…
Peet's Coffee & Tea
UC. Berkeley Extension Strategic Marketing
May 24th 2010
Tara Alcantara-Beers
Karol Caballero
Yizhe Liu
Daniel Brockman
Ming Yang
Peet's Mission & Vision
MISSION
VISION
•
"To enable and inspire customers
to enjoy the daily pleasure of Peet's
Coffees & Teas by providing a
distinctive, superior product, superior
coffee and tea knowledge and superior
service to every customer, every day.”
•
“To be the gold standard specialty
coffee and tea brand available to the
world, with one of the most dedicated
and loyal customer followings of any
brand.”
Strategic Marketing - Spring 2010
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General Description of Peet's Coffee & Tea
• Peet’s is a specialty roaster of whole bean
coffee & teas based in Emeryville, CA
• Peet's founded by Alfred Peet in 1966 in
Berkeley, California
•
Alfred focused on the quality of the coffee
• Original store located at corner of Walnut & Vine
near U.C. Berkeley
• In 1979 Alfred sold Peet's but stayed on as coffee
buyer
•
Roasting plant is located in Alameda
Peet's Website/Wikipedia
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ALFRED PEET-FOUNDER
1920-2007
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Peet's Company Info
US Statistics:
• Public Company
• Retail Stores: 192 in 6 states
• Employees: 3750
• Sales: 311 million
• Competitors: Starbucks, Tully's, Coffee Bean & Tea Leaf, local coffee shops in
the retail stores channel, and Kraft and J.M. Smucker in the grocery channel
Yahoo Finance
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2009 Sales Breakdown
Retail Sales (stores only) :
• Retail stores remained stable
7% comprising 65% of net revenue
• Retail store sales were 65% of net revenue
• Specialty (consists of grocery, foodservice & office)
• Grocery Sales
22% comprising 20% of net revenue
• Sales of specialty coffee was 84% of net revenue
Peet's Coffee & Tea, Annual Report on Form 10-K for 2009
•
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Quarterly Financials
Revenues, Thirteen Weeks Ended (dollars in thousands)
APRIL 4, 2010
March 29, 2009
Increase/(Decrease)
Grocery
$ 18,643
$ 13,387
$5,256
39.3%
Foodservice & office
8,480
6,706
1,774
26.5 %
Home delivery
4,002
4,029
(27)
-0.7%
Total specialty
$ 31,125
$ 24,122
$ 7,003
29.0 %
www.peets.com Form 10-Q Quarterly Report Filed May 14, 2010
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Grocery to be Peet's Strength
• Peet's is focusing on Grocery Growth as Starbucks Shuts Cafes
•
Revenues growth year over year in the 1st quarter of 2010
 4% in retail stores
 39% in grocery
•
•
Operating margins in the 1st quarter of 2010

9% in retail stores

26% in grocery, office and home delivery
Peet's even has a separate Grocery Website
http://www.peetscoffee.com/
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Target Customers
Customers who care about quality, variety, convenience:
• Quality: customer values most
•
Like strong, dark coffee
•
Annual household income: +125,000
•
Peet's drinker buys coffee from specialty (Peets, Starbucks)
Peetniks:
•
Strong loyalty customer
•
Morning coffee every day
•
Members of the Peetniks loyalty program
•
Passionate about Peet's products
•
Exclusive benefits to active recurring orders
http://www.peets.com/peetniks/about.asp?rdir=1&
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Products
Highly selective sourcing:
• Carefully chosen beans, taste coffees
again and again
• Coffee and Tea Expertise
• Paying the highest prices for quality
Delivered fresh:
• Use the freshest beans within 24 hours of
being roasted
• Brewed fresh every 30 minutes or less
• Never re-steam milk
Artisan roasting style:
• Roast in small batches
• Draw out the depth of flavor
Peet's Coffee & Tea Inc, Form 10-k annual report 20100319
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Key Success Factors
•
Expertise in Coffee and Tea
•
Sophisticated information systems infrastructure
 Business Intelligence
 ERP, POS and CS
•
Freshness
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Sustainable Competitive
Advantage
•
DSD - Direct Store Delivery system

•
Artisan roasting style

•
From Roaster to Shelf in 24 hours
Small batches
Highly selective sourcing

Long-term relationships with exporters,
brokers & growers
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Taste Test
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Promotional Efforts
•
In-Store Promotions
•
Partnerships with Foodservice Operators
•
Online Presence
•
Community Service
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Price
Prices of selected medium (grande) drinks
Starbucks
Peet's
Regular coffee
$ 1.85
$ 1.85
Espresso
1.95
2.20
Caffe Latte
3.35
3.35
Retail stores in Petaluma, California, May 2010, Daniel Brockman
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SWOT Analysis
• Effective distribution
network
• High quality
ingredients
• Community
involvement
• High quality
collaboration with
sources
• Weak brand
recognition
• Highly Competitive
Market
• US Economic
Slowdown
S
T
W
O
•New Product Launch
•Godiva flavored Coffee
•Geographic expansion
• Limited food
selection
•Partnerships
•Airline
•Groceries
•Candy
•Expand coffee and tea selection
•Instant
•canned, bottled
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Critical considerations
•
Grow the company
•
Excellent coffee experience
•
Responsibility
•
Profitability
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Alternative 1: Airborne
The Concept:
•
•
•
Partner with airline.
Learn to serve excellent fresh coffee at
8,000 feet.
Trials on flights from Oakland Airport,
1 mile from roastery.
Pros:
•
Creates markets distant from
California in travelers' homes
•
Can we train airline crews to serve
excellent coffee?
Cons:
Recommendation:
•
Conduct a trial and assess.
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Alternative 2: Invest in Grocery
The Concept:
•
•
Expand Grocery eastward.
Driver: Customer migration to specialty coffees.
o
Growing customer awareness of Peet's.
Pros:
•
•
•
•
Peet's has financial assets to invest
Rapid growth: 39% in 10Q1 vs. 09Q1
Profitable: 26% operating margin
Better than expanding retail stores
Cons:
•
•
What are the limits to Grocery channel growth?
Large competitors
Recommendation:
• Invest in Grocery star
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Alternative 3: Instant and Canned
The Concept:
•
Introduce canned and instant lines of coffee.
Pros:
• Reach out to new customer segments.
• Synergic use for store delivery system.
Cons:
• Canned and instant coffee isn't fresh.
• Compromise existing standard of quality.
Recommendation:
• Let Starbucks do it.
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Summary of Recommendations
•
Try airborne Peet's coffee.
•
Don't produce Instant or Canned coffees.
•
Expand distribution through Grocery channel.
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Questions?
21
Appendix 1:
22
Appendix 2: Promotional Efforts
Community Service:
• Partnerships with International Non-Profit Organizations
 Grounds for Health
 Coffee Kids
 TechnoServe
 Utz and Rainforest Alliance Certification
• Global Initiatives
 KIMSSA
 Las Hermanas
 The Butterfly School
 International and American Red Cross
• Local Sponsorships
 Local School fundraisers
 Back to the Roots Ventures
 Athletic fundraisers
 Culture and Arts NPOs
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Appendix 1: Pivot of age vs kind.
Question 7) Which kind of coffee do you like?
Question
2) Age:
I don't like
coffee
Light
Medium
55
1
18-35
3
6
8
36-54
1
1
Grand
Total
5
7
Sometimes
one and
sometimes
another
4
Strong
dark
roasted
Grand
Total
1
6
2
9
28
6
1
12
21
18
3
22
55
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