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5. MARKETING PLAN AND SALES STRATEGY
This section explains the Marketing plan and Sales Strategy. The marketing plan will consist in developing several activities to generate brand recognition and legitimacy among the international coffee buyers. The sales strategy will be focused on positioning our coffee products in the Taiwanese market and then develop new markets.
5.1 Target Market
The coffee market, as one of the most traded products in the world, is big and complex. There are more than 130 countries that are importing coffee from around 55 nations that are spread all around the globe. United States of America and The European Union are the regions that imports and consume more than the half of the total coffee production. However, Asia is the continent where coffee consumption is booming due to the westernization of its societies and the changes in social and economic environments. According to a study performed by the ICO, since 1990, Asia has experienced the most dynamic growth in coffee consumption in the world, growing by an average rate of 4.0% per annum, increasing to 4.9% since the year 2000. This study also points out that in countries such as Japan, South Korea and Taiwan tend to exhibit a higher percentage of Arabica consumption and specialty coffee industry, due to the development of their economies and markets.
Taiwan has a population of 23.3 million and a total area of 36,188 Km2. The National Disposable Income is on average USD 322.11 billion from 2012 to 2016, and the annual Household Income per Capita in 2016 was US $12,666.79 which let Taiwan occupies the 20th position in the world according to Euromoney Institutional Investor Company.
Taiwan is among the 20 largest coffee importers countries in the world. This country has experimented an average annual growth of 8.41% from 2012 to 2016. The development of the Taiwanese society can explain this positive trend in terms of education, salaries and disposable
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income. Another factor is that Taiwan has an increasingly urbanized population, with one of the highest population densities in the world, which is conducive to further growth in the market.
“Las Colinas Estates” target market are Taiwanese coffee importers, wholesalers or roasters that import green arabica beans and green specialty coffee. The size of these companies must be medium or large because they can order enough quantities to complete a shipment without complication.
According to information provided by National Trade Office of Exports and Imports of Nicaragua (CETREX), twelve Taiwanese companies imported coffee from Nicaragua in 2016. These companies are listed in Table VI and represent the target market of our company because they have already developed commercial relationships with Nicaraguan companies, they know the quality of Nicaraguan coffee and they are familiar with the trade conditions and terms.
Table VI. Target Market. List of Major Importers of Green Coffee Beans in Taiwan
Name Of The Company Telephone
Number Web-Page
Coffee Chain World 04-2522-2359
Ergos Coffee 09-0961-5000 https://www.ergoscoffee.com Fengjen Trading Co Ltd 02-8752-3275 http://www.fengjen.com.tw Haaya Gourmet Coffee Co. Ltd. 02-2651-3551 http://www.haaya.com.tw Haru International Corp. 02-2717-6777 http://www.harucafe.com.tw Jin Kuanq Enterprises Co. Ltd https://www.crownfancy.com Mitsui & Co. Ltd 02-2326-2543 https://www.mitsui.com/tw Orsir Coffee Co., Ltd. 04-2221-2828 http://home-www.orsir.tw
Pebble Coffee Co., Ltd. 02-2694-0723 https://www.facebook.com/PebbleCoffee Treasure Year International, Co. 02-2902-9933
Tres Soles Coffee 04-2676-3808 http://www.tressolesfinca.com Trio Cheng Trading LTD. 02-2773-2072 http://www.beecoffee.com.tw
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5.2 Positioning Strategy
“Las Colinas Estates” will position itself as a credible and secure exporter of High-End Arabica coffee beans produced in Jinotega, Nicaragua. Our company will focus on developing legitimacy among the international buyers aiming to be recognized by our capacity to deliver constancy in our offer concerning quality and quantity.
“Las Colinas Estates” will also position Jinotega as a High-Quality coffee producing region in Nicaragua. Our coffee will be recognized not only by its Specialty and its unique flavor, but also by the story that is behind of each lot and micro lot of coffee that we sell. These stories go beyond the environmental conditions in which our coffee grows to the selection of the coffee varieties, processes performed on the coffee beans, and the “mystic” that our collaborators put in the activities they do that give our coffee its unique characteristics.
5.3 Pricing Strategy
Coffee prices in the international market are experimenting a negative trend. As we can see in Figure 4 since January 2017 the coffee price for the coffee category Other Milds went down from USD 168.61 cents/lb to USD 137.42 cents/lb in December of the same year. In 2018 the trend continues affecting the coffee producers, and in March of this year, the coffee price closed at USD 135.00 cents/lb.
Taking as reference the coffee imports from Nicaragua to Taiwan in 2017, the average FOB (Freight On Board) price paid by Taiwanese Coffee Importers depending on the quality of the coffee is as shown in Table VII. Low-End coffee is not Specialty coffee and its average price was USD149.79 cents/lb; however, the Specialty coffee average price was 432.08 cents/lb, almost three times higher than the Low-End coffee. Focusing just on the Specialty coffee, the minimum price paid by Taiwanese coffee importers for this product is about 40% higher than the maximum price paid for the Low-End coffee. Another important fact is that the maximum price paid for Specialty
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coffee was USD 960.07 cents/lb, which represents an excellent opportunity for our business in terms of what Taiwanese importers are willing to pay for Specialty coffee.
Table VII. Average FOB Price in USD cents/lb of Nicaraguan Coffee paid by Taiwanese coffee importers
Coffee Quality Average Minimum Maximum
Low-End Coffee 149.79 141.39 159.80
Specialty Coffee 432.08 252.61 960.07
Based on the analysis presented above, our Price Strategy will be based on offering a price premium according to quality and process of the coffee. We aimed to offer our micro lots coffee at a minimum price of USD 450 cent/lb, our High-End coffee at a minimum price of USD 250 cents/lb, and our Low-End coffee at a minimum price of 140 cents/lb. This prices above consider the product in Port. The prices FCA-Free Carrier (at the Dry-Mill) and FOB will be affected by a differential as shown in Table VIII. The differential calculation was made taking one of the Nicaraguan coffee exporter as benchmark.
Table VIII. "Las Colinas Estates" Pricing Scheme
Product Price US cent/lb Difs US cent/lb FCA Mill
Difs US cent/lb FOB Nic
Micro Lots 450 +28 +30
High-End 250 +23 +25
Low-End 140 +12 +14
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5.4 Promotion Strategy
“Las Colinas Estates” promotion strategy aims to create an image of Legitimacy among our buyers and final consumers to strength our brand recognition. As coffee exporter beginners our clients must know from first-hand the processes and techniques that our products pass through from the harvesting until it becomes exportable green coffee beans. Moreover, we have to be able to promote a “unique story” for our coffee beans that our clients will be able to promote among their buyers. This story must be sold at each coffee shop where our coffee is served.
Our Promotion Strategy will be centered on the origin of our coffee. Consumer awareness of the origins they drink does lead to product loyalty and the development of a brand image. This results in some protection from the vagaries of the market. Furthermore, we want our buyers to know how reliable we are in terms of supply the quantities they need; this is extremely important because if coffee importers and roasters are unable to obtain regular supplies from one exporter, they will, of course, be encouraged to seek alternative sources.
5.4.1 Push Marketing
Free Samples – In the coffee business, the way to make a successful sale is by sending samples to the potential buyers. “Las Colinas Estates” will send samples to potential buyers upon request and without it. The size of the sample will be 5 Kg, but it can vary if the requester decides so. Each sample will contain the information related to the lot and its quality and agriculture characteristics. The samples will be sent from Nicaragua to Taiwan, and in the process, the Nicaraguan Embassy and the Central American Trade Office in Taipei help with the import-export process. The output of the Sending Samples Strategy can be not only measured by the success of a sale, but also for receiving direct feedback from our customers. This valuable information will be used to improve our processes, techniques, products and to know from first-hand possible new trends in the market.
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International Coffee Shows Participation –Taipei is the venue of one of the biggest coffee shows in Asia, the Taiwan International Coffee Show. Each year this show has on average 194,169 visitors from 61 different nationalities, and among other activities, Taiwanese and international coffee buyers gather together to evaluate possible new suppliers and its different coffee offers. “Las Colinas Estates” will participate by renting a booth in this coffee show to promote Nicaraguan coffee, our products, and the techniques we do to produce it. This coffee show offers exhibitors the opportunity to be advertised on their official website and access to free marketing events to boost the exposure.
5.4.2 Pull Marketing
Coffee Association Membership – “Las Colinas Estates” will be member of national and international coffee associations. In Nicaragua, the most important is the Specialty Coffee Association of Nicaragua (ACEN). It charges US $1,200.00 annually to its members. In the international field the options are, but not limited to, the Specialty Coffee Association of America and the Taiwan Coffee Association.
Being part of these organizations will help “Las Colinas Estates” to promote its coffee and reach potential buyers. It also offers the opportunity to benchmark with other players in the industry exchanging knowledge and practices. Moreover, being part of these organization is an excellent way to gain legitimacy among our actual and potential buyers.
Coffee Certifications – Internationally, a certification helps business to gain Legitimacy, and it also provides a way to differentiate from the competitors. “Las Colinas Estates” will certificate its estates with the Rainforest Alliance. This strategy will be easy to accomplish because in the past one of our Estates was certificated as Organic by BIOLATINA, a well-known Latin American certification organization. Despite the fact that we decided to discontinue the certification in 2015, the general framework is still followed in the coffee farming activities.
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Participation in coffee contests: “Las Colinas Estates” will actively participate in Nicaraguan Cup of Excellence, the most famous coffee contest nationally and internationally. This contest takes place annually and winners have the opportunity to promote their coffee brands and to sell their coffee in an auction that is managed by the contest staff. In 2017 edition, a Nicaraguan Cup of Excellence winner established a record by selling his coffee at a price of US $40.3 per pound in the international auction.
Online marketing – The physical distance between our clients and consumer is long. “Las Colinas Estates” will tackle this drawback by leveraging on its website and social media platforms to connect with its clients and consumers. The next section explain in detail what Online marketing consist on and how “Las Colinas Estates” plans to use it to create awareness of its products and to develop brand recognition.
5.5 Online Marketing Strategy
As it was mentioned before, “Las Colinas Estates” will connect with its clients and its coffee consumers through the different options that nowadays the internet offers to the businesses to grow in terms of the awareness to their customers. The Internet is the fastest growing channel for communicating our message to our clients. “Las Colinas Estates” will use a Website, Social Media and Vlog. The last one is a blog in which the postings are primarily in video form.
5.5.1 Website
“Las Colinas Estates” website will be our primary way to connect with our buyers and our coffee consumers. It will contain different sections but our products and its characteristics as well as the stock will be shown easily and firstly to the visitors to facilitate their purchase and learning process.
Our website will be the center of all our digital marketing efforts, so it will be clean, comfortable to read, and enjoyable.
The first section of our website will be the company introduction. Our mission, vision, objectives, origin, certifications, and memberships will be displayed to our visitors to let them to know us and
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our purposes. The second section will be the introduction of our Estates, in a very interactive way we want our visitors to know in detail where our coffee is grown, the climatic conditions, how our Estates are divided into lots and which varietals we produce in each lot.
The third section of our website will tell about our processes and techniques. We want to tell a story. This stories will be described by our collaborators; visitors will have the opportunity to watch short videos that will explain each activity related to the coffee farming, harvesting, and natural and washed processes.
The fourth section will be our Social and Environmental Responsibility. Using the same strategy described in the third section, we want to let our visitors know our environmental friendly activities as well as how our collaborators are treated.
The last section will be dedicated to our Push Marketing strategy. In this section, we will let our website visitors know about the events that we have participated. They will also be able to request samples, subscribe to our webpage and leave their comments and questions.
Besides of what has been explained above, we will use Opt-In Email List on our website. It allows customers to come to us and sign up to receive email campaigns and correspondence. It will facilitate the process of communicating our offer of products to the buyers.
5.5.2 Vlog
One of our business owners is a well-recognized coffee growing techniques advisor in Nicaragua.
We want to take advantage of his recognition and knowledge to develop a Vlog. In this platform, he will share all the good practices we follow to grow coffee through short videos. We also want to promote other small coffee producers and benchmark from other farms in Central and South America. This platform will also allow us to answer interactively any inquiries that our buyers and coffee consumers might have.
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5.5.3 Social Media
“Las Colinas Estates” will have a strong presence on Facebook and Instagram, the two most used Social Media platforms at this moment. The main goal with Facebook is to create a community of followers and interact with them through publications of important information and facts related to the coffee industry as a whole. On the other hand, we will use Instagram to interact with our followers through media content such as photos and videos to influence on their lifestyle.
5.6 Sales Forecast
Our sales forecast is made based on the production capacity of the coffee estates and the sales goals the owners have set to the company. Table IX shows the coffee production capacity of each type of coffee according to what was described in section 4.3 Types of Coffee. This projection reflects the average production capacity of the coffee estates. The capacity can oscillate plus/minus 300 quintals. For the cycle 2018/19 the production of micro-lots will be 5% of the total production of each state and from the second year on micro lots will represent 10% of the total production.
The sales goals for the micro lots is to position all coffee production in the Taiwanese market since the first year of operation. The goal for the high-end coffee is to start shipping one container (418 quintals) in the first year; in the second year, we aim to duplicate the amount of coffee and by the fourth year we intend to export the complete coffee production of the two Estates.
Table X shows the sales projections for the first five years of operations taking into account the prices explain in section 5.3 Pricing Strategy. For micro-lots the average price used is 450 cents/lb:
the average price for High-End coffee is 250 cents/lb and the average price is 140 cents/lb for Low-End coffee.
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Table IX. Green coffee production forecast in quintals9.
Coffee Estate Product Production Cycle
2018-19 2019-20 2020-21 2021-22 2022-23
Santa Lucia
Table X Annual Sales forecast.
Product 2019 2020 2021 2022 2023
Micro-Lots
quintals 140.00 370.00 370.00 375.00 380.00
Sales $63,000.00 $166,500.00 $166,500.00 $168,750.00 $171,000.00
High-End
quintals 418.00 836.00 1672.00 2745.00 2772.00
Sales $104,500.00 $209,000.00 $418,000.00 $686,250.00 $693,000.00
Sales $167,500.00 $375,500.00 $584,500.00 $855,000.00 $864,000.00
9 1 quintal is equivalent to 100 lb. and to 45.46 Kg.