Executive Summary

Since Ugandans have traditionally not been ardent coffee drinkers, the coffee business sector has been dormant for many years. Coffee remained an impressive cash crop amongst Ugandans and was encouraged by the government only for its impressive revenue generation figures for the government and coffee farmers as an export. This delay in the growth of the domestic coffee sector resulted from the many mythologies and past experiences the population always attached to it. For example, many people were told and believed coffee was a product for the rich and white; coupled with the experiences of British Coffee Uganda, folklore always seemed true. However, the good news is that the population is severing ties with past traditional mythologies. There is a growing trend amongst the modern generation and health-conscious consumers in the coffee cup-filled aromas of Espresso, lattes, macchiatos, and cappuccinos. With as many scientific studies confirming coffee as a healthy drink, the Peace Coffee Yard will be venturing into a long-term lucrative business. The business will run as a Private Limited Company. As such, the company management will consist of the company director, the general manager, the operations manager, the procurement manager, the sales director, and the operations staff, each tasked with specific roles as discussed under the management summary of the company. The Peace Coffee Yard Mission is to ‘serve Ugandan customers high-quality and freshly brewed coffees such as cappuccinos, lattes, and macchiatos, and more using espresso machines and Moka Pot and roasted coffees (coffee tea) with exceptional service at reasonable prices.’ To gain a competitive advantage and be unique, the Peace Coffee Yard will offer a range of unique services such as online order placements and doorstep deliveries, a value-based pricing method in which prices will be set at reasonable prices. Moreover, the business’s sales team will aim for the clients’ complete satisfaction by giving them a memorable experience that will encourage repeat clients. For example, our receptionists will welcome our customers from the entrance and direct them where to sit. There will also be entertainment services in the yard, allowing customers to listen to slow music and watch the news as they sip their aroma-filled cups of coffee. This range of services is intentional to help the business attract customers and gain an edge over its competitors. A budget of USD150,000 has been set aside as the initial outlay for the business. The money will be used to let the operations space and acquire furniture for the company, procure equipment, promote the company, hire staff, and more, as shown under appendices (appendix 3) of the business plan.

Introduction

One of Africa’s leading coffee-exporting nations (Uganda) is on an assignment to get its citizens to begin drinking coffee. Uganda ranks as the second largest coffee-exporting nation on the African continent and is second to powerhouse Ethiopia. Nevertheless, Ugandans have remained largely tea drinkers despite being the main coffee producers in Africa and the world (Hattem, 2017). In the past, some of the bases for this tradition have been the need for more value addition caused by the lack of modern technology and the indifference of Ugandans, as many see coffee as an exportation product rather than a pick-me-up to begin their day. In contrast, others believe coffee is a product for the rich. Fortunately, this tendency is changing as Ugandans have started to use and drink coffee.

In the same way, the Peace Coffee Yard will venture into the domestic coffee business to dispel the remaining orthodox standards of tea consumption and instead promote the coffee-drinking culture in the country. This summative assessment presents a business plan for the Peace Coffee Yard, a new business venture that will join Uganda’s retail coffee sector. The business plan describes the business, the background of the coffee industry with a specific focus on Uganda, market analysis, and the company’s mission. The plan also offers internal and external business analysis and long-term, grand/generic, and short-term strategy analysis for Peace Coffee Yard. The plan includes the functional tactics, strategic control, and continuous improvement plans that the Peace Coffee Yard will use to gain a competitive edge over its competitors and sustain its operations. It ends with a management summary of the business’s authority charge and responsibilities and an overall conclusion of the document.

Business Description

The new business venture is called ‘The Peace Coffee Yard.’ As chronic illnesses such as cardiovascular diseases, diabetes, and liver diseases have become common amongst the population, I have envisioned the idea of establishing a coffee shop in the city center of Kampala to serve quality coffee products, for example, Espresso-based drinks like cappuccinos, lattes, and macchiatos, iced coffee, drip coffee, cold brew coffee, and roasted coffee (coffee tea) which will not all quench thirst and hunger of the city residents but serve as an alternative to the sugary beverage drinks and teas which are health peril. Notably, Coffee tea and drip coffee will be served with sandwiches, nuts, salads, eggs, or Avocado as an escort for breakfast or evening coffee tea. The Peace Coffee Yard will also make provisions for retail distribution and online order placements to serve the greater Kampala population. I have visualised this business idea against the backdrop of the increasing consumer consciousness in the country. As more and more people become health conscious, the coffee culture is becoming predominant in the country, and more Ugandans are embracing coffee as a breakfast meal. This new trend promises a significant long-term market for coffee in Uganda, and as such, the Peace Coffee Yard is aspiring to be among the early movers in this sector. The market focus for this business venture is the healthy-conscious consumers and the young outgoing generation who need serene areas to unwind as they sip a drink.

Industry Background

The Coffee sector in Uganda has come a long way since the 15^th century. The industry has faced many slumps and booms influenced by political, economic, and climatic factors. The Uganda Coffee Development Authority, abbreviated as UCDA, is the nation’s umbrella body that oversees and promotes coffee growing, processing, brewing, and marketing. The Uganda Coffee Development Authority has witnessed exponential growth in the years past. For example, the anticipated export value for Uganda’s coffee was US$812.9 million in 2005, US$962.2 million in 2006, and US$1.34 billion in 2007 (Byanyima, 2011). In the latest speech given by the Managing Director of Uganda Coffee Development Authority at the end of the 2021/22 financial year, the UCDA managing Director reported that UCDA had posted US$559.16 million in coffee exports in 12 months. The figures represented an increase of 54% and 4% in value and quantity (Uganda Coffee Development Authority, n.d). The agency is a government entity established under the Parliament Act, UCDA Act 1991, later amended in 1994 Cap, 325, repealed and replaced by the National Coffee Act No. 17 of 2021. UCDA’s founding mission is ‘to increase quality coffee production, productivity, value addition, marketing, and consumption.’ UCDA provides an enabling environment upon which the various stakeholders in the coffee value chain can thrive in the coffee sector. For example, the agency offers advisory services for coffee farmers on the proper coffee growing and cultivation practices such as irrigation, mulching coffee gardens, and planting shade trees to ward off the adverse effects of climate change, which often affects coffee production in the country.

Following the above, industrial reports signal that ‘The Peace Coffee Yard’ could be tapping into a gradually growing coffee-drinking culture that will see the business make substantial profits. A survey carried out by Asala (2020) shows that there has been a growing trend in coffee consumption in Uganda, especially among the young generation that can be found in Espresso and cappuccino aromas. With a change in culture, the need for uniqueness amongst the young generation, and the increasing health consciousness levels in the population, the modern cultural times have seen a rapid rise in the number of coffee restaurants nationwide. The Uganda Coffee Development Authority also reported that coffee exports between 2015 and 2018 rose by 17% to 4.17 million (60kg bags). The main coffee-selling shops in Uganda include Olam Uganda Limited, Café Javas, Uganda Crane Coffee, Endiro Coffee, Volcano Coffee, Zigoti Coffee, Busingye Company Limited, Cafe Javas, Ibero Uganda Limited, and more. However, despite the known economic benefits of the coffee sector, stakeholders along the coffee value chain (CVC) in Uganda still face several insurmountable challenges; issues regarding access to finance, modern technology, and trade policy issues remain Uganda’s long-standing obstacles to many stakeholders to add value and meet the quality standards for coffee processing in Uganda. Ultimately, this stifles the ability of SMEs to expand their coffee marketing efforts beyond the Ugandan borders.

Market Analysis

As aforementioned, Uganda’s coffee consumption trend is on the rise first because of the growing consumer health awareness, a young outgoing generation needing to be unique, and a random cultural shift from tea to coffee consumption. The increasing literacy levels in public, changing culture, and the growing market of Baristas are influencing many Ugandans to become passionate consumers of coffee, and more outgoes who do not drink Alcoholic drinks love to breathe life in their time of time by sipping a cup of coffee brewed from our Ugandan coffee beans.

Company Mission

The mission of Peace Coffee Yard is to serve Ugandan customers high-quality and freshly brewed coffees such as cappuccinos, lattes, macchiatos, and more, using espresso machines and Moka Pot and roasted coffees (coffee tea) with exceptional service at reasonable prices.

Internal Analysis

Although the coffee brewing sector in Uganda is yet to be swamped, previous analysis shows the industry is slowly growing, which is visibly true, seeing the rising number of coffee bars around the different corners of Kampala. Major players like Endiro Coffee, Café Javas, Uganda Crane Coffee, Ibero Coffee, and Volcano Coffee have numerous sub-sections nationwide. To compete and usurp the current players in the market, the Peace Coffee Yard has conducted an internal analysis for its business venture using the SWOT strategic management and planning tool to identify its strengths and opportunities to embrace and exploit as well as its weaknesses and threats that will inform its marketing strategy to survive, and compete in the market.

External Environment

Uganda’s coffee industry is growing through waves influenced by internal and external factors, which equally impact its rise and dip. As a player in this sector, the Peace Coffee Yard will surely not be immune to these factors. This section of the business plan employs the PESTEL strategy framework tool to highlight external factors that will likely influence the business’s operations.

Political

Coffee production in Uganda has largely been for exports, with a small proportion of the coffee used for domestic and commercial purposes in the local market. As such, this emphasises the importance of establishing and maintaining positive international relations with foreign countries, as the drink is more popular in North America and Europe. The US remains a popular destination for Uganda’s Arabica coffee, while most of the Robusta coffee is exported to Europe. For that reason, Uganda has also continued to improve its trade relations with North American countries and European countries as part of its strategy to increase coffee production to 20 million bags by 2030 and increase its coffee export revenue to $2.2 billion in the same year (Mitchell, 2023). To the Peace Coffee Yard, this coffee exportation culture will likely pose breaking competition to the business’s supply chain as farmers prefer to export their coffee for higher gains.

Economic

Despite the public’s objection that Uganda’s economy is shrinking, the country’s Gross Domestic Product (GDP) is inarguably growing, which is representative of the growing income levels of the people in the economy. The GDP is projected to increase to $48.53 billion by 2024 from $45.57 billion recorded in 2022 (Trading Economics, n.d). Trading Economics estimates that Uganda’s gross domestic product will trade at $51.93 billion by 2025. These statistics imply that consumers have more income to spend, and with more money, consumers will be willing to splurge on quality products, for example, high-quality coffee.

Social

According to a report published by UNICEF, Uganda ranks number two for the second biggest youth population globally. UNICEF further projects that the youth population will double by 2048 (UNICEF Uganda, n.d). Naturally, this demographic group has a high socialisation culture; Ugandan youths are wild outgoes and spendthrifts in bars, respite centres and entertainment areas. They will provide a potential target market for the Peace Coffee Yard products. On the other hand, the 21^st century period is experiencing a shift in the population’s view of health. Making conscious food health choices is more fashionable than before, and people spend more time engaging in healthy eating habits and avoiding unhealthy ones. Since many studies confirm coffee is healthy as it does not contain much caffeine, the Peace Coffee Yard will surely be served a ready market waiting for their healthy coffee products.

Technology

Undoubtedly, the coffee processing industry is evolving under the influence of technology, and the growing number of local retail coffee shops in and around Kampala is a testament to the claim. Coffee machines like Espresso, Moka Pot, drip machines, and grinders can now be found in most electronic shops around Kampala. The Peace Coffee Yard will use the Espresso machine, Moka Pot, drip machines, and grinders to ease the coffee brewing process, thus making it easy for the business to meet its customer needs 24/7.

Environmental Factors

Uganda’s eighth global ranking as one of the leading coffee producers and exporters is by no means a coincidence. Several factors, including climate, aid the country’s large-scale coffee growing performance. &Bloss (2022) adduces that Uganda naturally has a conducive climate that favours coffee growing in the country. No wonder Uganda has managed to maintain its global status as one of the world’s leading coffee-producing nations. However, issues relating to drought and rainfalls are still some of the primary ecological factors affecting coffee growth in Uganda. Since the industrial era began sweeping across the country, large amounts of fossil fuels and other greenhouse gases have been emitted into the atmosphere.

Consequently, this is causing unstable changes in the country’s weather patterns, and today, natural incidents like earthquakes, droughts, global warming, and more are more common than before. These factors are responsible for the coffee production fluctuations that the country sometimes experiences. In due course, this affects the country’s coffee supply chain, causing sudden price hikes, ultimately hurting consumers.

Legal Factor

Since coffee is a product meant for human consumption, it falls under the drinks and food regulations. In Uganda, Uganda Coffee regulates the country’s storage, transportation, and brewing process of coffee. With the growing trend of health consciousness, these standards are becoming tighter daily. However, the advent of coffee processing, handling, and storage machines is making this a no problem in the coffee industry, and this ought not to be a problem for the Peace Coffee Yard.

Strategic Analysis and Choices

Peace Coffee Yard stands for a striving mission: to serve Ugandan customers the best freshly brewed and roasted coffees with exceptional services at reasonable prices to its customers and suppliers. The company bears an unpacked, ambitious mission to see the business open up more service points across the Capital, Kampala, and key cities across Uganda. The Peace Coffee Yard’s dedication to the best practices to improve the coffee-drinking culture in Uganda through our first-rate services to the customers, suppliers, employees, community, and environment is what will define the Peace Coffee Yard. Therefore, we will be practicing many grand strategies to achieve and sustain our long-term objective.

Long-Term Objectives

The Peace Coffee Yard’s long-term objective is to promote and sustain the coffee-drinking culture in Uganda. En route to this, the business aspires to become the leading domestic player in the coffee sector in Uganda. Although the coffee-drinking sector is rising in the country, this trend is more common in Uganda’s major city centres, and it has yet to permeate the upcountry areas of the country. By establishing different service points selling brewed and roasted coffee across the nation in the long term, the business will prompt Ugandans to embrace the coffee-drinking culture, increase its revenue earnings, and thus achieve this long-term objective.

Generic Grand Strategies

As a business scholar, I know the marketing challenges ahead of this new venture. I have thus set out some competitive gaining strategies that will endear customers to our brand, enable us to compete with the legendary coffee manufacturing firms in the country, and even usurp the market share in the long term. They include the following;

A Low-cost Supplier

The Peace Coffee Yard will use the value-based pricing method. Prices for our coffee products will be set after a pretest survey, just above our production costs to match our customer’s incomes. Also, the business will establish strong relations with its farm suppliers to remove intermediaries who would otherwise increase our production costs. Eventually, this will allow the business to set prices that will favour its business function and side with the customers.

Focus Strategy

The Peace Coffee Yard is focused on the local domestic market of Uganda to which it will sell coffee products such as iced coffee, cold brew coffee, drip coffee, warm brew coffee, Espresso-based drinks like cappuccinos, lattes, and macchiatos, and roasted coffee. The businesses allude to the young outgoing generation, non-alcoholic individuals, and health-conscious consumers as their target audience. Thus, the Peace Coffee Yard advertising content will be designed in line with the business’s niche market.

Differentiation

Following the present purchase behaviours of Ugandan consumers in which buyers prefer comfort and convenience instead of queuing in grocery stores and service points, the Peace Coffee Yard will offer online ordering and delivery services for customers within the city of Kampala. The business will create a website through which its customers can place their coffee orders and make payments for the product, plus an additional transport fee if they wish their coffee delivered to their doorsteps. To achieve this, the business will hire a permanent motor vehicle field sales team whose role will be to deliver customers’ online orders. Also, the company will create a receptionist sales team; the receptionists will welcome our customers from the entrance point, direct them to where to sit, and serve them our menu list to ease the customer ordering process. Lastly, there will be slow entertainment music and news display television sets to help soothes our customers as they sip coffee in a tranquil Yard ostensibly their second home away from their homes.

Short-term Objectives

The Peace Coffee Yard’s short-term objective is to capture 70% of the market share in the first year of the business’s establishment. As a Private Limited Company, the business will base its revenue generation on expanding its reach to the market. Therefore, attracting customers and increasing its sales proceeds is key to achieving its long-term strategy. Thus, the Peace Coffee Yard will ensure constant pivoting of its marketing strategies to realise its grand strategies to establish a competitive advantage for the business in the industry.

Functional Tactics

The Administrative Function

The Peace Coffee Yard seeks to operate as a formal and standard organisation with an authority source. The business will head the administration function of the business director, Ms. Peace Bakama, in support of the company’s general manager, procurement manager, operations manager, and sales and marketing director. The administrators will provide a charge of authority and support and direct the operations staff by inspiring them and enabling them to efficiently use the business’s resources to improve their role functions in favour of the company’s objectives.

The Procurement Function

The coffee sector is improving in the country, with major players like the government actively involved, and competition for coffee is tight. Even though the Peace Coffee Yard will need a reliable supply of coffee to operationalise its long-term objective, this is where the business’s procurement department will need to be even more vibrant lest the company is to operate on a large scale. The procurement department will help the company establish strong supply relations, procure high-quality coffee products and negotiate the best supply terms and prices aligned with the company’s strategy.

The Sales Function

For a company that is prioritising short-term market growth, the business’s sales department will be key to achieving Peace Coffee Yard’s short-term goal. Like in any other commercial organisation, the sales department exists to drive a company’s growth and development. The business’s sales department will be trained to exhibit a strong commitment to giving the business’s customers exceptional experiences to support repeat customers, encourage referrals, and give positive public ratings, as it is this that will enable the business to grow its market share rapidly. Moreover, everyone in the business will be a sales agent tasked with spreading word of mouth about the business and handling the company’s customers with the utmost care.

Strategic Control and Continuous Improvement

Forecasting

Understanding the dynamics of Uganda’s coffee industry will be primary to ensuring our continuous improvement in the market. Our sales team will make certain to foresee shifts in consumer behaviours, coffee growing trends and effects to help the business develop a strong plan to ease risks. At the same time, it contributes towards the continued improvement of the customer needs.

Establish Strong Relations with Suppliers

One of the key elements in the coffee industry is knowing the coffee supply chain. In Uganda, coffee is usually grown in highland areas such as on the slopes of Mount Elgon (Bigsu region), in Kasese, and in Ibanda. In central Buganda, coffee is mostly grown in Masaka, the Southwest areas of Moon Mountains, Bwindi Forests, and Mountain Rwenzori. Lately, the regions of Bukedi, Acholi, Lango, and West Nile have commenced a serious coffee-growing campaign after identifying the cash crop as economically beneficial (Senyonyi, 2022). Therefore, to avoid supply breaks and supplier exploitations in times of coffee scarcity, the Peace Coffee Yard will seek to establish strong relationships with its suppliers to guarantee steady and quality sourcing of coffee beans for the business’s continued operations.

Market Research

The Peace Coffee Yard needs to ensure it stays up-to-date with the prevailing trends, ranging from innovative marketing strategies to new coffee brewing trends, flavour profiles, and sustainability methods in the coffee sector. This way, the Peace Coffee Yard will be able to position itself at the front of its market niche to meet its new customer’s tastes and preferences.

Management Summary

The Peace Coffee Yard will be headed by Ms Peace Bakama, who also doubles as the business’s director. The company’s general manager will assist Ms. Peace. The General Manager will be tasked with improving the efficiency of the business’s operations and overseeing the operations of the general business by managing the business’s employees, working with the sales director to develop and implement marketing plans, overseeing the business budget, and more. The General Manager will report to the business director. Third in command is the operations manager. The operations manager will oversee the company’s operations involving the processing/brewing and servicing of the company’s customers. Precisely, the operations manager will be in charge of the daily floor operations of the business, develop plans and strategies for the business’s routine task activity implementation, and he will report to the general manager.

On the other hand, the procurement manager’s role is to help the Peace Coffee Yard business establish strong supply relations, procure high-quality coffee products, and negotiate the best supply terms and prices aligned with the company’s strategy. Lastly, the business will comprise a team of on-site customer service agents and a field sales team guided by the sales director. The sales director, together with his team, will be responsible for driving the company’s growth and development by developing marketing strategies that will thrust the company’s sales turnover in the short term.

Conclusion

As it flows from the above, Uganda’s coffee sector is fortunate to have long-term opportunities that the Peace Coffee Yard will be tapping into to grow the coffee drinking culture in the Pearl of Africa. The coffee market in Uganda is still saturated, and there is a growing coffee culture in the domestic market with few players on the scene. A few of the retail coffee brewing businesses are mostly concentrated in Uganda’s capital, Kampala. Suppose the Peace Coffee Yard successfully achieves its long-term goal of expanding nationally. In that case, it will be going to tap into a lot of local virgin markets where people are already health-conscious and willing to spend on quality and health-conscious products like coffee. Our awareness of the coffee industry, internal and external sector analysis and our strategic control and continuous improvement plans will help us mitigate the customary risks and challenges that have long affected stakeholders in Uganda’s coffee industry. Therefore, our cautious plan and determination to provide the best customer experience will enable us to achieve our long-term objectives.

References

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BYANYIMA., B. F. (2011). DETERMINANTS OF EXPORT VOLUMES OF UGANDA‟S COFFEE, 1991-2007 [Doctoral dissertation]. http://makir.mak.ac.ug/bitstream/handle/10570/2400/Byanyima-COBAMS-Master.pdf?sequence=1&isAllowed=y

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Johns Hopkins Medicine. (2021, October 28). 9 reasons why (the right amount of) coffee is good for you. Johns Hopkins Medicine, based in Baltimore, Maryland. https://www.hopkinsmedicine.org/health/wellness-and-prevention/9-reasons-why-the-right-amount-of-coffee-is-good-for-you

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Appendices

Appendix 1: A Graph Showing the GDP Earnings of Uganda from Coffee Exports from 2014 – 2022

Source: (Trading Economics, n.d)

Appendix 2: Coffee Production from the Different Coffee Regions of Uganda – Financial Year 2018/2019

Source: (Seyonyi, 2022)

Appendix 3: Budget Overview for the Peace Coffee Yard Business Plan