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Project Report

On

Café Vergnano in Luxembourg

Submitted by

Mohammed Naseer Khan

(1226114117)

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1. Country Profile:-

Luxembourg is a tiny European country, bordered by Belgium, France and

Germany. It’s mostly rural, with dense Ardennes forest and nature parks in the

north, and the Moselle river valley in the southeast. The rocky gorges of the

eastern Mullerthal region earned it the nickname “Little Switzerland.” Its

capital, Luxembourg City, is famed for its fortified medieval old town perched

on sheer cliffs.

Full name: Grand Duchy of Luxembourg

Population: 516,000 (UN, 2011)

Capital: Luxembourg

Area: 2,586 sq km (999 sq miles)

Major languages: French, German, Luxembourgish

Major religion: Christianity

Life expectancy: 78 years (men), 83 years (women) (UN)

Monetary unit: 1 Euro = 100 cents

Main exports: Steel products, chemicals, rubber products

GNI per capita: US $77,160 (World Bank, 2010)

Internet domain: .lu

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International dialling code: +352

2. Luxemburg economic profile:-

This small, stable, high-income economy - benefiting from its proximity to

France, Belgium, and Germany - has historically featured solid growth, low

inflation, and low unemployment. The industrial sector, initially dominated

by steel, has become increasingly diversified to include chemicals, rubber,

automobile components, and other products. Growth in the financial sector,

which now accounts for about 36% of GDP, has more than compensated for

the decline in steel. Most banks are foreign-owned and have extensive

foreign dealings, but Luxembourg has lost some of its advantages as a

favourable tax location because of OECD and EU pressure. The economy

depends on foreign and cross-border workers for about 40% of its labour

force. Luxembourg, like all EU members, suffered from the global economic

crisis that began in late 2008, but unemployment has trended below the EU

average. Following strong expansion from 2004 to 2007, Luxembourg's

economy contracted 3.6% in 2009, but rebounded in 2010-11 before slowing

again in 2012.

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The country continues to enjoy an extraordinarily high standard of living - GDP

per capita ranks among the highest in the world, and is the highest in the euro

zone. Turmoil in the world financial markets and lower global demand during

2008-09 prompted the government to inject capital into the banking sector and

implement stimulus measures to boost the economy. Government stimulus

measures and support for the banking sector, however, led to a 5% government

budget deficit in 2009. Nevertheless, the deficit was cut to 1.1% in 2011 and

0.9% in 2012. Even during the financial crisis and recovery, Luxembourg

retained the highest current account surplus as a share of GDP in the euro zone,

owing largely to their strength in financial services. Public debt remains among

the lowest of the region although it has more than doubled since 2007 as

percentage of GDP. Luxembourg's economy, while stabile, grew slowly in 2012

due to ongoing weak growth in the euro area. Authorities have strengthened

supervision of domestic banks because of their exposure to the activities of

foreign banks.

3. Culture of Luxemburg:-

Facts and Statistics:-

Location: Western Europe, bordering Belgium 148 km, France 73 km, Germany

138 km

Capital: Luxembourg

Population: 462,690 (July 2004 est.)

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Ethnic Make-up: Celtic base (with French and German blend), Portuguese,

Italian, Slavs (from Montenegro, Albania, and Kosovo) and European (guest

and resident workers)

Religions: 87% Roman Catholic, 13% Protestants, Jews, and Muslims (2000)

Language in Luxembourg:-

French and German are the official languages of Luxembourg. The spoken

language of the majority of the 400,000 population is Luxembourgish. The 1984

Language Act determines that French is the only language of legislation, and

that French, German as well as Luxembourgish can be used for administrative

or judicial purposes. Official documents are usually not available in

Luxembourgish.

Luxembourg Society & Culture:-

The Family

Luxembourg is a small country and many people remain in the same town in

which they were raised, therefore creating close extended families.

. Obligation to one's family is a person's first priority.

. Parents are intimately involved in the education and career choices of their

children.

. The family is the social adhesive of the country and each member has

certain duties and responsibilities.

Religion:-

. The majority of the people are Roman Catholic, although Article 19 of the

constitution guarantees freedom of religion.

. The church's strong influence on the culture is reflected in the national

holidays, many of which are religious observances.

. It is also seen in the respect for hierarchical relationships, the formal and

ritualized behaviour, and the way that the family is seen as the basis of the

social structure.

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Privacy:-

. Although friendly and informal with close friends and family, Luxembourgers

are often reserved and formal when dealing with outsiders. . They are private

people and do not put their possessions or emotions on display.

. Luxembourgers do not ask personal questions and will refuse to answer

should you intrude on their privacy.

. Personal life is kept separate from business.

. If a friendship develops at work and is carried into the personal arena, this

camaraderie will not be brought into the office.

. Personal matters are not discussed with friends, no matter how close.

Etiquette and Customs in Luxembourg:-

. Greetings are reserved and formal until a relationship has been established.

. The most common greeting is a brief handshake.

. Very close friends greet each other by lightly kissing on the cheeks three

times, starting with the left cheek and alternating.

. This can be between women or a man and a woman.

. Men never kiss other men; they always shake hands.

. Surnames with the honorific titles Monsieur or Madame are used in most

social situations.

. Wait to be invited before using someone's first name and always use the

formal pronoun for you, "vous" rather than the informal "tu".

4. Political system of Luxemburg:-

The Grand Duchy of Luxembourg is a representative democracy in the form of

a constitutional monarchy, with hereditary succession in the Nassau family.

The Grand Duchy of Luxembourg has been an independent sovereign state

since the Treaty of London was signed on 19 April 1839. This parliamentary

democracy has one particularity: it is currently the only Grand Duchy in the

world.

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The organisation of the Luxembourg State is based on the principle that the

functions of the different powers have to be spread between different organs. As

in many other parliamentary democracies, the separation of powers is flexible in

Luxembourg. Indeed, there are many relationships between the executive and

legislative powers although the judiciary remains completely independent.

The legislative power rests on the joint action of the Parliament,

the government and the Council of State.

Together with the government and its responsible members, the Grand

Duke forms the decision-making body of the executive power.

According to the Constitution, the courts and tribunals are responsible for

exercising the judicial power. They carry out their duties independently.

A constitutional monarchy regime is the perfect framework for a country in

which social consensus and dialogue are catch-words.

The country’s stability is incidentally reflected in the fact that changes in

governments occur smoothly: in the past, two of the three main political

parties (the Christian-Social People's Party, the Luxembourg Socialist Workers’

Party and the Democratic Party) have generally formed coalition

governments following legislative elections that take place every five years.

Business profile of Luxemburg:-

1. Due to its largely service-oriented economy, Luxembourg has a lower R&D spending target than the EU2020 strategy. R&D spending in the area of 3% by

2020 is not a realistic target in large parts of the Greater Region. 2. Additional to its service-orientation, Luxembourg is also characterised by a

strong research sector. This sector relies on a high share of human resources working in knowledge-intense activities and on their ability to participate in

research networks.

3. In terms of innovation, Luxembourg is strong with respect to marketing and organisational innovation, but less in terms of product and process innovation.

4. Whether considering the knowledge economy or innovation, entities of the

Greater

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Region show heterogeneous patterns. If one agrees that “one size does not fit all”, each entity should have its own strategy.

5. The impact of R&D investment on regional growth is unequal; it depends on

an existing critical mass of R&D and on the extent to which each region is capable to transfer its knowledge into its economy (innovation profile).

What does it take to start a business in Luxembourg?

According to data collected by Doing Business, starting a business there

requires 6.00 procedures, takes 18.50 days, costs 2.00% of income per capita

and requires paid-in minimum capital of 22.60% of income per capita Most

indicator sets refer to a case scenario in the largest business city of an economy,

except for 11 economies for which the data are a population-weighted average

of the 2 largest business cities. See the chapter on distance to frontier and ease

of doing business ranking at the end of this profile for more details.

5. Coffee culture in Luxembourg:-

Drinking Coffee in Luxembourg with Knopes Brothers

For Fabien and Francois Knopes coffee is a family affair. These young and

passionate guys are the fourth generation of Knopes Artisan Torréfacteur

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business. They carry the heritage of their great grandfather, Albert Knopes,

who opened a grocery store with colonial goods in 1936. Soon after that he

specialized in coffee.

Coming from Belgium, they moved their business to Luxembourg in 2014 to

establish a coffee scene in the country previously untouched by the Speciality

Coffee. Join us for a coffee with Knopes brothers in their two cafés in the city

of Luxembourg.

Knopes Roastery

What used to be a garage in the suburbs of Luxembourg is now a culinary

centre with restaurants, shops and also a roastery/café. It is called Am’Garage

and it was our first stop in Luxembourg. Parking marks are still evident on the

ground as a reminder of the original purpose of the building.

In the morning the café was of a rather calm and relaxed ambience. Volume

came later in the afternoon when people gathered from the surrounding

offices. We ordered our coffees, a cappuccino using a seasonal coffee branded

“1936” regarding to the company’s history. This time it was Brasil Fazenda

Irmas Pereira and, to our surprise, a single origin filter coffee was brewed

with beans from Vietnam (Da Lat). Fabien Knopes had just a few minutes

between roasting so he sat down with us and talked us through the history of

their coffee obsession.

“I always liked coffee to some degree but it was only in 2009 when I cupped

speciality grade coffees for the first time. Then I knew I was in love. Now I

know I will spend the rest of my life working with it,” describes his story

Fabien. Their father took a bold decision to move from commodity coffee to

Speciality at the time few people in Europe had a clue about Speciality coffee.

The brothers took over the company when their dad died and worked closely

together, Francois more focused on the café and Fabien on the finance.

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Knopes Café

We found our way to the city centre to talk to the other half of Knopes duo.

Just a bit hidden from the Avenue de la Porte-Neuve is located Knopes Café

where we met Francois Knopes. He got hooked on coffee at the World Barista

Championship in 2006 in Bern. Eventually Francois started to compete

himself and became Belgium Latte Art Champion of 2012. Talking about the

family affair, his competitor in the World round in Seul, South Korea, was his

girlfriend Anaïs. She is French Latte Art Champion of 2012 and she works for

the Knopes brothers in Luxembourg now too.

“The only thing that is worse than no coffee is bad coffee” says the sign next

to the café’s entrance. Well, that is the reason to carry our coffee kit with us

anytime we hit the road. We tried an experimental batch of cold brew from

Kenya Marimira AB instead of espresso or cappuccino. Mikaël Portannier,

French barista working in Luxembourg, brought a Toddy cold brewer with

him from Paris and started experimenting.

Knopes Café is a cosy small café with dozen of seats inside and outside,

usually filled with Luxembourg’s international expats. These are regular

customers at Knopes. They feel comfortable here due to the multicultural feel

of the place that reminds them of cafes back home. On top of that they

appreciate tasty coffee and good service. Although it is not a standard in

Luxembourg yet, both brothers believe in the bright future of their business

and speciality coffee in this small country. We wish them good luck! Thus

people of Luxemburg use more milk in the coffee.

6. Price preferences:-

1. Dosette E.S.E. 100% Arabica x 150 par Caffé Vergnano-35.09euros

2. Dosette ESE Vergnano Decaffeinato x18- 5,30 euros

3. Capsule Espresso Dec Caffè Vergnano x10 pour Nespresso-2,90euros

4. Capsule Espresso Bio Caffè Vergnano x10 pour Nespresso-3,90euros 5. Café moulu Vergnano Antica Bottega 100% Arabica 250gr-5,20euros

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7. Business plan and entry strategies:-

• Short-term goal: Use the quality of our service and advertising to soon

become well-known throughout Connersville.

• Long-term goal: Expand the business to other locations and include

catering.

• Strategy: Work hard to have the best-tasting coffee, treats, and service in

town and surrounding areas.

Project at glance:-

• Shop name : café vergnano

• Product : Coffee

• Location : Luxembourg

• Capacity : 4800 cups/month

• Raw material : Coffee bean, Milk, Sugar, Cream, Ice-

cream, Chocolate

• Land : 1000 sq.ft

• Labor : 10

• Cost of Project : 2815000

Swot analysis:-

• Strengths: Reasonable prices, wide variety of coffee and drinks, a lot of

home-made treats

• Weaknesses: Turn down in the economy, start-up costs, new business, no

reputation

• Opportunities: Job opportunities for the many unemployed in

Connersville, catering

• Threats: Gas stations, McDonalds, Brian’s Bookstore, and other local

restaurants

Legal structure:-

• My business will be run as a sole proprietorship.

• All debts and liabilities of this business will be my responsibility.

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• I will pay personal income taxes on the profits made. This will make

accounting much simpler.

• With having a sole proprietorship, I can also deduct my business losses to

the extent of my total income that I may have from all sources.

Market analysis:-

• Target Market: My target market will be to anyone who enjoys coffee,

but I will mainly target people age 18 and older, both male and female,

and who are of the working class. The total population of Connersville is

15,411, and the number of males and females are about the same. There

are 11,813 residents over the age of 18.

• Competition: My major competitors would be Brian’s Bookstore which is

located on Central Avenue in Connersville. One of the strengths of

Brian’s Bookstore would be that they serve coffee along with selling

books. They have also been in Connersville since 1998 and they are well-

known. People may also be brand loyal to their coffee.

• Market Trends: Coffee is the drink of choice for many people across the

world. Every morning millions of people rely on their morning fix to get

going for the day.

– The US Department of Agriculture’s estimate of the 2006/07 world

coffee production has increased to 128.6 million bags, up 4.9

million bags from its June 2006 estimate.

– 17% of the adult population consumed a gourmet beverage on a

daily basis in 2008 compared with 14% in 2007.

Marketing mix:-

Pricing:

Our pricing scheme will be based on a competitive pricing model

with other similar product providers

Distribution:

Our products will be dispended from our one and only shop. we

provide home delivery.

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Promotion :

Our shop is located in traffic area so it will significantly increase

visibilities.

Customer services :

We provide products base on customer’s taste and preferences.

Positioning:-

The competitive edge is based on customer taste and preferences. There is

exestitiing competitors in the market so its difficult to survive in market so we

more focus on youngsters and students and for those we provide entertainment

source like customer play musical instruments in our shop.

Marketing strategy:-

I will do as much as I can to get my business name known throughout

Connersville. I plan to make flyers to put on cars that have my business name,

logo, and address on them. It will also list the day of opening and will state that

if you bring the flyer in through the first week of opening you can get 20% off

any drink of any size. I will also have two coupons in the local newspaper for

1.00 euro off any purchase. I will have reasonable prices, but they will not be

too high or too low.

Start up costs:-

• Incorporating 176.72

• Licenses and Permits 239.88

• Insurance 700.00

• Legal 500.00

• Bean Grinder 795.00

• Food supplies 900.00

» 3,311.60

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Break even analysis:-

3,311.60/ (1.45-.50)

– =3,485.89

I need to sell 3,485 cups of coffee to break even.

Competitor Analysis:-

DIRECT COMPETITOR

Starbucks Coffee

INDIRECT COMPETITOR

Mc Donald's Local cafes

Target market:-

1. College students

2. Young professionals

3. Tourists

4. Shoppers

8. Punch line for coffee:-

“Fall in love with coffee all over again.”

In French - Tomber en amour avec le café tout recommencer.

In German - Verlieben Sie sich in Kaffee alle immer wieder.

9. Branding and promotion through advertisements:-

PROMOTION

We would adopt the following promotion strategies:

Print advertisements:

• University campus

• Outside MRT Stations

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• Television advertisements in local cabs and buses

• Local FM radio advertisements

• Discount coupons on frequent visits

Poster of my business plan for café vergnano in Luxembourg in the

official languages:-

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10. Bibliography:-

1. http://www.worldmapper.org/posters/worldmapper_1038_coffee_consum

ption_ver2.pdf

2. https://en.wikipedia.org/wiki/Luxembourg

3. http://www.everyculture.com/Ja-Ma/Luxembourg.html

4. http://citysavvyluxembourg.com/category/lifestyle/food-and-drink/cafe-

culture/

5. http://theculturetrip.com/europe/luxembourg/articles/the-top-10-cafes-in-

luxembourg-city/

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