SWOT Analysis of Costa Coffee
Costa Coffee is a British coffeehouse chain brand. It was founded by Sergio Costa and Bruno brothers in 1971. It is currently headquartered in Dunstable, England. In 1995, Whitebread acquired the brand. In 2019, they sold it to the Coca Cola Company for 3.9 billion pounds. The annual revenue in 2019 of Costa Coffee was 1.34 billion pounds. Currently, more than 18412 employees are working for the band. Chocolates, Gennaro Pelliccia, canned coffee, ice drinks, snacks, cold drinks, cakes, pastries, tea, and sandwiches are some main products of the brand. Read the SWOT Analysis of Costa Coffee.
The main competitors of the brand are Café Coffee Day, Starbucks, McDonald’s, Barista Lavazza, Mochas, and more. Today, we will highlight its success story by finding its strengths, weaknesses, opportunities, and threats. For this, we are going to use a reliable strategic management tool called SWOT.
SWOT Analysis of Costa Coffee
Company Name: Costa Coffee
Founders: Sergio Costa, Bruno Costa
Founded: 1971, London, United Kingdom
Headquarters: Dunstable, United Kingdom
Parent Company: The Coca-Cola Company
CEO: Jill McDonald (Dec 2, 2019-)
Type: Coffee Joints
Sector: Food and Beverages
Tagline: We make it better
Unique Selling Proposition: A famous British coffeehouse chain brand now going global with a variety of innovative products.
Customers: People looking to go to have a coffee and snacks at a hangout place.
Target Consumers: Youth in the higher and middle-income groups.
Revenue: Please check the report
Net Income: Please check the report
Strengths of Costa Coffee | SWOT Analysis of Costa Coffee
Strong Brand Recognition:
When it comes to coffee brands, Costa Coffee comes to our mind first. It is a globally recognized coffeehouse chain brand with a robust brand image. The brand identity of the company is also very strong. In more than 31 countries, it has a huge network of 3820 stores. More than 2420 out of 3820 stores are in the UK. They also launched a state-of-the-art roaster in 2017. It is the biggest brand in Europe.
The brand has built a loyal customer database over the years by offering high-quality products and services. These customers love to visit its stores every day to have some coffee. Its stores offer a friendlier and more attractive environment where people can enjoy some fun time. These loyal customers are the main reason for its success and remarkable sales.
Customer-Oriented Products and Strategies:
The coffees and drinks Costa Coffee offers are highly special because they make these products while keeping customers in mind. They produce customer-oriented products and build strategies for their interest. In short, their focus is mainly on the customers. That’s why Costa Coffee provides excellent service and quality.
Excellent Service Quality:
When it comes to sourcing and processing coffee beans, Costa Coffee is really conscious about it. The brand gives value to ethical practices, customers, and suppliers. These small things add value to the company and make significant importance. Some companies like Baristas serve something else with coffees that add value to their service.
Extensive Product Portfolio:
The product line of the brand is highly diverse as they offer chocolates, hot and cold coffee, drinks, cakes, pastries, sandwiches, tea, snack, and much more. Customers can get a variety of products from its stores easily to satiate their hunger.
Influence of Strong Parent Brand:
In 2019, Whitebread sold the brand to Coca Cola Company for 3.9 billion pounds. We know that Coca Cola is one of the leading cold drink brands in the world with an amazing brand identity and image. Working under such a big parent organization helps the company to exploit several benefits. They don’t need to invest more money in marketing because Coca Cola does this for the brand. As a result, its profitability, growth, and sales are touching the skies.
Weaknesses of Costa Coffee | SWOT Analysis of Costa Coffee
- Limited International Presence:
The company has a strong presence in the UK and other developed markets. When it comes to developing countries, Costa Coffee does not have a strong presence. It shows the dependency of the brand on developed markets. If anything happens with these markets, it would badly hurt the business performance and profitability of Costa Coffee. They should increase their presence in other regions of the world for securing more market share and recognition.
- Pricey Products:
Most of its products including coffees are pricey as compared to others. They don’t compromise on quality but premium prices are not acceptable for some users. On the other hand, its competitors are offering good quality coffee and products at reasonable prices. It would negatively affect Costa Coffee’s sales and customer loyalty.
- High Sugar Coffee and Drinks:
According to some health-conscious customers, Costa Coffee does not produce healthy coffee and products due to the high sugar content. Just because of this reason, its coffee sale has significantly dropped due to the diet trends. It is a weakness of the brand and they can fix it by offering healthy diet products containing low sugar content.
Opportunities for Costa Coffee | SWOT Analysis of Costa Coffee
- Alliances and Acquisitions:
In order to increase its internal expansion, sales, and profitability, the brand should acquire small coffee brands and companies. They can also work as a partner with big companies. Such alliances and acquisitions would help the brand in different ways like market expansion, product expansion, and more. On the other hand, the company should revise its pricing policy.
- Market Expansion:
By venturing into other international markets, Costa Coffee can easily expand its business and operation. This thing directly improves its revenue stream and market cap. There are so many growth opportunities in both developed and developing countries for Costa Coffee. It is imperative for the brand to take benefit of this thing.
- Increasing Product Portfolio:
In order to attract more customers and generate more revenues, the brand should expand its product line by offering healthier options. As a result, they can easily target health-conscious customers. Moreover, Costa Coffee can also sell coffee beans, coffee-making equipment, and other similar products.
Threats to Costa Coffee | SWOT Analysis of Costa Coffee
- Fierce Competition from Big Players:
Running a coffee business in some countries is really difficult and challenging. It is because these countries are already occupied with many big players like Starbucks, McDonald’s, Caffe Nero, and more. These rivals are very well-reputed in the world because they spend millions of dollars on marketing, promotion, and product innovation. It is hard for Costa Coffee to maintain its position in such a highly competitive market.
- Price Competition:
The presence of local players in the market can’t be ignored. They are giving tough competition to Costa Coffee and hurting its market share. They are offering affordable products in the caffeine segment. Such completion from these local players could be dangerous.
The ongoing economic recession has reduced the spending behavior of middle-class customers. With limited income, they can’t afford Costa Coffee products which ultimately hurt its sales and annual revenue.
Final Thoughts | SWOT Analysis of Costa Coffee
There is no doubt that Costa Coffee is one of the biggest players in the coffeehouse chain brand with a strong market position. It is necessary for the brand to work carefully on its weaknesses in order to reduce the danger of threats. They should exploit opportunities in order to strengthen their position.
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