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Words: | Submitted: Fri Jan 28 2005
... respect to the coffee growers. Private labels are however emerging as significant players in the retail market and, by virtue of their lower overhead costs, are exerting a downward influence on pricing. * Increasing price sensitivity / lower quality differentiation in the minds of consumers: Given the decline in overall market, the Big Four & the private labels have resorted to greater use of the relatively cheaper robusta beans in their coffee products in order to reduce their cost of production and maintain aggressive pricing. As a result, the differentiation between the various varieties of coffee (for example arabica versus robusta-based coffees, 100% Café de Columbia versus other Columbian coffees and miscellaneous mild products) and different brands at the retail level has declined. Moreover, the frequent use of price promotions by the major roasters has further increased the price-sensitivity and reduced the quality-consciousness of consumers. These developments have been particularly detrimental ...
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