We all love coffee, right?
It’s no wonder its the second most traded commodity in the world and according to numerous reports in the media and also from research houses like Euromonitor – the market is booming, and this has indicatively lead to the expansion and diversification of coffee retail outlets across the country.
But here’s the thing…
I actually hate going to Vida e Cafe. I don’t like their noisy and poor attempts at speaking (or is that shouting?) the Portuguese language. I also don’t like the noisy environment – in fact, it’s so noisy one can barely take a phone call inside. I also don’t think their coffee is that great either but perhaps worst of all… I really HATE standing in the queue waiting for my fix of caffein.
Having said all of that… I need coffee. I want great coffee and to be honest, I require more from my overall coffee experience.
So this got me thinking – what if the entire retail coffee model was disrupted and what would a coffee business look like in a new retail context all together?
So here goes…
Push Button Coffee helps coffee drinking consumers avoid the hassle of going to a coffee retailer all together. This approach is unique because it saves customers time and gives them access to super premium coffee with the simple click of a button.
In terms of market insights, the retail channel of the coffee market makes up over 50% of the entire market and Gauteng and the Western Cape represent the biggest regions in terms of coffee consumption.
Then, according to Euromonitors 2015, SA Coffee Market Report: we know that the market is growing in especially in the retail channel. It further goes on to indicate that:
“Convenience, as well as value for money, will continue to be key drivers of growth in South African coffee…The upper LSM consumers will be tempted to make their choice based on the region where the coffee is produced. There may also be a move towards organic coffee amongst these consumers, as the health and wellness trend takes hold”.
In a market that is growing, it is my current belief that in order for a start-up business to succeed, a market penetration and product differentiation strategy is critical in order to create a monopoly within the value chain.
Market penetration could be achieved by disrupting the retail supply channel by making the point of sale (POS) completely mobile and location independent (see product overview below) and the product differentiation achieved by securing the exclusive supply of a comparatively low cost but premium (assumption!) bean from say Kenya supporting the research mentioned earlier.
The intention of these two strategies would be to create a monopoly for the business in terms of market supply and demand – this is what Uber has done so well think of this as Uber Coffee if you will.
Ideas of this nature already exist in the pizza category:
The target market for this business would be working professionals and LSM 7 – 10.
Interestingly, in the late 90’s whilst living in the UK – I met the author of a marketing book (and for the life of me I can’t recall the title of it now) but he referenced a case study for a coffee supply business focused at corporates. The business case effectively identified that it cost companies more money having their staff stand in queues at coffee shops than it did for them to supply a coffee machine in the office… and a coffee machine that made an excellent, if not better, cup of coffee.
I think there is an opportunity within the SME space for this type of business. Yes, most businesses have a kitchenette of some kind but the majority of it is either plunge coffee or crappy instant stuff. (Note: There are often no tea spoons anywhere and the kettle I find is always empty – a common pain point).
I’ve managed to find two examples of ‘mobile coffee’ in SA – but they seem largely to focus on coffee supply at events.
This is Vida’s stab at it…
Outside of them, there are no major competitors I can see.
As the business if focused on high LSM customers we can assume that the large majority of them will own a smartphone.
So this is an app – here is an executive summary of the application experience:
- User registration
The user registers using either manual registration, Facebook connect or LinkedIn ID.
- Profile management
The user then goes through a wizard process where they specify the type of bean and coffee they want. This is only specified once but can be changed in their profile management. User then adds credit card information into the app.
- Order management
After the profile has been setup the user can at any point then run the app. A big red button is displayed where they can push it to submit their order as per the information in their profile.
A map is then displayed showing the location of a Push Button Coffee mobile vehicle with a count down in minutes to the arrival (similar to the Uber experience).
Note: the coffee order would be fulfilled on site or at the location of the customer. An alternative option would be for the coffee to be collected at a mobile supply station position in close proximity to commonly travelled routes.
There are definite benefits on the table for an operation of this kind – consumers benefit from getting a premium cup of coffee delivered to them by simply pushing a button for quick ordering and as the operation scales it could lend itself well to the creation of much needed jobs in the SA economy.
However, in order to get a more granular sense of the legs in this idea, one would need to unpack the commercial viability of it and really uncover the economies of scale in play. Further consideration would need to be given in terms of the design of the mobile supply station itself i.e. is it possible to embed a coffee machine and all required accessories into the space of a tuk tuk or delivery bike and further models would need to be run on driver remuneration. All this would affect price point entry and this will be critical with regards to the market penetration strategy.
I do also acknowledge that there additional trends in play that will greatly affect who this business is for e.g. the cafe culture that is booming in CPT and the insight that going to a coffee shop is driven to an extent by the social nature of drinking coffee and that the retail environment is also a place where working professionals can go to have offsite meetings or work in isolation without distractions.
I think further thought could be given to how this kind of business would materialise in the pizza category – same principles would apply – consumers order on an app and the pizza is cooked onsite off the back of a delivery bike.
Uber pizza anyone?