Marketing Analysis of Costa Cafee in the UK.

Essay by jumathieUniversity, Bachelor'sC+, October 2005

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1.1 Background

In 1971, Italian brothers Sergio and Bruno Costa started a wholesale operation supplying roasted coffee to caterers and specialist Italian coffee shops. Within a few years they were so famous for combining their roasting business with premium coffee shops, that Costa Coffee quickly became a dominant name on the UK's high streets.

The Costa brothers opened the first Costa store in London in 1978 and growth expanded at the rate of two stores per year with the help of their family and friends in the business.

In October 1995, food and drinks giant Whitbread PLC acquired Costa and immediately established the brand as the market leader in the premium coffee shop sector. Developments such as the new roaster were crucial to Costa. With huge growth over the 1990's the company had increased to 186 stores by 1999 and in 2000, 3.7 million cups of coffee were sold each week (source:

Costa is now the leading UK branded coffee shop with over 300 stores (source:

1.2 Financial situation.

Pre-tax profits for Costa Ltd improved from �1m in 2001 to �9m in 2002. Between 2001 and 2002, the pre-tax profit increased by almost 553% probably due to an increase of the economy of scale. Indeed, Costa opened several outlets during this year. Turnover for the company rose by 19.1% with �.5m. A typical Costa outlet has a turnover of between �000 and �000 per week, excluding VAT.

1.3 Target Market Selection

There are so many different variants of coffee shops that there is something for everyone. Consequently, it is difficult to define the target market for speciality branded coffee shops since by their nature they have a very wide and disparate target market. Moreover it is mainly influenced by the location of the coffee shop...