Hello....thank you for your time today. Please allow me the opportunity to introduce our team. They are Jillian Fowler, Daniela Krajacic, Crystal Kappel, Rozel Bepari, and myself Richard Nodal. We intend on launching our business venture, Kool Beans and Brew within the Berlin market. I am excited to now share with you our research and strategic market approach for the next biggest coffee café in Berlin....Kool Beans and Brew.
These are the most important facts of Germany: The capital is Berlin, Population is Approx. 81 million, Ethnic Germans compose 91.5%, German is the official language, Germany is 5 th in the world, The Primary Natural Resources : coal, gas, lignite, natural gas, iron ore, copper, nickel, uranium, potash, salt, construction materials, timber, and arable land.
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There are 95 competitors, but just to name the top 3 are Balzac, Manalo, and Starbucks. They all offer coffee, munchies and a different type of environment setting.
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It is very difficult for a foreigner to come into Germany and qualify for government subsidies. The best option is to pursue a loan through the German Small Business Association. In order to accomplish this one must first develop a business plan and submit it to the German Small Business Association board for approval. If successful, this can provide up to $150,000 of capital to start a coffee shop within the boundaries of Berlin. Regarding, government intervention, There are the usual business licenses and sellers permits that need to be granted. Our team is working hard to achieve all of the necessary licenses and is confident we will be successful.
The trend indicates that such chained brands are becoming increasingly popular among German culture. This will certainly pose a risk for Kool Beans and Brew. As popularity grows within this chained market segment, German consumers will less likely look to unchained alternatives. This will undoubtedly present a risk for our business venture. It is becoming more of a trendy market than anything else. Independent cafés face keen competition with chained specialist coffee shops. Especially chains like Starbucks are enjoying increased popularity. With respect to such brands, it is not only about the coffee, but also about lifestyle.
Coffee is very popular in Germany and consumers have begun to assimilate it into their culture as a trend. It is a constant battle between competitors to make the more better-tasting coffee. Future demand translates into a coffee which differentiates itself from the rest. Something the consumer has not already experienced. Kool Beans and Brew intends to satisfy this demand with not only its fresh roasted beans, but with its local brewed beer, pastries, muffins, scones, and teas. Its’ warm, comfortable ambience and extended lounge hours will make it stand out from the rest.
The local demand of a Café/Bar is a very profitable market to enter in Berlin, Germany. Germany is a coffee dominated industry cafés are less common that offer snacks, gourmet coffee with a lounge/bar social comfort feel. In addition to regular coffee consumption, consumers are also looking for an appealing place in which to consume coffee in. Our competitors offer good tasting coffee and a desirable place in which to enjoy it in. Kool Beans and Brew will satisfy these needs as well as offer conveniences such as the latest technology and Wifi. These are all things that consumers expect and appreciate as they choose where to spend their consumer dollars.
Primary research using a survey was conducted. Survey results revealed that the traditional pattern of drinking standard filtered coffee has changed with the growth of chained and independent coffee shops. Verbatim from slide - connect while reading so it makes sense, read it shorter if needed since presented on slide
The concept of Gemütlichkeit (meaning “akin to cosiness”) is increasingly present in Berlin’s cafés. The so-called ‘Third Wave’ of coffee is spreading from east to west of the city. The introduction of artisan espresso bars is amounting to something of a revolution in coffee consumption. It reflects the demands of an increasingly international population for whom a café becomes the office. Germans did not have a culture of indulgence. The city was not known for gourmet things. It changed through the people who moved to Berlin, as the city became more international. While leveraging the “third place” concept that encourages longer stays and more frequent visits, Kool Beans & Brew will cater to those “young, trendy, discriminating” Berliners who love to indulge in high quality gourmet coffee.
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Kool Beans & Brew will open in Berlin, Germany. The cafe will face 95 competitors, and many indirect competitors including retail stores that sell coffee beans. Needless to say market is very saturated. We will be focusing on Differentiation. Kool Beans & Brew will be promoted predominately through social media. In a nutshell, Kool Beans & Brew’s objective is to provide highest possible quality coffee, food, beers, service and espresso using the state of art technologies, and provide a place to relax, socialize and have access to communication related technologies.
Our focus for our target market is going to be men/women, working professionals and students, between the ages of 20-35. According to a Euromonitor International, “Cafés, bars/pubs and specialist coffee shops appeal to different type of customers. While independent cafés are mainly visited by middle-aged consumers and families, specialist coffee shops usually have a much younger target group, including students, young professionals and couples. We will also brand ourselves as a place for health conscious consumers.
Kool Beans and Brew will enter the German Market by licensing the use of products through Bonanza Coffee Roasters, Neumann Kaffee Gruppe, and Berliner Bürgerbräu. Kool Beans & Brew has eliminated the risk of introducing a brand of coffee and beer that would not meet the tastes of our target market. As part of our differentiation strategy, Kool Beans & Brew will cater to Berliner’s by appealing to their “lingering” coffee shop culture. To do so, we will enter the market by bringing an innovative café design that combines a relaxed atmosphere with an interactive technology setting.
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The lifestyle of many working professionals is busy and hectic. In Germany they work long hours and often grab quick snacks and bites to eat. In order to focus on a target market we need to focus on consumer spending. The focus of many consumers is price, quality, recommendations, and branding. We will adapt our product to the target market by consumer and brand ourselves within the market in Germany by 5 ways: Online Marketing as the future of food service branding Focus on the dining experience High-margin items in the spotlight Health and wellness Spicy International flavors Our research has shown that the German culture favors ambience and special environments with comfort, art, vintage, music, and uniqueness. We will brand our establishment as a unique café/lounge to our consumers with an at home feeling
Annual disposable income in Germany is forecasted to increase over the next several years. By 2019, the per capita disposable income in Germany is expected to be over U.S. $25,000. This positive forecast along with the German cultural tendency for frequenting cafés has played an integral role in setting Kool Beans & Brew’s pricing strategy. Kool Beans & Brew will adopt the following pricing tactics: Short-term pricing tactic – Kool Beans & Brew will adopt a competitive pricing strategy in the short term. With Starbucks being a primary competitor, we will focus our pricing to be approximately 10–20% below Starbucks. Kool Beans & Brew will initially be priced between Starbucks and McDonald's McCafe. Long-term pricing strategy – Kool Beans & Brew will adopt a diversification strategy which allows our menu to have pricing variety. . Kool Beans & Brew will offer a diversified menu that includes higher profit earning products such as pastries, espresso and Iced-coffee beverages. “Snack and beverages often have high mark-ups, especially beverages (espresso-based drinks, smoothies, alcohol). High-margin items help maximize profits and help offset the effects of discounting” (Euromonitor International, 2011). Food Service (i.e. pastries) will be a key driver in Kool Bean & Brew’s revenue. In Germany, nearly 60% of sales in Cafes and Bars were driven by food. (Euromonitor International, 2011). As a smaller operation, the management at Kool Beans & Brew will maintain tight expense and labor cost controls and as a result believes that a 15% profit margin is attainable.
Our high-end café/bar named “Kool Beans & Brew” will enter the German market as a single location in a central city area - Kreuzberg quarter of Berlin. At night, the café/bar will also offer craft brews from the local brewery and have an in house pastry maker. The café/bar will be open daily, offering free Internet and live music at night in order to cater to the German “lingering” coffee shop culture. Online advertising and social media are the relatively easiest ways to reach consumers and is often cost effective. Germany is a developed country with highly evolved technologies. Internet is available to most Germans, with 67% of people using the internet in 2009. Kool Beans & Brew will focus on the online marketing and social media, as well as implementing technology-based services such as mobile pay using the Kool Beans & Brew App and a scanner. The app will allow the customers to perform the scan themselves and this fast and easy option.
Kool Beans and Brew German Market EntryTeam Members: Jillian Fowler Daniela Krajacic Crystal Kappel Rozel Bepari Richard Nodal
Country Information Capital of Germany is Berlin. Population is approx. 81 million. Ethnic Germans compose 91.5% German is the official language. Current economy is the 5th largest in the world. Primary Natural Resources : coal, gas, lignite, natural gas, iron ore, copper, nickel, uranium, potash, salt, construction materials, timber, and arable land. “Germany has one of the worlds most technologically advanced telecommunications systems; as a result of intensive capital expenditures since reunification, the formerly backward system of the eastern part of the country, dating back to World War II, has been modernized and integrated with that of the western part” (CIA World Factbook, 2012).
Industry Information Global cafés/bars in Western Europe account for 40% of global value sales in 2010. In the Café/Bar Industry 4 types exist: Cafes, Bars/Pubs, Juice/Smoothie Bars, and specialist coffee shops. “For cafés/bars, the key advantage relative to other operators will remain its status as a bastion of local drinking culture, offering a social component unmatched in any other category” Euromonitor, 2011).
Current Competitors in Local Market 95 competitors in the Local Market The TOP 3 in the local market: Balzac is in the middle of city life you can read and do your academic studies. They offer macchiatos, coffee, banana bread, and lunch bread products. Manalo is a coffee spot with a dinner/restaurant feel. They offer coffee, teas, chocolates, salads, breads, and pies. Starbucks is an American coffee chain that is filled with tourists and working people, but not very comfortable and individual. They offer sweet muffins, nibbles, and bagels.
Comparative Product Analysis In Western Europe $175 Million vs. the US is $450 billion. Globally coffee culture is increasing. 40% of Café/Bars are located in Western Europe. “Rising competition has dramatically increased the number of operators offering the types of products other cafés/bars specialize in - coffee/tea, alcoholic drinks, and experience - placing severe pressure on what are often small, independent operators, forcing many to close their doors” (Euromonitor, 2011).
Government Subsidies/Interventions Very difficult for a foreigner to qualify for government subsidies. A business plan is needed in order for the government to review. Subsidies up $150,000 from the German government. A health and food inspection is also required before permits are granted for food to be served on premises.
Growth Risks and Challenges Trend indicates that chained brands are becoming popular among German consumers. If this continues, consumers will less likely consider independent alternatives. One of the largest threats in Germany is from large chained shops like Starbucks. They will be expanding their presence into untapped markets.
Current Consumption/Future Demand German consumer trends have changed rapidly with large and independent coffee shops emerging in the market. The current trend among consumers is now trendy and flavored coffees. Future demand will consist of anything in the market which differentiates itself from the rest.
Consumer Needs The local demand of a Café/Bar is a very profitable market to enter in Berlin, Germany. “Coffee consumption has been traditionally high amongst German consumers, with per capita consumption of 150 litres per year and 70% of consumers drinking coffee regularly, according to figures by the European Coffee Federation (Euromonitor, 2012). Germany is a coffee dominated industry. Consumers are also looking for a pleasant place to consume coffee in. Consumers also need modern technology and conveniences like Wifi as they consume their coffee.
Survey Research Specialty coffee and tea drinks are preferred by young adults Coffee variants like lattes and cappuccinos & tea variants like chai latte Drinking coffee is a cultural experience Consumers value nice coffee shop atmosphere and socializing with friends and family Preference for gourmet coffee, fair trade certified, freshly locally roasted Preference for health conscious snack/food menu including ingredients that are organic and/or locally sourced, sustainable and otherwise eco-friendly Drinking coffee - affordable indulgence, part of lifestyle Prefer “to go” option when needed In-store entertainment: added benefits - live music at night, beer Favorable attributes: Wi-Fi, mounted iPads, Mobile pay App, Reward Stars
Existing and Emerging Segments Concept of Gemütlichkeit (“akin to cosiness”) increasingly present in Berlin’s cafés ‘Third Wave’ artisan espresso bars reflect the demands of an increasingly international population: café becomes the office The “third place” concept encourages longer stays and more frequent visits A typical customer is: “young, trendy, discriminating” Berliners “a professional, a creative, a world citizen… cosmopolitan, often multilingual, aware of food, music, and fashion; friendly and open”
Macro-Segmentation Variables In 2010, , Germany held the largest total annual disposable income in Western Europe, as well as one of the largest in the world (US$2.1 trill). Income inequality is low and between 2010 and 2020, it will only rise moderately. The middle class is large - 31.5% of all households in 2010. High savings rates, but real per capita consumer expenditure will increase only by 9.5% over 2010-2020. Germany had the most foreign citizens in Europe in 2011 (7.2 million). Economic immigrants bring a young and dynamic workforce, which is providing commercial opportunities and offsetting the country’s rapidly ageing population. Berlin has the highest urban population in Germany. Berlin urban population has been steadily increasing. Thus, Berlin is a very suitable central location for opening of a first Kool Beans & Brew café/bar.
Other Variables Affecting the Success of Kool Beans & Brew Private consumption will increase from 1.4 % in 2011 to 1.7 % in 2013. Activity will further increase as confidence improves and domestic demand strengthens. The positive rebound in private consumption will be enticed by strong labor market performance, low deleveraging needs and favorable financing conditions. Business confidence should be further boosted by the expected recovery of world trade and the rest of the euro area. Café/bars and specialist coffee shops appeal to different type of customers - either youngish or elderly consumers: Kool Beans & Brew will position its outlet to appeal to a younger target group, including students and young professionals. The positive development of café/bars market is greatly due to the economic recovery in 2010 and 2011. The proportion of food in cafés/bars total foodservice sales has increased from year 2006 to 2011: Due to extended food offering and a wider selection of products Kool Beans & Brew featuring a limited health conscious food menu.
Team Objective Open Kool Beans & Brew In Berlin, Germany. 95 different competitors that sells Coffee. Many indirect competitors. Team is betting on the differentiation. Promoting the predominately through social media. Kool Beans & Brews mission is to provide highest possible quality coffee, food, beers, service and espresso using the state of art technologies, and provide a place to relax, socialize and have access to communication and related technologies.
Target Market Kool Beans & Brews will focus on working professional and students between the ages of 20-35 Focus will be given to health conscious consumers
Foreign Market Entry Licensing Agreements Bonanza Coffee Roasters Neumann Kaffee Gruppe Berliner Bürgerbräu Differentiation strategy Cater to Berliner’s by appealing to their “lingering” coffee shop culture Kool Beans & Brew brings an innovative café design that combines a relaxed atmosphere with an interactive technology setting
Product/Service Information Kool Bean & Brew Services Extended hours between 8 AM – 2 AM In store Entertainment to enhance customers experience likely to increase revenue Place for relaxation, social hour, and leisure with an at home feeling will help create loyal customers Wi-Fi service as well as mounted iPads for work, and study. Absolutely the best possible customer service.
Product Positioning and Brand Image We will adapt our product to the target market by consumer and brand ourselves within the market in Germany by 5 ways: Online Marketing as the future of food service branding Focus on the dining experience High-margin items in the spotlight Health and wellness Spicy International flavors Absolutely the best possible customer service. German Café Culture will be integrated.
Pricing Strategy Annual disposable income in Germany is forecasted to increase over the next several years. Kool Beans & Brew will adopt the following pricing tactics: Short-term pricing tactic – Kool Beans & Brew will adopt a competitive pricing strategy in the short term. Long-term pricing strategy – Kool Beans & Brew will adopt a diversification strategy which allows our menu to have pricing variety. Diversified Menu will help drive profitability Profit margin expectation is 15%
Location and Promotion Strategy Singlelocation in a central city area - Kreuzberg quarter of Berlin. Café will cater to German’s “lingering” coffee shop culture Primary Promotion Strategy: On-line advertising and social media. Internet is available to most Germans, with 67% of people using the internet in 2009. Introduction of the Kool Beans & Brew App