The coffee is a choice of millions of people all around the world; consumers come to coffee shops daily from morning to evening. The sales of coffee have risen up to 50 percent in the year 2007(Burritt, 2007). That is the main reason more and more organizations are moving to coffee business, examples of McCafe from Macdonald’s and Dunkin Donuts Coffee from Dunkin Donuts are the recent addition to competition in international coffee business. In this report McCafe and Dunkin Donuts coffee will be examined as the major competitor of Starbucks. By examining the driving forces of coffee industry we can come to a conclusion why business model of Starbucks is an example for new companies. The prices for coffee beans has increased from 108.39 U.S. cents per Ib. in 2009 to 184.26 U.S cents per Ib. in 2010(“International Coffee Organization Prices,” 2010). This 200% increase in the price of coffee beans in the last two years has disturbed the whole industry forcing to leave many small players and declining the profits of other players. Because of this increase in price of coffee beans and overall economic condition of world the Starbucks also has to increase the prices especially in china and the United States (Baertlein, 2011).
Besides increase in coffee prices all over the world, the coffee industry can still survive because of high demand and strong consumer base. The coffee industry will continue to grow till 2015 or even more in the emerging economies of the world (Lingle, 2007). As it has demand and very strong consumer base. For overall industry position there are no issues for Starbucks as they have emerging markets in the form of Brazil, China and India. As Brazil is progressing economically and it has been estimated that in near future Brazil will become the larger coffee consumer country with its recent coffee consumption of 39% (Murphy, 2011). The Starbucks is already in China and planning to buy coffee from India as well as opening Starbucks in India (Bose, 2011).
The coffee industry is growing at a pace and survival of coffee operators in the industry depends on expansion of company that will provide the company with market leadership among its competitors (Bose, 2011).