We conduct a Costa Coffee SWOT Analysis to analyze the strengths, weaknesses, opportunities, and threats the coffee brand faces.
Close your eyes and remember the strong, bitter, sweet, and slightly smoky smell of fresh Coffee beans. This must have felt good, but you must be wondering why I asked you to do that.
Well, that is because today's article is about your favorite Coffee. The one and only Costa Coffee! This article will be a treat for Coffee lovers since we'll discuss the history and the current operations of one of the tastiest Coffee manufacturing brands.
In this article, we will also conduct a Costa Coffee SWOT Analysis to analyze the strengths, weaknesses, opportunities, and threats the coffee brand faces.
Jim Makos
But before proceeding to the SWOT analysis, you must wonder how Costa Coffee got established and its history behind it. So, let's look at the history of Costa Coffee before proceeding further.
The story of Costa Coffee goes back to 1971 when two brothers, originally from Italy, established a small roastery in London. The Coffee beans roasted in the roastery of the Costa brother had a distinguished taste that made its place in the market.
Soon the demand for Costa Coffee increased across London. Costa Coffee needed more space to establish a bigger roastery. That's why Costa Coffee shifted to South London. At this time, the Costa brothers were distributing Coffee to renowned Coffee shops, restaurants, hotels, and other places.
Later the idea of establishing their own Coffee shop struck the Costa brothers. That's when they opened the very first Costa Coffee shop. From there onwards, Costa Coffee kept on expanding its operations.
Initially, the Costa brothers opened Coffee shops across the UK. However, after making the UK saturated with Costa Coffee, they decided to spread its operations across the globe. Currently, there are over 3,800 Costa Coffee shops in 32 countries.
To ensure that the operations are being run organized in all the branches, Costa Coffee has employed more than 18,000 skillful employees.
Costa Coffee has undoubtedly made its place in the hearts of the people of Britain with its magical taste. The love of the people of the UK for Costa Coffee can be clearly seen after their favorite Coffee brand was voted UK's favorite coffee shop consecutively for the twelfth time.
Costa Coffee had become a significant brand in the coffee industry till 2019, and that's when Coca-Cola decided to acquire the Coffee brand. However, the last annual revenue of Costa Coffee before getting acquired was recorded to be around £1.3 billion.
Since we have discussed enough the history of Costa Coffee and how its operations evolved with time. Let's now proceed to Costa Coffee's SWOT analysis. However, before we carry out the SWOT analysis, you need to know what SWOT analysis is.
A SWOT template makes it easy for analysts and readers to analyze the internal and external factors that impact an organization's operations.
Since we have also shed light on the purpose of a SWOT analysis, let's proceed further and start the Costa Coffee SWOT analysis.
Costa Coffee's Strengths
Every brand possesses strengths that help it retain its market position. Companies try to increase the number of their strengths so that they can dominate the market. Now, let's proceed further and discuss some of the strengths of Costa Coffee.
Strong Brand Recognition
All the brands that operate in the market are looking for ways to increase their brand recognition. Brands want to be recognized because their customer base increases with recognition causing their revenue to increase.
Costa Coffee is a globally recognized coffeehouse chain with a strong brand reputation and a good identity. The brand has more than 3800 stores in 32 countries worldwide and 2000 stores in the UK.
Such brand recognition will act as a catalyst to increase the annual revenue of Costa Coffee by increasing its customer base.
High-Quality Service
Customers may compromise on many things, but customer service is something upon which customers never compromise. Therefore, a brand must first improve its service quality if it wants to build a solid customer base.
High-quality customer service is the key to providing a good customer experience. As a coffeehouse brand, Costa Coffee provides an excellent location and service to build its database of loyal customers. Its stores offer a high-quality environment where customers feel welcomed and can relax and shop for their needs on the same visit.
Diversified Portfolio
Brands that offer a wide range of products that cater to the needs of different types of audiences achieve success. This is why, when brands get big, they increase the number of products placed on their shelves.
A wide range of products is offered by Costa Coffee. However, Costa Coffee is famous for its coffee. However, it also offers a variety of drinks, snacks, and pastries to its customers for breakfast or in the afternoon. So if you visit Costa Coffee anytime, you'll always find something for yourself.
Costa Coffee's Weaknesses
All brands possess some weaknesses along with strengths. Weaknesses are the shortcomings of the companies that stop them from achieving success. This SWOT analysis section deeply analyses some of Costa Coffee's weaknesses.
Limited Presence Across the Globe
Brands that want to grow and increase their revenue must have a global presence. Organizations in a specific part of the world fail to maximize profits. Although Costa Coffee has more than 3,800 shops altogether, they are saturated in a specific region.
Costa Coffee has headquarters in the United Kingdom and mainly operates in Europe. It doesn't have much presence in different countries. Most of its stores are in developed countries like the UK and other European countries.
Costa Coffee seems to rely heavily on its developed markets as its primary source of income. But if sales decline in this region, it could negatively impact the company's brand image.
High Sugar Products
As the world is progressing in terms of technology and medical science, research shows that a high sugar intake can harm human health. Such reports have made people conscious of their diets. As a result, people have started avoiding products that contain high sugar.
Costa Coffee, a coffee brand and cafe, offers many products with high sugar levels. For example, cakes, muffins, cookies, and drinks served at Costa Coffee have high-sugar substances.
Due to this, the product's health-conscious customers say the company's products are unhealthy because of their high sugar levels. This may lead to a decline in the demand for Costa Coffee products.
High Price
Brands need to have reasonable prices to attract customers. Consumers are always looking for cheaper substitutes available in the market. Therefore, if a brand has high-priced products, consumers will look for substitutes available in the market.
Costa Coffee sells high-priced coffee compared to its competitors. The recent increase in its coffee prices has really annoyed its customers. Costa Coffee must bring down its prices before consumers switch to other brands.
Costa Coffee's Opportunities
The market provides opportunities to every brand. It is upon them how they choose to avail those opportunities. Brands that avail of the opportunities at the right time achieve success. This section will highlight the opportunities ahead for Costa Coffee.
Mergers and Acquisitions
Brands look forward to expanding their operations and removing the competition with the help of mergers and acquisitions. Using mergers and acquisitions correctly can help brands to penetrate new markets and increase their revenue.
Costa Coffee should consider forming mergers with other brands in the food and beverage industry. If it carries out this plan, it will not only be able to expand its portfolio but also learn a lot from the pre-existing brands about new markets.
Expanding Operations In Other Countries
Companies need to keep penetrating new markets because moving to new countries can help them to form a new customer base that can cause profit margins to increase.
Costa Coffee has a geographical presence limited to a specific region. The coffee-selling brand should expand its target market by entering the global market. By doing so, it will be able to receive the benefits of globalization and gain access to markets in developed countries. This can increase revenue and profits for Costa Coffee.
Increase Marketing
Marketing is essential since it attracts people to consume the products and services. Therefore, adopting the proper marketing methods can help brands increase their customer base and revenue.
Costa Coffee is famous for doing minimum marketing for its products. However, the opportunity lies for the brand to market its products correctly to increase its revenue and profit margin.
Costa Coffee's Threats
Every brand, no matter how big or small, has to deal with the threats it receives from the external environment. These threats must be dealt with in time before they start to damage the brand. In this section, we will look at a few threats faced by Costa Coffee.
Cut Throat Competition
Intense competition exists in the food and beverage industry since countless suppliers supply similar products in the market at different prices. The coffee industry is full of coffeehouses that sell quality products.
Costa Coffee is a global brand and has established itself as one of the top coffeehouses in the market. However, it has become very challenging for Costa Coffee to maintain its position due to many other brands offering similar services.
For example, brands like Starbucks intensify competition with Costa Coffee since both offer similar products at a similar price level. As a result, Costa Coffee needs to improve its game to stay relevant in the market.
Global Recession
Recessions are devastating for brands since they end up making people poor. As a result, the demand for products drops, and brands observe losses due to the fall in sales. According to economists, we are about to observe a global recession soon.
This recession poses a threat to Costa Coffee since it'll lower the sales of the coffeehouse, causing the profit margins of Costa Coffee to shrink.
Russia-Ukraine War
Multinational brands always suffer when wars and conflicts occur between countries because their operations get affected due to war. For example, several brands suspended their operations after war broke out between Russia and Ukraine.
Costa Coffee was also among those brands that announced the boycott of Russia. The coffee brand got seriously affected after suspending its operations in Russia because the Russian market used to add almost $2 billion to the revenue of Costa Coffee.
If this war is prolonged, Costa Coffee will observe more losses, which is unsuitable for the brand.
Costa Coffee SWOT Analysis: Final Word
Costa Coffee is a well-known coffee brand that operates in different parts of the world. In this article, we decided to conduct its SWOT analysis to analyze the strengths, weaknesses, opportunities, and threats the coffee brand faced in detail.
We started off this article by shedding light on the history and current operations of Costa Coffee. We then proceeded to its SWOT analysis.
As we carried out the SWOT analysis, we learned that Costa Coffee has strong brand recognition and a diverse portfolio, which acts as its strengths. Besides that, high-quality customer service also benefits the brand in increasing its customer base.
Moreover, we also discovered that Costa Coffee has a limited international presence and unhealthy products, which is a weakness for the brand. Besides that, we also discussed that Costa Coffee has an opportunity to increase its revenue and customer base by increasing marketing and expanding its operations.
In the end, we also shed light on the threats present for Costa Coffee that are to be dealt with timely. You can also represent the findings of this SWOT analysis more effectively with the help of a SWOT Matrix or a SWOT table.
If you've come this far, I am sure you're now aware of how to conduct a SWOT analysis. However, if you still have some questions, look at some examples of SWOT analysis to understand it properly.
