Strengths in the SWOT analysis of Costa Coffee
Second largest coffee chain in the world – Costa Coffee is the second largest coffee chain in the world. It has a presence in 31 countries and is known for its good taste of coffee.
Largest coffee chain in the UK – While Starbucks is the leader in coffee in the US and several other countries, Costa Coffee is the clearly the leader in the UK and has a majority market share since 2007. It is the largest coffee chain in the UK.
Widespread operations – Costa coffee has 3,401 stores across 31 countries. The business has 2,121 UK restaurants, over 6,000 Costa Express vending facilities and a further 1,280 outlets overseas
Good taste – Fans of Costa Coffee swear by the taste of the coffee served by the brand.
Premium image – Costa coffee is trying to achieve a premium image across the world.
Weaknesses in the SWOT analysis of Costa Coffee
Big gap between 1st and 2nd – There is a big gap between the 1st ranked in the coffee industry vs the second ranker. Starbucks has 2400- outlets across the world whereas Costa Coffee is around 4-5000 outlets. Thus, this gap in itself shows that Costa coffee has a large ground to cover.
More Aggression needed – Here is another comparison between Costa Coffee and Starbucks. Both the brands were founded in 1971. Yet Starbucks has a presence in 70 countries now whereas Costa Coffee is present in only 31 countries. This is a clear indication that Costa Coffee needs to expand aggressively.
Lack of Marketing and Advertising – Costa Coffee does not spend a huge amount on Marketing and Advertising for the brand which is a huge negative for the brand. In this segment, there is direct as well as indirect competition like Tea brands or Soft drink brands. Hence Marketing and Advertising investment is needed heavily to attract customers.
Price – Costa coffee is sold at higher prices compared to Starbucks and this effects the consumer mindset especially in developing economies.
High concentration in the UK – Costa Coffee clearly has a very high concentration in its home ground – The UK and Europe but it has a lower presence in other countries.
Opportunities in the SWOT analysis of Costa Coffee.
Expansion to other countries – The number 1 thing Costa coffee needs to do is to expand properly in more countries. It has 50% of its presence in the UK. Costa coffee is present in 31 countries whereas Starbucks is present in 70. McCafe by McDonald’s is soon catching up though it does not serve only Coffee and serves other beverages too. Thus, Expansion is critical for Costa Coffee.
Costa express can boom – Because Costa coffee acquired the brand Coffee nation, it can now tie up with many corporate houses for its coffee vending machines and this business can boom in all countries.
Strategic alliances – There are many restaurant chains across the US and UK and other developed nations where Costa Coffee can set up strategic alliances and deliver its own coffee to these restaurants customers. Similarly, Corporate tie-ups can also help the brand more and more.
Pull strategies – Starbucks is known for being smart in its pull strategies and utilizes various means to attract customers to its coffee shops. Similarly, Costa coffee needs to execute pull strategies and use innovative means to attract the young crowd to the coffee shop.
Threats in the SWOT analysis of Costa Coffee
Starbucks – The dominance by Starbucks is the number 1 threat against Costa Coffee quite simply because the brand is not allowing Costa coffee to settle and is expanding very aggressively.
Indirect competition – There are many regional players and regional factors in the sale of Coffee. One of the factors is the consumption of Tea against Coffee. The UK itself has a huge consumption of tea vs coffee and so does India and China (largest tea drinking countries). Thus, this indirect competition also affects the sale and revenue of the brand.
Dropping brand value – Because of the consistent competition and lack of marketing and advertising, the brand value of Costa Coffee is dropping which is a huge threat to the brand.