SWOT Analysis of Costa Coffee (Costa Coffee SWOT)
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 thoughts 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.
Strengths of Costa Coffee
Costa Coffee has achieved an internationally recognized brand name for coffee. There is a strong brand awareness in many countries around the world. It has over 2,420 stores in the UK. Including international operations, its total number of stores goes over 3,820 (Lock, 2020). In 2017, it opened 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.
The coffee sold at Costa Coffee is of very high quality which has helped it gain many loyal customers some of whom visit it on a daily basis. 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.
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, 2021).
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 is a premium brand. Therefore the price is relatively high in comparison to smaller coffee shops. Many of its 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.
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. Similarly, it 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.
Opportunities for Costa Coffee
Costa Coffee should consider pursuing more international market expansions which will help it increase its revenue. Developing and emerging economies are growing fast due to globalization and the world economy is becoming interdependent.
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.
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
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.
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 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.
The current economic crisis has led to many people losing their income; and therefore, they are less likely to spend on non-essential foods and drinks. Costa Coffee warned of cutting around 1650 jobs in the UK in September 2020 due to economic crisis (BBC, 2020).
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Last update: 17 January 2021
BBC (2020) Costa Coffee warns up to 1,650 jobs are at risk, available at: https://www.bbc.co.uk/news/business-54009637 (accessed 17 January 2021)
Costa (2021) Behind the Beans, available at www.costa.co.uk/behind-the-beans/our-story/history (accessed 17 January 2021)
Lock, S. (2020) Number of Costa coffee shops in the United Kingdom (UK) 2008-2018, available at: https://www.statista.com/statistics/283302/number-of-costa-coffee-stores-in-the-united-kingdom-uk/ (accessed 17 January 2021)
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).