coffee project marketing and finance

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PROJECT ON COFFEE (MARKETING & FINANCE)

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Page 1: Coffee Project Marketing and Finance

PROJECT ON

COFFEE

(MARKETING & FINANCE)

Page 2: Coffee Project Marketing and Finance

GROUP MEMBERS

Kavitha Ananth

23

Tejas Mehta

33

Page 3: Coffee Project Marketing and Finance

Nimitha Poojary

42

Pooja Sabnani

44

Susan Sequeira

48

Page 4: Coffee Project Marketing and Finance

ACKNOWLEDGEMENT

WE, THE STUDENTS OF T.Y.B.COM (BANKING AND

INSURANCE), KET’S V.G.VAZE COLLEGE OF ARTS, SCIENCE AND

COMMERCE, WOULD LIKE TO THANK PROF. VISHAL KADAM FOR HIS

GUIDANCE AND MOTIVATION IN PREPARATION OF THIS PROJECT.

AGAIN, WE WOULD LIKE TO THANK OUR COLLEGE’S TEACHING

AND NON-TEACHING STAFF FOR THEIR CONSTANT SUPPORT TO US.

BEING A PROJECT THERE ARE CHANCES OF ERRORS AND OMISSIONS FOR

WHICH WE WOULD LIKE TO HAVE FEEDBACK ON OUR PROJECT.

LASTLY, WE WOULD ALSO LIKE TO THANK OUR BATCH MATES AS

THEY ALSO HAVE SUPPORTED AND CORRECTED US THROUGHOUT THIS

PROJECT.

Page 5: Coffee Project Marketing and Finance

INDEX

SR.NO TOPICS

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

INTRODUCTION

COFFEE MARKETING

ICO

PRE – LIBERALIZATION MARKETING CHAIN

POST – LIBERALIZATION MARKETING CHAIN

MEDIUM TERM EXPORT STRATEGY FOR COFFEE

TATA COFFEE LTD

MARKETING PLAN OF TATA COFFEE

FINANCIAL ASSISTANCE IN EXPORTING COFFEE

COFFEE SCHEMES

CONCLUSION

Page 6: Coffee Project Marketing and Finance

INTRODUCTION

BABA BUDAN HILLS-BIRTHPLACE OF INDIAN COFFEE

INTRODUCTION TO THE INDIAN COFFEES

The world's best shade-grown 'mild' coffees. Indian coffee is the most

extraordinary of beverages, offering intriguing subtlety and stimulating

intensity. India is the only country that grows all of its coffee under shade.

Typically mild and not too acidic, these coffees possess an exotic full-

bodied taste and a fine aroma.

Indian coffee has a unique historic flavor too! It all began with a long,

arduous journey around four hundred years ago... When the legendary

saint bababudan brought seven magical beans from distant Yemen and

planted them in the chandragiri hills of Karnataka. The sensations of aroma,

flavor, body and acidity that you enjoy with each coffee experience is

rooted in these mystical beginnings.

Page 7: Coffee Project Marketing and Finance

It is often said, the Indian coffee grower pours his life into the crop. Is it any

wonder then that India has consistently produced and exported a

remarkable variety of high-quality coffees for over one hundred and fifty

years?

GROWING CONDITIONS

India cultivates all of its coffee under a well-defined two-tier mixed shade

canopy, comprising evergreen leguminous trees. Nearly 50 different types

of shade trees are found in coffee plantations. Shade trees prevent soil

erosion on a sloping terrain; they enrich the soil by recycling nutrients from

deeper layers, protect the coffee plant from seasonal fluctuations in

temperature, and play host to diverse flora and fauna.

Coffee plantations in India are essential spice worlds too: a wide variety of

spices and fruit crops like pepper, cardamom, vanilla, orange and banana

grow alongside coffee plants.

India's coffee growing regions have diverse climatic conditions, which are

well suited for cultivation of different varieties of coffee. Some regions with

high elevations are ideally suited for growing Arabicas of mild quality while

those with warm humid conditions are best suited for Robustas.

Page 8: Coffee Project Marketing and Finance

MAP OF INDIA SHOWING THE VARIOUS

REGIONS OF COFFEE PRODUCTION

Page 9: Coffee Project Marketing and Finance
Page 10: Coffee Project Marketing and Finance

COFFEE GROWING REGIONS IN INDIA

CAN BE GROUPED UNDER THREE

DISTINCT CATEGORIES

Traditional areas representing the southern

states of Karnataka, Kerala and Tamil Nadu.

Non-traditional areas comprising Andhra

Pradesh and Orissa in the eastern Ghats of the

country.

The northeastern region comprising the

'seven sister' states of Assam, Manipur,

Meghalaya, Mizoram, Tripura, Nagaland and

Arunachal Pradesh.

The plantations in the south are the cradle of

Page 11: Coffee Project Marketing and Finance

Indian coffee. They include the bababudan

giris in Karnataka, known as the birthplace of

coffee in India. The eastern Ghats and the

north eastern states are newly developed

areas of coffee.

VARIETIES

India offers several varieties of specialty coffees that are popular in the

west. Continuous research by Indian scientists has helped identity better

strains that will make finer coffees with added flavor profiles, in both

Arabica and Robusta varieties.

MONSOONED COFFEE

Monsooned coffee has a story to tell. The "monsooning" of coffee first

happened quite by accident in the deep of sailing ships - a shipload of

coffee bound for Europe acquired a mellow yet unique taste en route, with

the coffee beans 'swelling' due to the moisture in the air. A new kind of

coffee was born - Monsooned coffee.

Page 12: Coffee Project Marketing and Finance

Even today, India offers the same golden quality monsooned coffee

prepared by the unique natural elements of yester years and the special

process of today; the Monsooned coffee still has the Monsooned flavor,

mellow taste and golden look. Consumers in Scandinavian countries love it

for its special color and flavor.

MAIN GRADES:

MONSOONED MALABAR AA

MONSOONED BASANALLY

MONSOONED ROBUSTA AA

MYSORE NUGGETS EXTRA BOLD

This coffee is a premium coffee that represents the best quality coffee from

India. The beans are very large, uniform blush green in color with a clean

polished appearance. In cup, the coffee exhibits full aroma, medium to

good body, good acidity and fine flavor with a hint of spice Arabica

plantation coffee (washed coffee) grown in the Mysore, Coorg, Biligiris and

Shevaroys regions.

Page 13: Coffee Project Marketing and Finance

ROBUSTA KAAPI ROYALE

This coffee is prepared from Robusta parchment from the regions of

Mysore, Coorg, Wynad, Shevaroys, Pulneys and Barbabudans.

The beans appear to be bold, round with pointed ends and gray to bluish

gray in color. This cup ensures full body, soft, smooth and mellow flavor.

Page 14: Coffee Project Marketing and Finance

PRODUCTION AREA:

In India, coffee bean cultivation is largely confined to the hilly regions

of the southern states of Karnataka, Tamil Nadu and Kerala.

Karnataka accounts for 70 percent of country's total coffee production

followed by Kerala (22 percent) and Tamil Nadu (7 percent).

GROWTH PROMOTIONAL ACTIVITIES:

Only one fifth of the coffee bean produced in India every year is

consumed in the domestic markets, while rest of it is exported.

Most of the exports are to Russian federation, Germany, Italy and us.

Till recently, the coffee board directed coffee sales in India. Coffee growers

with a total coffee cultivation area of above 10 hectares were required to

sell a minimum of 30% of their production to the coffee board. This quota

system has now been abolished to encourage exports and now growers can

export 100% of their produce in order to boost the coffee consumption the

coffee industry has started emphasizing on three channels of distribution,

namely cafe chains, vending machines and ready to drink products.

MAJOR PLAYERS

The major players in this segment are:

NESTLÉ

Page 15: Coffee Project Marketing and Finance

BROOKE BOND (LEVER)

TATA TEA

Page 16: Coffee Project Marketing and Finance

COFFEE BOARD OF INDIA

The coffee board of India is an autonomous body, functioning under the

ministry of commerce and industry, government of India. The board serves

as a friend, philosopher and guide of the coffee industry in India. Set up

under an act of the parliament of India in the year 1942, the board focuses

on research, development, extension, quality up gradation, market

information, and the domestic and external promotion of Indian coffee.

Till 1995, the coffee board had a monopolistic control over the marketing

of coffee in India. However, the winds of liberalization swept the Indian

coffee industry and since 1995, marketing of coffee is strictly a private

sector activity. In fact the coffee board went through a massive down-

sizing and two- thirds of its employees were retired under a voluntary

retirement scheme.

The coffee board conducts basic and applied research on coffee and can

boast of 75 glorious years in coffee research. The central coffee research

institute in the chickmagalur district, Karnataka state has been in the

forefront of coffee research over the years and continues to remain one of

the premier institutes of the world as far as coffee research is concerned

The board also has a vast extension network spread over the three main

producing states of Karnataka, Kerala and Tamil Nadu, as well as in the

Page 17: Coffee Project Marketing and Finance

non-traditional areas of Andhra Pradesh, Orissa and the seven north-

eastern states. The extension set up provides the day- to- day link with the

grower community and this wing facilitates the transfer of technology from

lab to land.

The board also encourages the consumption of coffee in India and abroad.

Towards this end, the board participates in food and beverage exhibitions

abroad. The board also runs 14 India coffee houses in the country. The

India coffee house brand of coffee powder is well known in India for its

quality and aroma.

The board has for long years worked on the quality of Indian coffee. The

board runs two quality control laboratories in Bangalore and Hassan, which

control and advise the industry on quality issues. The labs are equipped

with the best roasting and brewing machines. The best cup- tasters and

quality evaluators keep a strict vigil on the pre and post harvest processes

with a view to ensure that the quality of Indian coffee is maintained.

Economic & market intelligence unit the board has an economic & market

intelligence unit functioning from its head office at Bangalore. The unit

undertakes various activities related to market information & intelligence,

market research studies, crop forecasting and coffee economics aspects.

The unit also undertakes studies on research related to the coffee trade

including WTO issues. Notable publications include the daily market

intelligence report, a comprehensive database on coffee (bimonthly) and

Page 18: Coffee Project Marketing and Finance

market intelligence report (quarterly). The periodical reports that are

already completed included coffee consumption in urban India 2001 and

coffee consumption in India 2003. The unit is currently coordinates a study

on logistics and competitiveness of coffee producing countries (India,

Vietnam & Brazil) and a manual on coffee retailing. The unit also in the

process of implementing a project on price risk management for coffee

growers.

Page 19: Coffee Project Marketing and Finance

COFFEE MARKETING

Coffee market can be segmented as instant and filter coffee. Filter

coffee can further be segmented into pure and chicory blend coffee. Coffee

is a major export commodity in many developing countries. Many countries

like India, USA depends heavily on coffee as a source not only to foreign

exchange but also of employment in rural areas. Before liberalization heavy

taxation made coffee an important source of government revenue.

Governments of developing countries regulated coffee marketing not only

because coffee was as important as a source of export earning and foreign

exchange, but also for institutional and political reasons. The main

intergovernmental organization for coffee, bringing together the world

coffee sector through international cooperation is the international coffee

organization (ico).

Page 20: Coffee Project Marketing and Finance

ICO (INTERNATIONAL COFFEE

ORGANISATION)

The international coffee organization was established in London in

1963. It makes a practical contribution to the world coffee economy by:

Enabling government representatives to exchange views and co

ordinate coffee policies and priorities at regular high-level meetings.

Improving coffee quality through the coffee quality-improvement

programme and specific projects.

Increasing world coffee consumption through innovative market

development activities.

Initiating coffee development projects to improve quality and

marketing.

Encouraging a sustainable world coffee economy.

Working closely with the private sector through a 16 strong private

sector consultative board which tackles issues such as food safety.

Providing objective and comprehensive information on the world

coffee market; and;

Page 21: Coffee Project Marketing and Finance

Ensuring transparency in the coffee market through statistics.

INTERNATIONAL COFFEE AGREEMENT (ICA):

International coffee agreement (Ica) entered into force in 1962 for a

period of five years, and it has continued to operate under successive

agreements negotiated since then. The main objective of the agreement

was to raise and stabilize the world coffee prices and hence the

governments of all major coffee producing countries came together to take

some joint market controlling measures and doing so would have been

difficult and costly, so they liberalized coffee sub sector.

Page 22: Coffee Project Marketing and Finance

Pre – liberalization marketing chain:

Before liberalization, the producers of coffee were selling their coffee

production to coffee board, a regulatory body at fixed price. On the basis of

curing works like cleaning, sorting and grading, coffee board decide to

market these goods in market in proportion of 30 % to domestic market

and 70 % for exportation.

The coffee board of India is an autonomous body, functioning under

the ministry of commerce and industry, government of India. The board

serves as a friend, philosopher and guide of the coffee industry in India. Set

Producers

Coffee Board

Export

(70%)

Domestic Market

(30%)

Page 23: Coffee Project Marketing and Finance

up under an act of the parliament of India in the year 1942, the board

focuses on research, development, extension, quality up gradation, market

information, and the domestic and external promotion of Indian coffee.

Till 1995, the coffee board had a monopolistic control over the

marketing of coffee in India. However, the winds of liberalization swept the

Indian coffee industry and since 1995, marketing of coffee is strictly a

private sector activity. In fact the coffee board went through a massive

down- sizing and two- thirds of its employees were retired under a

voluntary retirement scheme.

Post – liberalization marketing chain:

Auction

Producers

Exporters

Domestic

Market

Export

Page 24: Coffee Project Marketing and Finance

After liberalization, producer started to sell their product in domestic

and international (export) market on auction basis and role of coffee board

was shifted from marketing to research, extension & promotion.

Thus producers were satisfied after liberalization of marketing chain

because that made export to customers directly, avoiding implicit taxes

(despite the fact that exported commodities were exempt from taxation,

the board had effectively been paying a sales tax.)

Page 25: Coffee Project Marketing and Finance

MEDIUM TERM EXPORT STRATEGY

FOR COFFEE

To boost Indian coffee exports as well as to maximize export

earnings, the coffee board is implementing a medium term export strategy

during the current plan period. The key initiatives identified in the strategy

to improve coffee exports from India are as under:

Shifting product mix in favor of Arabica.

Cost reduction to improve competitiveness.

Improving quality perception of Indian coffee.

Integrating Indian coffee with the global coffee trade.

Page 26: Coffee Project Marketing and Finance

Guarantee reliability of exporters.

Carryout a major communication initiative in key overseas markets to

enhance the image of Indian coffee as well as to improve market

share.

Participation in important overseas trade fairs involving exporters and

grower exporters.

Organizing buyer-seller meets between Indian exporters and overseas

buyers in key markets.

Hosting visits of roaster/buyer delegation from leading consuming

countries to Indian coffee tracks and facilitating interaction with the

industry representatives.

Organizing "cupping" of Indian coffees by international coffee experts

to evaluate and propagate the finer attributes of Indian coffees.

Institution of export awards to encourage exporters.

Page 27: Coffee Project Marketing and Finance

FUTURE STRATEGIES FOR NEW MARKET:

Establishment of export promotion council for coffee.

Government regulation in quality testing and processing.

Duty free import for processing equipments.

Extensive marketing and promotional activities.

Sponsoring trade fairs and global coffee summits.

Attractive and durable packaging and transportation.

Regular market survey for customer satisfaction and preferences.

WORST CASE RISKS INCLUDE:

Determining that the business cannot support itself on an ongoing

basis.

Having to liquidate equipment or intellectual property to cover

liabilities.

From the above case study we conclude that proper market analysis by

expert is needed and suitable marketing strategies are to be executed

to strive in market.

Page 28: Coffee Project Marketing and Finance

FINANCIAL ASSISTANCE IN EXPORTING

COFFEE

Export finance refers to the finance of the goods from the home

country to the importers port. The export financing begins with as soon as

export order is received and accepted. The exporter needs finance for

transportation, taxes, documentation, insurance, packing, clearing and

forwarding and payment of freight. Most of the export trade is carried out

on credit basis. It takes 3 to 6 months to realize the export bills. Meantime

the exporter has to execute further orders for which additional working

capital is required. The export finance mechanism and institutional support

are vital for the promotion for international business. India is the first

among the developing countries to design an integrated export financing

scheme. The various agencies involved in provision of finance are RBI, EXIM

bank, commercial banks, ECGC and other financial institutions.

Page 29: Coffee Project Marketing and Finance

EXPORT FINANCE IN INDIA:

The nature of export finance may be short term or long term credit.

Short term credit facility is extended for a period from 30 days to 180 days

which is granted by commercial banks. The long term finance is provided

for a period from 5years to 2o years which is provide by EXIM, ECGC and

IDBI bank. The irrevocable letter of credit is generally used in export of

coffee.

PRE – SHIPMENT FINANCE:

Pre – shipment finance is defined by reserve bank of India as “any

loan to an exporter financing the purchase, processing, manufacturing,

packing of goods.” It is an interim advance provided by bank for helping

the exporter to purchase process, packing & shipment of the goods for

exports. It is also known as packing credit. It is provided by any bank or

financial institution. The exporters generally require finance at the pre-

shipment stage for the following purpose:

To purchase raw materials, components, machinery equipment &

technology.

To pay for transportation & warehouse expenses.

For specialized export packing of goods.

To pay insurance premium on shipment of goods.

Page 30: Coffee Project Marketing and Finance

To clear the goods after inspection, customs & excise authorities.

To pay commission to overseas agents & freight for shipment of

goods.

To provide additional working capital from time to time.

POST – SHIPMENT FINANCE:

When the exporter needs an advance after completing the process of

shipment of goods is called as post-shipment finance. The exporter needs

finance at the post-shipment stage for the following purposes:

To pay ECGC premium, freight, insurance premium on shipment &

other shipment expenses.

To participate in the fairs & exhibitions.

To pay to overseas agents and various authorities such as customs,

port, inspection etc.

To pay regular expenses between the shipment of goods &

realization of exports bill.

Page 31: Coffee Project Marketing and Finance

COFFEE SCHEMES

The important function of the development department is to render

financial assistance coupled with the technical assistance to the coffee

growers for the overall development and improvement of their estates

through increase in production. In this section the board is implementing 6

types of loan schemes and 3 types of subsidy schemes. They are:

Intensive cultivation loan.

Replanting loan.

Extensive cultivation loan.

Special purpose loan.

Interest subsidy.

Expansion subsidy.

Page 32: Coffee Project Marketing and Finance

The tribal coffee growers are given 4% interest on intensive

cultivation loan, replanting loan, extensive cultivation loan, and special

purpose loan.

INTEREST SUBSIDY SCHEME FOR LARGE AND SMALL

GROWERS:

To provide financial relief to small coffee grower sector on the

interest charged by the financial institutions on extending the working

capital/crop hypothecation loans, interest subsidy scheme has been

introduced on year on year basis subject to the approval of government @

5% for small growers and 3% for large growers.

EXPANSION SUBSIDY SCHEME:

The coffee board expansion subsidy scheme implemented between

1978 and 1989 had given fillip to the coffee expansion among the tribal

growers. The interest shown by the tribal farmers had forced government

to create an independent agency for coffee development. Accordingly, m/s.

Girijan coffee plantation Development Corporation limited, has been

formed to develop coffee in tribal sector. This agency developed coffee in

an extent of another 1000 ha, in the tribal holdings. The itda, paderu, has

taken over the development of coffee in the state of Andhra Pradesh,

among the tribal sector from the year 1995 and is the only agency,

currently involved in coffee development.

Page 33: Coffee Project Marketing and Finance

INCENTIVES SCHEME FOR ORGANIC COFFEE GROWERS:

Coffee board is providing financial assistance (grant) to organic coffee

growers towards the cost of inspection & certification of organic coffee.

The eligibility norms for providing financial assistance are as follows:

The grower/growers association/shg has to produce organic coffee as

per the national standards of organic production (nsop).

The coffee should have been certified by an accredited inspection &

certification agency recognized under national programme for

organic production (npop). Visit www.apeda.com for the list of

inspection & certification agencies.

In case of the self help groups, growers associations/ cooperatives

and ngo’s they should have been registered under co-operative

societies act or society’s registration act of their respective state.

The financial assistance towards inspection & certification cost will be

released only after evaluation of application by coffee board.

Page 34: Coffee Project Marketing and Finance

SUPPORT TO SMALL GROWER SECTOR SCHEME:

Financial incentives are given for taking up the following capital

investments in the farms of the small coffee growers:

Replanting.

Water augmentation.

Quality up gradation.

Pollution abatement measures.

OBJECTIVES:

To augment Arabica coffee production through new planting,

replacement/renewals of old plants and replanting of Robusta into

Arabica in suitable locations.

To enhance farm productivity in Robusta holdings through systematic

harnessing of water resources and irrigation methods.

To establish/set up appropriate infrastructure in the farms, to prepare

washed coffees, to achieve value additions.

SUBSIDY COMPONENT:

The subsidy is provided subject to ceiling limit prescribed for the

above said activities. While the subsidy is generally linked to credit

provided by financial institutions, the board may extend subsidy also in

select cases where growers are able to provide details of funds procured

Page 35: Coffee Project Marketing and Finance

from other sources. A subsidy of 20% on the capital cost is provided for

replantation, quality up gradation and pollution abatement measures and

25% for water augmentation.

ELIGIBILITY:

Registered coffee growers having holding up to a maximum of 10 ha.

Individual/joint applicants (family members/growers) are eligible to

avail the benefits of the scheme provided the coffee holdings are

contiguous under common management and do not exceed 10 ha.

Applicants shall produce revenue records as proof of area/ownership.

An applicant can avail subsidy benefit for one or more than one

component of the scheme provided the grower gives undertaking of

the sources of finance.

Defaulters under board's (old) scheme of development loans are not

eligible to avail the benefits of the scheme.

Page 36: Coffee Project Marketing and Finance

TATA COFFEE LTD (CASE STUDY)

The company was incorporated at pollibetta, south Coorg in

Karnataka state. The main object of the company is cultivation of coffee,

pepper, oranges, paddy, cardamom and other plantation and agricultural

products. The estates of the company are situated in Coorg. The company

also owns curing works known as kushalnagar works which was originally

acquired in January 1949. The various brands of products of the company

are Tata kaapi, Tata cafe, Mysore gold coffee, Mr. Bean, international tata

café etc.

Tata kaapi is a mixture of instant coffee and chicory and is the third

player in the instant coffee – chicory segment. This brand attempts to strike

a balance between tradition and modernity. A blend of tradition and

lifestyle imagery has been used to project this brand. Innovative marketing

has been the hallmark of this brand, with everything larger than life and

beyond ordinary. This brand has also entered the Guinness book of world

records with the world's largest coffee mug.

Page 37: Coffee Project Marketing and Finance

BUSINESS PLAN

Coffee export business

Marketing plan

1.0 EXECUTIVE SUMMARY:

Tata coffee prepares green Arabica coffee beans grown in India for

exportation to American, and sells to wholesalers on the Indian market.

Tata coffee prepares the top five percent for quality standards of all Arabica

beans on the market. Tata coffee' customers seeks this product as it

provides them with a point of differentiation. In the past six years, demand

for the coffee has exceeded the amount, TATA COFFEE is able to supply and

has been forced to refuse requests for larger shipments. TATA COFFEE has

positive indicators from current importers that the additional amount of

beans produced will be sold.

The keys to success are:

Page 38: Coffee Project Marketing and Finance

Establishing and maintaining working relationships and contractual

agreements with American importers and Indian coffee brokers and

wholesalers.

Bringing the new facility to maximum production within three years of

operation.

Increasing the profit margin with the use of improved technology in

the new facility.

Effectively communicating to current and potential customers,

through targeted efforts.

Coffee has been a growing industry for the past five years. The most

notable growth has been in the American market where imports have

increased almost one-hundred percent and the market price has nearly

doubled. There is a constant struggle within this market to produce the

best coffee and serve one or more niches within the larger market. Indian

coffee producers and exporters have made great efforts to improve

agricultural techniques, processing methods, and distribution in order to

better serve this growing market. Demand for Indian coffee is currently

greater than supply.

By providing the finest species of coffee, TATA COFFEE has taken the

first step towards a differentiated product. To further distinguish its coffee,

TATA COFFEE adheres to higher quality standards. It is grown in the

Page 39: Coffee Project Marketing and Finance

mountains surrounding. TATA COFFEE has assumed the position of a

specialized provider of this exceptional coffee. The customers, American

and Indian specialty roasters, recognize TATA COFFEE for it stability to

provide the type of beans they require to produce award winning coffee.

2.0 SITUATION ANALYSIS:

TATA COFFEE has been in business for six years. The business has

been well received and marketing will be key to elevate the business to the

next level. The basic market need is a source of high-quality Arabica coffee

beans that exceeds the quality of almost every other bean on the market.

2.1 MARKET SUMMARY:

TATA COFFEE possesses good information about the market and

knows a great deal about the common attributes of the targeted

customers. This information will be leveraged to better understand who is

served, their specific needs, and how TATA COFFEE can better communicate

with the target market.

2.1.1 MARKET DEMOGRAPHICS:

The profile for TATA COFFEE customers consists of the following

geographic, demographic, and behavior factors.

Page 40: Coffee Project Marketing and Finance

GEOGRAPHIC’S:

TATA COFFEE sells primarily to the U.S.A and Indian market.

The total targeted population is just over 100,000.

DEMOGRAPHICS:

The majority of companies have been in business for over five years.

BEHAVIOR FACTORS:

Some of the clients are wholesalers who will sell to the roasters

Other clients are wholesalers and roasters, buying the beans in bulk,

roasting themselves, and then selling the finished product to the

retailer.

2.1.2 MARKET NEEDS:

TATA COFFEE is providing its customers with a high-quality Arabica

coffee bean, exceeding the quality of almost every other bean on the

market. TATA COFFEE seeks to fulfill the following benefits that are

important to its customers:

High – quality beans.

Fresh product.

Timely, professional service.

Page 41: Coffee Project Marketing and Finance

2.1.3 MARKET TRENDS:

Coffee is the second largest commodity market and India has remained the

second largest producer of coffee in the world for two centuries. Imports of

Arabica coffee in the United States have increased ninety-four percent in

the past five years and consumption of coffee within India has seen similar

increases. In addition, demand for green coffee is above the market

clearing level, and market price and crop yield estimates are at an all time

high.

The increase in the number of independent specialty roasters in the United

States and India is an indicator of the increased demand for coffee.

2.1.4 MARKET GROWTH:

Coffee has been a growing industry for the past five years. The most

notable growth has been in the American market where imports have

increased almost 100% and the market price has nearly doubled. The

number of specialty roasters has increased from a handful of well-known

companies to thousands of independent entities. There is a constant

struggle within this market to produce the best coffee and serve one or

more niches within the larger market. Indian coffee producers and

exporters have made great efforts to improve agricultural techniques,

Page 42: Coffee Project Marketing and Finance

processing methods, and distribution in order to better serve this growing

market. Demand for Indian coffee is currently greater than supply.

2.2 SWOT ANALYSIS:

The following SWOT analysis captures the key strength and weaknesses

within the company, and describes the opportunities and threats facing

Tata coffee.

2.2.1 STRENGTHS:

Strong relationships with growers, and American and Indian

wholesalers and roasters.

The use of the highest-quality beans.

Sophisticated technology that drives production costs down while

ensuring quality.

2.2.2 WEAKNESSES:

Costs of doing business with American firms while located in India.

Dependence on a few suppliers who are the only ones capable of

growing the highest quality Arabica beans.

A limited marketing budget, necessary for developing brand

awareness.

Page 43: Coffee Project Marketing and Finance

2.2.3 OPPORTUNITIES:

Participation within a growing industry.

Coffee is a universal beverage.

The ability to increase the profit margin through the leveraging of

technology.

2.2.4 THREATS:

The commodity aspect of coffee.

Costs associated with international trade.

Future/potential competition from a large corporation.

2.3 COMPETITION:

Tata coffee deals exclusively in the exportation and sale of green

Arabica beans. There are approximately 150 Indian businesses in this

market. However, approximately 30 companies account for approximately

eighty percent of the total amount of green Arabica exports. In addition

many of these companies prepare, export and sell, to the Indian market,

other coffee products. Additional products include:

Green Robusta (conillon) beans: the Robusta bean is produced in

far less quantity than the Arabica and is considered an inferior

Page 44: Coffee Project Marketing and Finance

species. The Robusta market represents less than ten percent of all

coffee produced in Brazil.

Soluble coffee products: these are instant (water soluble) coffees

and are either regular or decaffeinated. Sales of soluble coffee

products account for approximately twelve percent of the total

market.

Roasted and ground coffee: approximately eighty-five percent of all

roasted and ground coffee (decaffeinated and caffeinated) goes to

internal consumption and represents approximately twenty-seven

percent of the total coffee market.

Competitors include: Brazil is a great competitor.

The purchase decision for the customer is based on trust in the

process and bean selection. Tata coffee has established relationships with

the customers that extend beyond that of the buyer/seller. The TATA

COFFEE label means that the product has been chosen and prepared with

the highest quality standards in mind. The beans are priced up to nine

percent higher than similar products.

The customers are willing to pay more for TATA COFFEE' product

because they are familiar with the company and trust in the quality of the

beans. There are approximately 150 exporters of green Arabica beans in

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India. Market contributions of individual exporters are held in strict

confidence and are not available to the public.

2.4 PRODUCTS OFFERED:

Tata coffee deals exclusively in Arabica green coffee, grown in the

states of India. Beans in parchment are purchased directly from growers

and are de-husked and packaged into 60kg sacks in the TATA COFFEE'

plant. The final product is suitable for sale and exportation.

Coffee Robusta, though it shares some similarities with the Arabica

bean, is very different. Coffee Robusta is grown at lower elevations and has

a higher yield per plant is more resistant to disease, and has up to twice the

caffeine level. Due to the lower cost and larger market amount of Robusta

coffee, it is found primarily on supermarket shelves. The Arabica species

grows at much higher elevations, better soil rich areas, and is the source of

the world's finest coffees. By providing the finest species of coffee, TATA

COFFEE has taken the first step towards a differentiated product.

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2.5 KEYS TO SUCCESS:

The keys to success for Tata coffee are:

Establishing and maintaining working relationships and contractual

agreements with American importers and Brazilian coffee brokers and

wholesalers.

Bringing the new facility to maximum production within three years of

operation.

Increasing TATA COFFEE' profit margin with the use of improved

technology in the new facility.

Effectively communicating to customers TATA COFFEE position as a

differentiated provider of the highest-quality Arabica beans in the

world.

2.6 CRITICAL ISSUES:

The critical issues that TATA COFFEE faces are:

Continue to ensure that its product is superior to the other Arabica

beans on the market.

Continue to analyze market demand to verify that TATA COFFEE is

indeed meeting the market needs.

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3.0 MARKETING STRATEGY:

TATA COFFEE marketing strategy will include the use of targeted print

media advertising and direct selling to importers in the United States, as

well as a website. TATA COFFEE will capitalize on existing relationships with

importers who have stated their willingness to contact. TATA COFFEE has

positioned themselves as a differentiated provider of the highest-quality

Arabica beans. The primary goal of the marketing efforts will be to

communicate this to existing and potential customers.

3.1 MISSION:

TATA COFFEE mission statement is to provide the finest quality and

freshest Arabic coffee beans available. We exist to attract and maintain

customers. With strict adherence to this maxim, success will be ensured.

Our products will exceed the expectations of our customers.

3.2 MARKETING OBJECTIVES:

Maintain positive, steady growth each quarter.

Experience an increase in new customers who are turned into long-

term customers.

Decrease the customer acquisition costs by 6% per year.

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3.3 FINANCIAL OBJECTIVES:

Increase the profit margin by 1% every two quarters.

Holding spending, as a percentage of sales, at a specific level.

Decrease the overhead fixed costs as a percentage of sales.

3.4 TARGET MARKETS:

The potential customer groups for Tata coffee are:

American importers of green Arabica beans: market research

suggests that there are approximately 200 importers of green Arabica

coffee on the west and east coasts of the United States that would be

able to handle the quantities of TATA COFFEE shipments and are in

their target market. Combined, they import a total of four to five

million/60kg bags of Indian coffee per year.

Indian green coffee wholesalers: this market serves as a safety valve

for our export business. By maintaining relationships with Indian

wholesalers we have an alternative market with established

distribution channels.

Indian specialty roasters: As TATA COFFEE moves towards maximum

capacity they plan to be more aggressively target this audience. This

should eventually reduce transactions with wholesalers and capture

their value-added costs as profit. TATA COFFEE anticipates that this

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effort will begin approximately four years into operation of the new

facility.

3.5 POSITIONING:

TATA COFFEE will position itself as the high-end Arabica coffee bean

distributor in north and South America. TATA COFFEE will only sell the

highest quality and freshest quality bean, recognizing that coffee is

traditionally a commodity. TATA COFFEE will leverage its competitive edges

to achieve the desired positioning. TATA COFFEE competitive edge comes

from the advantage of having established relationships with American

importers, and Indian coffee growers, green coffee brokers and wholesalers.

TATA COFFEE has received affirmation of the demand for its product in the

form of requests from importers for larger product shipments. TATA

COFFEE is a superior product offering because of the larger average size of

the bean and because it purchases from growers who rely on the use of

chemicals and pesticides less than two percent of the time. In addition,

prompt preparation and shipment provides importers with a product that is

up to one month fresher than beans sold by many exporters.

3.6 STRATEGIES:

The single objective is to position TATA COFFEE as the premier

Arabica coffee bean distributor whose quality is always counted on. The

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marketing strategy will seek to first create customer awareness regarding

the products offered, then develop the customer base, and finally work

toward building customer loyalty. The message that TATA COFFEE seeks to

communicate is that its name is synonymous with the highest quality

Arabica beans available. This message will be communicated through a

variety of methods. The first method will be the use of printed sales

material. The material will detail all of the different products that TATA

COFFEE sells.

Another method of communication is through the development of

strategic relationships with buyers and sellers of TATA COFFEE products.

TATA COFFEE recognizes that developing close, communicative

Relationships with its clients are very important to maintaining a high

quality, sustainable business. TATA COFFEE will also use advertisements,

placed in industry journals to increase brand awareness. The last method of

communication is the use of a website. The use of the website will allow

interested parties from around the world to view a wealth of information

regarding TATA COFFEE, its products, their production methods, and other

information. The website is a fairly rich, comprehensive resource that is

accessible at all times during the day.

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3.7 MARKETING MIX:

TATA COFFEE marketing mix is comprised of the following

approaches to pricing and distribution, advertising and promotion, and

customer service.

Pricing: TATA COFFEE pricing scheme is based on per product costs.

Distribution: the product can be distributed throughout the world.

Advertising and promotion: several different methods will be used

for advertising and promotion.

Customer service: obsessive customer service is TATA COFFEE

mantra. If the mantra is adhered to, sustainable success will happen.

3.8 MARKETING RESEARCH:

During the marketing plan development, TATA COFFEE issued a

comprehensive questionnaire to many different perspective customers. The

surveys were developed by a graduate statistics student ensuring validity

and accuracy in the findings. A total of 300 surveys were released with 99

returned surveys completed. The findings of the survey were quite

insightful. Some of the findings supported already held assumptions. Other

information from the survey provided new information and insight into the

perspective customers.

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Because the surveys were so useful, TATA COFFEE plans to do more

surveys in the following years.

4.0 FINANCIALS:

This section will offer a financial overview of TATA COFFEE as it relates

to the marketing activities. TATA COFFEE will address break-even analysis,

sales forecasts, expense forecasts, and how they link to the marketing

strategy.

Sales forecast: TATA COFFEE strategy focuses first on meeting the

increased demand from importers with whom it has established

relationships for larger orders. These importers are critical to the

ability to acquire additional accounts on both the east and west

coasts of the United States without having to spend a great deal on

sales efforts. Secondly TATA COFFEE will focus on increasing the

volume of beans sold to the internal Indian market. When TATA

COFFEE has reached maximum sales to existing channel sit can then

shift the majority of the focus to securing additional import accounts.

Expense forecast: The expense forecast will be used as tool to keep

the department on budget and provide indicators when a

modification is needed for the proper implementation of the

marketing plan.

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5.0 CONTROLS:

The purpose of TATA COFFEE marketing plan is to serve as a guide

for the organization. The following areas will be monitored to gauge

performance:

Revenue: monthly and annual, results compared to planned sales.

Expenses: monthly and annual, results compared to planned

expenses.

Customer satisfaction, to generate repeat purchases and referrals.

Research and developments costs relative to sales.

5.1 MARKETING ORGANIZATION:

TATA COFFEE will be responsible for the marketing activities. Tata will

conduct a performance assessment after the campaign is over to attempt

to determine if it merits repeating.

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5.2 CONTINGENCY PLANNING:

Difficulties and risks:

Problems developing brand awareness.

Difficulty obtaining the highest – quality raw product. Issues

involving importation of the beans into the U.S.A

From the above case study we conclude that proper market analysis by

expert is needed and suitable marketing strategies are to be executed

to strive in market.

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CONCLUSION

Coffee is a major export commodity in developing country like India

and liberalization of coffee market has given rise to competition and to

survive in this competitive market newer and newer strategies are need to

be formed to take the advantage of opportunities arising in this market.

Simultaneously financing also plays an important role in developing coffee

market and coffee export.

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BIBLIOGRAPHY

International business – P. K. Bandgar

WEBLIOGRAPHY

www.google.com

www.yahoo.com

www.ico.com

www.coffeeboard.com