PROJECT ON
COFFEE (MARKETING & FINANCE)
GROUP MEMBERS
Kavitha Ananth 23 Tejas Mehta 33
Nimitha Poojary 42 Pooja Sabnani 44 Susan Sequeira 48
ACKNOWLEDGEMENT
WE,
THE
STUDENTS
OF
T.Y.B.COM
(BANKING
AND
INSURANCE), KET’S V.G.VAZE COLLEGE OF ARTS, SCIENCE AND COMMERCE, WOULD LIKE TO THANK PROF. VISHAL KADAM FOR HIS GUIDANCE AND MOTIVATION IN PREPARATION OF THIS PROJECT.
AGAIN, WE WOULD LIKE TO THANK OUR COLLEGE’S TEACHING AND NON-TEACHING STAFF FOR THEIR CONSTANT SUPPORT TO US. BEING A PROJECT THERE ARE CHANCES OF ERRORS AND OMISSIONS FOR WHICH WE WOULD LIKE TO HAVE FEEDBACK ON OUR PROJECT.
LASTLY, WE WOULD ALSO LIKE TO THANK OUR BATCH MATES AS THEY ALSO HAVE SUPPORTED AND CORRECTED US THROUGHOUT THIS PROJECT.
INDEX SR.NO
TOPICS
1.
INTRODUCTION
2.
COFFEE MARKETING
3.
ICO
4.
PRE – LIBERALIZATION MARKETING CHAIN
5.
POST – LIBERALIZATION MARKETING CHAIN
6.
MEDIUM TERM EXPORT STRATEGY FOR COFFEE
7.
TATA COFFEE LTD
8.
MARKETING PLAN OF TATA COFFEE
9.
FINANCIAL ASSISTANCE IN EXPORTING COFFEE
10.
COFFEE SCHEMES
11.
CONCLUSION
INTRODUCTION
BABA BUDAN HILLS-BIRTHPLACE OF INDIAN COFFEE INTRODUCTION TO THE INDIAN COFFEES The world's best shade-grown 'mild' coffees. Indian coffee is the most extraordinary of beverages, offering intriguing subtlety and stimulating intensity. India is the only country that grows all of its coffee under shade. Typically mild and not too acidic, these coffees possess an exotic fullbodied taste and a fine aroma. Indian coffee has a unique historic flavor too! It all began with a long, arduous journey around four hundred years ago... When the legendary saint bababudan brought seven magical beans from distant Yemen and planted them in the chandragiri hills of Karnataka. The sensations of aroma, flavor, body and acidity that you enjoy with each coffee experience is rooted in these mystical beginnings.
It is often said, the Indian coffee grower pours his life into the crop. Is it any wonder then that India has consistently produced and exported a remarkable variety of high-quality coffees for over one hundred and fifty years?
GROWING CONDITIONS India cultivates all of its coffee under a well-defined two-tier mixed shade canopy, comprising evergreen leguminous trees. Nearly 50 different types of shade trees are found in coffee plantations. Shade trees prevent soil erosion on a sloping terrain; they enrich the soil by recycling nutrients from deeper layers, protect the coffee plant from seasonal fluctuations in temperature, and play host to diverse flora and fauna. Coffee plantations in India are essential spice worlds too: a wide variety of spices and fruit crops like pepper, cardamom, vanilla, orange and banana grow alongside coffee plants. India's coffee growing regions have diverse climatic conditions, which are well suited for cultivation of different varieties of coffee. Some regions with high elevations are ideally suited for growing Arabicas of mild quality while those with warm humid conditions are best suited for Robustas.
MAP OF INDIA SHOWING THE VARIOUS REGIONS OF COFFEE PRODUCTION
COFFEE GROWING REGIONS IN INDIA CAN BE GROUPED UNDER THREE DISTINCT CATEGORIES
Traditional areas representing the southern states of Karnataka, Kerala and Tamil Nadu.
Non-traditional areas comprising Andhra Pradesh and Orissa in the eastern Ghats of the country.
The northeastern region comprising the 'seven sister' states of Assam, Manipur, Meghalaya, Mizoram, Tripura, Nagaland and Arunachal Pradesh.
The plantations in the south are the cradle of
Indian coffee. They include the bababudan giris in Karnataka, known as the birthplace of coffee in India. The eastern Ghats and the north eastern states are newly developed areas of coffee.
VARIETIES India offers several varieties of specialty coffees that are popular in the west. Continuous research by Indian scientists has helped identity better strains that will make finer coffees with added flavor profiles, in both Arabica and Robusta varieties.
MONSOONED COFFEE Monsooned coffee has a story to tell. The "monsooning" of coffee first happened quite by accident in the deep of sailing ships - a shipload of coffee bound for Europe acquired a mellow yet unique taste en route, with the coffee beans 'swelling' due to the moisture in the air. A new kind of coffee was born - Monsooned coffee.
Even today, India offers the same golden quality monsooned coffee prepared by the unique natural elements of yester years and the special process of today; the Monsooned coffee still has the Monsooned flavor, mellow taste and golden look. Consumers in Scandinavian countries love it for its special color and flavor.
MAIN GRADES: MONSOONED MALABAR AA MONSOONED BASANALLY MONSOONED ROBUSTA AA
MYSORE NUGGETS EXTRA BOLD This coffee is a premium coffee that represents the best quality coffee from India. The beans are very large, uniform blush green in color with a clean polished appearance. In cup, the coffee exhibits full aroma, medium to good body, good acidity and fine flavor with a hint of spice Arabica plantation coffee (washed coffee) grown in the Mysore, Coorg, Biligiris and Shevaroys regions.
ROBUSTA KAAPI ROYALE This coffee is prepared from Robusta parchment from the regions of Mysore, Coorg, Wynad, Shevaroys, Pulneys and Barbabudans. The beans appear to be bold, round with pointed ends and gray to bluish gray in color. This cup ensures full body, soft, smooth and mellow flavor.
PRODUCTION AREA: In India, coffee bean cultivation is largely confined to the hilly regions of the southern states of Karnataka, Tamil Nadu and Kerala. Karnataka accounts for 70 percent of country's total coffee production followed by Kerala (22 percent) and Tamil Nadu (7 percent).
GROWTH PROMOTIONAL ACTIVITIES: Only one fifth of the coffee bean produced in India every year is consumed in the domestic markets, while rest of it is exported. Most of the exports are to Russian federation, Germany, Italy and us. Till recently, the coffee board directed coffee sales in India. Coffee growers with a total coffee cultivation area of above 10 hectares were required to sell a minimum of 30% of their production to the coffee board. This quota system has now been abolished to encourage exports and now growers can export 100% of their produce in order to boost the coffee consumption the coffee industry has started emphasizing on three channels of distribution, namely cafe chains, vending machines and ready to drink products.
MAJOR PLAYERS The major players in this segment are:
NESTLÉ
BROOKE BOND (LEVER)
TATA TEA
COFFEE BOARD OF INDIA The coffee board of India is an autonomous body, functioning under the ministry of commerce and industry, government of India. The board serves as a friend, philosopher and guide of the coffee industry in India. Set up under an act of the parliament of India in the year 1942, the board focuses on research, development, extension, quality up gradation, market information, and the domestic and external promotion of Indian coffee. Till 1995, the coffee board had a monopolistic control over the marketing of coffee in India. However, the winds of liberalization swept the Indian coffee industry and since 1995, marketing of coffee is strictly a private sector activity. In fact the coffee board went through a massive downsizing and two- thirds of its employees were retired under a voluntary retirement scheme. The coffee board conducts basic and applied research on coffee and can boast of 75 glorious years in coffee research. The central coffee research institute in the chickmagalur district, Karnataka state has been in the forefront of coffee research over the years and continues to remain one of the premier institutes of the world as far as coffee research is concerned The board also has a vast extension network spread over the three main producing states of Karnataka, Kerala and Tamil Nadu, as well as in the
non-traditional areas of Andhra Pradesh, Orissa and the seven northeastern states. The extension set up provides the day- to- day link with the grower community and this wing facilitates the transfer of technology from lab to land. The board also encourages the consumption of coffee in India and abroad. Towards this end, the board participates in food and beverage exhibitions abroad. The board also runs 14 India coffee houses in the country. The India coffee house brand of coffee powder is well known in India for its quality and aroma. The board has for long years worked on the quality of Indian coffee. The board runs two quality control laboratories in Bangalore and Hassan, which control and advise the industry on quality issues. The labs are equipped with the best roasting and brewing machines. The best cup- tasters and quality evaluators keep a strict vigil on the pre and post harvest processes with a view to ensure that the quality of Indian coffee is maintained. Economic & market intelligence unit the board has an economic & market intelligence unit functioning from its head office at Bangalore. The unit undertakes various activities related to market information & intelligence, market research studies, crop forecasting and coffee economics aspects. The unit also undertakes studies on research related to the coffee trade including WTO issues. Notable publications include the daily market intelligence report, a comprehensive database on coffee (bimonthly) and
market intelligence report (quarterly). The periodical reports that are already completed included coffee consumption in urban India 2001 and coffee consumption in India 2003. The unit is currently coordinates a study on logistics and competitiveness of coffee producing countries (India, Vietnam & Brazil) and a manual on coffee retailing. The unit also in the process of implementing a project on price risk management for coffee growers.
COFFEE MARKETING
Coffee market can be segmented as instant and filter coffee. Filter coffee can further be segmented into pure and chicory blend coffee. Coffee is a major export commodity in many developing countries. Many countries like India, USA depends heavily on coffee as a source not only to foreign exchange but also of employment in rural areas. Before liberalization heavy taxation made coffee an important source of government revenue. Governments of developing countries regulated coffee marketing not only because coffee was as important as a source of export earning and foreign exchange, but also for institutional and political reasons. The main intergovernmental organization for coffee, bringing together the world coffee sector through international cooperation is the international coffee organization (ico).
ICO (INTERNATIONAL COFFEE ORGANISATION) The international coffee organization was established in London in 1963. It makes a practical contribution to the world coffee economy by: Enabling government representatives to exchange views and co ordinate coffee policies and priorities at regular high-level meetings. Improving coffee quality through the coffee quality-improvement programme and specific projects. Increasing world coffee consumption through innovative market development activities. Initiating coffee development projects to improve quality and marketing. Encouraging a sustainable world coffee economy. Working closely with the private sector through a 16 strong private sector consultative board which tackles issues such as food safety. Providing objective and comprehensive information on the world coffee market; and;
Ensuring transparency in the coffee market through statistics.
INTERNATIONAL COFFEE AGREEMENT (ICA): International coffee agreement (Ica) entered into force in 1962 for a period of five years, and it has continued to operate under successive agreements negotiated since then. The main objective of the agreement was to raise and stabilize the world coffee prices and hence the governments of all major coffee producing countries came together to take some joint market controlling measures and doing so would have been difficult and costly, so they liberalized coffee sub sector.
Pre – liberalization marketing chain:
Producers
Coffee Board
Domestic Market (30%)
Export (70%)
Before liberalization, the producers of coffee were selling their coffee production to coffee board, a regulatory body at fixed price. On the basis of curing works like cleaning, sorting and grading, coffee board decide to market these goods in market in proportion of 30 % to domestic market and 70 % for exportation. The coffee board of India is an autonomous body, functioning under the ministry of commerce and industry, government of India. The board serves as a friend, philosopher and guide of the coffee industry in India. Set
up under an act of the parliament of India in the year 1942, the board focuses on research, development, extension, quality up gradation, market information, and the domestic and external promotion of Indian coffee. Till 1995, the coffee board had a monopolistic control over the marketing of coffee in India. However, the winds of liberalization swept the Indian coffee industry and since 1995, marketing of coffee is strictly a private sector activity. In fact the coffee board went through a massive down- sizing and two- thirds of its employees were retired under a voluntary retirement scheme.
Post – liberalization marketing chain:
Producers Auction
Exporters
Domestic Market
Export
After liberalization, producer started to sell their product in domestic and international (export) market on auction basis and role of coffee board was shifted from marketing to research, extension & promotion. Thus producers were satisfied after liberalization of marketing chain because that made export to customers directly, avoiding implicit taxes (despite the fact that exported commodities were exempt from taxation, the board had effectively been paying a sales tax.)
MEDIUM TERM EXPORT STRATEGY FOR COFFEE
To boost Indian coffee exports as well as to maximize export earnings, the coffee board is implementing a medium term export strategy during the current plan period. The key initiatives identified in the strategy to improve coffee exports from India are as under: Shifting product mix in favor of Arabica. Cost reduction to improve competitiveness. Improving quality perception of Indian coffee. Integrating Indian coffee with the global coffee trade.
Guarantee reliability of exporters. Carryout a major communication initiative in key overseas markets to enhance the image of Indian coffee as well as to improve market share. Participation in important overseas trade fairs involving exporters and grower exporters. Organizing buyer-seller meets between Indian exporters and overseas buyers in key markets. Hosting visits of roaster/buyer delegation from leading consuming countries to Indian coffee tracks and facilitating interaction with the industry representatives. Organizing "cupping" of Indian coffees by international coffee experts to evaluate and propagate the finer attributes of Indian coffees. Institution of export awards to encourage exporters.
FUTURE STRATEGIES FOR NEW MARKET: Establishment of export promotion council for coffee. Government regulation in quality testing and processing. Duty free import for processing equipments. Extensive marketing and promotional activities. Sponsoring trade fairs and global coffee summits. Attractive and durable packaging and transportation. Regular market survey for customer satisfaction and preferences.
WORST CASE RISKS INCLUDE: Determining that the business cannot support itself on an ongoing basis. Having to liquidate equipment or intellectual property to cover liabilities. From the above case study we conclude that proper market analysis by expert is needed and suitable marketing strategies are to be executed to strive in market.
FINANCIAL ASSISTANCE IN EXPORTING COFFEE
Export finance refers to the finance of the goods from the home country to the importers port. The export financing begins with as soon as export order is received and accepted. The exporter needs finance for transportation, taxes, documentation, insurance, packing, clearing and forwarding and payment of freight. Most of the export trade is carried out on credit basis. It takes 3 to 6 months to realize the export bills. Meantime the exporter has to execute further orders for which additional working capital is required. The export finance mechanism and institutional support are vital for the promotion for international business. India is the first among the developing countries to design an integrated export financing scheme. The various agencies involved in provision of finance are RBI, EXIM bank, commercial banks, ECGC and other financial institutions.
EXPORT FINANCE IN INDIA: The nature of export finance may be short term or long term credit. Short term credit facility is extended for a period from 30 days to 180 days which is granted by commercial banks. The long term finance is provided for a period from 5years to 2o years which is provide by EXIM, ECGC and IDBI bank. The irrevocable letter of credit is generally used in export of coffee.
PRE – SHIPMENT FINANCE: Pre – shipment finance is defined by reserve bank of India as “any loan to an exporter financing the purchase, processing, manufacturing, packing of goods.” It is an interim advance provided by bank for helping the exporter to purchase process, packing & shipment of the goods for exports. It is also known as packing credit. It is provided by any bank or financial institution. The exporters generally require finance at the preshipment stage for the following purpose: To purchase raw materials, components, machinery equipment & technology. To pay for transportation & warehouse expenses. For specialized export packing of goods. To pay insurance premium on shipment of goods.
To clear the goods after inspection, customs & excise authorities. To pay commission to overseas agents & freight for shipment of goods. To provide additional working capital from time to time.
POST – SHIPMENT FINANCE: When the exporter needs an advance after completing the process of shipment of goods is called as post-shipment finance. The exporter needs finance at the post-shipment stage for the following purposes: To pay ECGC premium, freight, insurance premium on shipment & other shipment expenses. To participate in the fairs & exhibitions. To pay to overseas agents and various authorities such as customs, port, inspection etc. To pay regular expenses between the shipment of goods & realization of exports bill.
COFFEE SCHEMES
The important function of the development department is to render financial assistance coupled with the technical assistance to the coffee growers for the overall development and improvement of their estates through increase in production. In this section the board is implementing 6 types of loan schemes and 3 types of subsidy schemes. They are: Intensive cultivation loan. Replanting loan. Extensive cultivation loan. Special purpose loan. Interest subsidy. Expansion subsidy.
The tribal coffee growers are given 4% interest on intensive cultivation loan, replanting loan, extensive cultivation loan, and special purpose loan.
INTEREST SUBSIDY SCHEME FOR LARGE AND SMALL GROWERS: To provide financial relief to small coffee grower sector on the interest charged by the financial institutions on extending the working capital/crop hypothecation loans, interest subsidy scheme has been introduced on year on year basis subject to the approval of government @ 5% for small growers and 3% for large growers.
EXPANSION SUBSIDY SCHEME: The coffee board expansion subsidy scheme implemented between 1978 and 1989 had given fillip to the coffee expansion among the tribal growers. The interest shown by the tribal farmers had forced government to create an independent agency for coffee development. Accordingly, m/s. Girijan coffee plantation Development Corporation limited, has been formed to develop coffee in tribal sector. This agency developed coffee in an extent of another 1000 ha, in the tribal holdings. The itda, paderu, has taken over the development of coffee in the state of Andhra Pradesh, among the tribal sector from the year 1995 and is the only agency, currently involved in coffee development.
INCENTIVES SCHEME FOR ORGANIC COFFEE GROWERS: Coffee board is providing financial assistance (grant) to organic coffee growers towards the cost of inspection & certification of organic coffee. The eligibility norms for providing financial assistance are as follows: The grower/growers association/shg has to produce organic coffee as per the national standards of organic production (nsop). The coffee should have been certified by an accredited inspection & certification agency recognized under national programme for organic production (npop). Visit www.apeda.com for the list of inspection & certification agencies. In case of the self help groups, growers associations/ cooperatives and ngo’s they should have been registered under co-operative societies act or society’s registration act of their respective state. The financial assistance towards inspection & certification cost will be released only after evaluation of application by coffee board.
SUPPORT TO SMALL GROWER SECTOR SCHEME: Financial incentives are given for taking up the following capital investments in the farms of the small coffee growers: Replanting. Water augmentation. Quality up gradation. Pollution abatement measures.
OBJECTIVES: To augment Arabica coffee production through new planting, replacement/renewals of old plants and replanting of Robusta into Arabica in suitable locations. To enhance farm productivity in Robusta holdings through systematic harnessing of water resources and irrigation methods. To establish/set up appropriate infrastructure in the farms, to prepare washed coffees, to achieve value additions.
SUBSIDY COMPONENT: The subsidy is provided subject to ceiling limit prescribed for the above said activities. While the subsidy is generally linked to credit provided by financial institutions, the board may extend subsidy also in select cases where growers are able to provide details of funds procured
from other sources. A subsidy of 20% on the capital cost is provided for replantation, quality up gradation and pollution abatement measures and 25% for water augmentation.
ELIGIBILITY: Registered coffee growers having holding up to a maximum of 10 ha. Individual/joint applicants (family members/growers) are eligible to avail the benefits of the scheme provided the coffee holdings are contiguous under common management and do not exceed 10 ha. Applicants shall produce revenue records as proof of area/ownership. An applicant can avail subsidy benefit for one or more than one component of the scheme provided the grower gives undertaking of the sources of finance. Defaulters under board's (old) scheme of development loans are not eligible to avail the benefits of the scheme.
TATA COFFEE LTD (CASE STUDY) The company was incorporated at pollibetta, south Coorg in Karnataka state. The main object of the company is cultivation of coffee, pepper, oranges, paddy, cardamom and other plantation and agricultural products. The estates of the company are situated in Coorg. The company also owns curing works known as kushalnagar works which was originally acquired in January 1949. The various brands of products of the company are Tata kaapi, Tata cafe, Mysore gold coffee, Mr. Bean, international tata café etc. Tata kaapi is a mixture of instant coffee and chicory and is the third player in the instant coffee – chicory segment. This brand attempts to strike a balance between tradition and modernity. A blend of tradition and lifestyle imagery has been used to project this brand. Innovative marketing has been the hallmark of this brand, with everything larger than life and beyond ordinary. This brand has also entered the Guinness book of world records with the world's largest coffee mug.
BUSINESS PLAN Coffee export business Marketing plan 1.0 EXECUTIVE SUMMARY: Tata coffee prepares green Arabica coffee beans grown in India for exportation to American, and sells to wholesalers on the Indian market. Tata coffee prepares the top five percent for quality standards of all Arabica beans on the market. Tata coffee' customers seeks this product as it provides them with a point of differentiation. In the past six years, demand for the coffee has exceeded the amount, TATA COFFEE is able to supply and has been forced to refuse requests for larger shipments. TATA COFFEE has positive indicators from current importers that the additional amount of beans produced will be sold. The keys to success are:
Establishing and maintaining working relationships and contractual agreements with American importers and Indian coffee brokers and wholesalers. Bringing the new facility to maximum production within three years of operation. Increasing the profit margin with the use of improved technology in the new facility. Effectively communicating to current and potential customers, through targeted efforts. Coffee has been a growing industry for the past five years. The most notable growth has been in the American market where imports have increased almost one-hundred percent and the market price has nearly doubled. There is a constant struggle within this market to produce the best coffee and serve one or more niches within the larger market. Indian coffee producers and exporters have made great efforts to improve agricultural techniques, processing methods, and distribution in order to better serve this growing market. Demand for Indian coffee is currently greater than supply. By providing the finest species of coffee, TATA COFFEE has taken the first step towards a differentiated product. To further distinguish its coffee, TATA COFFEE adheres to higher quality standards. It is grown in the
mountains surrounding. TATA COFFEE has assumed the position of a specialized provider of this exceptional coffee. The customers, American and Indian specialty roasters, recognize TATA COFFEE for it stability to provide the type of beans they require to produce award winning coffee.
2.0 SITUATION ANALYSIS: TATA COFFEE has been in business for six years. The business has been well received and marketing will be key to elevate the business to the next level. The basic market need is a source of high-quality Arabica coffee beans that exceeds the quality of almost every other bean on the market.
2.1 MARKET SUMMARY: TATA COFFEE possesses good information about the market and knows a great deal about the common attributes of the targeted customers. This information will be leveraged to better understand who is served, their specific needs, and how TATA COFFEE can better communicate with the target market.
2.1.1 MARKET DEMOGRAPHICS: The profile for TATA COFFEE customers consists of the following geographic, demographic, and behavior factors.
GEOGRAPHIC’S: TATA COFFEE sells primarily to the U.S.A and Indian market. The total targeted population is just over 100,000.
DEMOGRAPHICS: The majority of companies have been in business for over five years.
BEHAVIOR FACTORS: Some of the clients are wholesalers who will sell to the roasters Other clients are wholesalers and roasters, buying the beans in bulk, roasting themselves, and then selling the finished product to the retailer.
2.1.2 MARKET NEEDS: TATA COFFEE is providing its customers with a high-quality Arabica coffee bean, exceeding the quality of almost every other bean on the market. TATA COFFEE seeks to fulfill the following benefits that are important to its customers: High – quality beans. Fresh product. Timely, professional service.
2.1.3 MARKET TRENDS: Coffee is the second largest commodity market and India has remained the second largest producer of coffee in the world for two centuries. Imports of Arabica coffee in the United States have increased ninety-four percent in the past five years and consumption of coffee within India has seen similar increases. In addition, demand for green coffee is above the market clearing level, and market price and crop yield estimates are at an all time high. The increase in the number of independent specialty roasters in the United States and India is an indicator of the increased demand for coffee.
2.1.4 MARKET GROWTH: Coffee has been a growing industry for the past five years. The most notable growth has been in the American market where imports have increased almost 100% and the market price has nearly doubled. The number of specialty roasters has increased from a handful of well-known companies to thousands of independent entities. There is a constant struggle within this market to produce the best coffee and serve one or more niches within the larger market. Indian coffee producers and exporters have made great efforts to improve agricultural techniques,
processing methods, and distribution in order to better serve this growing market. Demand for Indian coffee is currently greater than supply.
2.2 SWOT ANALYSIS: The following SWOT analysis captures the key strength and weaknesses within the company, and describes the opportunities and threats facing Tata coffee.
2.2.1 STRENGTHS: Strong relationships with growers, and American and Indian wholesalers and roasters. The use of the highest-quality beans. Sophisticated technology that drives production costs down while ensuring quality.
2.2.2 WEAKNESSES: Costs of doing business with American firms while located in India. Dependence on a few suppliers who are the only ones capable of growing the highest quality Arabica beans. A limited marketing budget, necessary for developing brand awareness.
2.2.3 OPPORTUNITIES: Participation within a growing industry. Coffee is a universal beverage. The ability to increase the profit margin through the leveraging of technology.
2.2.4 THREATS: The commodity aspect of coffee. Costs associated with international trade. Future/potential competition from a large corporation.
2.3 COMPETITION: Tata coffee deals exclusively in the exportation and sale of green Arabica beans. There are approximately 150 Indian businesses in this market. However, approximately 30 companies account for approximately eighty percent of the total amount of green Arabica exports. In addition many of these companies prepare, export and sell, to the Indian market, other coffee products. Additional products include: Green Robusta (conillon) beans: the Robusta bean is produced in far less quantity than the Arabica and is considered an inferior
species. The Robusta market represents less than ten percent of all coffee produced in Brazil. Soluble coffee products: these are instant (water soluble) coffees and are either regular or decaffeinated. Sales of soluble coffee products account for approximately twelve percent of the total market. Roasted and ground coffee: approximately eighty-five percent of all roasted and ground coffee (decaffeinated and caffeinated) goes to internal consumption and represents approximately twenty-seven percent of the total coffee market. Competitors include: Brazil is a great competitor. The purchase decision for the customer is based on trust in the process and bean selection. Tata coffee has established relationships with the customers that extend beyond that of the buyer/seller. The TATA COFFEE label means that the product has been chosen and prepared with the highest quality standards in mind. The beans are priced up to nine percent higher than similar products. The customers are willing to pay more for TATA COFFEE' product because they are familiar with the company and trust in the quality of the beans. There are approximately 150 exporters of green Arabica beans in
India. Market contributions of individual exporters are held in strict confidence and are not available to the public.
2.4 PRODUCTS OFFERED: Tata coffee deals exclusively in Arabica green coffee, grown in the states of India. Beans in parchment are purchased directly from growers and are de-husked and packaged into 60kg sacks in the TATA COFFEE' plant. The final product is suitable for sale and exportation. Coffee Robusta, though it shares some similarities with the Arabica bean, is very different. Coffee Robusta is grown at lower elevations and has a higher yield per plant is more resistant to disease, and has up to twice the caffeine level. Due to the lower cost and larger market amount of Robusta coffee, it is found primarily on supermarket shelves. The Arabica species grows at much higher elevations, better soil rich areas, and is the source of the world's finest coffees. By providing the finest species of coffee, TATA COFFEE has taken the first step towards a differentiated product.
2.5 KEYS TO SUCCESS: The keys to success for Tata coffee are: Establishing and maintaining working relationships and contractual agreements with American importers and Brazilian coffee brokers and wholesalers. Bringing the new facility to maximum production within three years of operation. Increasing TATA COFFEE' profit margin with the use of improved technology in the new facility. Effectively communicating to customers TATA COFFEE position as a differentiated provider of the highest-quality Arabica beans in the world.
2.6 CRITICAL ISSUES: The critical issues that TATA COFFEE faces are: Continue to ensure that its product is superior to the other Arabica beans on the market. Continue to analyze market demand to verify that TATA COFFEE is indeed meeting the market needs.
3.0 MARKETING STRATEGY: TATA COFFEE marketing strategy will include the use of targeted print media advertising and direct selling to importers in the United States, as well as a website. TATA COFFEE will capitalize on existing relationships with importers who have stated their willingness to contact. TATA COFFEE has positioned themselves as a differentiated provider of the highest-quality Arabica beans. The primary goal of the marketing efforts will be to communicate this to existing and potential customers.
3.1 MISSION: TATA COFFEE mission statement is to provide the finest quality and freshest Arabic coffee beans available. We exist to attract and maintain customers. With strict adherence to this maxim, success will be ensured. Our products will exceed the expectations of our customers.
3.2 MARKETING OBJECTIVES: Maintain positive, steady growth each quarter. Experience an increase in new customers who are turned into longterm customers. Decrease the customer acquisition costs by 6% per year.
3.3 FINANCIAL OBJECTIVES: Increase the profit margin by 1% every two quarters. Holding spending, as a percentage of sales, at a specific level. Decrease the overhead fixed costs as a percentage of sales.
3.4 TARGET MARKETS: The potential customer groups for Tata coffee are: American importers of green Arabica beans: market research suggests that there are approximately 200 importers of green Arabica coffee on the west and east coasts of the United States that would be able to handle the quantities of TATA COFFEE shipments and are in their target market. Combined, they import a total of four to five million/60kg bags of Indian coffee per year. Indian green coffee wholesalers: this market serves as a safety valve for our export business. By maintaining relationships with Indian wholesalers we have an alternative market with established distribution channels. Indian specialty roasters: As TATA COFFEE moves towards maximum capacity they plan to be more aggressively target this audience. This should eventually reduce transactions with wholesalers and capture their value-added costs as profit. TATA COFFEE anticipates that this
effort will begin approximately four years into operation of the new facility.
3.5 POSITIONING: TATA COFFEE will position itself as the high-end Arabica coffee bean distributor in north and South America. TATA COFFEE will only sell the highest quality and freshest quality bean, recognizing that coffee is traditionally a commodity. TATA COFFEE will leverage its competitive edges to achieve the desired positioning. TATA COFFEE competitive edge comes from the advantage of having established relationships with American importers, and Indian coffee growers, green coffee brokers and wholesalers. TATA COFFEE has received affirmation of the demand for its product in the form of requests from importers for larger product shipments. TATA COFFEE is a superior product offering because of the larger average size of the bean and because it purchases from growers who rely on the use of chemicals and pesticides less than two percent of the time. In addition, prompt preparation and shipment provides importers with a product that is up to one month fresher than beans sold by many exporters.
3.6 STRATEGIES: The single objective is to position TATA COFFEE as the premier Arabica coffee bean distributor whose quality is always counted on. The
marketing strategy will seek to first create customer awareness regarding the products offered, then develop the customer base, and finally work toward building customer loyalty. The message that TATA COFFEE seeks to communicate is that its name is synonymous with the highest quality Arabica beans available. This message will be communicated through a variety of methods. The first method will be the use of printed sales material. The material will detail all of the different products that TATA COFFEE sells. Another method of communication is through the development of strategic relationships with buyers and sellers of TATA COFFEE products. TATA COFFEE recognizes that developing close, communicative Relationships with its clients are very important to maintaining a high quality, sustainable business. TATA COFFEE will also use advertisements, placed in industry journals to increase brand awareness. The last method of communication is the use of a website. The use of the website will allow interested parties from around the world to view a wealth of information regarding TATA COFFEE, its products, their production methods, and other information. The website is a fairly rich, comprehensive resource that is accessible at all times during the day.
3.7 MARKETING MIX: TATA COFFEE marketing mix is comprised of the following approaches to pricing and distribution, advertising and promotion, and customer service. Pricing: TATA COFFEE pricing scheme is based on per product costs. Distribution: the product can be distributed throughout the world. Advertising and promotion: several different methods will be used for advertising and promotion. Customer service: obsessive customer service is TATA COFFEE mantra. If the mantra is adhered to, sustainable success will happen.
3.8 MARKETING RESEARCH: During the marketing plan development, TATA COFFEE issued a comprehensive questionnaire to many different perspective customers. The surveys were developed by a graduate statistics student ensuring validity and accuracy in the findings. A total of 300 surveys were released with 99 returned surveys completed. The findings of the survey were quite insightful. Some of the findings supported already held assumptions. Other information from the survey provided new information and insight into the perspective customers.
Because the surveys were so useful, TATA COFFEE plans to do more surveys in the following years.
4.0 FINANCIALS: This section will offer a financial overview of TATA COFFEE as it relates to the marketing activities. TATA COFFEE will address break-even analysis, sales forecasts, expense forecasts, and how they link to the marketing strategy. Sales forecast: TATA COFFEE strategy focuses first on meeting the increased demand from importers with whom it has established relationships for larger orders. These importers are critical to the ability to acquire additional accounts on both the east and west coasts of the United States without having to spend a great deal on sales efforts. Secondly TATA COFFEE will focus on increasing the volume of beans sold to the internal Indian market. When TATA COFFEE has reached maximum sales to existing channel sit can then shift the majority of the focus to securing additional import accounts. Expense forecast: The expense forecast will be used as tool to keep the department on budget and provide indicators when a modification is needed for the proper implementation of the marketing plan.
5.0 CONTROLS: The purpose of TATA COFFEE marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance: Revenue: monthly and annual, results compared to planned sales. Expenses: monthly and annual, results compared to planned expenses. Customer satisfaction, to generate repeat purchases and referrals. Research and developments costs relative to sales.
5.1 MARKETING ORGANIZATION: TATA COFFEE will be responsible for the marketing activities. Tata will conduct a performance assessment after the campaign is over to attempt to determine if it merits repeating.
5.2 CONTINGENCY PLANNING: Difficulties and risks: Problems developing brand awareness. Difficulty obtaining the highest – quality raw product. Issues involving importation of the beans into the U.S.A From the above case study we conclude that proper market analysis by expert is needed and suitable marketing strategies are to be executed to strive in market.
CONCLUSION
Coffee is a major export commodity in developing country like India and liberalization of coffee market has given rise to competition and to survive in this competitive market newer and newer strategies are need to be formed to take the advantage of opportunities arising in this market. Simultaneously financing also plays an important role in developing coffee market and coffee export.
BIBLIOGRAPHY International business – P. K. Bandgar
WEBLIOGRAPHY www.google.com www.yahoo.com www.ico.com www.coffeeboard.com
