Issue and Purpose of the Report
Dutch Bros Coffee is an American-based coffee company known for its specialty coffee drinks, smoothies, and blended beverages. With more than 320 locations in the U.S., the company is looking to expand its operations into the Japanese market. To effectively enter the Japanese market, it is important to understand the country’s coffee consumption patterns, culture, and economic conditions. This paper will provide an in-depth analysis of Japanese coffee consumption, allowing Dutch Bros Coffee to understand better how to target this market and position its products. The report aims to develop an international marketing plan for Dutch Bros Coffee, a specialty beverage and coffee retailer. The marketing plan will focus on the company’s current capabilities, challenges, and opportunities related to international expansion. It will also discuss the various steps and processes that need to be undertaken to execute a global marketing strategy successfully. The plan will assess the current situation of Dutch Bros, identify potential international markets, and provide a comprehensive marketing strategy to allow the company to expand its operations to those markets.
The report will overview Dutch Bros Coffee’s current marketing situation and objectives, discuss potential markets for international expansion, and develop a global marketing plan for the company. The report will also provide an action plan for implementing the new marketing strategy. The current situation of Dutch Bros Coffee will be assessed from an internal and external perspective. The internal analysis will examine the company’s organizational structure, resources, and capabilities. External analysis will include examining the company’s current markets and assessing macro-environmental forces such as political, economic, social, and technological (PEST) trends. The potential markets for international expansion will be identified based on an analysis of the global coffee market, the competitive landscape, and the company’s objectives and capabilities. The international marketing plan will then be developed based on the identified target markets, focusing on the four Ps of marketing: product, price, promotion, and place. Finally, an action plan will be provided to guide the company in implementing the international marketing strategy. In developing the global marketing plan, various research methods will be used. These include an analysis of secondary data sources such as reports, articles, and industry publications; interviews with key stakeholders; and surveys of potential customers. Through this process, the report will provide an in-depth understanding of the global coffee market and a comprehensive international marketing plan for Dutch Bros Coffee.
Background of Dutch Bros Coffee
Dutch Bros Coffee is a privately owned drive-thru coffee chain founded in 1992 by brothers Dane and Travis Boersma in Grants Pass, Oregon. The corporation is the leading privately owned drive-thru coffee chain in the United States, with over 400 localities in seven states, including Oregon, Washington, California, Idaho, Arizona, Nevada, and Colorado (DutchBros, 2023). The firm’s mission is to “inspire and uplift everyone we come in contact with,” and they strive to do this through their unique coffee and customer service. The company has a unique brand identity, offering a variety of specialty drinks, coffee beverages, specialty drinks, and smoothies, creating a culture of fun and friendliness. Dutch Bros Coffee is also firmly committed to giving back to its communities and is dedicated to positively impacting the world. It has donated more than $8 million to various charities since its inception (DutchBros, 2023). Dutch Bros Coffee has achieved remarkable success and has become an established leader in the specialty coffee market. In 2019 the company made a revenue of $238, $327 in 2020, and $498 in 2021 (macrotrends, 2022). The establishment is recognized for its fast service, friendly staff, and signature blended and iced coffees.
Dutch Bros Coffee’s home marketing strategy includes the 4Ps: Product, Price, Promotion, and Place. Product: Dutch Bros Coffee offers a wide selection of coffee, tea, smoothies, and energy drinks, as well as specialty drinks such as the Dutch Bros Blue Rebel, a nitro cold brew. They also offer food items such as pastries and breakfast sandwiches. They are committed to using quality ingredients and have various options to meet different dietary needs, such as vegan and gluten-free. Price: Dutch Bros Coffee is known for offering competitive product prices. They have a loyalty program that offers frequent customers discounts and other perks. They also offer discounts for large orders and military personnel. Promotion: Dutch Bros Coffee uses various promotional techniques to reach customers. They use conventional media, such as television and radio, and digital media, such as social media and email campaigns. They also utilize in-store campaigns such as free samples and rebates. Place: Dutch Bros Coffee has over 400 locations across the United States. They also offer online ordering and delivery options and a mobile app. They have a strong presence in the Pacific Northwest but are expanding into other regions. Overall, Dutch Bros Coffee’s home marketing strategy is designed to reach a wide variety of customers and offer them quality products at competitive prices. They use traditional and digital media to promote their brand, products, and in-store promotions. They have a strong presence in the United States and are expanding into other regions. They offer online ordering and delivery and a loyalty program to reward frequent customers. These strategies help Dutch Bros Coffee remain competitive in the market.
The company’s decision to internationalize is driven by its desire to expand its brand and reach new markets. The company has seen significant growth in the past few years, and they are now looking to move into new markets to exploit the increasing demand for its products. The company has also seen success in the international markets where its competition operates, and they believe it can replicate this success in other markets. The company Dutch Bros Coffee has seen steady growth since its inception in 1992 and has now become a leading specialty coffee retailer in the U.S. As of 2021, Dutch Bros has over 400 localities in eight states and generates over $400 million in revenue annually (macrotrends, 2022). The company has a solid customer base and an established reputation for quality products and customer service. Therefore, Dutch Bros Coffee is well-positioned to benefit from international expansion.
There are several reasons why Dutch Bros Coffee should consider internationalization. First, the company has a well-known brand and a large customer base in the United States. It could be leveraged to establish a presence in a new market and attract customers from abroad. Specialty coffee is growing globally, and Dutch Bros could capitalize on this trend by offering its unique products and services to international customers. The increasing demand for specialty coffee in the global market could lead to greater profits for Dutch Bros Coffee. Data from Macrotrends indicates that Dutch Bros Coffee has seen steady revenue growth since 2020, which is likely to continue. It suggests that the company’s current business model is successful and that international expansion could increase its revenue even further. According to Hollensen (2020), global markets offer businesses new opportunities. Dutch Bros Coffee could benefit from this by introducing new products, services, and marketing strategies in a new market. To successfully develop an international marketing plan, Dutch Bros Coffee must first analyze its current business model, identify potential target markets, and assess those markets’ economic and cultural environment. Once this is done, the company can develop a comprehensive marketing strategy, including the following steps:
- Establish a presence in the new market, which it can accomplish by opening a physical store, online presence, or franchising.
- Develop a comprehensive marketing plan that includes branding, advertising, and customer service strategies.
- Develop pricing strategies tailored to the target market.
- Analyze the competition and determine how to differentiate Dutch Bros Coffee from them.
- Monitor progress and adjust the strategy accordingly.
By following these steps, Dutch Bros Coffee can develop a successful international marketing plan and gain a strong foothold in the global market.
Methods: New Market Analysis
To expand the reach of Dutch Bros Coffee, three potential countries for market entry include the United Kingdom, India, and Japan. The United Kingdom is a developed economy with a stable political system and a free market. It is also an attractive destination for businesses due to its relatively low taxes and regulations. Furthermore, the U.K. is an English-speaking country with a long-standing coffee-drinking tradition, making it a natural choice for Dutch Bros Coffee to enter. Additionally, the UK is a member of the European Union, which offers benefits such as access to a more extensive consumer base, the ability to move resources and personnel freely, and the option to use the pound sterling as a common currency. India is another attractive destination for Dutch Bros Coffee. The country has a large population and a growing middle class, meaning there is a potential for strong demand for the company’s products. The Indian government has been promoting foreign direct investment in recent years, making it an attractive option for businesses looking to enter the market.
Moreover, India has many unique cultural and culinary practices, allowing Dutch Bros Coffee to introduce its products innovatively. Japan is a potential market for Dutch Bros Coffee due to its large population and high disposable income. The country also has a strong culture of coffee drinking, making it an ideal market for the company. The Japanese government has recently introduced policies to encourage foreign direct investment, making it a viable option for businesses looking to enter the market.
While making an informed decision about which countries to enter for international marketing, conducting an in-depth country analysis is essential. After considering various factors, such as market size, economic stability, cultural compatibility, and access to resources, the United Kingdom, Japan, and India were selected as the countries for Dutch Bros Coffee’s market entry. The United Kingdom is an attractive market for Dutch Bros Coffee due to its high purchasing power, solid economic stability, and large population of young people who are interested in new and innovative products. According to the Office for National Statistics, in 2020, the U.K. had a GDP of $2.91 trillion, making it the 5th largest economy in the world (Office for National Statistics, 2021). The country’s population is the 22nd largest in the world, with a large proportion of young people, making it an attractive target market. The U.K. is also a culturally compatible market for Dutch Bros Coffee, with a high rate of coffee consumption and appreciation of specialty coffee products. Japan is another attractive target market for Dutch Bros Coffee. Japan has a high purchasing power and a large population, making it an attractive market for any product. According to Macrotrends (2022), Japan had a 2020 GDP of $5.11 trillion, making it the 3rd largest economy in the world. It also has a large population, with 127 million people, making it the 10th most populated nation in the world. Japan has a culturally compatible market for Dutch Bros Coffee. The Japanese are known to be discerning coffee drinkers and have an enormous appreciation for specialty coffee products. Finally, India is an attractive target market for Dutch Bros Coffee. India has a large population of over 1.3 billion people and an economy with a GDP of over $3.8 trillion in 2021, making it the 4th largest economy in the world (Verma, 2022). India has a large population of young people interested in trying new products, making it an attractive target market for Dutch Bros Coffee. India is also a culturally compatible market for Dutch Bros Coffee, with a high rate of coffee consumption and appreciation for specialty coffee products.
Japan:
The macro environment of Japan presents an interesting opportunity for Dutch Bros Coffee’s international market entry. Japan has an advanced economy with a high GDP per capita, a dependable and efficient infrastructure, and a highly educated and skilled labor force. Its political environment is stable, with a long-standing democracy, and its legal environment is highly protective of foreign investors and intellectual property (McGraw-Hill Education, 2020). Culturally, Japan is an open and accepting country with a strong appreciation of foreign goods and services. The microenvironment of the Japanese market is favorable to the entry of Dutch Bros Coffee. The coffee and tea industry in Japan is highly competitive. However, there is still room for new entrants, with organic and specialty coffee offerings expected to grow in the coming years (McGraw-Hill Education, 2020). Japanese consumers have an established appreciation for coffee and tea and are willing to pay for high-quality specialty drinks.
United Kingdom:
The macro environment of the United Kingdom presents an attractive opportunity for Dutch Bros Coffee’s international market entry. The U.K. has a large, open economy with a high GDP per capita and a strong infrastructure. Its political environment is stable, and its legal environment is highly protective of foreign investors and intellectual property (OECD, 2020). Culturally, the U.K. is open to foreign goods and services and is a highly cosmopolitan country. The microenvironment of the U.K. market is also favorable for the entry of Dutch Bros Coffee. The coffee and tea industry in the U.K. is highly competitive, but there is still room for new entrants, with organic and specialty coffee offerings expected to grow in the coming years (OECD, 2020). British consumers have an established appreciation for coffee and tea and are willing to pay for high-quality specialty drinks.
India:
The macro environment of India presents an interesting opportunity for Dutch Bros Coffee’s international market entry. India’s rapidly growing economy has a high GDP per capita and a dependable infrastructure. Its political environment is stable, with a long-standing democracy, and its legal environment is highly protective of foreign investors and intellectual property (India Brand Equity Foundation, 2020). Culturally, India is an open and accepting country with a strong appreciation of foreign goods and services. The microenvironment of the Indian market is favorable to the entry of Dutch Bros Coffee. India’s coffee and tea industry are highly competitive, but there is still room for new entrants, especially with specialty offerings (India Brand Equity Foundation, 2020). Indian consumers have an established appreciation for coffee and tea and are increasingly willing to pay for high-quality specialty drinks.
Japan, the United Kingdom, and India have been selected as potential country markets for Dutch Bros Coffee. Each country offers unique opportunities to expand the company’s global presence. Japan: Japan is a significant economic power and a major producer of coffee. It is one of the world’s top 10 coffee-consuming countries with a large, sophisticated coffee culture. Despite Jpan being a coffee producer, the consumption is very high, and the country tends to rely on imports to cover the gap. Japan is also a popular tourist destination, making it a desirable market for Dutch Bros. The government is also known for its high-tech infrastructure, which could benefit the company’s digital marketing efforts. United Kingdom: The United Kingdom is a central hub for international business, providing a favorable environment for Dutch Bros to establish operations. It is a major coffee-consuming nation with a large population and a thriving economy (Euromonitor International, 2022). The U.K. is a significant export destination for coffee, with a well-developed infrastructure for distributing coffee products. India: India is the world’s second-largest coffee producer and has a large, growing population. It is an attractive market for Dutch Bros due to its increasing demand for high-quality specialty coffee and its growing e-commerce market. India’s high-tech infrastructure and growing digital economy could benefit Dutch Bros’ efforts to expand its online presence (Euromonitor International, 2022). Overall, Japan is the best choice for Dutch Bros Coffee to enter the international market. The country’s high-tech infrastructure, large population, and sophisticated coffee culture make it an ideal market for the company. The government is also known for its high-quality standards, which could help Dutch Bros to establish itself as a premium coffee brand in the market.
Findings: Target Country Market Analysis
Japan is the world’s fourth-largest coffee consumer and the second-largest specialty coffee consumer (Euromonitor International, 2022). According to the International Coffee Organization, Japan’s coffee consumption has been steadily increasing, reaching 4.0 million bags in 2019 (Euromonitor International, 2022). The coffee market in Japan is mainly divided into two categories: domestic and imported coffees. Domestic coffee accounts for most coffee consumed in Japan, with an estimated 74% of the market share in 2019 (Euromonitor International, 2022). Regarding consumer preferences, Japanese coffee drinkers are likelier to prefer coffee roasted for a light flavor and coffee with low bitterness and a pleasant aftertaste. The Japan Coffee Association has reported that the popularity of cold brew coffee has been steadily increasing over the past few years. The trend will likely continue as the Japanese coffee market is expected to grow at an annual rate of 2.1% through 2024 (Euromonitor International, 2022). In terms of market size, the specialty coffee market in Japan accounted for an estimated US$2.2 billion in 2019. The market is largely dominated by domestic brands, which account for an estimated 77% of the market share. However, the market is also becoming increasingly open to imported coffees, with the imported market share estimated to have reached 23% in 2019. The Japanese coffee market is expected to grow at 1.9% per year through 2024 (Euromonitor International, 2022).
To understand the potential of Dutch Bros Coffee in Japan, an analysis of the coffee consumption culture in Japan and a comparison to the market in the United States are necessary. Hofstede’s cultural dimensions can be used to analyze Japan’s coffee culture. Hofstede’s cultural dimensions provide insight into a culture’s values, beliefs, and norms, which are all important factors to consider when expanding into a foreign market (Hofstede, 2020). Power Distance Index (PDI): Japan has a high power distance index, which indicates a strong hierarchy in the country (Hofstede, 2020). There is a strong respect for authority figures, and those in positions of power are expected to be obeyed without question. It is important to consider when marketing in Japan as it will be important to ensure that any authority figures in the country are respected to gain market access. Individualism vs. Collectivism (IDV): Japan’s low individualism score indicates a strong collectivist culture (Hofstede, 2020). It means that the Japanese highly value group cohesion and loyalty, which is important to consider when marketing in Japan, as it will be important to emphasize the importance of community and group cohesion through marketing campaigns. Masculinity vs. Femininity (MAS): Japan has a high masculinity score, indicating a culture that values hard work, competition, and success (Hofstede, 2020). It is an important factor in Japan, as marketing campaigns should emphasize the importance of success and hard work.
Uncertainty Avoidance Index (UAI): Japan’s high uncertainty avoidance score indicates a risk-averse culture and values stability (Hofstede, 2020). It is important to consider when marketing in Japan, as it will be important to emphasize the reliability and trustworthiness of the product to appeal to the culture’s values. Long-Term Orientation vs. Short-Term Orientation (LTO): Japan has a very high long-term orientation score, indicating a culture that values long-term planning and vision (Hofstede, 2020). It is important to consider when marketing in Japan, as it will be important to emphasize the long-term benefits of the product to appeal to the culture’s values. When comparing the coffee consumption market in Japan to the U.S., it is important to note that the U.S. market is much larger than the Japanese market. According to the National Coffee Association, the U.S. coffee market is projected to be valued at $48 billion, while the Japanese coffee market is estimated to be worth $11 billion (National Coffee Association, 2020). Additionally, the U.S. market has seen a growth of 3% in the past year, while the Japanese market has only 0.5% (National Coffee Association, 2020). It indicates that the U.S. market is a much larger and faster-growing market than the Japanese market.
Market Segmentation Analysis in Japan
When considering international expansion, it is important to analyze the target market and identify potential segments. In the case of Dutch Bros Coffee, the target market is Japan. The Japanese coffee market is highly competitive and is the second largest in the world, accounting for 11.9% of global coffee consumption (Kotler & Keller, 2012). Dutch Bros Coffee should conduct a market segmentation analysis to increase the chances of success in the Japanese market. Market segmentation divides a market into clusters of customers with the same behaviors, characteristics, and needs who may need distinct products or marketing strategies (Kotler & Keller, 2012). Segmentation can be based on variables such as age, gender, lifestyle, and occupation. In the case of Japan, the segmentation variables are more specific, such as coffee preference, purchasing power, and lifestyle. The first segment is the “coffee-loving” segment. The segment comprises young people and adults willing to pay for quality coffee products and familiar with different coffee types. They are the main target of Dutch Bros Coffee, as they are likely to be interested in trying new products. The second segment is the “occasional coffee drinker” segment. The segment comprises people who usually drink instant coffee or occasionally visit coffee shops but are not necessarily coffee connoisseurs. They are more likely to be price-sensitive and may prefer value-for-money products. The third segment is the “coffee-free” segment. The segment comprises people who rarely or never drink coffee and are not interested in trying new products. They are likely interested in something other than Dutch Bros Coffee and may not be a viable target market. These three segments can be further divided into sub-segments depending on the specific preferences and needs of the target market.
For example, the “coffee-loving” segment can be divided into sub-segments based on the type of coffee they prefer, such as espresso, cappuccino, or latte. The “occasional coffee drinker” segment can be divided into sub-segments based on their preferred price range. Once the target market segments have been identified, Dutch Bros Coffee can develop a marketing strategy tailored to each segment. It includes developing products and services that meet the needs of each segment and creating marketing strategies designed to appeal to each segment.
Customer analysis in Japan
When looking at the potential customer base in Japan, it is important to consider both the existing coffee consumption culture and the unique tastes of the Japanese consumer. The Japanese market is one of the world’s largest and most competitive markets. The country is known for its high quality of life, strong economic performance, and highly educated population. In terms of coffee consumption, the Japanese market is one of the largest in the world, with an estimated 10 million people drinking coffee daily (Euromonitor International, 2022). While most Japanese coffee is domestically produced, imported coffees are also widely consumed. The Japanese are known for their appreciation of specialty coffees, making them an ideal target market for Dutch Bros Coffee. Coffee Consumption in Japan Coffee consumption in Japan has been steadily increasing over the past few decades. In 2017, the total coffee consumption was estimated to be 7.8 million tons, with a projected increase of 8.1 million tons by 2021 (Euromonitor International., 2022). Most of this consumption is for domestic consumption, with imported coffees making up a small but growing portion of the market. Most coffee consumed in Japan is instant coffee, with pre-ground and brewed coffees making up the remaining share. In terms of specialty coffee, the Japanese market is one of the largest in the world. Specialty coffees, such as cold brew, nitro brew, and espresso drinks, are becoming increasingly popular with the country’s growing middle class. Furthermore, the Japanese population highly appreciates its coffee’s quality, making it an ideal market for Dutch Bros Coffee.
Two main and substantial adaptations to the Japanese market
- One major and substantial adaptation Dutch Bros Coffee should make to the Japanese market is to focus on creating a unique product offering that appeals to local tastes. According to a study by the International Food Information Council, Japanese consumers prioritize taste and flavor when purchasing food and beverages. As such, it would be beneficial for Dutch Bros Coffee to develop unique items specifically tailored to the Japanese market, such as incorporating traditional flavors into their menu. For example, the company could offer drinks that feature matcha, green tea powder, or azuki beans, which are popular in many Japanese desserts. Packaging could be designed to appeal to local aesthetics, such as featuring Japanese-style artwork and decorative elements, to better connect with Japanese consumers (Bryant, 2018).
- Another major and substantial adaptation Dutch Bros Coffee should make to the Japanese market is to focus on providing a high-quality service experience. According to a survey by the Japan Productivity Center for Socio-Economic Development, Japanese customers value customer service when selecting a business. Thus, it would be beneficial for Dutch Bros Coffee to emphasize its customer service standards when entering the Japanese market. For example, the company could require its employees to provide courteous and helpful service and ensure that its stores are clean, well-lit, and comfortable. Dutch Bros Coffee could also offer additional amenities such as free Wi-Fi, charging stations, and comfortable seating areas to enhance further the customer experience (Japan Productivity Center, 2018).
Entry strategy
When entering the global market, it is important to understand each market’s different objectives and strategies. For Dutch Bros Coffee, a popular American coffee chain, the entry strategy should combine market skimming and market penetration. Market skimming entails setting high prices to maximize profits, while market penetration involves setting low prices to maximize market share (Kotler and Armstrong, 2010). Using a combination of the two strategies, Dutch Bros Coffee can capitalize on both the high-end and low-end markets. By focusing on market skimming, they can create a premium product that appeals to the high-end market. Focusing on market penetration allows them to attract a larger base of customers by offering a lower-priced product. In addition to pricing strategies, Dutch Bros Coffee should also focus on product development and marketing. By continuing to develop innovative products, they can create a unique brand identity that stands out from the competition. By developing an effective marketing strategy, they can reach a global audience and ensure their products are seen and purchased by consumers worldwide. In conclusion, Dutch Bros Coffee can use a combination of market skimming and market penetration to enter the global market. By focusing on product development and marketing, they can create a unique brand identity and reach a global audience.
Recommendation
Internationalization to Japan by Dutch Bros Coffee could be successful due to the growing popularity of specialty coffee in Japan. Japan is already known for its unique and high-quality coffee, and specialty coffee is becoming increasingly popular with younger generations. Dutch Bros Coffee will be successful in internationalizing to Japan because of the unique coffee offerings that the company provides. Dutch Bros Coffee has a wide variety of coffee drinks, ranging from traditional coffee to more creative flavored drinks. The variety and creativity will be appealing to the Japanese market, as they are known for their appreciation of unique, creative flavors. The company’s focus on quality ingredients and customer service will likely help win over the Japanese market. The company’s brand and marketing strategy could be well-received in Japan, as the Dutch Bros Coffee brand is associated with fun, positive energy, and great-tasting coffee. With the right marketing strategy and a strong presence in Japan, Dutch Bros Coffee could be successful in this market. Therefore the company’s strong presence on social media platforms, such as Instagram and Facebook, will help the company to reach a wide range of potential customers in Japan.
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