Our first company visits occurred today as we toured both Doka Estate Coffee and Café Britt. Doka and Café Britt are two of the most popular coffee companies in Costa Rica. Ticos and tourists alike enjoy coffee from both businesses, but each company has a distinct style for providing customers with what they want. Today, I learned about the intricacies of each company, particularly about Café Britt’s unique sales situation.
One of the main differences between Doka and Café Britt’s business models is each company’s position within the coffee supply chain. Doka Estate Coffee is a more traditional style coffee plantation, established in 1940 and growing coffee beans ever since. Doka is positioned at the most upstream portion of the coffee supply chain since it grows coffee beans, the raw materials necessary for the industry. Once the coffee beans are grown, picked, and processed at Doka, they are sold to other companies for roasting, packaging, and distribution to customers. One of the companies that buys coffee beans from suppliers is Café Britt, which roasts the coffee beans they purchase, then packages and sells the finished coffee products to customers. Both companies are successful, but curiously most Ticos do not drink Café Britt coffee. This is likely due to the fact that Ticos are relatively knowledgeable coffee drinkers (after all, they live in a country full of coffee). Café Britt, as a purchaser of coffee beans rather than a producer, creates the finished coffee product using coffee beans sourced from other companies. As a result, Ticos who are knowledgeable about Café Britt’s business practices or who have tasted Café Britt coffee may believe that Café Britt coffee is of slightly lower quality because the coffee beans are outsourced rather than grown by the company itself. This would explain why coffee is not even Café Britt’s most popular product.
A critical factor related to how Café Britt makes coffee which contributes to the company’s success is its ability to make multiple product lines of different premium products. In addition to high-quality coffee, Café Britt also produces gourmet chocolate, nuts, and other candies. Thus, it does not solely rely on coffee sales for revenue generation, which is helpful since coffee is not their top selling product. I agree with their approach in choosing to make multiple products rather than just focusing on coffee. Making different types of products rather than just a single type reduces the risk of the firm that could be incurred by that single product only generating reduced revenue levels or losses. Instead, with multiple products, a firm can avoid the risk of experiencing losses on a single product by relying on the success of their other products. Café Britt does just that by producing coffee, candy, and nuts. The drawback to producing multiple products, however, is that the firm could lose benefits of focus that would be gained by focusing attention on a single product. Despite the potential opportunity loss of innovation in Café Britt’s products, I believe that the company is better off making multiple products since its products, particularly the coffee, are gourmet items that do not need much additional product-specific innovation to succeed.
Although Café Britt is successful in selling its products as a whole, there are still ways that it could improve its sales, particularly with its coffee which, intuitively, should be its primary product as the company has the Spanish word for coffee (café) in its name. To increase coffee sales, I would suggest that Café Britt offers a new set of bundle deals that pair its coffee specifically with its more successful products. Café Britt already implements a bundling strategy in which customers can buy a certain number of Café Britt products and receive additional products free of charge, but with the current strategy consumers have full control over the products that they can bundle and buy. I would suggest that Café Britt instead offers a bundle deal that requires consumers specifically to buy some of their coffee along with the chocolate or candies that they already plan to buy, that way consumers would have incentive to purchase coffee along with the products that they desire more. Since the bundle deals that Café Britt currently offers are some of the most successful ways that Café Britt earns revenue, I believe that this new bundling strategy would further elevate Café Britt as one of the most dominant coffee companies in Costa Rica.