Miller & Co Case Study 2A. Introduction Miller & Co is an international chain of tea and coffee shops. The company was founded in Sydney. It now has 5 successful stores in Australia, and recently expanded to China with the launch of three Miller & Co cafes.

2A.i. Your role at Miller & Co You work as a Marketing Analyst at Miller & Co. A key part of your role is to monitor and analyse data relating to the Miller & Co.s international business performance.

2B. About Miller & Co Miller & Co are a chain of cafes that offer teas and coffees. Miller & Co mostly sells coffee beverages; however, a smaller selection of teas is also included on its menu. The company prides itself on offering delicious, quality coffee at affordable prices. Its key target market is millennials.

2C. The Chinese Market 2C.i Market research To aid your understanding of Miller & Cos business performance, you conducted research on the Chinese market for coffee from credible government and industry sources. You made the following notes:

China is known for its historical preference for tea. Tea, as opposed to coffee, has been a strong part of Chinese culture for a number of centuries. The average number of cups of coffee drunk per person per year is much lower in China that it is for Australia and America. For example:

- The average Australia drinks 300 cups of coffee in a year - Three in four Australians (75%) enjoy at least one cup of coffee per day - The average Chinese drinks just 3 cups of coffee in a year

However, the amount of coffee consumed in China is rising quickly. Retail coffee sales in China are now worth over 65 billion yuan (US$9.41 billion). The average annual sales growth over the next five years is estimated at 6 per cent.

By contrast, coffee sales and consumption in Australia is fairly stable; it is expected to stay at similar levels over the next five years.

You also undertook qualitative research, such as by using surveys to gauge perceptions of people in China towards drinking coffee. Your notes you made on this qualitative research include:

Millennials and younger generations are drinking more coffee. This is driving the growth in coffee consumption

Most millennials surveyed: o Viewed Starbucks as too expensive o Liked hanging out in coffee shops o Spent a large amount of times in cafes, using them to socialise, browse the internet and generally relax o Liked the social status of drinking coffee over tea, saying coffee feels more modern and on trend o Liked that drinking coffee was a break from the traditions of older generations o Had not heard of Miller & Co, but the ones who had were impressed by its taste, affordability, Australian coffee blends and unusual coffee art o Saw Luckin Coffee was affordable, but average in terms of taste o Viewed Luckin Coffee and Starbucks as big generic chains, whereas Miller & Co had a greater appeal for being a relatively smaller company

2C.ii Insights on Chinese culture To develop your knowledge on Chinese culture you undertook research. The notes you made on your research include: - Tea is a historical and important part of Chinese culture. This could be why younger generations are starting to drink more coffee instead of tea; it signifies a desire to have a more modern lifestyle distinct from older generations

- With increasing urbanisation, a culture of hanging out in cafs is springing up across China - Politically, Chinese culture is influenced by its communist government. The communist party has significant influence over international companies doing business in China. - Verbal and non-verbal communication differences exist - for example negative answers like a blunt no are considered impolite - Cultural symbols are also different - for example, 8 is the luckiest number and 4 can be a taboo number because it sounds like the word death - Chinas middle class has grown substantially over the past 4 decades. For example, in 2000, just four percent of China's urban population was considered to be middle class, rising to over 30 percent in 2018. With a growing middle class has come increasing demand for a wider range of products, including coffee

2D. Competitors in China Miller & Co. has two main competitors in China: Starbucks Luckin Coffee

Starbucks is are rapidly expanding their presence in China. The company has more than tripled its stores to 4,000 just in the past four years. Dominating Chinas coffee market with over 58 percent of the market share, Starbucks plans to have 6,000 outlets in China within 4 year. On average, Starbucks opens a new store in China every 15 hours. Luckin Coffee currently has 2,370 stores in 28 cities and wants to increase to 4,500 by the end of the year. The chain sold 90 million cups of coffee last year. Luckin Coffee was founded in China, and some customers enjoy that the company has Chinese owners, as opposed to foreign ones.

The survey you undertook to gauge perceptions of people in China towards drinking coffee included questions on attitudes towards Miller & Cos competitors. You noted the results of the survey included: Most millennials surveyed: - Viewed Starbucks as too expensive - Saw Luckin Coffee was affordable, but average in terms of taste - Viewed Luckin Coffee and Starbucks as big generic chains, whereas Miller & Co had a greater appeal for being a relatively smaller company

- Had not heard of Miller & Co, but the ones who had were impressed by its taste, affordability, Australian coffee blends and unusual coffee art

Qus1) Summarize trends in consumer preferences for coffee in China, and how this compares to Australia. Describe how might these trends impact Miller & Cos success in China.

Qus2)

For two of Miller & Cos competitors in China identify: - At least two strengths

- At least two weakness

	Strengths	Weaknesses
Starbucks	Write your answer here	Write your answer here
Luckin Coffee	Write your answer here	Write your answer here

Qus3) Identify at least two opportunities and two threats that Miller & Co faces in China.

Qus4) Compare Miller & Cos business performance in China against its competitors. Then describe the companys market position.

Qus5) Review the qualitative data provided in the case study. Analyse this data, then describe two or more reasons that might explain current trends in coffee consumption in China.