Vega Coffee Go-To Market Strategy

Tera GallegosJacqueline Ng

Tara NguyenMichael Stewart

Executive Summary

Current Offering Recommended Offering

4 roasts listed as options for subscription

4 roasts differentiated with unique packaging, highlighting flavor notes and source of origin

One price point ($15) Tiered pricing model with an increased opening price point ($21)

Earned and owned media with emphasis on subscription service

Hero farmer empowerment & product story through social media, website, sponsored relevant blogs, native ads, and lifestyle sites

Subscription Service (Delivery offered every 2 or 4 weeks)

One time purchase online, Pop-up shops in cafes, natural/organic grocery, wholesale

Product

Price

Promotion

Distribution

Conjoint analysis was used to distill consumer preferences

● Conjoint analysis survey contained 18 product profiles with 5 demographic questions

● Received 34 qualified responses● Conjoint survey can be found here:

http://goo.gl/forms/wuCBYDsrpb

Attributes Levels

Brand

Intelligentsia

Vega Coffee

Blue Bottle

Coffee Style Assortment

Organic Coffee

Cold Brew

Espresso

Price

$15

$17

$19

$21

Cadence for subscription

Every two weeks

Every month

Every two month

One-time purchase

Social causeYes

No

Target consumers show a willingness to pay for a social cause

● Recommendation: Target 35 - 44 year old consumers making over $100K. This consumer group shows the least price sensitivity and willingness to pay a premium for a social cause regardless of brand.

● Other Findings:o 25-34 year olds are also willing to pay a premium for a social cause, regardless

of brand; this demographic shows greater price sensitivity.o Delivery cycle is the most important attribute for all groups.

There are two groups to target: Coffee Experience Seekers & Social Cause Advocates

Name: Dan MahleTitle: VP of Global Ecommerce, CliniqueLocation: NYCAge: 44Salary: $100,000+Education: Graduate Degree from GeorgetownGoals & Challenges: As a busy professional, Van has a limited amount of time so he values convenience. At the same time, he enjoys the best food and will actively seek the best of everything he eats even if it means going out of the way to get it. On the weekends, he’s been known to drive 25 miles away from his country home upstate to get the best donuts.How Vega Can Help: Deliver convenience straight to his door; help him signal to his friends, family, and colleagues that he has refined tastes and supports a social cause.

Name: Mari HollowayTitle: Strategy Manager, GapLocation: San FranciscoAge: 28Salary: $65,000+Education: UC BerkeleyGoals & Challenges: Mari recently moved back to SF after a stint in NYC. Now back in her hometown, she wants to catch up with her friends. She rushes around during the week, but enjoys the experience of brewing a “real” cup of coffee at home on the weekends. Mari supports a number of social causes in her community and loves the idea of contributing to a social cause.How Vega Can Help: Teach Mari how to savor coffee at home and help her to find the ideal blend for each occasion and mood. Educate her on benefits of Farmer Empowerment.

We tested 5 potential Vega product mixes to identify an ideal product

● Product A: o Type: Organico Delivery Cycle: One Timeo Price: $21

● Product B: o Type: Espresso

Delivery Cycle: One Timeo Price: $19

● Product C: o Type: Espressoo Delivery Cycle: Every 2 monthso Price: $19

● Product D: o Type: Organico Delivery Cycle: Every 2 monthso Price: $17

● Product E: o Type: Organico Delivery Cycle: Every montho Price: $15

Product A is our go-to market product recommendation with the most potential market share of the 5 test product combinations.

The go-to market product recommendation is projected to outperform existing market offerings

Type: OrganicDelivery Cycle: One TimePrice: $21Supports Social Cause: Yes

Type: OrganicDelivery Cycle: Every 2 weeksPrice: $19Supports Social Cause: No

Type: OrganicDelivery Cycle: One TimePrice: $17Supports Social Cause: No

Physical locations continue to be the primary channel our target is shopping

The Why Behind the Buy 11th Edition, Acosta Sales & Marketing

Access to Vega coffee to drive trial is key to acquiring new customers and increasing salesRetail

● Health food stores● Gourmet food shops

Wholesale● Partner with restaurant & hotel chains to become exclusive coffee provider● Sell bulk to offices that provide coffee to employees Ex: Google, WeWork

Events● Distribute coffee at events target group frequents Ex: Shakespeare in the Park in

NYC● Exhibit coffee at coffee-centric festivals and food markets Ex: Coffee & Tea Festival in

NYCPartnerships with Food Start Ups

● Coffee in recipes Ex: Blue Apron, Munchery, HelloFresh● Coffee as part of subscription box Ex: Naturebox, Love with Food, Try the World

To promote the brand, lead with Farmer Empowerment and focus less on subscription serviceFarmer Story

● Create Farmer profiles on website (“Day in the Life”)o Educate consumers on how farmers are being

helped & quantify impacto Connect farmers and consumers with

emotional story to solidify brand experience & provide a reason to believe

● Highlight partnerships with women cooperatives● Enhance touchpoints with more photos

o Lifestyle & travel imagery in Nicaraguao Snapshot of farmers: roasting, resting, “being”

● Add farmer story to coffee packaging and drive traffic back to website

Product Story● Explain taste notes of Nicaraguan coffee

o Individual product detail pages with compelling copy describing each roast

● Create appealing product names that provoke emotions or storieso Ex: Miraflor → the nature preserve where you

first stumbled upon the specialty beanso Nicaragua-related name to convey the

product’s origin and ties to the farmer● Testimonials / ratings & reviews from customers● Fan photos: Customer photos on product detail

pages featuring Vega coffee & coffee lifestyle● If promoting subscription, benefits must be

emphasizedo Samples with coupon code for first ordero Loyalty program: Discount, insider access to

new roasts, tours with farmerso Starter Kit for consumers to make coffee the

right way

Ex: Warby Parker

Enhance existing product portfolio with levels based on price and benefits

● Target price sensitive consumer (18-24yo)

● Leverage current product offering● Recommended price: $15● Affordable luxury product versus

mainstream coffee brands

● Target young professionals (25-34yo)

● Consumer willing to pay more for social cause attribute

● Recommended price: $17-19● Opportunity to experiment

with more complex flavor notes

● Target recommended segment: established professionals (35-44yo)

● Consumer willing to pay more for social cause and experiential attributes

● Recommended price: $21● Limited edition seasonal

offerings

Esteli La Roya Miraflor

Increase retail pricing across a broader product portfolio to be perceived as a quality brand and capture more margin

# of Oz Retail Cost/oz

illy 8.8 $15.00 $1.70

Blue Bottle 12 $19.00 $1.58

Ritual 12 $17.75 $1.48

Intelligentsia 12 $17.00 $1.42

Stumptown 12 $16.50 $1.38

Counter Culture 12 $16.50 $1.38

Vega 12 $15.00 $1.25

Philz 16 $18.00 $1.13

Oren's 16 $16.99 $1.06

Lavazza 12 $9.99 $0.83

Peets 16 $12.50 $0.78

Starbucks 16 $11.95 $0.75

Joe 12 $7.99 $0.67

Dunkin Donuts 16 $8.99 $0.56

● Vega’s base cost/oz resides in between mainstream & specialty brands

● The target segment (35-44yo) is willing to pay $21 for a coffee product with a social cause

● Tiered product framework will incent trade up & loyalty once brand awareness is secured

● Esteli: $15● La Roya: $17-19● Miraflor: $21

High

Low

Inferior SuperiorRelative Quality

Rel

ativ

e P

rice

Fair Value Line

Better Customer Value

Worst Customer Value

Fair Value Line

Vega differentiates itself by providing quality at a better customer value

Advertising Strategy

Target 1: Coffee Experience Seekers Target 2: Advocates (Millennials)

Objectives Raise awareness of Vega and its various coffee offerings.

Increase sales.

Raise awareness of Vega and its various coffee offerings.

Encourage talk and buzz about Vega.

Start a long term relationship. Promote sales.

Tools Initial investment in pop-up coffee kiosks or trucks in key cities and neighborhoods (e.g. Manhattan Upper West Side).

Initial investment in an advertising campaign utilizing new media, i.e., Internet web sites (e.g. Gilt City, Tasting Table), or winning food bloggers.

Personal visits to the farms and meet the farmers.

Initial investment in a print advertising campaign in food or lifestyle magazines, e.g. Epicurious.

Initial investment in pop-up coffee kiosks or trucks in key cities and neighborhoods (e.g. Manhattan Upper West Side).

Initial investment in an advertising campaign utilizing new media, i.e., Internet web sites (e.g. Pinterest, Thrillist) and other channels that will be perceived by end consumers as modern, cutting edge, hip and fun.

Additional spend in print campaign in younger lifestyle magazines, i.e., Architectural Digest, etc.

Advertising Campaign Ideas: Awareness

Assignment Develop an ad campaign for lifestyle oriented sites that will be perceived as hip and fun. Present Vega as taking innovative approach to social cause, supporting and adding value to farmers who produce very high quality coffee, ready to be discovered and enjoyed.

Reason to Believe Once I know the story of the social cause, and how farmers’ lives and their communities are improved having been taught how to roast, I will support the cause and want to try this product.

Brand Identity I want to drink and share a brand that is regarded as innovative/hip. I also want to feel proud and comfortable about selecting and recommending this social-cause related brand to friends.

Mandates Vega coffee is supporting farmers and is hip.

Example campaign(s)

1) Offer complimentary coffee to an influential blogger that supports social cause in exchange for an honest review. Target Audience: Advocates.

2) Gilt City campaign for Father’s Day. Target Audience: Both Coffee Experience Seekers and Advocates.

Advertising Campaign Idea: Loyalty & Brand Experience

Assignment Develop a new unique travel experience - a new place to visit, new way to deepen the coffee ”connoisseur” experience, and new way to be involved in a social-cause helping farmers. Understand how organic coffee is produced by visiting a working farm. Tours that will deepen the coffee experience. Beautiful place to enjoy coffee, nature and historic sites.

Reason to Believe

Personal connection with farmers, the farm, production, and roasting facilities will create a bond and trust. In addition, the farms have a rich history and the farmers have deep experience in coffee beans. If I met and know the farmers, I am more likely to believe.

Brand Identity I want to drink and share a brand that is innovative/hip. I also want to feel proud that I’ve had this unique experience with this brand, and would be comfortable and enthusiastic about selecting and recommending this social-cause related brand to friends.

Mandates Vega coffee is supporting farmers, enhancing their lives and communities, and is hip.

Example campaign

Develop an experience tour of the farms, the facility, and meet the farmers. Add local itinerary of this “experience tour.”

Appendix

Coffee Industry

Market

Drivers & Challenges

Trends

Competition

● The retail value of the US coffee market is estimated at $30-32 billion dollars, with specialty comprising ~37% volume share, but nearly 50% value share

● Americans consume 2.1 cups of coffee per day ● 43% of Americans make their coffee at home or get at work

Source: Specialty Coffee Association of America Specialty Coffee Facts & Figures, March 2012; Zagat Coffee Consumption Statistics 2015

Drivers:● urbanization growth● discretionary income growth● increasing demand from

younger consumers

Challenges:● competitive landscape● quality control● health concerns

● increased usage of single-cup brewing● increased daily consumption of espresso-based drinks● increased willingness to pay for gourmet coffee

Supply Chain Disruptors

Fashion -Customer photos and word-of-mouth-Editorial content focused on fashion-Strong social media presence

IndustryCompany Value Proposition

Flexible ownership model where customers can subscribe and keep products for as long as they want. Enables “closet on rotation.”

Marketing Strategies

Healthcare Enables efficient rental of specialized non-emergency equipment within a multi-hospital healthcare system

-Primarily focused on direct sales

Office Space

Allows small businesses access to office space without traditional long-term, fixed costs.

-Word-of-mouth

Fashion Structured supply chain to be much faster than typical luxury retail brands with value passed on to consumers

-Robust Pinterest following (primary driver of traffic)-”Lean Closet Movement”

Pangea Consulting Team

Jacqueline Ngjng16@gsb.columbia.edu

Tera Gallegostgallegos16@gsb.columbia.edu

Tara Nguyentnguyen16@gsb.columbia.edu

Mike Stewartmstewart16@gsb.columbia.edu