Will new machines perk up coffee sales
1. Challenges that Kraft and other coffee sellers face are numerous in terms of competition and trends. Brand-loyal premium coffee drinkers are flocking to Starbucks, which expects to achieve a net revenue growth of 20% in fiscal 2005 . In the supermarket, sales are being taken not only by lower-priced private label brands but also by upscale whole-bean and ground packaged coffee. Tea accounts for an approximate 38% share of overall coffee/tea dollar sales. The coffee market in the US has been slow growing. Between 2002 and 2003, coffee consumption decreased from 3.2 to 3.0 cups per day. 2. Developing their own brewing machines will provide a mechanism which will allow Kraft to sell the coffee pods used in those machines. Since Kraft's is a closed system, users will be forced to buy only the pods manufactured by Kraft. 3. Kraft's business model for its Tassimo coffeemaker is very similar to HP's model for its printers and cartridges. B
Kraft undoubtedly sees Starbucks as an illustration of the fact that consumers want better-quality coffee at home. 99 (25 center per cup) All machines promise high-quality, coffee-shop coffee. A new HP printer cartridge sells for 29. 99, while a remanufactured cartridge for the same printer sells for 11. For example, do buyers in certain regions drink more coffee than tea? What brew settings, resulting in coffee strength, are preferred? What varieties of coffee are preferred? French roast, bolder roast, caf, decaf? Are users consuming beverages other than coffee, such as tea or hot chocolate? The Tassimo also has the capacity to produce steamed milk for use in lattes and cappuccinos. Does a higher price mean better quality?There is a wide difference in the price of the machines themselves. This type of customer response could very well influence future trends. From a consumer perspective this means several things, not the least of which is choice. 99% said they would recommend the system to family or friends because of the variety, convenience, quality of drinks, and innovative design. The Senseo and Home Cafe machines sell for $59. Still another consideration for the consumer is quality. This is evidenced by the fact that the machine itself is distributed by Braun (a division of Gillette) while the T-discs are manufactured and distributed by Kraft. While a 13 oz can of Kraft's Maxwell House makes 80-90 cups at 4 cents per cup, let's compare single-serving prices.
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