Second Cup

Part
01
of three
Part
01

Second Cup - SWOT Analysis

Based on research, a SWOT Analysis for Second Cup reveals one of its strengths as its geographic presence in many regions and a weakness as slow sales growth. One of its opportunities is expansion into emerging markets and a threat is complicated supply chain.

STRENGTHS

  • Second Cup's major strength is its geographic presence in different regions. It enables high business reach to the target market and easy accessibility. (Source 1 pcorroborated by Source 2)
  • It has a wide product portfolio that allows customer base expansion. (Source 1 corroborated by Source 2)
  • Strong online presence enables strong relationships with customers.
  • Its strong financial position and health is good for further investments. (Source 1 corroborated by source 2)
  • Its access to the suppliers for raw material at a lower cost improves the overall business efficiency.
  • The locational advantage can improve its competitiveness in many ways, such as lower cost, improved accessibility or enhanced brand image.
  • The efficient IT infrastructure can improve the operational efficiency.
  • Competent and committed human capital can act as a powerful source of competitive advantage, particularly when business is service-oriented in nature.
  • High product quality expands brand loyalty. (Source 1 corroborated by Source 2)
  • Workplace diversity goes well with its intent to operate in international market.
  • The horizontal and/or vertical integration can increase the control over whole value chain, resulting in improved access to raw material and quick product delivery to the final customer.
  • An organization may own different intellectual property rights that can make the product offerings unique and exclusive, making it difficult for competitors to imitate.


WEAKNESSES


OPPORTUNITIES

  • The changing customer needs toward healthier products. (Source 1 corroborated by Source 2)
  • The development of new technologies to assist in production and delivery. Technology decreases costs, improve efficiency and result in the quick introduction of innovative products. (Source 1 corroborated by Source 2)
  • Higher customers’ disposable income and bigger affluent customer base is an opportunity to offer more high-end products.
  • E-commerce and online marketing can increase its sales.
  • It can expand into emerging markets and niches. (Source 1 corroborated by Source 2)
  • Developing countries like India and China have the biggest markets on the planet and are good revenue opportunities for the company.
  • More globalization enables higher customer reach. (Source 1 corroborated by Source 2)
  • Better relationships with schools, hotel chains, restaurants etc. can also increase the number of its consumers.

THREATS


Part
02
of three
Part
02

Second Cup - Competitive Analysis

Starbucks' major competitive advantage, vis-à-vis Second Cup, is Starbucks' brand name. For Tim Horton, the advantage takes the form its positioning as an "authentic" house brand name of Canada. Blenz has a unique advantage in its variety of blends of coffee, which can be unique to each customer.

TIM HORTONS

Overview
  • Tim Horton is a Canadian Coffee chain which has headquarters in Oakville, Ontario, Canada and over 4000 restaurants in 9 countries. The brand is owned by Restaurant Brands International which also owns popular restaurants like Burger King and Popeyes.
  • The company's mission is to provide superior quality service to the customer.
  • The Tim Horton company sales grew by more than 2% but it still lagged behind the other company brands owned by Restaurant Brands International Inc., The Parent company 'Restaurant Brands International' had shown 87% profit.
Competitive Advantage
  • Authenticity: As per marketing SWOT analysis Tim Horton is always voted as the most authentic brand in most surveys.
  • Goodwill in Canada: Many people in Canada prefer this brand and are loyal to Tim Horton.
  • Pricing: The pricing of Tim Horton coffee and products is less compared to its competitor Starbucks.
  • Reward Program: The company provides many reward program the latest one is to provide customers a coffee, tea or select baked goods after seven purchases.
Target Market
  • The company is currently targeting the Chinese market but are facing a major competition from Starbucks which is already operating in China for two decades.
What the company is doing to stay relevant
  • The company is trying to deliver food and have started to test delivery in three cities.
  • They are also planning for children menu's and more loyalty programs.
  • All day breakfast program: In this program the company is planning to provide breakfast anytime.
  • Also, the company is investing $100 million in Canada to improve the supply chain and is building new distribution centers in Alberta and British Columbia.
  • New look and feel across the board: The company's hockey card program was a huge success. The video was viral has 270 million media impressions in Canada and the U.S. and has more than 1.5 million views on Facebook based on which a hockey theme doughnut box was introduced.
Threats

STARBUCKS

Overview
Competitive Advantage
  • Brand Name: The company has the most popular coffee brand name around the world.
  • Extensive international supply chain: the company has an extensive supply chain. Suppliers are selected based on quality.
  • Financial Performance: The company has a strong financial performance. It has increased its profits consistently, and now has a market capitalization of $81.06 billion in 2018.
  • Acquisitions: The company has acquired Seattle’s Best Coffee, Teavana, Tazo, Evolution Fresh, Torrefazione Italia Coffee, and Ethos Water.
Target Market/Audience
What the company is doing to stay relevant
Threats
  • The biggest threat would be competitive low cost coffee sellers and coffee chains.
  • Another major threat takes the form of competitive imitation by the other coffee brands.
  • Many sociocultural movements support small independent and local coffeehouse and they oppose to franchises.

BLENZ

Overview
  • Blenz opened its first coffee shop in 1992 on Robson Street in the heart of downtown Vancouver.
  • The company's is passionate about giving back to the society like in 2018 it has made 100% donation of drip coffee sales to breast cancer research.
  • It has over 82 franchises in 6 countries.
Competitive Advantage
Target Market
What the company is doing to stay relevant
  • They have a lot of community partners. Some of which are the Canadian cancer society, Canadian mental health institution, Canadian Red Cross, etc. Though these partnerships, the company engage in numerous charitable projects that impact the communities and lives of Blenz' customers.
  • The company uses Simply Sage accounting technology to improve their financials.
  • Giving back to society is one of the company's main charity goals. The company announced plans to donate $20,000 to the Canadian Cancer Society.
  • Per the managing director Blenz, the company provides perks such as free pastries and unlimited coffee on Mondays.
  • They also started blind taste test campaign for the customers to know more about different flavors of coffee. This campaign was received positively by customers and the customers started changing their preference after the taste test.
  • For the health conscious customers, the company has introduced the Turmeric Latte that the company claims has anti-inflammatory properties. These superfood drinks are becoming a growing trend.
Threats

Research Strategy:

To identify competitive features in the Canadian market for Tim Hortons, Starbucks, and Blenz we started by gathering direct and indirect details and statistics about companies and their markets. We discovered existing SWOT analyses for all three companies and, after confirming the respectability and reliability of the sources for these existing SWOT analyses, we integrated them into our research.
Part
03
of three
Part
03

Second Cup - Industry Trends and Threats

Canada's coffee chain industry is very competitive with large names like Starbucks and McDonald’s that offer premium coffee experience. Other major competitors include Tim Horton, Subway, Taco Bell, and Burger King. Below is an overview of the findings.

The Coffee Chain Industry in Canada

  • Coffee is the most popular beverage among adult Canadians and is more popular than tap water. Approximately 67% of Canada’s adults drink a minimum of one cup of coffee and on average three cups per day. Most people consume coffee at breakfast (80%).
  • Canada's coffee chain industry consists of 7,583 coffee-shop enterprises which employ 166,196 people and has a total revenue of $11 billion. Between 2012 and 2017 this industry had an average annual growth of 5.7%.
  • Currently, Tim Horton has 3,692 locations across Canada, which comes down to approximately one location for every 9,000 Canadians.

KEY TRENDS

Many Chains Are Offering Espresso-Based Beverages

  • Espresso-based drinks are increasing in popularity in Canada. According to the Coffee Association Canada (CAC), the percentage of Canadians between 18 and 79 years "who drank an espresso-based beverage in the past day increased from 13% in 2013 to $23% in 2017."
  • Espresso is a denser brew of coffee and latte, cappuccino, macchiato, mocha, and Americano are examples of beverages that are considered to be espresso-based drinks.


Differences in Consumption Patterns Between Age Groups


THREATS

Competition

  • The industry is very competitive with large names like Starbucks and McDonald’s that offer premium coffee experience.
  • For example, McDonald’s brand McCafé "has positioned itself as the place to find high-quality but affordable coffees."
  • Other major competitors include Tim Horton, Subway, Taco Bell, and Burger King.

Market stagnation

  • The market seems to be stagnating. According to analysts, the market is mature and increasing consumer traffic in this market will be increasingly challenging.
  • Operators will be successful if they can offer "added value in the form of a premium product and/or consumer experience."
  • "Furthermore, there is a (small) chance that increasing consumer debt could impact the overall demand for the services this industry provides."

RESEARCH STRATEGY

To answer this question, we found readily available data on Canada's coffee chain industry. We selected reports compiled by consumer research firms like Franchise Direct, coffee organizations like Coffee Association of Canada (CAC), leading coffee chains like Starbucks, and market research firms like Euromonitor. To select the trends, we chose those that are backed by research data and repeated in multiple credible sources.
Sources
Sources

From Part 02
Quotes
  • "MISSION STATEMENT: Our guiding mission is to deliver superior quality products and services for our guests and communities through leadership, innovation and partnerships."
Quotes
  • "The demographic segmentation by Starbucks is between 25 and 40 years of age with high incomes, the second target group is 18 to 24 year of age and belongs to richer families."
From Part 03
Quotes
  • "Espresso is generally a denser brew of coffee. Espresso-based drinks include the latte, cappuccino, macchiato, mocha, and Americano. Regular coffee can also be combined with espresso to increase the flavor and caffeine content of the drink. The popularity of espresso-based drinks is growing in Canada. According to the CAC, the percentage of Canadians aged 18 to 79 who drank an espresso-based beverage in the past day increased from 13% in 2013 to $23% in 2017."
Quotes
  • "The growth in bars/pubs has been subdued – impacted by a couple of social trends that negatively impacted sales. Bars and pubs are no longer the top places for people to socialise."
Quotes
  • "Coffee is Canada’s most consumed beverage amongst adults – even more than tap water. As champions for the advancement and enjoyment of coffee in Canada, the Coffee Association of Canada (CAC) continually strives to better understand and educate Canadians about their favourite brew."
Quotes
  • "Consumers remain keen to indulge in coffee and doughnuts as an affordable luxury. And in addition, many now view some of the exclusive coffee varieties served by independents as a third wave trend to be savoured rather like fine wine."
Quotes
  • "People are conscious and aware of the dangers of eating junk food and thus they prefer to eat home-cooked meals. This is a trend which will dampen restaurant sales in the future."
Quotes
  • "Canadians prefer, above all, traditional coffee, followed by espresso based beverages. In the last 5 years (2014 – 2018), the penetration espresso-based beverage among adults between 18 – 79 has had a steady increase, from 14% in 2014 to 24% in 2018."
Quotes
  • "It seems millennials are responsible for the spiked interest in new tea flavours. Who are millennials exactly? They are people born between 1981- 1996, ranging in age from 18-33. When Nielson conducted a study with Canadian consumers of all ages, 55% said they were tea drinkers, meaning they drink at least 1 cup of tea per week. When Nielson took the data from millennials alone, 64% of said they were tea drinkers, and the age group that consumed the most tea were people aged 20-29. "