processed and packaged goods mitchell schmitt. coffee production in the us this industry produces...
TRANSCRIPT
![Page 1: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/1.jpg)
Processed and Packaged Goods
Mitchell Schmitt
![Page 2: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/2.jpg)
Coffee Production in the US
“This industry produces coffee, typically by purchasing coffee beans and processing them into roasted or ground coffee products…
…the industry excludes tea production and revenue from coffee made on premises, such as in a coffeehouse or cafe. Coffee creamer production is also excluded from the industry.”
Supply IndustriesBaking Mix & Prepared Food ProductionHay & Crop FarmingPlastic Film, Sheet & Bag Manufacturing
Demand IndustriesGrocery WholesalingSupermarkets & Grocery StoresConvenience StoresFood Service Contractors
Source: IBIS World
![Page 3: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/3.jpg)
Coffee Production in the US
Source: IBIS World
![Page 4: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/4.jpg)
Coffee Production in the US
Source: IBIS World
![Page 5: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/5.jpg)
Coffee Production in the US
Source: IBIS World
![Page 6: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/6.jpg)
Major Industry Players
Source: IBIS World
![Page 7: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/7.jpg)
Industry Performance• Key external drivers:
– Demand from supermarkets, grocery wholesalers, and grocery stores• Wholesalers are the link to stores, and stores are the link to customers• Fighting for in-store advertising and shelf space
– World price of coffee• Risen sharply recently growing demand in other countries leading to supply
shortages
– Per capita coffee consumption• Recent studies have shown positive health effects of coffee
– World price of crude oil• Transportation costs
![Page 8: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/8.jpg)
Industry Performance• Current performance: coffee production industry’s revenue has
performed well despite increases in commodity pricing, which has been passed on to the consumer.
• Increased demand: consumers are increasingly demanding specialized, high-quality coffee, particularly in single-serving amounts.
– Though economic recession curbed consumer income in 2013, consumers view coffee as an affordable luxury item.
– Media attention pointing to positive health benefits from coffee has also spurred greater demand.
![Page 9: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/9.jpg)
Industry Outlook
• Life cycle: industry is mature, characterized by saturated domestic market and a range of well-established brands.
• Premiumization and stable coffee consumption will drive the Coffee Production industry's growth over the next five years.
• Weak dollar against the currencies of major trading partners will boost industry exports.
• Revenue is forecast to grow at an annualized rate of 1.0% to $11.5 billion over the five years to 2018.
![Page 10: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/10.jpg)
Products and Markets
Key Buying Industries:• Grocery Wholesaling• Supermarkets & Grocery
Stores• Convenience Stores• Food Service ContractorsKey Selling Industries:• Baking Mix & Prepared Food
Production• Hay & Crop Farming• Plastic Film, Sheet & Bag
Manufacturing
![Page 11: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/11.jpg)
Products and Markets
Coffee manufacturing• Gourmet and specialty
coffee segments• Ground roasted coffee• Whole bean and other
coffee
![Page 12: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/12.jpg)
Products and Markets
Market Segmentation• By age• Brewed in home vs.
purchased in store• Exports
Consumers by Age
Exports Consumers aged 13-24Consumers aged 25-39 Consumers aged 40-59Consumers aged 60+
![Page 13: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/13.jpg)
Products and Markets
International Trade• Imports are increasing• Exports are increasing
![Page 14: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/14.jpg)
Competitive Landscape
Market Share Concentration• High industry
concentration• Expected market share
going forwardBasis of Competition• Competition is medium
and increasing• Internal Competition• External Competition
![Page 15: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/15.jpg)
Competitive Landscape
Barriers to Entry• High and increasing• Major players have
established high brand and customer loyalty• Contracts with key
suppliers
Competition Medium
Concentration High
Life Cycle Stage Mature
Capital Intensity High
Technology Change Medium
Regulation & Policy Medium
Industry Assistance Low
Source: www.ibisworld.com
![Page 16: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/16.jpg)
Major CompaniesPercent Market Share
Kraft
Starbucks
Nestle
J.M. Smucker Co.
Green Mountain Coffee Roasters
10.9%
15.6%
16.2%
21%
22%
Market Participants
Brands
Maxwell House, General Foods, Seattle’s Best, StarbucksNescafe, Taster’s Choice, Coffee-MateFolgers, Dunkin, Millstone, Café BusteloGreen Mountain, Keurig, Tully’s, Diedrich
![Page 17: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/17.jpg)
Operating Conditions
High levels of Capital Intensity Plants require sophisticated
technology Recent CapEx Expenditures
for major companies Increased automation,
decrease in labor hours $.38 is spent on capital per
labor dollar
Technology and Systems• Level of technology is
determined by processing method
• 2 Methods: Dry and Wet
• Change in the technology necessary to roast and grind coffee beans is low
![Page 18: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/18.jpg)
Operating Conditions pt.2
Industry is defined by high levels of revenue volatility Revenue is dependent
upon cost of raw materials, energy and oil prices, weather conditions, exchange rates, and household incomes
Extremely sensitive to economic conditions
Industry revenues have been rapidly increasing in recent years
Average levels of regulation Governed by FDA Required to label nutrition
contents Consumers are demanding
more detailed information Failure to abide by
regulations can cause product recalls
![Page 19: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/19.jpg)
Environmental Regulation
Industry Assistance
Governed by EPAEco-friendly
operations are used as selling points to potential customers
Adherence has created more efficient operations and improved quality
Low amounts of tariff protection exists for manufacturers
The U.S. protects coffee bean to prevent there rusting
Further research is being conducted by Global Agriculture and Food Security Program
International Coffee Organization is made up of coffee importing and exporting countries to facilitate trade
Operating Conditions pt. 3
![Page 20: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/20.jpg)
Starbucks Coffee Company
![Page 21: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/21.jpg)
Relevant Facts CEO is Howard Schultz (Highly
Regarded) Headquartered in Seattle, WA $13.3 B in revenues in 2012 with
operating margins of 15% Nearly 80% of stores are company-
owned vs. franchised SBUX has paid a dividend for the past
12 quarters
![Page 22: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/22.jpg)
Brief History First Store opened in 1971 in Seattle, WA;
Only sold coffee beans and equipment 1980’s- Howard Schultz started Il Giornale
coffee bars and bought out Starbucks 1990’s- Franchise expands beyond Seattle
and becomes a leading coffee provider in North America
06/26/1992- Starbucks is taken public at $17 per share
Present Day- 18,000 stores in 62 countries with stock trading around $75 per share
![Page 23: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/23.jpg)
StrategyMission Statement: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time. Product Differentiation; Sell premium
products with large profit margins Outstanding Marketing Campaigns Repeat Business (Starbucks cards) Keep Employees Satisfied Make entering their stores an
experience Company Operated stores
![Page 24: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/24.jpg)
ProductsStarbucks is the premier roaster, marketer and retailer of specialty coffee in the world Frappuccino, Lattes, Iced Coffees, Espresso Also sell tea, other beverages, and fresh
food items Sell packaged products through licensed
stores, grocery stores, and other foodservice accounts
K-Cups and Coffee Grounds
![Page 25: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/25.jpg)
Business Units and Markets Segmented into four markets1. Americas (75%)2. Europe, Middle East, and Africa(EMEA)
(9%)3. China- Asia Pacific (CAP)(5%)4. Global Consumer Products (10%)
![Page 26: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/26.jpg)
Competition Premium coffee sales compete against
quick service restaurants and specialty coffee shops
Main competitors for this segment include Dunkin Donuts, McDonald’s, and Caribou Coffee
Competes with all packaged coffee and tea products sold through supermarkets and other retailers
![Page 27: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/27.jpg)
Risk Factors Global Economic Conditions Increased prices of Arabica Coffee Beans Success is dependent upon perceived
value of brands Adverse public or medical opinion about
health effects of products Changes in healthcare laws may induce
employees to elect Starbucks’ insurance plan
![Page 28: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/28.jpg)
SWOT AnalysisStrengths Customer Loyalty Employees #1 coffee sales Strong
management Product Innovation
Weaknesses Difficulty adopting
café culture in Europe
Heavily dependent on sales in the Americas
![Page 29: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/29.jpg)
SWOT AnalysisOpportunities Enter emerging
Economies Expand Retail
Sales Increase Product
Offering Vertical
Integration
Threats Health effects Rising price of
coffee beans Low barriers to
entry for competition
![Page 30: Processed and Packaged Goods Mitchell Schmitt. Coffee Production in the US This industry produces coffee, typically by purchasing coffee beans and processing](https://reader034.vdocument.in/reader034/viewer/2022051515/55167365550346a2698b58bb/html5/thumbnails/30.jpg)
Recent Performance