Kusmi tea case

Topics: Retailing, Coffee, Flagship Pages: 9 (1590 words) Published: March 9, 2014
1. Think about the comparison between Starbucks and Kusmi Tea

The key difference between Starbucks and Kusmi Tea is the brand experience. Starbucks offer fresh-made coffee that is generally to be consumed in-store. Because of this Starbucks has to ensure a consistent experience in all their stores. Kusmi Tea’s key product is packaged tea, and tea consumption is more geared towards in home consumption where out of home tea consumption is driven by need for premium tea experience. These different expectations of their customers will lead to different retail strategies for the two brands (see question 3).

Brand Awareness in France
Awareness but no preference
High awareness in premium tea segment
Competitors

Starbucks and Kusmi Tea compete in the same product category: beverage.

Specific competitors for each brands vary by distribution formats (shown on the right) Physical Store
Coffee Shops: Costa Coffee;
Nothing Hill; traditional cafes

Tea salon: Ladurée/ Mariage Frères/ Fauchon/ Meert/ etc

Supermarket Retailers
Illy, Nescafe and other bottled coffee brands
Lipton/ Tetley/ Twining

Premium outlet/ retail
Nespresso
Mariage Frères/ Pammamn/ Palais Des Thés
Market Situations/ Trend/ Challenges
Strong coffee culture in France; Zinc Culture
Repositioning of Tea Category to be more modern/ health-oriented and appealing to young clienteles Consumers Profile

Demographic
-Unisex
-Tourist/ Business clients/ Nesters

-85% Female
-Younger, modern, and more dynamic clientele
-Socio-professional categories

Consumer Trend (consumption trend

-Towards in-home consumption
-Social dimension of tea consumption makes tea consumption more popular in home than out of home

-When out of home, customers prefer high-end tea
Hero Product
Frappuccino
Fresh-made coffee drinks
-Well-Being range (Detox: 35% of sales)
-Packaged tea range
Brand Extension
Coffee, beverages and confectionary
Tea related
Distribution Coverage

Kusmi Tea is more selective in distribution strategy, focusing on premium outlets. -Major cities (56 outlets in France)
-Bottled coffee drinks in leading supermarkets

-Major cities
-30 retail outlets
-160 Monoprix
-Geographic: Ile de France region and western parts
Distribution Format
Starbucks has more consistent distribution formats
-Own-store and Franchise
-Bottled coffee, ice-cream distributed through supermarket retailers -Company-owned stores; franchises, corner in major stores, e-commerce, retailers, and tea salon SKUs/ Assortment & Merchandising

Consistent assortments throughout all store formats: Beverage, accessories, bakeries -Inconsistent assortment, depending on store formats
-350 SKUs
Territory Expansion (France)
External Intrusion:
From American  European
Internal Extension:
European -> European
North America
Key Business Issues
Profitable Growth mainly due to 1. Store organization 2. Organic growth 3. Brand Extension 4. Distribution channel Profitable Growth of diverse retail outlet networks, which varies from 30-150m2

1. Inconsistent retail formats 2. Commercial policy (heterogeneous pricing policy) 3. International Expansion

2. Work on an economic and commercial model for Kusmi with a shopping mall of 6 million visitors

Business Model
Best, base and worst case scenario calculations and monthly sale figures are presented respectively: EUR 117,000,000/ EUR 65,520,000/ EUR 35,100,000.

We suppose there will be 6 million visitors to the shopping mall per year. And according to the Kusmi tea, the sales in 2012 in main companies is € 21,702,273. Therefore, the number that we calculate is reasonable because the sales that generated in the corner shops in shopping mall is only one dimension of Kusmi’s tea distribution channels. Kusmi tea sill has other retail outlet such as independent store, supermarket, and flagship stores to gain ideal sales. 1. Capture rate: 3 levels of capture rates according to...
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