Research Paper: Organics Coffee Business in the Canadian Market

Target market In recent years the world has seen a growing awareness of health and environmental issues. It is a constantly growing number of concerned consumers, mainly in the industrialized countries of North America, Western Europe, Japan and Australia that are the cause of this development.

Canada, with retail sales estimated at US$ 0.8-1.0 bln, is ranked as the 6th largest market in the world for organic food and beverages in 2003, while the market appears to be growing approximately by 20-25% annually and this growth is sustained by strong consumer concerns over environmental and health issues (Kortbech-Olesen, R., 2004, p. 1).

The major concerns regarding food of Canadian consumers are: nutrition, taste, health and safety, including a strong concern over GMO. These mainstream consumer trends make organic food and beverages very appealing and help explain the rapidly growing organic market.

Environics International survey revealed that 18% of Canadians purchased organic food regularly (regular or heavy buyers) and 22% purchased organic food several times (several times or light buyers) as of October 2000.

Heavy (regular) buyers, the 18 percent who identified themselves as regular organic food purchasers, are fairly representative of the Canadian population with a few interesting demographic differences – 60% are female, income range is about $60 to 80K, they are slightly more likely to be in the 25-34 age group than in the over 55 age group, they are more likely to be from British Columbia (30%) and less likely to be from Saskatchewan (7 %) or Alberta (12%).

Several time (light) buyers, the 22 percent who purchase organic foods several times a year, more closely resemble the average Canadian consumer profile with the following differences: income range of $60 to 80K, they are slightly more likely to be in the 18-34 year age group and slightly less likely in the over 55. Primary focus should be given to these two groups as they cover approximately 40% of consumers and have close profiles. It may be practicable to make gradual entry by geographical principle starting from regions with higher rate of organic product heavy and light buyers.

Marketing mix

Products

Entry strategy should envisage introduction of several organic coffee into product range with consumer characteristics close to the most popular blends, with a following expansion in the range of organic blends. Organic substitutes for complement products (milk, sugar, syrups, etc.) and snacks should be gradually added to the product range or replace existing products.

Organic products naming and packaging should explicitly indicate organic nature of the product, as well as may incorporate elements of design that will hint this attribute.

Price

Prices for organic products may exceed current prices for regular products, providing that the difference in price should be explained to customers via promotion.

Distribution channels

Distribution channels should include all Starbucks coffee shops, retail outlets, mail and internet. Distribution via coffee shops may be started from introducing additional organic products into the range with later opening (or conversion) designated coffee shops providing full range of coffees and only organic supplements and snacks with natural twist of traditional Starbucks experience.

Promotion

It is necessary to invest into customer education regarding organic products via advertising, public relations (including Starbucks website) and POS materials.