CASE STUDY: COSTA EXPRESS The brief Millions depend on the hot jolt of java a perfect elixir to jumpstart their day. Coffee now an essential part of the busy fast life helps to keep us functioning and match the pace. In this age of quick fixes, a perfect flavorsome cup of coffee also will no longer need waiting. Costa Coffee plans to introduce ‘coffee on the go’. Whitbread the parent company for Costa has acquired self-service coffee chain Coffee Nation and plans to launch a new brand, Costa Express, with a view to target the self-serve coffee bar sector.
Andy Harrison, the Chief executive of Whitbread comments, “Customers increasingly want great-tasting coffee on the go, which makes the self-serve coffee market very attractive. ” After achieving the status of UK’s favorite coffee shop brand in 2010 by the Project Cafe10 research Costa started campaigning in the premise of quality offered by hand-made coffee, including also the claims “Save the world from mediocre coffee” and “7 of 10 coffee lovers prefer Costa” The strategy Great Tasting Coffee on the Go” Costa Express “Great Tasting Coffee on the Go” Costa Express What would be the strategy for a leader on its market, operating 1. 200 points of sale in the UK and a reported jump in profits of 43% on the last 6 months? If you answered “ Shield their current position”, you are completely wrong, Costa Coffee wants more, much more… Coming July the company plans to start the operation of Coffee Nation with about 900 coffee vending machines.
Costa plans to rebrand all the existing self-service machines. This is being done with an aim to achieve a number of 3000 Costa Express units within the next 5 years. Coffee Nation has an annual turnover in excess of ? 20m, from Milestone Capital and Investec Growth ; Acquisition Finance and members of the existing management team. Targeting an annual market of 1. 7 billion, the company is launching the new brand Costa Coffee, aimed at customers who want great tasting coffee on the go.
The significant differentiator from other self service coffee vending machines is the usage of fresh milk and freshly roasted coffee, obeying the basic premise of top quality hand-made coffee. “Combining Costa and Coffee Nation to create Costa Express is good news for our team and our customers and will allow us to continue to work with fantastic partners across the UK to provide customers with the highest quality coffee on the go” commented Scott Martin, Chief Executive Officer of Coffee Nation.
The company is working on a pre-existing market with already known product but in a different way. In order to change the perception of this express coffee and consequently change the consumer’s behavior, Costa Coffee was pioneer launching the first TV Campaign supplemented by outdoors, online, direct marketing and in-store activity. The execution “This acquisition provides an exciting launch pad to develop 3000 Costa Express bars across the UK, providing an additional growth lever for the Costa brand and making Costa available to more customers in more locations,” Harrison highlights.
The Costa Express coffee vending machines will be targeted at locations like supermarkets, motorway service areas, railway stations, hospitals, universities and other busy public places. These self-serve coffee bars will use fresh milk unlike other vending machines, which use milk powder. Costa plans to supply Coffee for the new Costa Express brand from the Costa Roastery in London, thus maintain quality and taste standards. The brand believes that this kind of machine technology and monitoring systems put it at a competitive advantage.
The existing customers for Coffee Nation included Tesco, Moto and Welcome Break ; the re-branded Costa express coffee machine units will be placed in these locations. The challenging task that arises with this expansion is how Costa will drive traffic towards these stand-alone self-service coffee machines. The popular belief that coffee from vending machines lacks quality in regard to taste, hygiene ; personalization in regard to the human touch might be an area of major concern and act as a barrier to success.
Costa Express needs to build a clear communication strategy and focus on developing brand image and changing perception in regard to quality of the product. The brand needs to assure the consumers that the product will meet the Costa standards and experience and will save time and add to convenience thus, providing ‘Great taste and quality on the go. ’ The outcome Costa Express will be operating in a mature and stable market, with the strategy of delivering the same product in a different way attending the urban consumer’s needs. The company has all the required assets and should succeed as the predominate Coffee Company.
If Costa Express follows an appropriate and targeted communication strategy they can capitalize in the Costa brand name and image and help achieve the final expansion target making Costa Coffee the leader in the coffee shop market. “The launch of Costa Express will quadruple the brands profit contribution,” comments Harrison. Analysis coffee – a highly perishable item, tangible in nature price lower than coffeeshop should bank on brand credibility i. e. costa goodwill product depends on taste and quality positioning – great quality on the go, convenience