Denmark's Coffee Industry

Strengths

• Government control of coffee market has consumer confidence high

• Denmark has no restrictions on capital transfers. Denmark adheres to EU rules on the liberation of capital movements. Also Denmark has no foreign exchange restrictions.

• Political violence is unknown in Denmark

• Corruption is generally unknown in Denmark.

• After oil, coffee is the most traded and valued commodity in the world.

• The Scandinavian countries (Finland, Denmark, Norway, Sweden) consume between 8 and 11 kilos per capita, per annum. This is the highest level of coffee consumption in the world.

• This expansion could strengthen a coffee shop’s global presence and also minimize risk.

• Danish currency, the Danish Krone (DKK), is pegged to the Euro.

Weaknesses

• Denmark citizens may not acquire a taste for an American coffee, which in turn could lead to diminishing returns.

• There are a very few coffee shops based in Denmark, so creating a pioneering image could backfire.

• In the coffee industry, beverage innovation is a determining factor of the Company’s success. The lack of beverage innovation could have a significant adverse affect on performance.

• Denmark has yet to adopt the Euro, the common currency of the European Union, as its currency.

Opportunities

• Volume of coffee sales increased in 2003 and showed strength in 2004.

• Hot drinks are subject to international influences. These influences are slowly changing drinking patterns in the hot drink market.

• In 2003 coffee consumption outside the home increased to 27% compared to its 2002 mark of 25%.

• The tea market was in a downward trend in volume sales in 2003.

• The Denmark hot drinks market is dominated by international players. Sara Lee Corp., Kraft Foods and Nestle all gained a dominant position in Denmark’s hot drink market by means of acquisition of already existing well known local companies. They utilized strong country loyalty by not changing the name but at the same time developing new flavors and brands.

• Denmark has no restrictions on capital transfers. Denmark adheres to EU rules on the liberation of capital movements. Also Denmark has no foreign exchange restriction.

• Vesterbro, Copenhagen’s former red light district, lends itself to trendy businesses such as coffee shops.

Threats

• Existing competition includes the following:

o Ricco’s Coffee Shop

o Art Cafй Riga

o Cafй Zach

o Bang & Jensen

o Hackenbush

o Cafй Sonja

o Amokka Kaffehaus

o Other cafйs

 Bars

 Restaurants

 Fusion Cafйs (cafйs with areas to shop, do laundry, or another activity)

• Kaffeplantagen Coffee Bar & Flower Shop

• Barbarellah Bar, Clothing Store, & Interior Decoration

• Potential

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