International Marketing

Introduction Beanie-the Flavor Company-was born in the homely garage of Mark Porteus in February 2009. It was the brainchild of Chris Tarling and Mark Porteus, former employees of Boater's Coffee. As more investors joined the company, the Beanies brand was officially launched and registered. As operations began to expand out of the scope of Mark's garage, a 1000 square foot space was rented as an economical alternative in May 2009. Four varieties of flavored instant coffee were introduced in the same month.

Beanies truly became an "international" brand when it commenced exporting its product for the coffee lovers in Poland. With business growing further, the firm moved to a 2000 square foot space at the end of the winter in 2010. Growth in the digital realm is of prior importance to Beanies and it launched its user friendly, fully integrated e commerce website that allows users to create a profile online with accordance to the purpose of visit.

A jarring line was procured and installed as well which allowed the firm to truly manufacture its own recipe and design the packaging as it wanted. (Beanies, 2012) Equipped with a diverse portfolio of flavored coffee blends in whole bean, ground and instant, Beanies prime objective is to now empower its brand in the international arena now It has marked its footprint in the coffee markets of Italy, Austria, the United States of America, Finland, Denmark, the United Kingdom Uruguay and Cyprus.

Now, it is looking towards intensifying its efforts in the European frontier, particularly Germany. It had some success at a food fair there during the UKTI mission. Beanies felt that Germany was ripe for the taking and wanted to take its business onto another corporate level there. Global Coffee Market Coffee consumption soared from 15000 tons in the 1990s to 55,000 tons in recent times. (German Coffee -- Flavor And Smoothness, 2011). The market is growing steadily as global demand for instant coffee is on the rise.

In 2008, the hot drinks sector as it has been termed, which included coffee, tea, and chocolate flavored drinks, had a total worldwide sales value of USD 59 billion. Coffee was the highest contributor and held USD 40 billion worth of sales from it. Leatherhead Research forecasted that this division would grow by 5% each year up to 2012, escalating the overall market value up to USD 48.75 billion by then.

The instant coffee market shared thirty five percent of this entire pie in the global sphere in value terms with high shares in the United Kingdom and Ireland, i.e., eighty one percent and eighty nine percent respectively. According to the Global New Products Database, coffee was the most "active" in the United Kingdom with the highest number of powdered instant coffee launches, followed by Russia, Germany, Poland and France.

Such brand introductions grew in 2009 to over 200 overall, with unflavored/plain powdered coffee dominating the market with 84% of all product launches. (Moe, 2010). The instant coffee market is on the rise, especially in the United State of America. About fifteen percent of the coffee consumed there annually is instant coffee. In the United Kingdom, instant coffee is synonymous to soluble coffee; Nestle controls over fifty percent of the market. As mentioned earlier, the market in Germany has grown to 55,000 tons from 1,000 tons.

With the advent of globalization coupled with the revolutions in communication technologies; the modus operandi of the international corporate empire has changed. Consumer behavior has evolved and now people lead busier, hectic lives and have less time on their hands. World consumption of soluble coffee products has improved after a "number of years of stagnation". It grew from 21.4 million bags in 1999 to 29.9 million bags in 2004.

Source: Neumann Kafee Gruppe Statistics The rate of growth in demand for coffee in Europe has been a humble 0.2% a year, which is slower than the total growth in usage for all sorts of coffee. Instant coffee is accounted for over 80% in England, demand was beginning to fall, but has rejuvenated with the introduction of specialty coffee brands. Other European countries witnessed a short yet transient demand for soluble coffee.

The Deutscher Kaffee-Verband estimated that the instant coffee slice rose from 6.2% to 7.5% between 1998 and 2005, demonstrating the increment in demand for these products. This topical development in the demand for soluble coffee can be credited to an increase in demand within the topographical Eastern bounds of Europe, especially Russia and then the Far East. Instant coffee owns high market shares in both geographical divisions. An innovative "3 in 1" instant coffee brand has gained a lot of popularity.

It is soluble coffee with a non dairy creamer and sugar, usually meant to serve one. The year 2009 witnessed 72% of the soluble coffee utilized in importing countries processed into soluble coffee in the very same countries. In 2000, the counterpart figure was 83% and this implied that manufacturing nations maybe forecasting a notable growth in their share of the soluble coffee market in importing countries. Demand for soluble coffee differs in manufacturing nations. It accounts for ninety five percent of total coffee utilization in the regions of the Philippines and Thailand.

The largest producer of instant coffee is Brazil and local consumption accounts for only five percent of total coffee utilization. Indian soluble coffee demand is thirty five percent of the entire coffee segment and is mostly imported with Mexico accounting for sixty percent. One interesting fact to note is that two powerful coffee giants are Nestle and Kraft Foods. Together, they dominate the world market for coffee with approximately seventy five percent market share. Nestle alone supplies half of the world demand for coffee.

(Trade Practices of Relevance to Exporters in Coffee Producing Countries: Demand-Soluble Coffee, 2011). Following is a table illustrating world consumption country by country. It demonstrates coffee consumption value from the years of 2007 to 2010. It appears that there was a downward slope in the demand for coffee in the countries of the UK, Italy and within Spain. As our focus is on Germany, it is interesting to note that the percentage change is positive and the highest amongst the European Union is that of Germany in the amount of 4.3%.

Coffee consumption trends are rising and falling over these three years and settles on a rise for 2010. As Germany tends to import its coffee, there is strong market potential here. (Monthly Coffee Report March 2012, 2012) Source: (Monthly Coffee Report March 2012, 2012) Market Environmental Analysis Now that the global coffee market has been explored in comprehensive detail, it is crucial to analyze the industrial and social dynamics of Germany in order to understand the context of the market. With a total area of 357,022 square km, only 33.13% of land is cultivable.

Agriculture is only 1.8% of the total gross domestic product and employed 5.6 of the total workforce. It is the third largest agricultural producer in the European Union. With a strong dearth of natural resources, Germany relied intensively on oil and natural gas imports for its energy requirements. In 2010, the country became the second largest natural gas importer and seventh largest oil importer. (Germany Economic Structure, 2010) The 2009 population statistics estimated a population of eighty two million people with a high level of consumerism.

The German market is moving away from the traditional, manufacturing sector to transforming itself into a source of knowledge based power. Its service division contributed seventy two percent to the gross domestic product. The Germany economy is the fourth largest one in the world and the greatest one within the European continent. It balances its trade sheet by being the world's second largest importer and also comes in second as the world's second greatest exporter.

Following are Germany's top ten imports for the year of 2009: As it is evident from the table above, machinery constitutes the highest number of imports with mineral fuels coming in a close second. Our interest is to do with commodities and it is interesting to note that it is a remarkable figure of USD 82.02 billion, accounting for approximately 8.7% of the value of total imports.

The table below illustrates the top ten exports for Germany in the year of 2009 The trade balance is positive as the value of exports exceeds the value of imports in the year f 2009. Germany's service division contributed seventy two percent to the gross domestic product. The GDP incremented to 3.0% in 2011, but had decreased from the figure in the preceding year of 3.7%. Germany has strengths in the technological sphere of information and communication. It accounted for over twenty percent of the complete European market with a turnover of Euro141.6 billion in 2010.

High demand exists for consumer intensive electronic products such as smart phones, LCDs etc. Another area where Germany enjoys potency is that of health and biotechnology. It is the third largest market in the world, after Japan and America. With a value of USD 18.3 billion, it is equal to USD 223 per capita. The local segment was tight with steady descending pressure on price trends. It was about eleven percent of the total gross domestic product.

Germany imports a lot of sea food with only twenty one percent utilized from domestic fisheries. Per capita consumption of fish is on the rise as it contributes to a healthier diet. It has the fourth largest wine market in the world after France, Italy and the United States of America. There was a lot of stress on organic food with sales totaling Euro5.8 billion. The worldwide recession did have an impact on Germany and the company shrank by nine percent in the year of 2009.

This was the greatest decline since the older times of World War II. The government did what it could to minimize the adversity of the economic conditions by creating a program that reduced the number of hours one worked. This, in turn, only affected unemployment slightly. German Demographics The total population in Germany as of 2011 was 81, 471, 834 people. Following section will explore the age bracket, median age, population growth rate, birth rate, death rate and other such factors. The subsequent table is extracted from data from Index Mundi.

(Germany Demographics Profile 2012, 2011) Age structure Male Female 0-14 years (13.3%) 5,569,390 5,282,245 15-64 years (66.1%) 27,227,487 26,617,915 65 years and over (20.6%) 7,217,163 9,557,634 Median Age Total: 44.9 years 43.7 years 46 years Infant Mortality Rate Total population: 80.07 years 77.82 years 82. 44 years German Coffee Market The hot drinks market is composed of coffee, tea, and other hot drinks. In 2010, the German market for hot drinks had sales of $4.9 billion, with a compound annual growth rate of 2.1% from 2006-2010. Coffee consumption volumes grew with a CAGR of 1.2% between 2006 and 2010, and reached a value of 370.7 million kg in 2010.

The market's volume is forecasted to grow at a CAGR of 1% from 2010 to 2015. Coffee was the greatest contributor in terms of revenue sales towards the hot drinks segment in Germany, completing sixty nine percent of the overall market value in 2010. Tea was only valued at $1.4 billion in 2010 and added to 27.9% of the total market. (Hot Drinks in Germany February 2012, 2012) As is clearly evident from the table above, coffee has dominated the hot drinks sector in Germany and remained within 69 % to 70% over the period of 2006 to 2010.

For Beanies to launch within Germany, another favoring factor is that Germany is the largest coffee consuming market in the entire European Union, as obvious from the subsequent chart. Germany has the highest coffee consumption pattern and occupies more than half the pie at 54.4%. This illustrates the massive potential for Beanies to enter the market and launch their customized, flavored instant coffee brand. (Hot Drinks in Germany February 2012, 2012) The graph below demonstrates the coffee market break up in Germany. Soluble coffee has had relatively stable demand over the years.

This has good implications for Beanies as it shows that there are no sharp variations or steep changes in the level of demand for their product. (Wheeler, 2011) It has the highest average per capita consumption of one hundred and fifty liters per year. (Coffee in Germany). Following is a table that was extracted from the Deustcher Kaffeeverband published report "European Coffee market with focus on Germany".

It clearly illustrates that there is a stable and steady demand for soluble coffee and remained at sixteen thousand and six hundred tons over the time duration of 2009 to 2010. Competitor Analysis The soluble coffee market was around seven percent in 2004. (Germany in Transition: Traditional Markets in decline, 2004). The following are major players in the market: * Nestle * Kraft Foods * Grandos * Tchibo * Jacobs * Bushido Target Market The market segmentation for Beanies Flavored Coffee will be towards the youthful generation as well as adults.

It will demographically aim for the individuals between the age of fifteen and sixty four. Both males and females will be targeted with a middle and upper level, annual household income. Geographical segmentation will take place through the alignment of the market topographically in the terrain of Germany. Fundamentally, there are two segments: in home consumption versus out of home.

As the economic slump has encouraged people to allocate their disposable income to other, more efficient usages, people are now tending to drink coffee more within the comforts of their own home. (Coffee in Germany). The German consumer is aware of the healthy and sustainable produced products available now. To complement that, smoking has been banned in cafes and other public places in Germany, so this will also cater to the market trend that advocates in home consumption of coffee. Psychographic division is through their attitudes, lifestyles, values and beliefs.

It will be a crowd that loves its coffee and thrives under coffee culture. It is meant for those who dwell in the present moments, who bloom in the hustle bustle and cherish the smaller things that life has to offer. For them, instant coffee is a kick start to the day. It is a medium through which they feel connected to the day, to their work and to the achievements that they can attain that very day.

They are the ones who are seeking ma taste that is of reasonable quality, enhanced by the richness of a tinge of flavor within its swirling bounds. Beanies will target those who favor diversity, versatility and flavor. Beanie has thirty six broad variants to serve the needs of its consumers. However, keeping in mind that Germany essentially comes under the umbrella term "unchartered territories" for Beanies, it may be more productive and effective in terms of resources and time to offer the seven flavored instant coffee brands initially.

It is also for those who are health conscious yet still have a sweet tooth. Beanies Coffee has no sugar content and still offers a sweet taste to its consumer. Marketing Strategy The firm has not indulged in hardcore marketing activities nor undertaken designing an apt and appropriate marketing strategy for itself or its products. Given the fact that there is a range of thirty six flavors, it is surprising that the process of branding has not been employed yet.

What is branding? Branding is an entire process that elevates the consumer's perception of a product to another emotional, spiritual dimension. It is the journey through which an emotional connect is created between the product and the consumer. It is an abstract concept that plants the seed of hope of success and promise in the heart of the customer. The brand becomes an invaluable asset to the consumer. The company in question enhances this relationship through imagery, symbols, design¸ and other visuals.

It has to be backed by a proper distribution and placement strategy to ensure that the brand is available and accessible to the consumer. Another important variable to keep in mind is that as Beanies is venturing into an international, unfamiliar market, it should try to understand the culture and mindset of the people there. It can perhaps adapt its brand's flavor and marketing to suit the German taste.

Positioning A strong blend of emotional and functional positioning strategies should be deployed as Beanies is entering the German market for the first time. Beanies Coffee should be positioned as an economical, fun, nutritious, convenient and tasty coffee flavored beverage that provides its consumers with energy. It can be positioned as a social drink that brings friends together, connects them and promotes relationships. Product As previously suggested, launching with six initial variants would be an optimal choice.

It will allow Beanies to get a feel for the market and to see how it progresses. Beanie is one of the few companies that produce flavored freeze dried coffee with natural resources. The brand line includes Amaretto, Cinnamon and Hazelnut, Caramel, Chocolate, Hazelnut, Irish Cream and Vanilla flavored coffee. The factors of taste and convenience are being accounted for here. Market research maybe required here to understand specifically what the German consumer values in terms of taste.

Packaging needs may have to be re addressed, perhaps Beanie can customize it to offer it in single serving sachets. It should be easy to tear and convenient for the consumer. According to the report on Coffee in Germany, published by the CBI, the market is growing for organic coffee and natural foods. Beanies could develop an additional variant in house that will cater to the taste buds and preferences of such a niche.

Changing the packaging to contain German script will make things easier as English is not as widely spoken. This investment if undertaken will prove worthy as it is customizing it for the German consumer and will resonate auspiciously with him. Place/Channel Beanies should offer its products through both channels of retailers and wholesalers. By placing it at strategic advantage placement points through supermarkets, small grocery stores, and hypermarkets as well; it can offer its brand to the consumer from all channels.

The most optimal way is to get in touch with domestic traders and wholesalers in the market who will take on the sole responsibility of getting Beanies once it rolls of.