Thursday, November 23, 2006

The Value in Gourmet Products

In 1988, General Foods, the makers of Maxwell House Coffee, saw coffee as a $5 billion industry - and a losing proposition. Coffee consumption had plunged to its lowest point in recorded history... 1.67 cups per person per day... and baby boomers had become obsessed with their health. General Foods lost $40 million on coffee that year. They said customers weren't willing to pay enough for the stuff.

But the reality was that customers no longer saw value in General Foods offering: low quality coffee. Nobody noticed Starbucks.. in Australia Dome... who were only doing $10 million a year, charging double the usual prices for a cup - and growing 30 percent to 80 percent a year - by using expensive beans and European atmosphere. Nor did the big boys see any relevance in the successes of Haagen-Dazs, Perrier and Mrs Fields. Baby Boomers may have become health nuts, but they saw value in Gourmet products - and were willing to pay.

Gourmet bean sellers and coffee bar operators now have 20% of the market from the giants - profitably - beacuse they understoof that the changing customers tastes had created values elsewhere.
Some food for thought about doing your market research.

No comments:

Post a Comment

ShareThis