Westrock Coffee Company: New Foreign Market and Marketing Mix

International Marketing
Author's Name
The Institutional Affiliation
Course Number and Name
Instructor Name
Assignment Due Date
Table of Contents Introduction. 3 Macro-Environmental Analysis. 3 PESTEL Analysis. 3 Political Factors. 4 Economic factors. 4 Social Factors. 5 Technological Factors. 5 Environmental Factors. 6 Legal  Factors. 6 Porters Five Forces. 6 Threat of New Entrants. 7 Bargaining Power of Suppliers. 7 Buyers' Bargaining Power 7 Threat of Substitute Products. 7 The Intensity of Competitive Rivalry. 8 Risk Assessment 8 Political Risk. 9 Commercial Risk. 9 Industrial Risk. 9 Financial Risk. 9 Westrock Coffee's 12 Cs for Indian Market Entry. 10 Segmentation, Targeting, and positioning (STP) 11 Westrock Coffee's Marketing Mix Evaluation in India. 13 Product Mix. 14 Pricing Mix. 14 Place Mix. 14 Promotion Mix. 14 Strategic Recommendations to Enter – Ansoff’s Matrix. 15 Market development 15 Product Development 15 Conclusion. 16 References. 17 Appendix. 20 Appendix 1: Coffee Massive Production. 20   Introduction
International marketing is now a crucial tenet for businesses looking to grow sustainably in unprecedented global connectivity. Thus, international marketing has become more diverse and complex (Doole & Lowe, 2022). Westrock Coffee Company, a well-known name in the international coffee industry, has made significant progress with its distinctive fusion of sustainable practices and high-end product offerings (Westrock, 2022). With a focus on delivering the best coffee while sourcing it ethically, Westrock is a shining example of how business and social responsibility coexist harmoniously (Jorgenson et al., 2023). The company is currently considering market expansion as a part of its ambitious growth strategy, leveraging its strong brand identity to tap into new areas and demographics. Westrock's planned market expansion is poised to usher in a new era of success and influence in the coffee landscape because of the changing preferences of modern consumers who value quality and sustainability (Westrock, 2022). Therefore, the research emphasizes the Indian market for expansion by considering the macro and micro environmental factors with a focus on risk assessment, 12 Cs, marketing, and future strategic considerations.
Macro-Environmental Analysis
Expanding into a new market requires a business to assess the external environment based on varying factors to consider the market's potential. PESTEL and Porter's five forces are assessed below to demonstrate the macro environment.
PESTEL Analysis
The strategic framework effectively demonstrates the external threats and opportunities considering the macro environment factors highlighted below (Doole & Lowe, 2022). The framework analyzed the Indian coffee industry for Westrock Coffee (Westrock, 2022).
Political Factors
The Indian government has actively promoted the coffee industry by enacting pro-business policies and facilitating exports. The creation of the Coffee Board of India, which aims to encourage domestic and international coffee consumption, demonstrates the political will to support the industry. Trade agreements and diplomatic relations with significant importers also support the export trajectory (Gokavi & Kishor, 2020). However, the industry must navigate and adapt to evolving political dynamics amid the uncertain geopolitical landscape.
Economic factors
Despite the country's large population, India's coffee market generated extensive revenue, raising US$0.34 by 2023 (Statista, 2023). To ensure economic stability, Robusta beans and instant coffee are exported strategically. Government-simplified trade regulations boost the industry's appeal, encouraging domestic growth and international cooperation. Thus, combining domestic focus and more straightforward trade indicates that industry expansion will be significant.
Figure 1: Growing Revenue per Capita (Statista, 2023)
Social Factors
The urban Indian population is slowly developing a taste for coffee, despite the country's long tradition of drinking tea. Global coffee chains and the developing cafe culture in significant cities will influence this shift and raise consumption to 62.5 kg by 2028 indicated below (Statista, 2023). Additionally, coffee's social acceptability has increased due to rising disposable incomes, globalization, and exposure to other cultures lifestyles.
Figure 2: Coffee Consumption per Capita (Kg) in Indian Market (Statista, 2023)
Technological Factors
The coffee farming industry in India has become increasingly technological as it has adopted new farming methods, machinery, and environmentally friendly practices. The development of e-commerce platforms has also benefited the sector by allowing producers to connect with a larger, global audience, as Indians' online consumption is increasing with time, as indicated below (Statista, 2023). The emphasis placed on digital traceability by companies like Westrock speaks to the fusion of coffee and technology.
Figure3: Coffee Online Revenue Increasing In Indian Market (Statista, 2023)
Environmental Factors
As awareness of environmental issues grows worldwide, the coffee industry is shifting its focus to more environmentally friendly production methods. Increasingly, it is crucial to use methods such as shade-grown coffee, organic farming, and carbon footprint reduction (Kothari, Ranjan & Singal, 2021). Due to the high resource requirements, water conservation is also gaining popularity in the coffee industry. Therefore, considering those factors is crucial to sustaining value in the Indian coffee industry.
Legal  Factors
Strict quality standards and certifications are necessary to make Indian coffee globally competitive. Compliance with environmental regulations, land usage rights, and labor laws is also crucial. International legal requirements require meticulous adherence (Chkanikova & Sroufe, 2021). Therefore, Westrock needs to focus on legal considerations to maintain high standards.
Porters Five Forces
According to Doole and Lowe (2022), considering the focus on the competitive intensity of the Indian market, Porter's five forces demonstrate the value of Westrock Coffee.
Threat of New Entrants
Westrock Coffee faces significant market entry barriers in India despite its integrated approach. Well-known players like Tata Coffee and benefits from economies of size, strong brand loyalty, and extensive distribution networks already characterize the Indian coffee market (Prakash & Verma, 2019). Along with tariffs and regulatory restrictions, the nation's preference for domestic brands raises these barriers even higher.
Bargaining Power of Suppliers
The sixth-largest coffee producer worldwide, India, has various suppliers. Over time, the fragmented supplier network has bargained collectively mentioned in Appendix 1 (Ibef, 2023). Inadvertently giving more influence to suppliers, the government-established Coffee Board of India helps maintain stable prices. Thus, Westrock's farmer-centric approach could negotiate better terms with local suppliers if aligned with global promises to farmers.
Buyers' Bargaining Power
Tea-drinking Indians, especially in cities, are slowly switching to coffee. Chains like Starbucks have promoted the culture of drinking fine coffee through their collaboration with Tata (Fischer & Roy, 2019). In contrast to CCD's more reasonably priced options, Westrock Coffee needs to position itself critically.
Threat of Substitute Products
Culturally, tea has always taken precedence over coffee in India. Tea consumption in India surpassed the consumption of coffee by a wide margin in 2019. The prevalence of this alternative is heightened due to local delicacies, traditions of culture, and a wide selection of indigenous teas (Behuria, 2020). Offering consumers a compelling reason to choose coffee over tea should be part of Westrock Coffee's strategy, in addition to simply competing with other coffee brands.
The Intensity of Competitive Rivalry
The competition in the Indian coffee market is fierce (Prakash & Verma, 2019). International players like Starbucks and domestic giants like Tata Coffee have solidified their position. With native products and options for entertainment, CCD's localized strategy demonstrates the intense competition for retaining customer loyalty (Polasi & Srinivasulu, 2022). With its extensive international experience and farmer-first approach, Westrock Coffee will bring new heat to the coffee industry.
Risk Assessment
Analyzing the concerns for Westrock Coffee to enter the Indian market, the following table demonstrates the risk of expanding in India.
Risk Type
Description
Risk Level
Political
India has a diverse political landscape that can impact regulations, tariffs, and trade policies (Contractor et al., 2020). Given Westrock's sourcing and farmer-focused approach, understanding and navigating these political nuances is vital.
Medium
Commercial
The Indian market has established coffee brands and regional preferences. Given Westrock's reliance on grassroots marketing, there is a risk of backlash if perceived as disingenuous. Moreover, changing consumer preferences and tastes need constant monitoring.
High
Industrial
India's agrarian landscape is unique, and Westrock's farmer-centric approach must adapt. India's infrastructure, logistics, and supply chain challenges could threaten the company's operations.
Medium
Financial
Westrock's recent acquisitions, as hinted by the acquisition of S&D Coffee & Tea, could strain its finances (Jorgenson et al., 2023). Entering a new market like India will require significant investment. Currency fluctuations and diverse tax regimes might add to financial unpredictability.
High
Table 1: Risk assessment for Westrocks expansion in the Indian coffee market
Political Risk
Considering the political risk, India's federal system allows state-specific regulations. Westrock's farmer-focused strategy relies on state governments' pro-trade policies, especially in agriculture (Contractor et al., 2020). Regional politics can affect business operations in India, a stable democracy.
Commercial Risk
The coffee market in India is developed and has long-standing competitors. Given Indian consumers' loyalty to local brands and skepticism of fake marketing strategies, the potential for backlash is significant. Therefore, the level of commercial risk is elevated.
Industrial Risk
India's agricultural methods, infrastructure, and supply chains differ from Western and African nations. While Westrock has experience operating internationally, the size and diversity of India present particular difficulties. Quality, adapting to India's agrarian landscape, and a reliable supply chain are crucial.
Financial Risk
A sizable financial investment is needed to enter a new market. Given Westrock's recent significant acquisitions, there could be a financial strain (Doole & Lowe, 2022). India's complex tax structure, potential tariffs, and currency fluctuations can affect profitability. The financial risk is elevated due to uncertainties and the recent financial obligations undertaken by the company.
Correspondingly, Westrock Coffee's global presence and farmer-centric approach make its Indian expansion risky. It will succeed in the Indian coffee market with local partnerships, authentic marketing, and financial prudence.
Westrock Coffee's 12 Cs for Indian Market Entry
Westrock Coffee's entry into India's coffee and tea market is a symphony of the 12 C's, from understanding cultural nuances to strategic costing, emphasizing the intricate dance between commitment and control, and preparing a distinct place in the country's rich tapestry of tastes as shown in the table below.
Country
* Political: Stable federal structure, but state-level variations in regulations,
* Economic: One of the fastest-growing economies, with a rising middle class,
* Social: Diverse culture with a historical preference for tea but a growing urban coffee culture,
* Technological: Rapidly advancing digital infrastructure and e-commerce growth,
* Legal: Complex tax structure with GST; foreign investment regulations present,
* Environmental: Rising awareness about sustainable and ethically sourced products,
Change
* Diverse cultural nuances across states and regions.
* Urban youth show an increasing affinity for coffee over traditional tea.
* Trends, brand reputation, and societal circles often influence decision-making (Prakash & Verma, 2019).
* Purchasing behavior is majorly influenced by quality, brand reputation, and sustainability factors.
Competition
* Established players like Tata Coffee and international chains like Starbucks are present (Richey & Ponte, 2021).
* The increasing influx of artisanal coffee brands.
* Strengths: Established brands have deep distribution networks.
* Weaknesses: Few have offered an authentic blend of global quality and local flavor.
* India primarily reports Robusta coffee beans but has an increasing local demand for finished coffee products.
Consumption
* Growing demand in urban centers with lifestyle changes.
* Coffeehouses and cafes are increasing, especially among the youth (Doole & Lowe, 2022).
Sectors like IT, which employ a vast young workforce, show increased coffee consumption patterns.
Threat from substitute products like traditional teas and local beverages.
Contractual Obligations
Business practices: Emphasis on partnerships and joint ventures for market entry.
Insurance: Essential for protecting investment...