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Essay / Coffee Industry Analysis - 653
Coffee Crafters manufactures fluidized bed roasters using a patent-pending chaff extraction system that allows for low temperature ventilation and easy installation. Mission: to build the best roaster in the world in its category. The global coffee industry generates combined revenues of nearly $10 billion annually. Around 25 million people depend on the coffee industry worldwide for their livelihoods. The coffee industry is highly concentrated at the top and fragmented at the bottom, with the 50 largest companies accounting for up to 70% of sales. However, this trend is changing due to the growing popularity of independent cafes. Starbucks leads the way with more than 20,891 stores worldwide; and Caribou Coffee comes far behind, with nearly 500 corporate stores and more than 100 franchised outlets (source: PBS - Kelly Whalen - “Your Coffee Dollar”). The general coffee industry is well developed and very competitive. A coffee shop operator will face competition not only from other coffee shops, but also from gas stations, quick service and fast food restaurants, convenience stores, donut shops, gourmet food stores and espresso machines and gourmet coffee at home. Additionally, coffee as a beverage faces strong competition in the United States from energy drinks as an alternative source of caffeine. The National Coffee Association of USA's 2013 market study on national trends in coffee consumption indicates (source: National Coffee Association): Coffee consumption increases 5%; as ownership of single cup coffee makers increases to...... middle of paper ......use and balanced in-cup result. ● Coffee Subscriptions – bespoke coffee deliveries of artisan blends delivered straight to your door. Typical structure of costs, margins, etc. Producers - 10-12% Traders - 2-3% Shippers - 4% Roasters receive 65 cents to 70 cents of every dollar spent on coffee in the United States. Nestlé, Philip Morris, Procter & Gamble and Sara Lee account for more than 60 percent of coffee sales in the United States and 40 percent worldwide. Exact information on the profit margins of the Big Four is not publicly available. But experts estimate their profit margins can be as high as 25 percent of the retail price of coffee – a higher margin than most other food and drink lines. In recent years, mega roasters have increasingly turned to the cheaper Robusta coffee in their blends. Retailers - 10-15% (Source: PBS - Kelly Whalen - “Your Coffee Dollar”)