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Sustainable Coffee Market Essay

1.1 Company overview

Our company CoffeeTime will be established in Rotterdam, The Netherlands. This is due to the fact that the highest proportion of coffee consumption within Europe is in the Scandinavian countries, followed by the Netherlands, Belgium and Luxembourg; it would therefore be efficient to establish the company in Rotterdam. This allows for a relatively central base with strong ties to other European countries to import/export and transport the coffee.

As a company we would like to do business as sustainably and fairly as possible. Due to fair trade, we would like to help our suppliers by giving them the opportunity to produce at reasonable costs and also help ourselves by selling the coffee at reasonable prices. Fair trade also includes an educating sytem for our employees and people related to the company, such as coffeefarmers and even consumers. This system is used to prove that honest and good quality products do not need to be expensive. With this in mind there it can create a positive effect in our products which will be of benefit to everyone.

The coffee will be produced and exported from Brazil to the Netherlands. Brazil was chosen due to the fact it is one of the best places in the world where coffeebeans are produced in relatively environmentally friendly circumstances. Indonesia, India, Kenia, Liberia and Mexico were further alternatives for CoffeeTime. However Brazil was chosen as it is single-handedly responsible for about a third of all the coffee in the world, as it is world’s largest coffee producer.

Furthermore, there is already a Fairtrade policy applied in that area of South America by many companies, which is still ongoing and can be of benefit for the objectives of our own company. Another reason why it is attractive to do business in Brazil, is because of the logistics. Brazil has the largest port of all South America, named Port of Santos. From there on the coffee can be shipped easily to the biggest port in Europe, situated in Rotterdam where CoffeeTime have decided to establish the company. This can be seen as an advantage for both countries due to having innovation hubs.

CoffeeTime wants to produce and sell the most popular coffee known on the target market; The Arabica and Robusta. However, each one of those beans can be used to provide different flavours of coffee, depending on the several techniques that are used for making coffee.

1.2 Mission and vision

1.2.1 Mission

Throughout all of our business activities we want to ensure honest dealing with customers and suppliers while offering impartial advice to become the best sustainable Coffee chain. We want to use our market position of CoffeeTime to benefit our customers by offering a world class coffee experience at an affordable price.

1.2.2 Vision

Treating eachother fairly can help maintaining a good relationship. CoffeeTime believes in creating an alternative way of helping the world right now and always in the future, by doing fair business from farmer to consumer.

1.3 Corporate Objectives

The objectives which we stand for are related to our mission and vision as well as to benefit all stakeholders, by providing a sustainable coffee market, now and in the future; • Become a leading coffee brand in order to change the market and influence Non- Fair trade coffee multinationals to go produce fairly. • Focussing on improving the environmental, social and economic conditions, as well as protecting and improving the natural environment and insuring the labour rights and health of local communities. • Branding CoffeeTime as a sustainable organic, Fair trade coffee brand on the market.

1.4 Keys to Success

CoffeeTime has to realise that succes can only be achieved by being the best in what you do. After all, coffee is a resource intensive industry. It takes an incredible amount of energy to produce, transport, roast, deliver and brew coffee. Committed to preventing an ecological footprint, CoffeeTime will continuously strive to find new ways to restrict the impact on the environment, from production to consumption.

Therefore it is of upmost importance for CoffeeTime to invest in the following:

• Provide an education for the farmers to help them at produce the coffee in a more optimised way.
• To have and keep a fair price for the coffee for everyone.
• To keep providing the best quality coffee.

• Make sure that every aspect of the product is produced in an eco-friendly way. For example, the packaging should be recycled so it can be reused wherever possible. • To have good transportation by sea with providing the least harm to the enivronment due to fuel of the ship etc. •

Chapter 2 Product and services

2.1 Product and service description

CoffeeTime will import from Brazil the finest selection of Arabica beans. In simple terms this means; Arabica is cultivated in the shade and Robusta is not. The culture of the Robusta beans are a dispensation in the culture of the traditional coffee in which coffee is cultivated under the cover of the native rain forest trees. In the 70s, a system of new farm was promoted but the result was that we’ve seen shaved forests and coffee trees planted in dense rows. These short-term farms of monoculture produced more coffee, but it had a number consequences for the environment, with soil depletion, accelerated erosion and pollution of streams.

From here out CoffeeTime will produce a number of different flavours, such as extra strong, strong, regular, decaf etc. Producers are forced not to overuse pesticides or insecticides. In fact, 70% of Fair Trade products come from organic agriculture. This approach to sustainable development is supported by the explicit prohibition of the use of GMOs in products. Part of the price paid by the final customer represents a premium (between 5 and 10% of the price paid by the consumer). The latter is used collectively for social projects of various natures that benefit not only small farmers but also their families and the environment. The cooperative may decide to invest in a training program on organic farming, build a school or hospital, to restore a drive or set up a transport service.

2.2 Competitive Comparison

The four major roasters – Kraft, Nestlé, Procter & Gamble and Sara Lee have little reflected this decline but profit margins remain high: Nestlé makes a margin estimated at 26% of the instant coffee. The benefits of Sara Lee’s coffee are estimated at almost 17%, which represents a very high figure compared to other brands of food and drinks.

2.3 Sales Literature

If people are sensitive to the approach and initiative, they will adhere to it quite naturally. The Sales aim is to target the niche market and to propose to our clients a wider offer which also corresponds to both modes of consumption in different social classes. Additionally, by selling our products we will not only provide a flavoursome product, but also inform customers about the product itself and how it is made. In Brazil, the production of coffee will not harm the environment ,(organic, wild harvest, farming) and it is important for our customers to know this . This method will therefore allow the customers of CoffeeTime to be involved in the process and feel valued as a consequence. The import of coffee from Brazil will be done in the most direct way possible to avoid costly middlemen, allowing to better pay artisans and producers.

2.4 Sourcing and fulfilment

Part of the price paid by the final customer represents a premium (between 5 and 10% of the price paid by the consumer). The latter is used collectively for social projects of various natures that benefit not only small farmers but also their families and the environment. The cooperative may decide to invest in a training program on organic farming, build a school or hospital, to restore a drive or set up a transport service.

2.5 Technology

The technology used by the company will include the use of partially automated selecting machines which will allow for increased production capacity with a lower machine-to-operator. Additional storage capabilities will decrease shipping charges and will reduce the need for permanent shipping employees. High-technology information system upgrades will improve all aspects of business, especially inventory control, tracking of shipments, and communication with clients in import and export countries.

2.6 Future Products and Services

In the future CoffeeTime will develop and produce a number of different types and flavours of coffee. In addition to Arabica and Robusta, we will also import from Liberia the Liberica coffee. The Coffee Liberica tree grows up to 9 metres in height, producing larger cherries than those found on Coffea Arabica trees. This coffee was brought to Indonesia to replace the Arabica trees killed by the coffee rust disease at the end of the 19th century. It can still be found in parts of Central and East Java today.The Liberica coffee will also be produced in different strengths and varieties of coffee.

Chapter 3 Market Analysis Summary

3.1 Market research

According to the Daily Dutch News, the Netherlands is one of the countries with the highest coffee consumption in the world. The Dutch are also world leader in sustainable coffee drinking. About half of the consumed coffee is sustainable. On the average the Dutch drink almost 150 litres of coffee per year and about three cups a day. The branded coffee shop market in the Netherlands saw a growth of 27 per cent in outlet numbers in October 2011. The market forecasts a growth of 13 per cent per annum until 2014. We see a huge advantage in the Dutch coffee market. There is a huge demand for our sustainable coffee and CoffeeTime would like to satisfy this need. However, there are a number of competitors in the market such as the Dutch market leader Douwe Egberts.[1]

2 3.2 Market targets

As a company who sells coffee, the main target audience of CoffeeTime are coffee consumers and consumers of warm drinks. Considering that coffee is not suitable for children, our target group consists from young adults (age 18) to the elderly (everyone above 18). There are many under aged Dutch citizens who also drink coffee, but as coffee is actually meant for adults it will be also treated and promoted by our company as such. Coffee is a product which is drunk by all genders and classes and in all work fields. In fact, the majority of our target group drinks coffee during work. Most consumers still buy their coffee in supermarkets, therefore is it important that our coffee is available in supermarkets such as; Albert Hein, Plus, C1000 and Bas van der Heiden.

3 3.3 Environmental/ industry analysis

When sustainable coffee was introduced, the average consumer had a vague notion that the quality of sustainable products was acceptable. When companies started to offer it the Dutch consumers went along with the choice of the companies, rewarding them by remaining faithful to their brand.

In recent years, the sustainable coffee market share in the Netherlands has risen rapidly. Nearly half of the consumed coffee in the Netherlands is produced in a sustainable way.

According to the report ‘Zuivere Koffie’ (Pure Coffee) from Oxfam Novib, 45% of all coffee which is consumed by the Dutch people is sustainably produced. 40% of all coffee in the Netherlands is UTZ CERTIFIED.[2]

Sustainability is important in the Dutch coffee market. Many players of the sector, roasters, supermarkets, but also NGO’s and the Dutch government have been long working together on raising consumer awareness and increasing the share of sustainably produced coffee.

The Royal Netherlands Coffee and Tea Association (KNVKT) decided to give a collective boost to move towards sustainability. They are doing this by consolidating their commitment in a Declaration of Intent. The Dutch Ministry of Economic Affairs and Agriculture, several semi-governmental platforms, certifiers, sustainability initiatives and NGO’s including UTZ CERTIFIED do support this. It is expected that three quarters of the Dutch coffee supply will be sustainable by 2015. [3]


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