Gevalia Coffee Marketing

Tracey Mitchell

MKTG 6100

Walden University

Gevalia Coffee

Gevalia coffee is a gourmet coffee crafted in Sweden. Gevalia has a rich history dating back 150 years of coffee making expertise.

• 30 premium blends

• Traditional cast-iron roasting

• Official coffee of the Swedish royal family

• Rich, never bitter taste

• Available in ground, whole bean, kcups, packets and iced coffee

Target Consumer Market

Young adults/ college students

Working professionals

Upper/middle class working mothers

Gevalia targets male and females ages 28-55 in these market segments:

Competitive Forces

Threat of New Entrants

The threat of new entrants for the coffee industry is high due to its low entry barrier. This scenario may allow for market saturation if too many new retailers decide to enter the business. This puts pressure on the market in regards to pricing, market costs and investments. (Martin, 2015)

Bargaining power of suppliers

Gevalia uses suppliers from all over the globe including Hawaii, Brazil, India, and African nations. These coffee suppliers include both organic and fair trade coffee from small and large farms. Suppliers affect costs and profitability based on need. Gevalia value’s sustainability and continually contributes to these communities to ensure continued availability and stable costs. (Gevalia, 2015b)

Competitive Forces

Bargaining power of buyers

Large volume buyers play a huge role in the capacity for a retailer to distribute products to the consumer. Gevalia’s Swedish distributor, Mondelez International, provides coffee to buyers around the globe. Recently, in 2012 Kraft Foods brought the Swedish java to the United States as part of its 5 billion dollar global coffee business. (Anonymous, 2014) As a major buyer and well known product distributor, Kraft has tremendous negotiating leverage in this area.

Threat of substitutes

A primary player in the threat of substitution in the coffee industry today are energy drinks. The energy drink business has skyrocketed from 3.89 billion in 1999 to a whooping 27.5 billion in 2013. US coffee retail sales amounted to 12 billion, while energy drink sales were just below 9 billion. (Ferdman, 2014). Many teens and young adults prefer these drinks to traditional coffee beverages.

Rivalry among existing competitors

Starbucks Dunkin Donuts Caribou Coffee

• Focus on speed of service

• Lower prices than competition

• Discounts and specials

• Loyal affluent customers

• Attractive atmosphere

• Global presence• Markets accessories

and online items

• Smaller, northern mid-west presence than competitors

• Delicious, rich coffee taste

• Marketing to the k-cup consumers

Comparison of two coffee retailers

In 2014, Starbucks outsold Gevalia by approximately $81 million in revenue sales. (Ferdman, 2014b). Starbucks attracts it’s target market of consumers by enticing them with a comfortable, inviting environment and offers free internet access within all of its café’s worldwide. Gevalia does not have a coffee shop presence in the consumer market. Starbucks merchandises coffee accessories and other items to increase its revenue sales. Gevalia focuses on its coffee sales only , although it does offer a small product line available only online. Starbucks positions its coffee houses in highly populated consumer traffic areas for increased exposure.(Sicoli, 2015). Gevalia positions its product sales online and in retail stores.

Gevalia vs. Starbucks

Starbucks Five Forces Review

Threat of new entry- New coffee retailers may enter the market to compete with Starbucks coffee. These retailers may undercut Starbucks higher prices in an attempt to gain increased market share.

Power of suppliers- Starbucks values its suppliers and contributes significantly to the growth and sustainability of these global regions to maintain long term relationships. (Gevalia, 2015b)

Power of buyers- Starbucks has a great competitive edge in this area as they have an established and reliable brand and maintain good relations with major buyers. (Trefis, 2015)

Threat of substitute products- Energy drinks are a major threat to the coffee retail market today and are projected to increase in the next few years.

Rivalry among existing competitors- Starbucks competes with a few major coffee chains that seek to increase their market share and profitability.

Competitive Advantage

Gevalia

Online sales

Retail sales

Limited

market

Starbucks

Satisfied custome

rs

Atmosphere

Wi-Fi

High visibility

Summary

Starbucks clearly has the competitive edge over Gevalia coffee. Starbucks has created an entire experience for its consumers when they visit their coffee shops. The atmosphere is that of a “hang out”, an inviting environment to visit with friends, meet with co-workers, or work on your laptop. Consumers don’t mind paying a little bit extra to enjoy a latte or cappuccino in the comfortable surroundings.

Gevalia has created an exceptional tasting coffee with a strong Swedish history. Advancing the market to the United States will help increase sales and brand exposure. Since they do not offer a coffee shop environment, all sales are made online or in retail environments. It would be hard for Gevalia to compete with the iconic Starbucks for consumer market share.

References

Anonymous. (2014, May 16). Gevalia Kaffee coffee brand leverages Kraft’s capabilities. Food Processing. Retrieved from http://www.foodprocessing.com/vendors/products/2012/gevalia-kaffe-coffee/

Anonymous. (2013, March 27). Gevalia takes on Starbucks in national taste test. Media Post. Retrieved from http://www.mediapost.com/publications/article/196787/gevalia-takes-on-starbucks-in-national-taste-test.html

Ferdman, Roberto A. (2014a, March 26). The American energy drink craze in two highly caffeinated charts. Quartz. Retrieved from http://qz.com/192038/the-american-energy-drink-craze-in-two-highly-caffeinated-charts/

Ferdman, Roberto A. (2014b, February 24). It’s true: Americans like to drink bad coffee. Washington Post. Retrieved from http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/24/its-true-americans-like-to-drink-bad-coffee/

References

Gevalia. (2015a, May 16). 150 years of Swedish craftsmanship. Retrieved from http://www.gevaliaexperience.com/

Gevalia (2015b, May 16). Our sustainability efforts. Retrieved from http://www.gevalia.com/Our-Sustainability/our_sustainability,default,pg.html

Martin. (2104, July 19). Strategy frameworks. How to create market entry barriers. Entrepreneurial Insights. Retrieved from http://www.entrepreneurial-insights.com/create-market-entry-barriers/

Neilson. (2015, May 16). Segment Explorer. Retrieved from http://www.claritas.com/MyBestSegments/Default.jsp?ID=30&menuOption=segmentexplorer&pageName=Segment%2BExplorer

Shayon, Sheila. (2013, March 29). Starbucks and Gevalia face off over social media and advertising claims. Brand Channel. Retrieved from http://brandchannel.com/2013/03/29/starbucks-and-gevalia-face-off-over-social-media-and-advertising-claims

References

Sicoli, Carlo. (2014, February 9). The five largest coffee shop chains on earth. The Richest. Retrieved from http://www.therichest.com/business/companies-business/the-five-largest-coffee-shop-chains-on-earth/?view=all

Tischler, Linda. (2014, December 1). It’s not about the donuts. Fast Company. Retrieved from http://m.fastcompany.com/51444/its-not-about-doughnuts

Trefis. (2015, May 15). Why Starbucks has an edge over competitors despite rising coffee prices. Nasdaq. Retrieved from http://m.nasdaq.com/article/why-starbucks-has-an-edge-over-competitors-despite-rising-coffee-prices-cm358945

Van Tan, Robin. (2010, June 4.). Field of beans. QSR magazine. Retrieved from http://www.qsrmagazine.com/executive-interviews/field-beans