills and that their company has provided 57k total hours of volunteering. They currently offer 14 appliances for brewing beverages, over 500 varieties of beverages, and use 75 Brands in the Keurig system. In 2014 they had $4.7 Billion in net sales totaling $596 Million in net income. In 2014 the company began entering the global market. In less than one year they were able to penetrate the UK and Canada markets. (Keurig Green Mountain, 2015)
Keurig and its K-cup concept revolutionized a market that had been around for over five hundred years to allow consumers to brew an excellent cup of coffee in their own home. Before the K-cup concept was introduced by the company, consumers had to measure the desired amount of coffee themselves and were largely constrained to coffee makers that would brew only multiple cups of coffee. Everyone in America has heard of Keurig but not many people know the history of the company behind bringing this product to the market. Green Mountain Coffee was a largely regional coffee company with loyal customers throughout the Northeast United States but not much market penetration elsewhere. It was not until the company purchased the Keurig concept from its creator John Sylvan that it was able to propel itself to the international company it is today. This new product revolutionized the coffee market and can now be found in thirteen percent of American workplaces and account for twenty-five percent of the coffee makers sold in the United States (Sozzi, 2015; McGinn, 2011; Ingram,
Drinking coffee has been a popular tradition for many years and will always remain a timeless convention. For coffee consumers, that first sip of caffeine in the morning is the highlight of their day, the boost they need to keep going, or the simple pleasure of enjoying a moment of peace. Coffee can be made with several different devices, comes in many different flavors, and can be enjoyed almost anywhere. Despite the various options offered by coffee companies, there is one thing that remains common among users – many are dependent on this addictive brew. Dependency is important for companies when it comes to their product because it produces consistent sales. Keurig Green Mountain not only produces coffee which is already a reliant product
1. Should Keurig use a single K-Cup for all markets or should it launch the Keurig Cup in the at-home market and continue to use the K-Cup in the commercial market?
“Coffee has become more than just a shot of caffeine. It 's a $30 billion-a-year national industry, a foodie fixation, an affordable luxury, a boost of disease-fighting antioxidants, a versatile ingredient, an intoxicating aroma and a beverage that brings people together.” Because of all these factors, Starbucks has a very diverse audience and numerous competitors in the industry. As of 2011, coffee shops have maintained an average growth rate of 7% a year, and Starbucks alone is the third most recognized restaurant chain in America. The specialty coffee industry will continue to grow because of the variety of drinks and the appeal of specialty coffee
The objective of this paper is to perform market research for Starbucks’ President, Charles Shultz to ascertain the possibility of establishing new coffee houses in China. The preliminary research and design for presentation to Mr. Schultz includes: 1) Two to three alternative target customer segments; 2) the types of secondary research used; 3) the problem statement; 4) research questions used to guide the study; 5) major competitors for this market; and 6) the cultural, economic, and political factors that need to be considered in China.
Coffee is a worldwide cash crop of which demand has exponentially increased over the years. “Coffee is (after oil) the world’s second most important traded commodity” (Cleaver 61). Competing coffee brewing companies wage war on offering the freshest, best tasting coffee the market has to offer. With such stiff competition there must be enough coffee beans deemed to be good enough in quality to supply the increasing demand. Starbucks can be considered one of today’s top competitors if not thee top coffee manufacturer presently in business. This successful company has had a huge impact on the coffee industry as well as the world. They have gone through great length to provide consumers with an excellent product as well as create a legacy that shows how to best go about running a massive corporation while keeping the environment clean and healthy.
In the United States, coffee is the second largest import (Roosevelt, 2004). Furthermore, the United States, consumes one-fifth of all the worlds¡¦ coffee (Global Exchange, 2004). The present industry is expanding. It is estimated that North America¡¦s sector will reach saturation levels within 5 year (Datamonitor. n.d.). According to National Coffee Association (NCA), 8 out of 10 Americans consume coffee. In addition, it is estimated that half of the American population drinks coffee daily. The international market remains highly competitive. It is estimated that 3,300 cups of coffee are consumed every second of the day worldwide (Ecomall, n.d.). The latest trends included dual drinkers, an increase in senior citizens...
Bruss (2001) argues that the company hopes as well to make new investments in new coffee types. Starbucks has recently developed a new type of coffee called green-coffee. These strategies are created with the objective of support Starbucks’ commitment to buy coffee that has grown and processed by suppliers. They meet certain conditions of social, economic and quality standards. In addition to that, the company is paying additional premiums to those vendors who meet the specific requirements that the company wants.
According to IBIS World Report the major players in the US coffee and snacks retail market are Starbucks and Dunkin’ Brands at 36.7% and 24.6% market share respectively with other competitors occupying the remaining market share of 38.7%. The industry is at the mature stage of its life cycle, has low barriers to entry and intense competition and rivalry between the players. The regulation and technological change within the industry is medium (IBIS world report)