Individual Assignment 1- IBA

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1 Bizzy Coffee International Business Insight Laniyah Robinson Professor Carolina Forero IBA 350-920 March 3, 2024 Description of the company: Bizzy Coffee originated from two best friends, Alex French, and Andrew Healy. The two had been childhood friends over the years and have started many business ventures together. One of being a group fitness company, which the duo has had a passion for since their college days. During that time, they trained for the Worlds Tuffest Mudder (WTM), a popular 24- hour endurance race. While training, Andrew and Alex still worked corporate jobs as well as the group fitness side business, but they needed something that could provide them stamina, the energy to manage their workload and a healthy alternative, Bizzy coffee was born. Of course, there were many drink options on the market so why did they choose to create their own? Alex and Andrew wanted to create a convenient product for its customers that highlighted the highest quality, healthiest and overall, most perfect cold brew worldwide. The duo began experimenting and researching the cold brew market to perfect their product and in May of 2015, they began brewing their coffee from their headquarters and manufacturing site in Minneapolis, Minnesota. As a team on a mission to create a product that positively impacted the world, including the sourcing of quality ingredients, sustainable production, and the creation of jobs to produce the finest, freshest, and healthiest coffee possible. Their manufacturing process has been designed and engineered to perfection. Many of their products include bottled ready-to-drink cold brew, brew bags, 2 oz Bizzy coffee shots and Bizzy Merch. Bizzy jumped into this market

2 so they could scale and stop trading hours for dollars. Though cold brew coffee is still a growing market and has become more popular and larger over the years, brands like Bizzy continue to have a competitive advantage against competitors in the industry. In the local market, Bizzy’s competitive advantage over other companies included its ability to maintain its quality, convenience to customers, and overall mantra of constant improvement; adopt, evolve, repeat. Description of the industry: Bizzy’s main competitors in the cold brew industry included companies that were in a similar category as them, who sold cold brew ready-to-drink coffee through other or the same similar big retailers, like Amazon and Walmart. Chameleon Cold Brew, Grady's New Orleans Style Cold Brew, and Starbucks cold brew were the top competitors when bizzy entered the market in 2015 and are still top competitors in the market today. The cold brew market was just beginning to develop, and many of the trends include increasing the popularity of instant coffee among millennials. In a recent podcast Bizzy’s CEO explained that Highschoolers today typically consume cold brew coffee for caffeine and energy purposes while older people drank it because of the low acidity of the drink, overall, these trends is what continues to expand the market and continue the trends associated with Cold brew coffee. Other trends of the cold brew coffee industry include the growing influence of online retailing and increasing the demand for organic and private labels. Bizzy jumped into the market considering the trends, the overall health of consumers and economy when manufacturing the product, and the competitive rivalry. The threat of entry into the current local coffee market is high due to the number of hurdles for market entry being low, however those hurdles for entering the market may also be eliminated. Low capital requirements, access to distribution channels, and trainable required skills are some hurdles when entering the current local market that can be considered with the constant growth

3 of the RTD (Ready-to-drink) coffee industry. Attracting new entrants and easing situations for upcoming brands like Bizzy Coffee continue to keep the threat of entrants into the local market high. There are a number of hot drinks substitutes available in the local market that keep the threat of substitutes high, Tea is a common substitute in the coffee industry and is often preferred by many over coffee. With other hot beverages interrupting the local coffee market, taking into consideration consumer costs, buyers propensity, and availability of replacements all help upcoming brands like Bizzy Coffee to understand the market they are in and how they can use considerable influence of current companies to drive their profits. The fact that there are too many coffee producers with no radical differentiation makes the bargaining power of buyers in the coffee sector very strong consumers. Customers do have loyalty with brands in the local market, but the loyalty between the brand and the consumer resulting in the switching behavior of the consumers in the coffee industry to be high with low or no switching costs. Some things to reflect on include:  Product differentiation  Threat of backward integration by buyers  Number of vendors that offer the product As companies are strong and have many suppliers to choose from, the negotiating power of suppliers is fairly low. Coffee Beans, the main ingredient of coffee, are produced by several companies. Brands like Bizzy can choose to buy from a variety of suppliers to have an advantage when it comes to negotiating with suppliers. Purchasing power from suppliers through large brands is typically accepted to generate economies of scale.

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4 The market size of Cold Brew Coffee in 2021 was USD 401.5 million and is expected to increase from USD 492.64 million in 2022 to USD 3105.5 million by 2030, growing at a compound annual growth rate of 22.7% during the forecast period. The demand for coffee has been boosted by younger consumers, such as Millennials and Generation Z, who are more likely to be interested in new types of coffee or taste trends like cold brew coffee. Due to rising RTD coffee consumption and increasing popularity of professionals who have a busy schedule, the market for cold brew coffee has been expanding. For example, Starbucks launched new cold brew pitcher coffee packs and other cold brewing products has significantly raised awareness among consumers, in turn accelerating the market. Description of the product/services: Bizzy Coffee produced signature organic blends of coffee including bottled cold brew that took an average of 18hours to make, various blends of brew-it-yourself brew bags, and Bizzy Cold Brew merch. To find who their targeted consumers were Bizzy conducted a test using social media’s hashtags to screen what a typical customer looked like, then using the data to decide their “Brand champion”. Though, profiling the average customer of Bizzy was quite challenging and a constant learning journey, they discovered the Brand Champion was typically millennials who lived in major cities, loved to be outdoors, and most likely owned a dog. Shortly after the cold brew industry matured, 64% of people in the U.S drank coffee. While catering to the needs of their brand champion as well as new potential consumers like high schoolers that drink coffee for energy and older groups that drink coffee due to low acidity. Bizzy concluded that to support the needs of every potential consumer, they must provide the best-quality convenient coffee on the market. Bizzy’s main marketing channels first consisted of collecting data through social media hashtags and developing the data. After profiling who their ideal customer was, they

5 created marketing strategies based off analyzed data. Another method included placing stickers on shipped products so customers could complete surveys that alternately provided feedback in exchange for 25% of their next order, which turned out remarkably effective. Now, Bizzy uses technological advances to auto collect data from customers and potential consumers to improve their marketing skills and continuously improve business operations. Alex and Andrew have had multiple business ventures together but many of them were not successful, like Bizzy Coffee. The duo researched and tested every variable when it came to the coffee industry, producing energizing, healthy, natural, and rich in flavor cold brew convenient coffee. After so many business ventures, they finally found the perfect product in an industry that was scalable. Bizzy coffee was created from consumer data and raised on Amazon, becoming the number one best-selling cold brew coffee shipping all over the U.S and the fastest growing brand in the refrigerated coffee sector. As a growing company, Bizzy focused on supporting its production all over the U.S and eventually partnered with big retail stores to sale their Bizzy products to Busy People as an alternative option. With North America cold brew coffee industry growing so fast, Bizzy Coffee focused on the sufficiently similar competition ensuring quality coffee, healthier than most brands, cheaper and can be made at home or on the go. Bizzy wanted to get the most out of the consumers in this geographic region and stay ahead of the competition Analysis of the potential for the company in the new country: There are many factors in the macro environment that will affect the decisions of Bizzy’s managers when potentially expanding into Tokyo, Japan. Japan is a constitutional monarchy composed of a government with Executive, Legislature, and Judiciary branches. The prime minister of Japan focus is to tackle the rising costs of living and declining birth rates, while wider policies include economic recovery, diplomacy, and security while tariffs remain low.

6 Can We Expand Our Operations? Bizzy Coffee’s collaboration with local businesses in the new market can establish a solid customer base and possibly be able to enter into longer-term contracts if it establishes good relationships with local cafes, restaurants, hotels or retailers. Utilizing online sales, like Amazon and expanding consumer demand gives the brand the opportunity to increase brand exposure and set themselves up as a premium supplier. Bizzy Coffee has a great online presence due to being the number one selling coffee on amazon in the U.S but maintaining it in the new market to potentially attract consumers and broaden the business's international reach. Considering these opportunities, Bizzy can rise past competitors and drive growth and probability. Are there new regulations that potentially could harm our products or operations? Entering a new international market could be frightening when competition from other brands is already established. In this competitive market, many brands like Starbucks and Boss coffee, Japan’s third bestselling RTD coffee, have a strong presence and may be challenging for smaller brands like Bizzy to compete against these players. Consumer presence is constantly changing, there is a risk that the demand for cold brew coffee will decrease in the future as consumer preferences change rapidly. For Bizzy to support the current trends within this market, they should adjust its products to meet the needs of the consumers on Tokyo, Japan. Across major Asian cities, many independent and domestic chains are flourishing alongside of international giants. There are multiple emerging coffee markets around Asia, Vietnam being the second largest coffee producer globally. However, Japan leads the region within Asia in consumption of coffee within Japan with a gross of $34.45 billion in sales (Kathryn, 2023) and later possibly become the US rival in the largest consumer market for coffee. I don't think there

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7 is any other city that should be considered to expand into over Tokyo, Japan. It is the biggest market for ready-to-drink coffee and it’s where RTD canned coffee originated. Although, many of the local and big name RTD coffee brands think consumers have made America a hot market, many of the consumers in Japan who purchase RTD coffee are older, male workers who buy from a vending machine (Boyden). This could help Bizzy as they enter the market and partner with local businesses to provide their products on the shelf or online, marketing the convenience of their healthy energizing coffee. Bizzy’s new entry to Japan's market can have a few negative impacts, some including how tea is a hug part of the Japanese culture. Canned coffee has become fairly known as a Japanese invention. Bizzy Coffee strictly focuses on coffee and no other hot beverage options. Bizzy could mitigate these impacts by providing exclusive teas for the Asian market only to still drive sales and attract potential customers. Adding teas or even providing them seasonally, like during peak times could increase the sales of Bizzy products in Tokyo Japan, while also adapting to their local way of living. Business professional recommendation: Bizzy’s main strategy in the new market will consist of brand exposure, finding ways to implement marketing to attract their target audience and ensure they can become established while offering the same consistent coffee as in the U.S. Bizzy Coffee should also consider creating a specialty menu, flavors, or an additional item to these specific consumers in order to tailor their brand to the needs of the consumers in the new market. Overall, adjusting to the new markets consumer demand to ensure Bizzy can stay present and consistent in this market, without losing their brand focus.

8 Implementing marketing strategies that attract their type of consumer is very important due to the fact this is a totally different market than in the U.S. should be considered to succeed are consumers flavor palette. The people of Japan prefer drinks with less sugar, so altering their coffee to adapt to the Japanese taste buds can improve sales, grow the customer base, and possibly save on production since less sugar is preferred and Japan likes smaller servings for their drinks, equaling overall less products. During seasons, implementing themes like cherry blossoms during the spring can improve marketing strategies within the new market, by offering seasonal flavors, or cherry blossom themed packaging designs. I think with Bizzy’s current business plan and based upon how they are working in the U.S I think they have the potential to become established in Tokyo due to the current market standing in the RTD cold brew industry. Making the necessary changes to compete with big name brands that are already set up will be just what Bizzy needs to run smoothly. I believe that Bizzy will be able to use technological advances and systems to find their brand champion and which they can then be able to make the informed decisions necessary to successfully conduct business in the new market and with the ability to cut cost by offering smaller portions, less sugar, and manufacturers closer to the market overall lowering production costs. Some potential next steps for Bizzy to expand into the new market includes familiarizing and researching what their ideal customer looks like, ways to improve marketing as a new brand in Tokyo to notify consumers and adjust products to meet the expectations of consumers (reducing product sizes, amount of sugar, including new flavors and menu items). To conclude, with Tokyo being the fastest coffee-growing market in the Asia Pacific, Bizzy can keep expanding with the necessary changes to their business plan to succeed. Maintaining their technological advances, implementing a cross-cultured team, and improving products based on

9 consumer needs will satisfy the latest trends, and overall help them becomes established in the new market . REFERENCES Alindahao, K. (2016, August 29). Battle of the cold brews: The best bottled coffees . Forbes. https://www.forbes.com/sites/karlaalindahao/2015/08/18/best-cold-brew-coffee-2015/? sh=4940112f4369 Cold Brew coffee market size, share, growth analysis, by beans type, distribution channel - industry forecast 2022-2028 . Cold Brew Coffee Market Size, Share, Growth Analysis, By Beans Type, Distribution Channel - Industry Forecast 2022-2028. (2024, February). https://www.skyquestt.com/report/cold-brew-coffee-market French, A. (n.d.). Our story: Bizzy Coffee . Bizzy Cold Brew. https://bizzycoldbrew.com/pages/our- story The hot market for cold brew . Boyden Executive Search. (n.d.). https://www.boyden.com/media/the- hot-market-for-cold-brew-18160178/ Kathryn. (2023, December 30). Asia’s Coffee Industry Outlook: Emerging Trends in the region . Kathryn Read. https://kathrynread.com/asias-coffee-industry-outlook-emerging-trends-in-the- region/ Latif, R. (2021, April 18). Taste radio insider EP. 89: Why “constant improvement” is the mantra for this top-selling brand on Amazon . Taste Radio. https://www.tasteradio.com/insider/2020/taste- radio-insider-ep-89-why-constant-improvement-is-the-mantra-for-this-top-selling-brand-on- amazon/

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10 Pawlowicz, J. (2023, December 4). Japan loves Starbucks - but why? . Digital Marketing for Asia. https://www.digitalmarketingforasia.com/why-does-japan-love-starbucks/#:~:text=Starbucks %20Japan%20offers%20smaller%20sizes,the%20Japanese%20taste%20buds%20better . APPENDIX Global Cold Brew Coffee Market 2021-2028 Global RTD Packing Material Market Share

11 Five Forces Summary between 2022 and 2027

Individual Assignment 1- IBA

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