…. Peet's Coffee & Tea Tara Alcantara-Beers Karol Caballero Yizhe Liu Daniel Brockman UC. Berkeley...

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Peet's Coffee & Tea

Tara Alcantara-Beers

Karol Caballero Yizhe Liu Daniel Brockman

UC. Berkeley Extension Strategic Marketing Ming Yang May 24th 2010

Peet's 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.”

MISSION

VISION

Strategic Marketing - Spring 2010Strategic Marketing - Spring 2010 11

General Description of Peet's Coffee & Tea

•Peet’s is a specialty roaster of whole beancoffee & 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

ALFRED PEET-FOUNDER

1920-2007

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

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

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

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

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/

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&

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

• 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

Key Success Factors

• Expertise in Coffee and Tea

• Sophisticated information systems infrastructure

Business Intelligence

ERP, POS and CS

• Freshness

Sustainable Competitive Advantage

• DSD - Direct Store Delivery system

From Roaster to Shelf in 24 hours

• Artisan roasting style

Small batches

• Highly selective sourcing

Long-term relationships with

exporters, brokers & growers

Taste Test

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Promotional Efforts

• In-Store Promotions

• Partnerships with Foodservice Operators

• Online Presence

• Community Service

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

SWOT Analysis

Critical considerations

• Grow the company

• Excellent coffee experience

• Responsibility

• Profitability

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

Cons:• Can we train airline crews to

serve excellent coffee?

Recommendation:

• Conduct a trial and assess.

The Concept:

• Expand Grocery eastward.• Driver: Customer migration to specialty coffees.

o Growing customer awareness of Peet's.

• Peet's has financial assets to invest• Rapid growth: 39% in 10Q1 vs. 09Q1• Profitable: 26% operating margin• Better than expanding retail stores

• What are the limits to Grocery channel growth?• Large competitors

Recommendation:

• Invest in Grocery star

Alternative 2: Invest in Grocery

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.

Summary of Recommendations

• Try airborne Peet's coffee.

• Don't produce Instant or Canned coffees.

• Expand distribution through Grocery channel.

Questions?

Appendix 1:

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

Appendix 2: Promotional Efforts

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

Sometimes one and sometimes another

Strong dark roasted

Grand Total

55 1 4 1 6

18-35 3 6 8 2 9 28

36-54 1 1 6 1 12 21

Grand Total 5 7 18 3 22 55

…. Peet's Coffee & Tea Tara Alcantara-Beers Karol Caballero Yizhe Liu Daniel Brockman UC. Berkeley...

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