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11322263
1. SWOT ANALYSIS (Table 1)
STRENGTHS
-Dominant force in world coffee, with the ownership
of some of worlds leading coffee brands.
-Operations in more than 80 countries & sells its
products in more than 165 countries.
-Strong distribution network across the markets it
operates.
-Employee base of over 107,000 people around the
world
-170 manufacturing & processing facilities, of which
160 were owned & 10 leased as at 2014.
-Creation of JDE, the largest pure-play coffee
company in the world through strategic alliance with
DE Master Blenders.
-JDE holds market leader positions in 18 countries & a
strong presence within emerging markets.
-JDE owns some of the leading coffee brands in the
world.
-Mondelez is one of the largest snack companies in
the world with a global revenue of over USD 34billion
- Mondelez being among the Americas top 100
companies list in 2015 with a broad product portfolio
spanning five consumer sectors
-meticulously worked employer development
programme, with the aim of enabling each employee
to achieve higher performance
-Global strategic partnerships with Twitter,
ChannelSight & Facebook.
OPPORTUNITIES
-Increase in the global coffee consumption by 2.5%
per annum since 2011
-Biggest growth potential in the emerging markets
such as Russia, South Korea & Turkey.
-Global beverages market is expected to reach a
value of US$2,245.6 billion by 2018, an increase of
22.3% since 2013.
-The rapid growth of coffee pods market following
value growth of 52%, with volume sales up 60% year
on year.
- Younger consumers changing preferences for
coffee shop coffees & Mondelezs likelihood to
benefit by it.
-Steady volume sales of Ground coffee and coffee
bean.
-Strong sales performance of Micro ground coffee.
-16-34 age groups biasness for tea and hot chocolate
purchasing suggests a focus on hot drinks should
encourage coffee usage by this age group.
3. CAPABILITY REVIEW (Table 3)
ASSETS
- Product portfolio spanning five consumer sectors
-JDE largest global pure play coffee company title.
-107,000 employees (Intellectual assets)
- Market leading brands in several markets
COMPETENCIES
-Diversification according to market it operates
-Global brand management
-Research & development
-Adaptable to joint ventures

ANALYSIS & DECISION| JULY 2016

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2. Key Issues (Table 2)

WEAKNESSES
-Potential damage to
Mondelezs corporate
reputation due to the
involvement in several
product recalls in recent
years.

Issues

Rate

How to minimize product recalls

High

How to manage changing consumer trends of

coffee shop culture
How to increase market share in a fiercely
competitive market
How to manage the declining supply Arabica
coffee bean
How to minimize foreign exchange fluctuations

High

How to integrate a global marketing strategy

Medium

How to manage the drop of average market prices

Medium

High
High
High

4. CORE COMPETENCY ANALYSIS (Rating 1-5)

(Table 4)

Competitive
Advantages

Strong ability to
form & work
within Strategic
Alliances
Strong
distribution
network across
the markets it
operates.
Strong global
expansion with
continuous
investment in
emerging markets
to broaden
growth
opportunities
Expertise of the
staff base
dedicated to
coffee industry

Valu
e

Rare

Inimitab
le

Non
substit
utable

Total

18

5
3
4
4
THREATS
-Intense competition from the
other large players in the
market such as Nestl.
-Workforce wages have been
rising in the US, Europe and
Canada.
5
4
4
4
-Threat of foreign exchange
rate fluctuations
-Average prices have been
pushed down in recent years
by supermarket price wars
-Sales volume decline in
5
5
3
3
instant coffee in 2014 & 2015.
-Overall usage of instant
coffee fell by 6 percentage
points to 64% in 2015.
-Decline in coffee crop
5. PORTERS GENERIC STRATEGIES JDE (Figure 1)
volumes.
Cost
Differentiation
Broad
Segment

Cost
Leadership

- R&D Teams
-Financial & fixed assets
-Existing customer base

Narrow
Segment

Cost focus

16

17

16

Differentiation
-Adaptation to
changing consumer
trends
-Responsible sourcing
-Strong branding

Differentiation
focus

-Distribution network

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6. STRATEGIC INTENT (Table 5)

MONDELEZ

JDE

Vision

Deliver top-tier financial performance and be a great place

to work

Belief

Mondelz believes that its success depends upon the wellbeing of its employees

Goals &
Objectives

Unleash the power of our people

Transform snacking
Revolutionise selling
Drive Efficiency to Fuel Growth
Protect the Well-being of our Planet

Values

Inspire trust
Act like owners
Keep it simple
Discuss decide deliver
Tell it like it is
Open and inclusive
Lead from the head and the heart

Coffee is an expression of enjoyment and personal taste, and everyone

should be free to enjoy their coffee, their way. Good coffee should not be
an exclusive experience but a simple pleasure available to everyone, no
matter where they are, who they are or how they take it.
Its Amazing What Can Happen Over A Cup Of Coffee, stressing
that coffee is with us for occasions throughout our life, both large and
small. Coffee is at the centre of the conversation, wherever in the world
that takes place.
Supporting global partnerships and origin programmes to address the
most challenging coffee and tea sustainability issues
Purchasing certified coffee and tea meeting internationally recognised
standards, such as UTZ, Rainforest Alliance and Fair Trade
Partnering directly with suppliers to improve working conditions and
protect natural resources where coffee and tea are grown.
It produces coffee and just coffee, yet offers considerable diversity through
its product range.

7. PORTERS FIVE FORCES FOR GLOBAL COFFEE INDUSTRY (Table 6)

FORCE

IMPACT

KEY DRIVERS

IMPLICATIONS

Threat of New
Entrants

Medium

Threat of
Substitutes

Medium

While new entrants can use Instant coffee as the entry level product, the
future of coffee industry lies within Ground, Whole bean coffee, coffee
pods & capsules which require a high level of investment & expertise in the
industry.
While the global coffee consumption market shows a growth trend of 2.5%
per annum; Younger aged groups has developed biasness towards having
tea & hot chocolate as a beverage over coffee.

New players could enter the coffee industry

but would undoubtedly struggle to remain in
the market; adhering to the changing trends
& demands.
Currently a significant implication is not
visible as coffee consumption is a steady
trend.

Bargaining
Power of
Customers
Bargaining
Power of
Suppliers

Very High

Ample brands under the product categories at different price points

Medium

Industry Rivalry

Very High

While the production volumes of coffee crops are said to gradually

declining & coffee is expected become a beverage of high demand; coffee
farmers are not expected to benefit from this situation.
However, limited number of suppliers may cause their bargaining power to
rise to a certain extend.
High number of coffee products available in the market.
Instant coffee market & coffee shop markets being dominated by few key
players.

-High industry investment on brand building

and Innovative product offerings according
to changing consumer palates & lifestyles.
Decrease in the number of coffee farmers
entering into the industry & existing farmers
diverting to alternative food cultivations.

8. BCG MATRIX FOR JDEs CURRENT PORTFOLIO

Figure 2

Key players being pressurized to sell high

quality, life styles oriented coffee products at
competitive pricing

9. PRODUCT LIFE CYCLE FOR GLOBAL COFFEE INDUSTRY

Figure 3

Micro ground coffee

Coffee
pods &
capsules

Ground coffee
Instant coffee

ANALYSIS & DECISION| JULY 2016

Ground
Coffee

Micro
ground
coffee

Instant
Coffee

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10.1 COMPETITOR ANALYSIS DIRECT COMPETITION (Table 7)

Competitor
Name

Product Categories

Countries &
Regions

Products & Brands

in competition

Market share

Nestle

Baby foods, bottled

water, cereals,
chocolate and
confectionery,
coffee,
culinary, chilled and
frozen foods, dairy
products, drinks,
food service,
healthcare nutrition
products, ice creams,
pet care products,
and weight
management
services

Operates a
network of
442 factories
located in 86
countries. The
company's
products are
sold in 197
countries
around the
world.

Nescaf - a wellknown brand of

soluble coffee
product, while

-In the UK, Nestls Original

and Gold Blend labels account
for 35% of total sales in 2015,
with Nestl products
capturing more than half the
total market at 53%.
-In the Chinese instant coffee
market
Nestl products captured a
huge 70% of sales as recently
as 2013.
Azera, has value growth of
32%, bringing its share of the
instant coffee segment to 5%

Supermarket
own label

Taylors

Specialist,
quality ground coffee

Lavazza

Ground coffee/
Microground instant
coffee

J.M.
Smucker

Fruit spreads, peanut

butter, ice cream
toppings, condensed
milk, health and
natural foods
Instant coffee

Dehong
Hogood

Based in the
north of
England

US & Canada.
Mainly North
American
markets.
Yunan
Province,
China

ANALYSIS & DECISION| JULY 2016

Nespresso - an
espresso coffee in
capsules.
Azera bestselling
micro ground
brand

Strengths/
Weaknesses/
Opportunities/
Threats
-Nestl is number
one in coffee in
key markets across
the world.

Strategic Goals &

Decisions

-Retailers have
expanded their
branded ranges
significantly, and not
just within the
instant coffee
segment. The
increasing number
of operators playing
in the pods segment
means that instant
coffee is having to
fight harder for
visibility in the coffee
aisle.
A family-based
company with niche
appeal

-All coffee types.

-In the UK, in

2014/15, own-label products
captured just 10 pence in
every 1 spent on coffee.
-Falling price of branded
instant coffee and increased
competition has caused ownlabel instant coffee to drop by
10% in the year to June 2015.

-Strong marketing
campaigns by the
leading instant
brands are taking
the spotlight off
own-label.
-Likely to be
impacted by sales
of coffee via the
discounters and
pound stores

Taylors

largest market share in

2014/15 of 25%

Lavazza

17% of the
segment in value terms

Consumer
preferences shift
away from instant
products, and
increasingly
embrace
traditional roots
and ethical causes
Official coffee
supplier for the
Wimbledon tennis
tournament for
the fifth year
in 2015

Folgers, Millstone,
Kava and Caf
Bustelo/Caf Pilon.
Dunkin Donuts
coffee products
Hogood Coffee

Market share of between

15 and 20%

2.7% segment share

Nescaf has
continued to invest
heavily in the Azera
brand, with a spend
of 2.3 million in
2014 and 1.4 million
in the first half of
2015.
The company has
continued to position
the
brand as coffee-shop
quality coffee.

Looking to extend
the brand to instant
coffee drinkers at an
early stage, hoping to
retain their loyalty
when they trade up
to ground coffee

Chinese
consumers are
more inclined to
go for famous
international
brands.

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10.2 COMPETITOR ANALYSIS INDIRECT COMPETITION (Table 8)

Competitor Name

Product Categories

Coffee Shops

Costa, Starbucks, Caff

Nero or other
specialist/branded
coffee shops

Non specialist
coffee shops
including offices,
schools,

Any shop or food outlet

which sells coffee as a
secondary product

Countries & Regions

Market share
Growth estimated at 6% in
2015, taking the market to 2.9
million in UK expected to
achieve growth of 26% in 201520, similar to the 28% growth
seen in 2010-15

Close to 8,000 non-specialist

outlets in the UK

11. PERCEPTUAL MAP OF JDES COMPETITOR POSITION

Taylors
JDE

58% of the British buy hot

drinks out of the home from
non-specialist
coffee shops

Figure 4

12. TRIPLE BOTTOM LINE (Table 9)

People
-Purchasing
certified coffee
Fair Trade coffee

Nestle

Lavazza

-Partnering
directly with
suppliers to
improve working
conditions

S/M Own labels

Brazil/
Russia/
India/ China
Protect
position

M
e
d
L
o
w

Europe/ US/
Japan
Build
selectively
Protect &
refocus

Turkey/
South Korea
Invest to built

Austria, France,
Germany &
Switzerland
Manage for
earnings

Netherla
nds/
Australia/
Spain

ST
R
O
N
G

Build
selectively
Limited
Expansion
or harvest

Russia/Ukraine/V
enezuela/
Argentina

Divest

AV
ER
A
GE
W
EA
K

Manage for
earnings

High

Figure 5

Medium

Profit
- Plans to invest
nearly US$200
million to help
coffee farming
entrepreneurs.
-Mondelz plans
to invest US$400
million to improve
the livelihoods
and living
conditions of
more than
200,000 cocoa
farmers and about
one million people
in cocoa farming
communities.

14. SEGMENTAL ATTRACTIVENESS MATRIX

Capability

Country Attractiveness

H
ig
h

Planet
-Purchasing
certified coffee
and tea meeting
internationally
recognised
standards, such as
UTZ, Rainforest
Alliance
-Supporting global
partnerships &
origin programmes
to address the
most challenging
coffee and tea
sustainability
issues

Dehong Hogood

13. COUNTRY ATTRACTIVENESS MATRIX

Strengths/ Weaknesses/
Opportunities/ Threats
Increase in real incomes and
consumer
confidence seen during the year,
which has benefited the pricesensitive coffee shops
market, with consumers spending
more per visit.

Time &
convenience
seekers

Older & less wealthy

instant coffee
drinkers

Older & less wealthy

traditional ground
coffee drinkers

16-34 yr coffee out

of home drinkers

Younger & better off

16-34 yr tea & hot

chocolate drinkers
Unattractive

Average

Attractive

Low

JDEs business strength

Figure 6

Segmental attractiveness

15. STRATEGIC POSITION (Kotler & Singh 1981) (Table 10)

Competitive Stance
JDE - Market Challenger

ANALYSIS & DECISION| JULY 2016

- Frontal Attack
- Flank Attack

Strategies
- Encirclement Attack
- Bypass Attack

- Price Discount
- Prestige Goods Quality

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16. PESTEEL ANALYSIS (Table 11)

POLITICAL/LEGAL

ECONOMICAL

SOCIAL

TECHNOLOGICAL

ENVIRONMENTAL/
ETHICAL

Drivers

Implications

1. Introduction of the UK Living Wage & the rise

of real income
2. Actions by foreign governments, political
uncertainty and vulnerability to infrastructure
and labour-force disruptions
1. Global currency movements against USD.
2. The economy, monetary policies and other
business restrictions in Venezuela, Argentina
and Russia
1. Coffee caf culture, perception of coffee as a
quality, rather than every-day, consumer
experience
2. Rise of Time & convenience seekers

1. Compound growth likely to come through store openings

and increased usage frequency.
2. Unfavourable currency impacts & frequent changes
business operations.

1. Negative impact from currency translations & cross

currency transactions
2. Challenging business environment in which to operate

1. Rising ownership of coffee pod machines with the trend

of recreating the coffee shop experience at home

2. Rise of non-specialist coffee shops

1. Rise of pods and capsules as a way of delivering

and consuming coffee
2. 16-34 are more likely to buy any hot drink out
of- home than all older age cohorts
1. Slave labour being used on plantations in Brazil
2. Changing environmental conditions which can
significantly impact on global coffee crop
volumes.

1. New market entrants & supermarket own brand

introductions causing drops in average price.
2. Rise in the number of new coffee shops.

1. Higher pressure on coffee companies to concentrate on

ethical sourcing of coffee beans.
2. Coffee is expected to become more of a luxury beverage.

17. RISK ANALYSIS (Table 12)

Risk Type

18. CULTURAL WEB

Risk

Rate

Reputational
Risk
Reputational
Risk

Potential damage to corporate reputation through

product recalls
Potential damaged to corporate reputation through
human rights abuses in their supply chain

Financial Risk

Threat of foreign exchange rate fluctuations

Medium

Market Risk

Political and economic volatility in global markets

Medium

Rising prices of coffee from suppliers

High

Rising cost of production

High

Future shortage in Arabica coffee beans

Medium

Operational
Risk
Operational
Risk
Operational
Risk

Rank

High
Medium

Q/T

(Table 13)

Stories & Myths

Symbols

Logos of Mondelez & JDE, A Coffee For

Every Cup, Brand names, Staff uniforms

Control systems

Responsibility driven control systems.

Organizational
structure

Geographic basis

Power structure

Mondelezs has significant power over

the JDE strategic alliance.

Ritual & Routine

Diversity based employee guidelines.

Paradigm shift

19. VALUE CHAIN ANALYSIS (Table 14)

IV.
Procurement Activities
Supporting global partnerships and origin programmes to address the most challenging coffee and tea sustainability issues.
Purchasing certified coffee and tea meeting internationally recognized standards, such as UTZ, Rainforest Alliance and Fair Trade.
V.
Inbound Logistics
VI.
Operations
VII.
Outbound Logistics
VIII.
Marketing
IX.
Partnering directly with
suppliers to improve
working conditions and
protect natural
resources where coffee
and tea are grown.

R&D, NPD &

Manufacturing
operations

ANALYSIS & DECISION| JULY 2016

Mondelz has a strong distribution network

across the markets it operates. At the end
of 2014, Mondelz had 216
distribution centres and depots worldwide,
of which 51 were company-owned and 165
were leased.

Communications,
distribution,
promotions,
sponsorships &
advertising

Services

Presales & post sales

services

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Profit Margin

I.
Firm Infrastructure
170 manufacturing & processing facilities, of which 160 were owned & 10 leased as at 2014.
II.
Human Resources Management
Employee base of over 107,000 people around the world
meticulously worked employer development programme, with the aim of enabling each employee to achieve higher performance
Mondelzs Global Diversity and Inclusion Strategies provide guidelines to its employees, making diversity relevant to its priorities and opportunities
III.
Technological Development
Global partnerships with Twitter, Facebook ChannelSight to deliver marketing solutions & increase digital media touch points.
Adaptation to new technological advancements in coffee culture such as Nespresso-compatible espresso capsules & coffees pods.

MEMBERSHIP NO. 11322263

20. MENDELOW'S POWER-INTEREST GRID (Figure 7)

21. CURRENT MARKETING MIX JDE (Table 15)

Low

Power

High

Product
Keep Satisfied
Government
International
coffee
organization

Minimal effort
Public

Key players
Shareholders
Employees
Parent company
Customers
Strategic Partners
Competitors

Price
Place
Promotion

Keep informed
Subsidiaries
Suppliers
Retailers & Distributors
Media
Pressure Groups

Low

High
Internal
Interest

COLOMBO

People

Process
Physical
evidence

Multiproduct, multi brand portfolio,

catering to varied segments
No sufficient data available
Supermarkets, Retail Stores, distributors, online, Fuel
stations, Pharmacies, Other retail food outlets.
Brands' product pages, social media, video advertising and
customer relationship management campaigns &
traditional advertising.
Mondelzs Global Diversity and Inclusion Strategies
provide guidelines to its employees, making diversity
relevant to its priorities and opportunities. Extensive
employee development programmes.
Manufacturing, Research & development, Corporate Social
Responsibility, Customer Relationship Management & NPD
Brand names, logo, strapline, Brands product pages,
merchandise.

External
Connected

23. VOLUME SALES OF UKS RETAIL COFFEE MARKET (Graph 2)

22. VALUE SALES OF UKS RETAIL COFFEE MARKET (Graph 1)

1400
1200

Coffee pods
Total million

1000
800

Ground
coffee Total
million

600
400

Instant coffee
Total million

200
0

25. Constituents of Brand Equity (David Aaker) (Table 16)

24. BRAND ONION MODEL (Figure 8)

Brand Vision
A coffee for every
cup
This signifies the need
to diversify their
product range to fit
different palates &
lifestyles.

Brand Values
-Innovative
-Close to
consumers mind
-Good quality
-Carries
diversified
product range

Brand Positioning
-Diversified
-Good Quality
-socially
responsible
-Adapts to
consumer taste &
lifestyle

Brand
Identity
Brand
Loyalty
Brand
Awareness

Perceived
Quality

Currently through Corporate Brand, Product Brand

Names, straplines.
High brand loyalty considering the ownership of
Market leading coffee brands in certain markets.
High brand awareness with some of worlds leading
coffee brands. Awareness & brand recall enhanced
through global strategic partnerships with digital media
platforms such as Twitter, Facebook & Channel Sight.
High perception on the quality of the product through
Responsible sourcing, Strong Brand personality &
diversified product range.

Brand Personality
-Innovative
-Wealthy
-Good valued
-Well connected
-Long relationship
holder
-Responsible

Figure 9
ANALYSIS & DECISION| JULY 2016

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