Where is our market share?
Kirjoittanut: Xiaoqing Yang-Pyydysmäki - tiimistä FLIP Solutions.
Written by Omar Puebla Roldan and Xiaoqing Yang-Pyydysmäki
This essay originated from a coffee business idea by Omar Puebla Roldan. Few people are currently involved in this coffee project. We are basically at the starting phase. We hope to find out our business model and market share, and general direction by researching the report “Coffee and coffee products in Finland” and other coffee-related data and documents.
Coffee consumption and coffee drinking culture in Finland
Probably a fact that many people don’t know is that Finland is among the highest coffee-consuming countries for decades. Per capita, Finns consumed around 9.9 kg in 2019, and 9,3 kg in 2020. (See Table 1.)
Table 1. Finns Coffee consumption (Statistics Finland)
“Almost all of the coffee consumed in Finland is being consumed at home or at work. A Finn starts the day with a cup of filter coffee and for most people the first thing when they get back home from work is to brew a cup of afternoon coffee. Also of course you start your workday with a cup of coffee.”
– By Jori Korhonen written in Finnish coffee, culture is one-of-a-kind
Jori is a coffee training expert in Helsinki, from his blog “Finnish coffee culture is a one-of-a-kind”, we notice some interesting facts about Finnish coffee culture. We believe that they will help us get to know deeper about the Finnish coffee market.
- Almost 80% of coffee consumed in Finland is light roasted.
- Dark roasted coffee has gained acceptance only in the past 10 years.
- Most families use filter coffee machines like Moccamaster to brew their coffee at home.
- Espresso, cappuccino, or café latte are not familiar to older generations.
- Finland is the only country in the world that has “two 15-minute coffee breaks in a workday” written in the labor agreement.
- “aamukahvi” (morning coffee), “päiväkahvi” (day coffee), “iltakahvi” (evening coffee), and “saunakahvi” (sauna coffee) are divide people’s daily life into different coffee breaks.
- Coffee is almost always served during a visit to someone else’s home. And mostly with cake.
- Coffee is seen as mandatory also in all sorts of gatherings, celebrations, and ceremonies.
- Pot coffee is used to brew coffee outdoors
- Finns also have different preferences while using different coffee cups, especially for older people.
Overview of the Finnish coffee market
According to Statista’s research on the coffee market in Finland, in 2021, Finnish coffee market revenue has increased by 200 million euros to around 1,62bn euros. They estimate that the revenue of the market will keep increasing to around 1.9 billion euros by 2025.
Table 2. Key figures 2021 (Statista)
Two types of green coffee beans (Arabica and Robusta), roasted coffee, and extracts, essences of coffee are the coffee products that are mostly imported to Finland. Paulig (Gustav Paulig Oy) and Meira (Meira Oy) are the major coffee brands in Finland and Paulig has 49% of the market share in Finland in 2016. According to a customer survey from 2020, Juhla Mokka is the most trusted coffee brand in Finland, followed by Paulig and Kulta Katriina. For the big brands, their sales channels are mostly selling via retailers such as S-Group, K-Group, and Lidl to the end customers.
There are plenty of small importers who are doing trade directly with developing countries and bringing variety to the Finnish coffee market. They are including Cafetoria, Kaffa Roastery, Mokkamestarit, Pirkanmaa Paahtimo, Porvoon Paahtimo, Kaffiino Oy, Turun Kahvipaahtimo, Helsingin Kahvipaahtimo, Jyväskylän Tuorekahvipaahtimo, and so on. The smaller-scale roasters are selling their products mainly through online shops, local grocery stores, or bigger retailers.
Origin and price
According to the report “Coffee and coffee products in Finland”, the coffee market can be segmented by quality. The criteria can be based on the per percentage of high-quality Arabica coffees in blends, single origins, micro-lots, etc. Therefore, the price can be divided into 3 levels: Upper end, middle end, and lower end. Their price range can be seen in Table3. below.
Table 3. Retail price (Coffee in Finland 2017)
Big roasters, usually import coffee directly from the country of origin which requires large volumes, consistent standard quality with competitive price, and certain sustainability standards. Smaller specialized roasters may pay more attention to sustainable sources, special flavors, and single origins.
The price proportion of the coffee business in the supply chain is 10% for the raw material, 10% for export, 55% for shipping and roasting, and 25% for retail.
When importing coffee to Finland
Brazil is the largest exporter of green coffee beans worldwide as well as to the Finnish market. Besides, Vietnam is the second-largest supplier of coffee to Europe, but the 12th largest supplier of coffee to Finland. This is because Vietnam is mostly producing Robusta which is recognized as bulk low quality coffee and Finnish consumers prefer the high-quality coffee which means the Arabica varieties.
Figure 1. Supplying countries of coffee to Finland 2017
- Quality criteria and Roasting
There are grading and classification criteria for evaluating the quality of green coffee beans. They are altitude and/or region, botanical variety, preparation, bean size, number of defects, roast appearance and cup quality, and density of the beans. In addition, the fragrance, flavor, aftertaste, balance, acidity, sweetness, and cleanliness are also important factors in grading the quality of beans. These are something basics we need to learn and know although they sound difficult to understand at this point.
Coffee roasting is a way of developing the flavor of the beans. In general, light roasting has more flavor and is sweeter whereas dark roasting gives less complexity with a richer, charred taste.
- Legal requirements
When importing coffee to Finland, we must follow food safety which is the key issue in EU food legislation. Traceability and hygiene are the most important themes. We need to pay special attention to specific sources of contamination such as pesticides, mycotoxins, and salmonella, which are the most common for green coffee beans.
- Labeling requirements
Finland follows EU general food labeling requirements. While importing coffee to Finland, the label should be written in English, and the following content should be contained in each package.
- Product name
- Country of origin
- International Coffee Organization (ICO) identification code
- Net weight in kg
- Certified coffee: name/code of the inspection body and certification number.
- Details of producers
- Additional requirements
Quality management system certification sometimes is required while importing the coffee beans to Finland. Having certificates like Hazard analysis and critical control points (HACCP), International Featured Standards: Food (IFS), and British Retail Consortium (BRC) are considered more competitive.
Social responsibility and sustainability are growing the importance as well as in the coffee business. Therefore, fair trade and organic certifications give a competitive image to the companies, for example, UTZ-certified products.
Where is our market share?
- Our business model
To make our business model we need to understand our value proposition. Why is our value proposition desirable to customers or clients, and how are we different from the others?
To create a business model, we need to position our business strategically. A great tool we can use is the 5P’s. The 5 P’s of Marketing are Product, Place, Promotion, Place, and People. also known as the marketing mix, which are variables that managers and owners control to satisfy customers in their target market, add value to their business, and help differentiate their business from competitors. (See Table 4.)
Table 4. 5P’s of Marketing Mix
- Product/ Service
We want to offer a Latin American high-quality coffee, we believe in a sustainable business this is why we want to offer another choice, where the people who work in the feels day by day have a better life, have a fair salary, we want the families than work in the feels can send their kids to the school. This is because we want to balance the equation, that is because we want to provide the best coffee quality.
Our coffees are from Latin America, especially from the areas that are next to the volcanoes, The volcanoes apport many benefits to the coffee plant, but the real benefit is in the soil and flavors. “Volcanic soil is incredibly nutrient-rich, in phosphorus, potassium, boron, iron, zinc … all of the nutrients coffee needs to thrive are present in volcanic soil. Volcanic soil is also incredibly light and fluffy, which allows for better drainage. Beyond the soil, volcanoes also provide shade for the coffee trees, which allows the coffee cherries to ripen more slowly. The volcanic eruptions of the giant volcanoes in the Latin America region helped to fertilize the soil with their ashes, this favored coffee farming and created a great variety of coffee flavors.
According to the report “Coffee in Finland 2017”, the coffee market can be segmented by quality. single origins, micro-lots. But because they’re inherently produced in small batches, farmers can focus on quality, not quantity. Shade-grown, single-origin beans are environmentally sustainable because they support native bee populations, help preserve biodiversity, and promote growing practices that maintain the beauty of the planet. This is very important to understand it is not just a price, it is a chain of factors that help us to determine the price for our customers.
The price element refers to the way you set prices for your products or services. It should include all the parts that make up your overall cost, including the advertised price, any discounts, sales, credit terms, or other payment arrangements.
Your pricing will also depend on your business’s position in the market, for example, if you advertise your business as a budget car rental service, your pricing should reflect that choice. Or if you are a premium food product then your price should be at a premium to lesser quality products to reflect the better packaging and quality of ingredients you offer.
Promotion refers to all the activities and methods you use to promote your products/services to your target market. It includes sales, public relations, direct marketing, advertising, sponsorship, and social media. Since promotion costs can be substantial, it is sensible to conduct a return-on-investment analysis (ROI) when making promotion decisions.
Firstly, you need to establish who your target market is. For our project, we need to find our coffee lovers and sustainability believers, because they believe in what we believe: we need to find our Tribe.
What is a “Tribe?” A tribe is any group of people, large or small, who are connected to one another, a leader, and an idea. For millions of years, humans have been seeking out tribes, be they religious, ethnic, economic, political, or even musical. It’s our nature. And what he wants you (us) to think about it, how can you unite people within your realm of influence to become a part of your tribe so that you can utilize the power of a team to make amazing things happen?! Because one of the most important points that Godin points out is that a motivated, connected tribe in the midst of a movement is far more powerful than a larger group could ever be. It’s about the strength of the connection and the meaning behind the unified purpose, not the numbers.
The place element refers to how you get your product or service to your customers at the right time, at the right place, and in the right quantity. It includes distribution channels (e.g. via a shopfront, online, or a distributor), location, logistics, service levels, and market coverage. Our place is coffee shops, and I.T companies located in Finland.
Big brain moment here, people. The amendment to the list kind of seems obvious but needs to be pointed out anyways. People include both your staff and your customers, and they do your business.
Every marketing strategy needs to consider people – their behavior, their fears, psychosocial elements, and everything that connects a person to the business.
Now, coming to the staff, they are your colleagues and employees. Who you hire, what motivates them, how they work, and the overall atmosphere in your company will shape how you grow. To find the right people for our project we need to define who our Tribe is because we will share the same values.
Specialty coffee in Finland
“Sell higher-quality coffees or even micro-lots which can attain superior prices. It might be more interesting for you to target smaller, specialized roasters. Requirements in terms of volume and certification might not be as strict as in the mainstream market. However, your capacity to support your sustainability and quality claims will be very important.”
- What really is sustainable coffee?
According to Wikipedia Sustainable coffee is coffee that is grown and marketed for its sustainability. This includes coffee certified as organic, fair trade, and Rainforest Alliance. Coffee has several classifications used to determine the participation of growers (or the supply chain) in various combinations of social, environmental, and economic standards. Coffees fitting such categories and that are independently certified or verified by an accredited third party have been collectively termed “sustainable coffees”. This term has entered the lexicon and this segment has quickly grown into a multibillion-dollar industry of its own with potentially significant implications for other commodities as demand and awareness expand.
Defined generally, it’s coffee that is grown in a way that conserves nature and provides better livelihoods for the people who grow and process it. Coffee is grown almost only in the tropics, in places that are home to most of the world’s remaining tropical forests. When farmers want to expand their coffee plantations, the easiest thing for them to do is to cut down some of the surrounding forests. Moreover, coffee is often grown on steep slopes; if care is not taken, it can lead to erosion and sedimentation of waterways. Processing coffee is also water-intensive, and the wastewater can contaminate rivers and streams. Taken together, these practices quickly become unsustainable.
Make a change or the rainforest will die
Coffee is grown almost only in the tropics, in places that are home to most of the world’s remaining tropical forests as the Latin America Rain Forest. The climate change alters temperatures and rainfall patterns, the areas that were once suitable for growing coffee — which requires a specific kind of climate — won’t be suitable anymore. This is already starting to cause problems in coffee-growing areas such as Mexico, where some farmers are switching to other crops that are less susceptible to the effects of climate change (and less subject to price swings caused by market volatility). This reduces the supply of coffee, which means that in the long run, prices will go up. We could even see coffee shortages in the future.
Coffee and coffee products in Finland
Finns Coffee consumption (Statistics Finland)
Finnish coffee culture is one-of-a-kind
Coffee market in Finland – statistics & facts
What is sustainable coffee?
What are the 5 Ps of Marketing? An Introductory Guide.
Why Do Some Producers Grow Coffee Near Active Volcanoes?