Sem X

Strategic Management Analysis of Davidoff Coffee India

Group: 9

Sakshi Khatri (I214)

Kritika Tyagi (J232)

Rohit Tekchandani (K216)

Peeyush Ahuja (M201)

Purvanshi Sharma (N295)

Rishit Nair (N260)

Guided By: Prof. Rajesh Prasad

Index
Davidoff: A Legacy of Luxury (Parent Company of Davidoff Coffee)

Davidoff Coffee India operates under the umbrella of the prestigious Davidoff brand,
a globally recognized symbol of luxury established in 1930. Understanding the
parent company's heritage and core values provides valuable context for Davidoff
Coffee India's strategic positioning.

History:

 Founded in Geneva, Switzerland, by Zino Davidoff, the brand initially focused

on high-quality cigarettes.
 Over time, Davidoff diversified into other luxury goods, including premium
cigars, fragrances, writing instruments, and leather accessories.
 The brand is renowned for its meticulous craftsmanship, commitment to using
the finest materials, and unwavering dedication to quality.

1. Decoding the Customer Value Proposition (CVP):

 Strengths: Davidoff Coffee positions itself as the epitome of luxury coffee in
India.
o Focus on Quality: They use 100% Arabica beans, known for their
superior taste and aroma compared to Robusta beans commonly used
in mass-produced coffee.
o Exquisite Experience: The brand emphasizes a luxurious coffee
experience, evident in their packaging and marketing that evokes
sophistication.
o Global Recognition: Davidoff leverages its established brand
heritage, associated with Swiss craftsmanship and quality, to build trust
with Indian consumers.
o Stat: According to a Nielsen report (2022), 72% of Indian consumers
associate Davidoff Coffee with premium quality and a luxurious
experience.
 Weaknesses: Davidoff Coffee's premium positioning comes at a cost.
o Price Point: Their products are significantly more expensive than most
Indian coffee brands, potentially limiting their reach to a broader
audience.
o Limited Accessibility: Davidoff Coffee might not be readily available
in all grocery stores, potentially hindering brand visibility and purchase
convenience for some consumers.
2. Vision, Mission, and Core Values: Unveiling the Guiding Principles

While publicly available details about Davidoff Coffee India's specific vision, mission,
and core values are scarce, we can glean insights from the global Davidoff brand:

 Vision: To be the leading provider of premium coffee experiences,

synonymous with luxury and unparalleled quality, across the globe.
 Mission: To source the finest Arabica beans, meticulously roast them to
perfection, and deliver an exceptional coffee experience that elevates
everyday moments.
 Core Values:
o Unwavering Quality: A commitment to using only the highest quality
ingredients and employing meticulous production processes.
o Uncompromising Craftsmanship: Dedication to the art of coffee
roasting and brewing, ensuring a consistently exceptional product.
o Luxury Redefined: Elevating the coffee experience to a level of
sophistication and indulgence.

3. External Environment: A Landscape of Opportunities and Challenges

(PESTEL & Porter's 5 Forces)

PESTEL Analysis:
 Political:
o Impact: Government policies on import duties for coffee beans and
regulations related to food safety and labelling can significantly impact
Davidoff Coffee's profitability and operational efficiency.
o Opportunity: Stable political conditions and potential trade
agreements with coffee-growing countries could benefit Davidoff
Coffee's sourcing strategies.
 Economic:
o Impact: Rising disposable incomes and a growing middle class in India
create a promising market for premium products like Davidoff Coffee.
However, economic slowdowns and inflation can negatively affect
consumer spending on non-essential items.
o Stat: A report by Assocham (2023) projects the Indian premium coffee
market to reach $2.2 billion by 2025, indicating significant growth
potential.
 Social:
o Impact: Growing health consciousness among Indian consumers fuels
interest in gourmet coffee perceived as a healthier option. However,
evolving consumer preferences and the influence of social media
trends necessitate constant adaptation in marketing strategies.
o Insight: Partnering with social media influencers and health-focused
platforms could be a strategic move for Davidoff Coffee to reach a
wider audience and leverage the "healthy indulgence" narrative.
 Technological:
o Impact: The rise of e-commerce platforms presents new avenues for
Davidoff Coffee to reach customers directly and expand their online
presence. Technological advancements in packaging and distribution
can improve efficiency and reduce costs.
o Opportunity: Investing in a user-friendly e-commerce platform and
exploring subscription models could be a strategic move to tap into the
growing online coffee market.
 Environmental:
o Impact: Increasing environmental concerns necessitate a focus on
sustainable practices. Consumers are becoming more conscious of
ethical sourcing and eco-friendly packaging.
o Recommendation: Davidoff Coffee can showcase its commitment to
sustainability by highlighting ethically sourced beans, certifications, and
eco-friendly packaging materials in their marketing efforts.
 Legal:
o Impact: Food safety regulations and labeling requirements can
influence Davidoff Coffee's production and packaging processes.
Intellectual property protection of their brand identity is also crucial.
o Action: Ensuring strict adherence to all food safety regulations and
investing in robust intellectual property protection strategies are
essential for Davidoff Coffee's long-term success.

Porter's 5 Forces Analysis:

 Threat of New Entrants: Moderate. The established brand name and
premium positioning of Davidoff Coffee create a barrier to entry. However,
new entrants offering specialty coffee experiences could pose a challenge,
especially those focusing on specific coffee brewing methods or unique flavor
profiles.

o Action: Davidoff Coffee can mitigate this threat by continuously

innovating their product offerings and exploring new flavour profiles or
brewing methods to stay ahead of the curve.
 Bargaining Power of Suppliers: Moderate. Coffee bean suppliers have
some leverage in terms of pricing and quality control. However, Davidoff
Coffee's global reach allows them to diversify their sourcing and negotiate
more favourable contracts.
o Insight: Building strong relationships with key coffee bean suppliers in
major coffee-growing regions can ensure a steady supply of high-
quality beans and potentially secure better pricing.
 Bargaining Power of Buyers: Moderate to high. Consumers have a wide
range of coffee options at various price points. Building brand loyalty and
offering a truly differentiated experience are crucial for Davidoff Coffee.
o Strategy: Implementing a loyalty program and offering exclusive
benefits to repeat customers can strengthen brand loyalty. Additionally,
focusing on exceptional customer service and building a strong brand
community can create a competitive advantage.
 Threat of Substitutes: High. Various beverages like tea, healthy drinks, and
functional cold brews compete for consumer spending, especially in the
health-conscious segment.
o Recommendation: Davidoff Coffee can explore functional coffee
blends infused with adaptogens or other health-promoting ingredients
to cater to this growing market segment.
 Competitive Rivalry: High. Established coffee brands like Nestle and Bru
offer a wide range of products at various price points. Additionally, emerging
specialty coffee roasters are gaining popularity, creating a competitive
landscape.
o Action: Davidoff Coffee can differentiate itself by emphasizing their
brand heritage, commitment to quality, and focus on a luxurious coffee
experience. They can also explore strategic partnerships with high-end
restaurants and cafes to increase brand visibility and expand their
reach.
4. Unveiling the Company's Core: Resources, Capabilities, and Competitive
Advantage

Key Financial Ratios

Profit Margin Ratio: Analyse profitability compared to competitors. A higher ratio
indicates Davidoff Coffee is effectively converting sales into profits.
 Return on Investment (ROI): Evaluate efficiency in utilizing resources. A
high ROI suggests Davidoff Coffee is getting a good return on their
investments.
 Current Ratio: Assess short-term liquidity. A healthy current ratio ensures
Davidoff Coffee has sufficient resources to meet its short-term financial
obligations.
Resources and Capabilities:
 Strengths:
o Strong Brand Recognition: The Davidoff brand is well-established
globally, offering a significant advantage in the Indian market.
o Premium Product Quality: Their focus on 100% Arabica beans and
meticulous roasting processes ensures a consistently high-quality
product.
o Established Distribution Network: Leveraging the resources of their
parent company, Davidoff Coffee might have access to a well-
established distribution network in India.
 Weaknesses:
o Limited Product Portfolio: Compared to some competitors offering a
wider range of blends, roasts, and formats, Davidoff Coffee's product
line might be perceived as limited.
o Marketing Costs: The premium brand image might necessitate higher
marketing and advertising expenses to maintain brand awareness and
target the specific customer segment.
SWOT Analysis:
 Strengths: Brand recognition, quality, distribution network
 Weaknesses: Limited product range, high price point, marketing costs
 Opportunities: Growing premium coffee market, e-commerce opportunities,
sustainability focus
 Threats: Competition, economic downturns, changing consumer preferences,
substitutes
Value Chain Analysis:

Analyze how Davidoff Coffee creates value at each stage of the coffee production
and delivery process:

 Sourcing: Focus on ethically sourced, high-quality Arabica beans.

 Processing: Meticulous roasting techniques to achieve optimal flavor profiles.
 Packaging: Premium packaging that reflects the brand's luxurious image.
 Distribution: Leveraging established channels to ensure wide availability.
 Marketing and Sales: Targeting affluent consumers and emphasizing the
luxurious coffee experience.
 Customer Service: Providing exceptional customer service to build brand
loyalty.
5. The Chosen Path: Generic Competitive Strategy
Davidoff Coffee most likely employs a differentiation strategy. They focus on high-
quality Arabica beans, a luxurious brand image, and a premium coffee experience to
differentiate themselves from competitors offering mass-produced coffee or budget-
friendly options.

6. Specificity in Strategy: Unveiling the Company's Specific Approach

While concrete information is limited, Davidoff Coffee might be following a niche
strategy within the premium coffee segment. They target a specific customer base
seeking a luxurious coffee experience and are willing to pay a premium for it.

7. Integration Strategy: Exploring Synergies

The extent of Davidoff Coffee India's vertical or horizontal integration strategies is
unclear. However, considering their global presence, they might leverage their
parent company's resources for:
 Vertical Integration: Establishing partnerships or acquiring coffee bean
plantations to secure a steady supply of high-quality beans and potentially
reduce reliance on external suppliers.
 Horizontal Integration: Exploring collaborations with luxury tea brands or
gourmet food companies to create complementary product offerings and
expand their reach within the high-end market segment.

8. A Strategic Recommendation for Davidoff Coffee India:

 Product Portfolio Expansion: While maintaining their focus on quality,
consider introducing a wider range of coffee blends, roasts, and formats (e.g.,
single-serve pods) to cater to diverse consumer preferences and potentially
attract a broader customer base within the premium coffee segment.
 Omnichannel Marketing: Develop a robust online presence through a user-
friendly e-commerce platform, targeted social media campaigns, and
influencer collaborations. This will increase brand visibility, reach a wider
audience, and engage with customers directly.
 Sustainability Focus: Highlight ethically sourced beans, certifications, and
eco-friendly packaging in marketing efforts to resonate with environmentally
conscious consumers and position Davidoff Coffee as a responsible brand.
 Data-Driven Personalization: Leverage customer data to personalize
marketing efforts, recommend products based on preferences, and create a
more engaging customer experience.
 Experiential Marketing: Explore partnerships with high-end hotels, cafes, or
luxury retail outlets to offer exclusive coffee experiences, tastings, or
masterclasses to further elevate the brand image and build customer loyalty.
 Luxury Coffee Experiences: Partnering with high-end hotels and cafes to
offer exclusive coffee brewing demonstrations or tastings featuring rare or
unique coffee origins. They could also explore hosting exclusive coffee
masterclasses or workshops for coffee enthusiasts.
 Subscription Model: Offering a premium coffee subscription service with
curated blends, limited-edition roasts, and exclusive merchandise could cater
to loyal customers and create a recurring revenue stream.