BSBMKG507 Interpret Market Trends and Developments

Coffee Market Outlook in Australia

Table 1 and the Graph 2 below show the current market trends and developments in the coffee industry.

Table 1: Figures and trends for the coffee product categories

Graph 2: Market trends for coffee product categories

The graph and data above show the consumption of different type of coffee products in Australia since 2010. The table below describes these products:

Graph 3 below shows the consumption of different type of coffee products in Australia by quarter in 2015.

Source: Statistica International Marketing Research Agency (SIMRA)

Graph 3: Market consumption of coffee product categories by quarter

Graph 4 (see next page) shows the growth in the coffee market industry for the since 2010 to 2015. This data consist of all coffee products including the revenue generated by coffee shops.

Graph 5 shows A & A’s market performance within the same time frame. It plots the change in the organisation’s market share compared to the overall market growth within the coffee industry. This chart can be used as a benchmark to analyse the shift in the company’s market standing.

Graph 4: Overall growth in the coffee industry [2010-2015]

Graph 5: Comparison of A & A’s market standing relative to the growth trend in the coffee industry

Competitor Product Market Performance

This section analyses the market performance of competitors and their products.

A & A Coffee is still a strong name in the market, however, a considerable downward trend can be observed:

Table 2: Market Share by competitor [2013-2015]

Roasted Amigos and Mocha Del Mar seem to have had the highest jump over the last two years due to their successful R & D strategies. Roasted Amigos has specialised in supplying single-serve sachets (flavoured and plan) and coffee capsules whereas Mocha Del Mar has hit the market with healthy alternatives.

Summaries of these two major competitors are given in the subsequent sections.

Roasted Amigos

Established in 2008 as a local company, Roasted Amigos began its business specialising in selling Mild Arabica and Robusta beans. The beans are sourced from a variety of locations all around the world.

The company also has coffee shops around Australia as outlined below:

Roasted Amigos has its own coffee roastery facilities which are equipped with in-house roasting equipment.

By 2010, the company decided to become a major supplier for single-serve coffee sachets and coffee capsules that are compatible with the coffee machines sold by global providers. These sachets and capsules are being sold in giant supermarket chains including Woolworths, Coles, ALDI and IGA, all around Australia.

Over the past five years, the overall market shares for single-serve sachets has significantly increased from 4.4% to 9.2% whereas capsule has inclined from 8.8% to 16.%. Currently, Roasted Amigos captures 42% and 26% of the Australian single-serve coffee sachet and coffee capsule markets respectively.

It is believed that the shift in consumer behaviour in terms of buying instant coffee products is due to their convenience and lower cost in long-term. For example, a decent coffee costs no less than $3.00 in a local coffee shop; on the contrary, a single capsule – for the most expensive selection – costs only $0.74. This means that anyone, at any time of the day, can have a decent coffee just in a few minutes with minimal effort and for less than a dollar.

The below table outlines Roasted Amigo’s current product line that are currently available in its own stores as well as in supermarkets.

Mocha Del Mar

Established in 2002 as an Australian beverage company, selling coffee beans and cold coffee beverages has been Mocha Del Mar’s main focus in the market.

The company is the main competitor for A & A Coffee and Roasted Amigos in relation to supplying Mild Arabica and Robusta beans. The beans are mainly sourced from Indonesia and South American countries and then bottled in Mocha Del Mar’s on-site facilities in the source country.

The company also has coffee shops around Australia as outlined below:

As opposed to Roasted Amigos, the company has its own facilities in source countries which are equipped with in-house bottling equipment. The idea is to roast the beans fresh and use in the manufacturing of cold bottled products prior the import process to keep its freshness. Nevertheless, this is not the only competitive advantage of Mocha Del Mar’s; none of the products contain any preservatives, artificial flavours, sugar, colours, etc. that are considered to be an unhealthy choice for consumers. For instance, stevia is used in the production of these products to give the sugary taste without the side-effects of real sugar.

In 2010, the company launched two products with the health conscious people in mind: instant healthy coffee products and bottle coffee drinks made of stevia. These products are not being only sold in the company’s nationwide stores, but also in gyms, Woolworths, Coles, ALDI, IGA, patrol stations, and convenience stores such as 7-Eleven.

The idea behind each product is as follows:

· Instant Healthy Coffee Products: convenient solution for people who are busy and health conscious. These products have long shelf life and can be drunk cold or hot depending on the consumer’s taste. They are sold in biodegradable boxes with environment friendly coffee bags. These products are fused with other ingredients to maximise their health benefits such as nuts, herbs, and other natural flavours.

· Bottled Coffee Drinks: portable ready-to-drink coffee beverages. These can be consumed at leisure, at work, or before/during/after a workout. These products are free from preservatives, artificial flavours, sugar, and colours. Their shelf life is shorter than the instant healthy coffee products but offer much more variety.

Since the launch of these two products, the overall market performance for instant healthy coffee products has jumped from 6.2% to 12.3% whereas the overall figures for bottled drinks rocketed from 3.4% to 8.1%. As at 31 December 2015, Mocha Del Mar captured 38% and 22% of the Australian instant healthy coffee and healthy bottled coffee drink markets respectively.

The below table outlines Mocha Del Mar’s current product line that are currently available in its own stores as well as in supermarkets.

Australia’s Health and Wellbeing

Health and Wellbeing Statistics

Source: Australian Institute of Health and Welfare

Health and Wellbeing Trends

Interview with the Focus Group

A & A Coffee commissioned SIMRA to gathering opinions, beliefs, and attitudes about the current market needs in the industry. The main motivation was to gain insight towards consumer tastes and preferences.

To achieve this purpose, SIMRA arranged a focus group comprised of 100 people with the following background:

· marketing professionals

· baristas

· regular and irregular coffee consumers which consists of a mixture of local and international persons

· coffee shop owners.

Below are the key outcomes of this meeting.

Why consumers drink coffee?

Majority of respondents (82 out of 100) stated that they drink coffee because they enjoy the taste and need caffeine to stay focused. The remaining eighteen participants drink coffee every day to socialise with others. The respondents offered a number of reasons for their decision to consume coffee regularly:

Why consumers select a particular coffee product?

Graph 6 below shows the frequency distribution of responses collected from the focus group. This output visualises why they select a specific coffee product.

Note that these products include purchases from a coffee shop combined with sales in supermarkets.

Graph 6: Responses of focus group during face-to-face interview

pg. 1