Premium Coffee Market Segmentation

Contents

Rationale Behind Study

  1. The first goal of the study is to define segments/communities to whom a premium brand of coffee can be cost effectively promoted.
  2. The second goal of this study is to identify if the defined segments/communities present a sufficient size to make coffee promotion viable.

Some background about coffee

Premium Grade Coffee:

Premium Grade Coffee is a general term that describes high quality coffee. Premium grade or premium coffee is also referred to as specialty or gourmet coffee. These terms underscore quality, which is easily perceived on our palate. High quality coffee beans generally produce a richer and more flavorful cup of coffee than most generic or store bought coffees. The Specialty Coffee Association of America reports that less than 8% of the world's production of coffee qualifies as specialty or premium. Typically these beans come from higher altitudes where ripening is slow and uniform. High grown beans are dense and take the rigors of roasting very well. When roasted to a medium dark level these beans produce a smooth and flavorful drink with intense aroma and rich flavor. Coffee drinkers who experience a superb cup of coffee seldom go back to drinking generic coffee. Savoring a cup of freshly roasted specialty coffee is an experience of its own and an affordable luxury.

Source

Different types of Coffee Beans:

The most prevalent and used type of coffee beans are

S.No. Name Characteristics
1 Arabica It is considered to be far superior in flavor - the champagne of coffee
2 Robusta Robusta, is higher in caffeine and tastes far bitterer and more acidic, which makes it less than preferable for most domestic use.


Robusta is cheap and this makes it substitute for Arabica, which sees several coffee companies add small amounts of Robusta to their product lines as ?filler?.

The various types or varieties of coffee are listed in the table below:

S.No. Types or Varieties of Coffee Definition
1 American (regular) roast Beans are medium-roasted, resulting in a moderate brew, not too light or too heavy in flavor.
2 French roast and dark French roast Heavily-roasted beans, a deep chocolate brown which produce a stronger coffee.
3 Italian roast Glossy, brown-black, strongly flavored, used for espresso
4 European roast Two-thirds heavy-roast beans blended with one-third regular-roast.
5 Viennese roast One-third heavy-roast beans blended with two-thirds regular-roast.
6 Instant coffee A powder made of heat-dried freshly brewed coffee.
7 Freeze-dried coffee Brewed coffee that has been frozen into a slush before the water is evaporated, normally more expensive that instants but with a superior flavor.
8 Decaffeinated coffee Caffeine is removed from the beans before roasting via the use of a chemical solvent (which disappears completely when the beans are roasted) or the Swiss water process which steams the beans and then scrapes off the caffeine-laden outer layers.

Source

Coffee Market: USA

Highlights

Consumption Pattern of Beverages

Average Annual Beverage Consumption

Distribution of coffee by segment

Distribution


Source: IRI as of 12/31/06

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Market Share data of different coffee brands over time

Home Brew

S.No. Brand Name Percentage Share
1 Folger?s 30%
2 Maxwell House 19%
3 Eight O? Clock Coffee 11%
4 Gevalia 9%
5 Kona 8%
6 Chock Full O? Nuts 7%
7 Green Mountain 6%
8 Jamaican Blue Mountain 6%
9 Newman?s Own 2%
10 Bustelo 2%


Source: IRI as of 12/31/06

USA - Coffee Consumption by Place

The below mentioned figure gives break up of coffee consumption pattern by place

NCA

USA - Coffee Consumption by Age

According to the 2008 Beverages Market Research Handbook

USA - Coffee Consumption (Out of Home data)

Out of Home coffee consumption:

Below bar chart shows the coffee consumption at various coffee bars, restaurants or retail locations.


Out of Home


The out of home coffee market is mostly captured by Starbucks.

Few other leading companies which fall under these companies are

Supply Chain of Coffee Products:

This below path very well depicts the supply chain of coffee for home consumption.

Supply Chain Management

Business Research

  1. Identify unique segments, through hypothesis generation, where coffee for in-home consumption can be promoted
  2. Define these segments
  3. Determine places, online or offline, where these segments congregate
  4. Size up the segments to determine marketing potential of each segment
  5. Provide calendar view on "offline events" where these segments congregate for effective promotion planning

Segment Identification

  1. Identified online media where coffee lovers congregate
  2. Ranked and sorted the online media based on traffic (from Alexa ratings)
  3. Read up user generated content on such websites to identify unique segments/communities for coffee promotion
  4. For each unique segment/community, we then defined the place where they congregate offline

Segments Identified : Segments defined

S. No. Statements Place of Usage Communities Source
1 People enjoy coffee as a cocktail drink. The places where the coffee is served alongwith cocktail drink Businessmen, Youngsters who like to hang out at bars coffeetea.about.com
2 Companies have started pairing premium coffee with individual personality or individual needs depending on mood Locations providing the customized coffee Anyone who enjoys a customized coffee drink ineedcoffee.com, gourmetcoffee.com
3 Messages pertaining to health Any beverage outlet that is positioned to sell healthy drinks Athletes, fitness conscious people www.positivelycoffee.org, www.nescafe.com
4 Caffeine supports physical performance Any place selling healthy beverage products Athletes, fitness consicous people www.positivelycoffee.org, www.nescafe.com
5 Coffee may reduce colon cancer risk among women Any place or website where people with this disease can congregate Women suffering from colon cancer www.positivelycoffee.org, www.nescafe.com
6 Caffeine and exercise may help against sun-induced skin cancer Any place or website where people with this disease can congregate population suffering from skin cancer www.positivelycoffee.org, www.nescafe.com
7 Coffee associated with lower liver cancer risk Any place or website where people with this disease can congregate population suffering from liver cancer www.positivelycoffee.org, www.nescafe.com
8 Coffee may lessen after-exercise muscle soreness Any place or website where people with this disease can congregate people visiting ortheopaedist www.positivelycoffee.org, www.nescafe.com
9 Coffee drinkers are less likely to develop Parkinson?s disease Any place or website where people with this disease can congregate Population suffering from parkinson disease www.positivelycoffee.org, www.nescafe.com
10 Coffee consumption lowers diabetes risk Any place or website where people with this disease can congregate Persons treated for diabetes www.positivelycoffee.org, www.nescafe.com
11 Coffee reduces cognitive decline in elderly men   age group bove 40 www.positivelycoffee.org, www.nescafe.com
12 Coffee can lower the risk of serious illnesses     www.positivelycoffee.org, www.nescafe.com
13 Coffee can ease headaches, prevent diseases   all classes www.positivelycoffee.org, www.nescafe.com
14 Church Goers drink coffee to keep themselves awake during the sermons. Café shops located in or around church church goers ineedcoffee.com
15 Creation of artistic centers attracts coffee drinkers. Various museums,art galleries etc. Tourists, Adults auburncoffee.com
16 People drink coffee at the various business conferences. Any business conference where lots of people meet together Business persons  
17 Coffee is consumed at International Coffee Festivals. The places where the international festival occurs Coffee lovers, business people that frequent these festivals  
18 High Street locations are places to which people?s visit. Places located on high street locations where beverages can be sold Business people, Shoppers, etc. classes.bus.oregonstate.edu/Summer-05/ba469/Elton/Sector%20Analysis/Starbucks_compiled.ppt
19 During Public performances Amphitheaters,community halls, opera houses etc. Art lovers/Theatre lovers classes.bus.oregonstate.edu/Summer-05/ba469/Elton/Sector%20Analysis/Starbucks_compiled.ppt
20 Charitable places Charitable organisations and their events Charitable organizations, Charitable events etc. classes.bus.oregonstate.edu/Summer-05/ba469/Elton/Sector%20Analysis/Starbucks_compiled.ppt
21 Rural and off highway locations Places on rural and off highway location selling beverages youngsters,tourists classes.bus.oregonstate.edu/Summer-05/ba469/Elton/Sector%20Analysis/Starbucks_compiled.ppt
22 At places that have kids playing area. Any place with a secure kids playing area Married Couple?Persons in Parenthood kimboal.ba.ttu.edu
23 At opera theaters. Opera theatres Opera goers  

Segment Sizing

Each of the segments identified and defined are sized to determine the market attractiveness/potential of each segment. This is done as follows:

  1. For each segment, a potential place where they congregate offline in large groups has been defined.
  2. A detailed list of such offline events, up to a predetermined calendar date, has been made.
  3. The places where such events happen/will happen have been identified.
  4. For each individual event, a potential size has been estimated.
  5. The size estimates for each individual event is then aggregated.
  6. Based on this aggregation, the viability for promoting to each segment is determined.

Segment sizing of communities that follow Operas - Executive Summary

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Opera Community Sizing: Methodology

  1. We identified a list of opera companies that produce operas in the USA.
  2. We made a detailed list of all operas produced by these companies, the number of times each opera is shown and the place where the opera is shown.
  3. We then made a ranking of the top opera shows in the USA, the composers whose music is associated with them, and the places where these shows are held.
  4. From the size of the opera theater where these shows are held, we estimated a potential audience each can cater to (since the calculation was for potential audience, we assumed 100% attendance).

Opera companies and their schedule of Operas


Opera companies and Schedule of Events

The below link will guide to the full spread sheet.

Opera Companies and Schedule of Events

Compilation of Operas and their respective number of shows

Comparison of Different Show






The below link will guide to the full spread sheet

Comparison of Different Shows

Compilation of shows by Composer

Composers

The below link will guide to the full spread sheet

COMPOSERS

Estimating Potential Audience Data for each Opera show

Potential Audience

Classification of Opera Acts

We had also tried to analyse the types of the acts written by composer i.e. type of acts whether it being comedy,tragedy,romantic act etc.

The following pie chart suggest this percentages of various types.

Trends

Methodology

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