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Country : | Australia |
Task:
Listened actively
Task 2 – Prepare for and analyse dataTask summary and instructions
Displays integrity in the way we do business.
Shows care and respect for our customers.
3031473128584OwnershipZEEMH is a Proprietary Limited company, 100% Australian owned and operated. The majority of the company is owned by founders John Cluber (40%) and Marla Bennet (40%). Steven Yun, an investor, owns 20% of the company, and he is also part of the Board of Directors as an executive director. They have recruited experienced and highly skilled board members.
The coffee-making process
Coffee beans are sourced from selected producers around the world, and they must meet these characteristics:
4107773660Organics and Fair Trade
Be produced in small to medium farms.
Pass the quality control from ZEEMH coffee roaster experts.
The product
Is roasted daily – an efficient inventory process is key to allow for the product to be shipped and re-stocked fast.
Has been awarded several quality prices from Australian coffee associations.
Delivered free of charge for orders over $ 80.00.
It is packaged using earthbags products ( https://www.thepackagingpeople.com.au/product/earth-bags/?gclid=EAIaIQobChMI5K3_zNai3QIViGkqCh2mgQX2EAQYBCABEgIjhvD_BwE )
Sales B2C and B2B
Sales numbers for 2019 and 2020 are reported below-average sale/kg.
B2C 2019 Data 2020 Data
Total Single Customer 620 15% Inactive18% shopped only once29% shopped twice32% shopped more than twice6% shopped more than 5 timesAverage single transaction 2 kg of coffee 902 26% Inactive16% shopped only once22% shopped twice30% shopped more than twice6% shopped more than 5 timesAverage single transaction 2 kg of coffeeIncrease of 5% on prices since 2018
Revenue $ (total-all blends production) $ 252,669.55 $ 366,975.00 B2B 2019 Data 2020 Data
Total Single Business Accounts 320 35% of cafés used Zeemh to work on own customised unique blend.
2% of inactive accounts 380 48% of cafés used Zeemh to work on own customised unique blend.
4% of inactive accounts
Revenue $ (total-all blends production) $ 38,944,471.82 $ 51,214,398.30
B2C
Product Packaging Description
250 gr 500 gr 1 kg Feature blend – premium line with a limited release $ 19.00 $ 36.50 This product changes every three months, and it is a limited seasonal offer.
Espresso – standard line $ 13.00 $ 25.00 $ 46.00 Full-bodied, Italian style coffee with a rich and warm flavours.(This product is made with less prestigious quality beans to meet the price point.)
Espresso – premium line $ 16.00 $ 31.00 $ 56.00 Full-bodied, Italian style coffee with a rich and balanced flavour.
Decaf – standard line only $ 15.00 $ 28.00 $ 52.00 Decaffeinated but just as good as your regular espresso.
Horizon – premium line $ 17.00 $ 33.00 $ 65.00 Rich in flavours, balanced and heavy bodied.
Daylight – standard line $ 14.00 $ 26.00 $ 48.00 Aromatic with a complex finish.
Awake – premium line $ 17.00 $ 33.00 $ 65.00 Complex flavours, intense and full bodied
Intensity – premium line $ 17.00 $ 33.00 $ 65.00 Intense creamy body with a hint of almonds and caramel.
Domain – premium line $ 17.00 $ 33.00 $ 65.00 Delicate flavour with hint of honey and blossom fragrance.
Summer Dream – premium line $ 17.00 $ 33.00 $ 65.00 All round coffee with a smooth and velvety body.
Renascence – standard line $ 14.00 $26.00 $ 48.00 Rich balanced and lively.
Customised blend $ 55.00 $ 105.00 The customer calls a coffee specialist at ZEEMH, completes a personality test (optional) and discuss its preference to have a special blend designed for him/her.Customised packaging options are also available with this product.
The purchasing cycle for B2C customers is provided below:
B2C Sales 2019-2020
Sales 2019Sales in Kg 2019Sales in $ 2020Sales in Kg 2020Sales in $ Additional Info
Feature blend – premium line with limited release 492 $ 35,915.95 692 $ 50,516.00
Espresso – standard line 421 $ 23,575.95 280 $ 12,880.00
Espresso – premium line 0 401 $ 22,456.00 NA in 2019
Decaf – standard line only 320 $ 16,639.95 280 $ 14,560.00
Horizon – premium line 752 $ 48,879.95 854 $ 55,510.00
Daylight – standard line 459 $ 22,031.95 421 $ 20,208.00
Awake – premium line 0 692 $ 44,980.00 NA in 2019
Intensity – premium line 381 $ 24,764.95 491 $ 31,915.00
Domain – premium line 512 $ 33,279.95 486 $ 31,590.00
Summer Dream - premium line 221 $ 14,364.95 142 $ 9,230.00
Renascence – standard line 692 $ 33,215.95 903 $ 43,344.00
Customised blend 0 183 $ 19,215.00 NA in 2019
Total $ $ 252,669.55 $ 356,404.00
B2BA strategic alliance has been established with NFB Coffee Equipment Company. A coffee equipment company that produces and distributes coffee equipment for Cafés around Australia. NFB currently serves 22% of Australian cafés.
NFB is awarded a perpetual 3% of the revenue from coffee sales for each café they signed up with ZEEMH.
An industry-standard dose for a coffee is 7 grams per serve. For a 1kg bag, you could expect to get in the range of 60-90 cups depending on strength, double shots and wastage.
Product 500 gr 1 kg Discount Description
Espresso – premium line $ 45.00 11-15 kg 5%
16-20 kg 8%
21-25 kg 10%
26-30 kg 15%
Full-bodied, Italian style coffee with a rich and warm flavour.
Decaf – standard line only $ 15.00 Decaffeinated.
Horizon – premium line $ 65.00 Rich in flavours, balanced and heavy-bodied.
Street – premium line $ 65.00 A slight bitter flavour, decisive and balanced.
Customised blend $ 95.00 The café' can order a customised blend of coffee.
B2B purchasing decisions by the client base are made considering:
Pricing point
Quality of the coffee
Opportunity to differentiate own café using Zeemh products.
Most businesses would have a manager in charge of purchasing services (in small cafés, this is usually the owner)
Cafés prefer a personal touch in the sales process and value face to face relationships with sales personnel.
Most businesses would look at the terms of payment (the most popular term of payment within Zeemh customers is 30 days from receiving an invoice from Zeemh; few clients pay within 60 days, but they may be charged an extra 5% of the invoice for this arrangements). 78% of clients choose 30 days payment terms, 21% 60 days, and only 1% pays upfront.
B2B clients are very rational in their decision-making process, and they would consider a range of factors such as testimonials from other businesses; recommendations; pricing; quality of service; quality of coffee; how Zeemh meets their business needs; cost savings on own business operations; quality of business relationships with Zeemh personnel.
The purchasing cycle for B2B customers is provided below:
B2B Sales 2019-2020
Sales 2019Sales in Kg 2019Sales in $ 2020Sales in Kg 2020Sales in $ Additional Info
Espresso – premium line 110,000 $ 4,949,999.95 95,000 $ 4,275,000.00
Decaf – standard line only 26,000 $ 779,999.95 25,800 $ 774,000.00
Horizon – premium line 0 112,000 $ 7,280,000.00 NA in 2019
Street – premium line 285,000 $ 18,524,999.95 261,000 $ 16,965,000.00
Customised blend 208,000 $ 19,759,999.95 301,000 $ 28,595,000.00
Total $ 44,014,999.80 $ 57,889,000.00
Discount applied % On Total orders Total $ of discount % On Total orders Total $ of discount
None 2 $ 880,300.00 3 $ 1,736,670.00
11-15 kg 5% 6 $ 2,508,854.99 4 $ 2,199,782.00
16-20 kg 8% 9 $ 3,644,441.98 11 $ 5,858,366.80
21-25 kg 10% 39 $ 15,449,264.93 37 $ 19,277,037.00
26-30 kg 15% 44 $ 16,461,609.93 45 $ 22,142,542.50
Total Revenue including discount $ 38,944,471.82 $ 51,214,398.30
On average, a café would consume 2 kg of coffee/ day. Busy cafés would consume an average of 40-50 kg of coffee/week.
Pricing considerations
ZEEMH premium price structure is justified by:
331667197542Organic and Fair-Trade coffee only
Superior quality coffee beans used for roasting.
Quality of customer service
ZEEMH mark-up on coffee price is on average 100% with the base cost to consider: green coffee cost, transportation, the cost for roasting (equipment, utilities and labour), cost to market and cost to deliver to a customer.
The cost structure is shown below:
Positioning Map
High perceived quality and status
Limited service
Less personal service 22034524066500
Extensive personalised service
Low perceived quality and status
317528511500The typical B2C customer profile for quality coffee
Zeemh positioned itself in the coffee speciality end, focusing on the experience of great coffee. Customers are no longer satisfied with just a quick caffeine fix. They have become more discerning in their preferences, they want to expand their coffee knowledge and with this, comes greater expectations on baristas and café owners to deliver coffee with more complex flavours.
Coffee drinkers tend to be older, with 74% of adults aged 55 and older consuming it daily, versus 50% of those aged 18 to 34. Among coffee drinkers, those younger than 35 tend to drink fewer cups per day on average (1.8) than those aged 35 and older, who consume roughly three cups per day.
Men drink as much coffee as women; each consuming an average of 1.6 cups per day. Women seem to be more concerned about the price than men.
Key B2B segments supplied to:
Independent cafés tend to be small boutique cafés that try to differentiate themselves with a speciality coffee offering, Moreover, 48% of them uses customised coffee blends (and packaging) that Zeemh creates for them.
Strategic DirectionZeemh's strategy is about capturing the higher end of the coffee lovers' market.
ZEEM aims to create a premier brand, so that they can eventually capture market share across broad geographic lines.
Zeemh's competitive edge is:
Quality Coffee
Easy-to-use website
Superior customer service
Coffee blends customisation for clients
The strategic objectives identified by the board of directors are:
Increase brand awareness among B2C and B2B customers
Increase market share among B2C clients by 20% in the next five years.
Expand to international markets.
Increase market share among B2B clients by 5% in the next three years.
Expand the product line to coffee equipment and Zeemh merchandise.
Identify strategic alliances to expand the company's footprint nationally and internationally.
Consider an HR strategic plan to attract and retain talent in the company.
Improve quality management practices to decrease production and logistic costs and establish the brand as synonymous with quality first.
Improve customer retention and loyalty.
An integrated digital marketing campaign is recommended by the board. However, the board has highlighted how the more traditional form of marketing, such as direct marketing, should be integrated into an overall strategy.
Zeemh's clients like a personal approach to sales and interaction with the company.
The board has committed to:
$ 210,000 in marketing expenditure for the next financial year
$ 450,000 in recruitment and improvement of HR practices (including professional development for staff)
$ 190,000 to quality improvement (including enhancements to the roasting facilities in Port Melbourne)
Market Information Excerpt
Source: Ibisworld – Research data further by gathering free access to IbisWorld from the State Library of Victoria https://www.slv.vic.gov.au/
Tea, Coffee and Other Food Manufacturing in Australia
The industry includes cafes and coffee shops that serve food and beverages to customers on-premises. Customers generally order and are served while seated and pay after eating. The industry excludes operators mainly engaged in takeaway food services, restaurant and catering services, the operation of theatre restaurants and selling alcohol for consumption on and off-premises.
Key Trends
Australia's strong cafe culture has helped generate sustained growth for the coffee segment.
Niche players have entered the industry to satisfy consumers looking for high-quality products.
Exports to China have been highly volatile, even before the COVID-19 pandemic.
Tea consumption is projected to decline as younger consumers shift towards other beverages.
Private-label brands are anticipated to place increasing price pressure on the industry.
Increasing consumer demand for premium industry products is projected to support revenue growth.
Consumer preferences have changed over the past five years due to growing health concerns.
Executive Summary
Mixed brew: Revenue has grown despite volatile input prices and international trade.
37365006Operators in the Tea, Coffee and Other Food Manufacturing industry produce a range of food products. Industry products include tea, coffee, prepared meals, salt, yeast, and herbs and spices. Rising health consciousness, consumer incomes, volatile input prices and international trade have all influenced industry revenue over the past five years. These factors have supported demand for some products at the expense of others.
A line chart that shows the annual percentage change in revenue over the past five years and a forecast for the next five years.
View as data table, Chart
The chart has 1 X axis displaying values. Range: 2015.9 to 2026.1.
The chart has 1 Y axis displaying values. Range: -5.5335 to 15.2235.
2026: 3.0%
Overall, industry revenue is expected to increase at an annualised 1.9% over the five years through 2020-21, to $8.2 billion. However, this trend includes an expected revenue decline of 4.6% in the current year, due to the COVID-19 pandemic negatively affecting exports and demand for premium food products. In addition, downstream demand from food-service establishments has been volatile during the COVID-19 pandemic. However, players have benefited from rising demand from the major retailers, such as Coles and Woolworths.
Consumer preferences have changed over the past five years due to growing health concerns, rising demand for foreign foods and increasing demand for premium product lines. These trends have allowed many small-scale niche manufacturers to enter the industry over the period, boosting the number of industry enterprises. However, growing interest in foreign foods has contributed to moderate import pressures on industry operators, limiting industry performance. Exports have declined as a share of revenue over the past five years, despite strong demand for premium Australian food products abroad, particularly in the Asia-Pacific region. The COVID-19 pandemic has disrupted supply chains and reduced demand from overseas markets, further constraining industry performance.
Industry revenue is forecast to grow over the next five years. Demand for premium products is likely to rise as the economy recovers from the downturn caused by the COVID-19 pandemic. In addition, exports are likely to grow as a share of revenue as demand from Asian markets recovers. However, operators are anticipated to face continued pressure from supermarket private-label brands and imported foods over the period. Overall, industry revenue is forecast to increase at an annualised 2.6% over the five years through 2025-26, to $9.3 billion.
Industry products are extremely diverse and include tea, coffee, salt, mayonnaise, condiments and prepared meals. Industry operators have contended with volatile input prices, fluctuations in international trade and private-label brands rapidly developing over the period. However, rising demand has mostly benefited industry manufacturers. Overall, industry revenue is expected to increase at an annualised 1.9% over the five years through 2020-21, to $8.2 billion.
366077579838400The COVID-19 pandemic has caused further volatility in the industry. Exports are expected to decline over the two years through 2020-21, due to decreased demand from many Asian nations, including China, and disrupted supply chains. Supply chain disruption is also expected to constrain import volumes during the pandemic. The pandemic has also had a mixed effect on domestic demand. As many industry products are non-perishable, demand soared during periods of consumer stockpiling during 2020. However, the decline in consumer disposable income in 2020-21 is likely to constrain industry performance, contributing to an expected revenue decline of 4.6% in the current year.
Health consciousness has grown over the period, with consumers increasingly concerned about the amount of fat, sodium and sugar in their diets. This has reduced demand for products perceived as unhealthy, such as salt and certain prepared meals. However, the rising number of busy consumers has helped limit declines in the prepared foods segment.
Consumers are increasingly opting for premium food products, including coffee beans and grounds, and loose-leaf tea. In addition, changing consumer preferences have boosted interest in more exotic meals, driving demand for herbs, spices, flavourings and sauces. Growing interest in specialty foods, premium products and international food products has provided scope for new, smaller players to enter the industry. This trend has boosted enterprise numbers and supported employment growth over the period.
Tea and coffee
Coffee is one of the largest product segments in the industry.
Australia's cafe culture and love of quality coffee have generated sustained growth for the coffee segment over the past five years. Coffee's popularity has encouraged dynamic product innovation through new blends and coffee-related products. Furthermore, consumer tastes have shifted to premium coffee varieties, contributing to revenue growth. However, volatile downstream demand from cafes and coffee shops during the COVID-19 pandemic has reduced the margins of coffee producers, despite a decline in the world price of coffee over the period.
Niche players have entered the industry to satisfy coffee consumers looking for high-quality products over the past five years. These niche markets are generally not catered for by the product ranges of the industry's larger players. The number of coffee machines owned by consumers has grown over the past five years, reflecting increasing demand for premium coffee. Conversely, demand for instant coffee has declined over the period. However, instant coffee continues to make up a large proportion of the industry's coffee segment.
Industry operators also generate a significant amount of revenue through tea manufacturing. Tea producers, particularly loose-leaf and specialty tea makers, have benefited from rising health consciousness over the past five years. For example, the demand for green tea has grown because consumers perceive it as having strong health benefits. Fruit teas and herbal teas have also risen in popularity.
Revenue for the Tea, Coffee and Other Food Manufacturing industry is forecast to grow over the next five years.
A projected recovery in export demand after the COVID-19 pandemic and increasing consumer demand for premium varieties of industry products, such as coffee capsules, are anticipated to support revenue growth over the period. However, ongoing pressure from imports and supermarket private-label brands is likely to limit the overall growth in industry revenue. Overall, industry revenue is forecast to increase at an annualised 2.6% over the five years through 2025-26, to $9.3 billion.
Source: Ibisworld – Research data further by gathering free access to IbisWorld from the State Library of Victoria https://www.slv.vic.gov.au/
Coffee Bean Distributors in Australia
Industry operators primarily supply roasted coffee beans to cafes and coffee shops in Australia. The industry excludes instant and percolated coffee.
Key Trends
Australia's rising coffee culture has supported industry demand.
The popularity of coffee capsules has been constraining demand for roasted coffee beans.
Weaker downstream demand, stemming from the COVID-19 restrictions, has squeezed profit margins.
6286515938500While demand for coffee will grow, industry firms will have to adapt to increasing competition.
Higher expenditure on recreation and culture is anticipated to drive industry expansion.
The instant coffee market will remain the most significant challenge to the industry.
COVID-19 has disrupted Australia's coffee culture and demand from primary downstream markets.
A rise in coffee culture has supported the Coffee Bean Distributors industry over the past five years. However, lockdown and movement restrictions brought on by the COVID-19 pandemic, has disrupted downstream demand over the past two years. Demand from cafes and coffee shops fell significantly over the lockdown periods, with many of these establishments temporarily shutting down due to subdued consumer demand and limited operating capacity. These factors have outstripped any growth over the past five years. As a result, industry revenue is expected to decline at an annualised 0.2% over the five years through 2020-21, to $2.5 billion.
3376295143827500The outbreak of COVID-19 has disrupted Australia's coffee culture and deteriorated demand from primary downstream markets. In March 2020, the Federal Government imposed trading restrictions on all non-essential businesses, limiting cafes, coffee shops and restaurants to takeaway services only. In response, many of these downstream establishments temporarily closed or ceased operations over the lockdown periods, due to difficult trading conditions. Although a shift to homemade coffee among consumers boosted demand from supermarkets and grocery stores, it has exposed the industry to stronger external competition from instant coffee and coffee pods. Nevertheless, easing movement restrictions and the reopening of cafes and coffee shops for dine-in services are anticipated to bolster industry demand in the current year. Industry revenue is expected to grow by 2.6% over 2020-21.
Downstream demand is anticipated to recover over the next five years, driven by rising discretionary incomes and the continued popularity of coffee culture. Industry revenue is forecast to increase at an annualised 1.8% over the five years through 2025-26, to $2.7 billion. Increases in demand from cafes and coffee shops, and expenditure on recreation and culture will likely be key drivers of industry revenue growth. Profit margins are projected to increase over the period, in line with stronger demand for premium coffee beans. However, price competition in the industry is anticipated to remain intense over the period, limiting growth in profitability.
The COVID-19 pandemic has had a significant effect on the industry's performance.
In March 2020, to contain the spread of the virus, the Federal Government imposed restrictions on downstream cafe, coffee shop and restaurant markets, limiting these businesses to takeaway only. Many of these establishments temporarily closed or ceased operations over the lockdown periods, due to subdued demand and limited operation ability. As a result, demand for roasted coffee beans fell sharply over 2019-20, putting downward pressure on industry revenue.
Meanwhile, many households shifted to making coffee at home during the lockdown periods, supporting sales to supermarkets and grocery stores. However, this shift also boosted demand for substitute products, such as coffee pods and instant coffee, hindering demand growth from supermarkets. Nevertheless, the easing of movement restrictions, and the reopening of cafes, coffee shops and restaurants for dine-in services are anticipated to bolster demand for industry products in the current year.
Key drivers
The amount of coffee purchased by consumers influences industry revenue.
Consumers are often more likely to drink instant coffee at home, instead of grinding their own coffee beans. Consequently, most demand for coffee beans comes from cafes and coffee shops. The number of small, independent coffee shops has increased over the past five years, driven by Australia's growing coffee culture. Changes in the world price of coffee also affect industry revenue. However, given that prices of arabica and robusta coffee beans do not always move together, price fluctuations can have a muted effect on industry firms.
As coffee is generally considered a non-staple product, discretionary income influences the industry's performance. Rising expenditure on recreation and culture over the three years through 2018-19 has supported industry revenue, with demand for coffee beans from both restaurants and coffee shops increasing before the imposition of COVID-19 restrictions and the negative economic consequences, such as consumer pessimism.
Industry operators face intensifying competition from coffee capsule distributors due to the popularity of Nestle's Nespresso and other coffee pod machines. These capsules offer some consumers a cheaper and more convenient alternative to freshly roasted coffee. This trend has hindered the industry's performance over the past five years.
Coffee culture in Australia
Australia's coffee culture has been the main factor driving industry revenue growth over the three years through 2018-19.
-825593535500Rising popularity of brunch culture among younger consumers has led consumer to opted for establishments where they can enjoy their coffee with a meal. This trend has prompted many food service establishments to offer coffee in their menus, benefiting industry players. Over the past five years, busy lifestyles have caused many Australians to spend less time at home preparing their own meals, which has driven revenue for coffee shops and cafes. Furthermore, premium coffee presents an affordable luxury that many consumers can indulge in. Demand for premium blends and fair-trade varieties has supported the industry's performance over the period.
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