Fahim ShahSWOT analysis of Costa Coffee
This is a detailed SWOT analysis of Costa Coffee. It offers detailed insights into the strengths and the weaknesses of Costa Coffee. It also offers valuable insights concerning the opportunities that the company should consider and the threats that it should keep close eyes on.
Costa Coffee is a British coffeehouse chain, headquartered in Dunstable, England. It is a subsidiary of the Coca-Cola Company. It is well-known for its handcrafted coffee beverages, delicious food offerings, and warm atmosphere, all of which have contributed to its success. It also has a strong commitment to ethical sourcing, environmental sustainability, and community engagement.
Strengths of Costa Coffee
Costa Coffee’s global operations
Costa Coffee has become an internationally recognised brand name for coffee. It has a state-of-the-art roastery in United Kingdom. It is one of the biggest in Europe and one of the most sustainable buildings in the world.
Loyal customer base
Costa Coffee is well-known for its distinctive logo, store design, and product packaging. This strong brand recognition has allowed it to build a loyal customer base and gain a competitive advantage over other coffeehouse chains.
Very high-quality coffee
The coffee sold at Costa Coffee is of very high quality which has helped it gain many loyal customers, some of whom visit it daily. Its stores have a trendy atmosphere in which customers like to spend some time. This in turn helps increase sales as customers tend to buy more when they spend more time at the coffee shop.
Variety of choices for customers
Costa Coffee sells foods which have been specially made for itself, in addition to different types of hot and cold coffees and drinks. This gives customers a wide variety of choices. The raw coffee beans are responsibly sourced from 100% Rainforest Alliance Certified farms, which shows their ethical values to the consumer (Costa, 2023).
High quality service by Costa Coffee
The quality of service in coffee shops is very high. The Baristas are quick to serve and always suggest other items to purchase, which in turn generates more sales as well.
Weaknesses of Costa Coffee
Costa Coffee’s pricing issue
Costa Coffee is a premium brand. Therefore, the price is relatively high in comparison to smaller coffee shops. Furthermore, Costa’s recent price increases have made many consumers furious (Hunter, 2022).
Consumer concerns
Some Costa products are not considered healthy by some customers. Therefore, as consumers become more conscious of their eating patterns, the demand for high sugary coffees has declined. In should be mentioned that Costa cappuccino has five times more caffeine than Starbucks’ (BBC, 2023).
Too reliant on the home market
Costa Coffee is predominantly located in developed economies. It also focuses heavily on its home soil, the UK. Therefore, if the demand in the home market declines, it will be a big problem for the company.
Store numbers and advertising issue
Similarly, Costa Coffee does not have a huge number of stores in total like some of its competitors. Many analysts also argue that it has a minimal spend on marketing and advertising.
Compared to its competitors, such as Starbucks, Costa Coffee invests relatively less in marketing and promotional activities. This lack of marketing investment can hinder its ability to create brand awareness and attract new customers, especially in international markets where the brand is less established.
Opportunities for Costa Coffee
International market expansion
Costa Coffee should consider pursuing more international market expansions which should help it increase its revenue. Developing and emerging economies are growing fast due to globalization and the world economy is becoming interdependent.
Healthier options
Costa Coffee also has the opportunity to develop healthier versions of caffeine products. It can also consider selling coffee beans and coffee making equipment to increase sales.
Strategic alliances
Costa Coffee can form strategic business alliances with other companies in the food and drink industry to increase the variety of items available in their shops. Likewise, broadening the target market to include slightly cheaper coffees of high quality is worth considering.
Threats to Costa Coffee
Competition
Increasing competition from existing coffee shops is a challenge. Some of which sell cheaper products which seem affordable to more customers. Costa Coffee’s biggest competitors in the UK are Starbucks, and Caffe Nero.
High prices of coffee beans
The rise in price of coffee beans and dairy products is also a threat. This will make coffee become more expensive and less customers will be able to afford it.
Government policies
Government policy changes could also interrupt the supply chains. Similarly, loss of sales due to coffee substitute products being introduced into the market is also a concern.
Global economic conditions
Lastly, Costa Coffee is susceptible to fluctuations in the global economy and political climate. Economic downturns can lead to reduced consumer spending on non-essential items such as premium coffee beverages.
Summary of SWOT analysis of Costa Coffee
The above analysis reveals that Costa Coffee has several strengths, such as its strong brand identity, commitment to product quality, and diversified product portfolio. However, weaknesses such as its dependence on the UK market, limited marketing efforts, and pricing issues need to be addressed.
Opportunities for growth include international expansion, product innovation, and strategic alliance. Threats faced by Costa Coffee include intense competition, high coffee prices, and economic uncertainties.
By leveraging its strengths and opportunities, addressing its weaknesses, and mitigating threats, Costa Coffee can continue to grow and maintain its position as a leading coffeehouse chain in the UK and beyond.
Hope the article ‘SWOT analysis of Costa Coffee’ has been useful. Please share the article link on social media to support our work. You may also like reading the following:
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Last update: 13 April 2023
References:
BBC (2023) Costa cappuccino has five times more caffeine than Starbucks’, available at: https://www.bbc.co.uk/news/business-64472214 (accessed 13 April 2023)
Costa (2023) Behind the Beans, available at www.costa.co.uk/behind-the-beans/our-story/history (accessed 12 April 2023)
Hunter, D. (2022) Our coffees Costa too much….available at: https://www.walesonline.co.uk/news/uk-news/coffees-costa-much-say-angry-24142226 (accessed 11 April 2023)
Author: Fahim Shah
Fahim Shah has been working in the UK as a visiting lecturer in Business and Tourism for the last 10 years. After completing a Bachelor’s degree in Business and Marketing, he went on to gain an MBA from the University of Bradford, the UK. He is a Fellow of Advance HE (FHEA) and a full member of the Association of Business Executives (ABE).
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