Bolaven Farms’ mission statement is “Growing the finest coffee is our passion. Restoring land ownership to the joy of the farming poor is our desire”. Its main purpose is to alleviate poverty and to produce premium organic coffee. Once earning the initial investment, its aim to reinvest 80% of its profit for community development sort of makes it a social business.
SWOT Analysis of Bolaven Farm:
Strength: Cheap labor, business with social cause, premium grade coffee, organic certified coffee, 75% of people are farmers Weakness: The business is oligopoly. So, it’s difficult to create the market, lack of farming skills, corruption in Laos, starting a brand from scratch, local market Opportunity: Market growth of coffee is huge (yearly average 90%), can venture in Europe and America, can take over roasters and have larger share of profit, establish itself as unique premium brand promoting social cause Threats: Political instability, the owner has political ambitions; there are alternatives (tea, soda etc)
Bolaven Farm falls under question mark (problem child) category in BCG Matrix. It isn’t generating much revenue right now because it doesn’t have a large market share (in fact, they are new). But, they are in high growth markets (the import volume of organic coffee to these countries grew by 564% from 2004 to 2008)import in coffee so the potential to make money is there.
The coffee market is mature and highly competitive. Bolaven Farm focuses on selling existing products into existing markets. Market penetration is the growth strategy in this case. Bolaven Farm can carry it out by:
Initially, Bolaven Farm has to give away free samples to establish it as brand and get recognition from the customers. It must offer competitive premium price once it develops certain awareness in the market. It also has to attract decent caterings. It can also bring out the product in mini-packs to make it affordable to all class.
The facebook page and the South China Morning Post article has already resulted in having collaborations with Impact Asia, a PR firm followed by renowned Sodexo who was looking to set up its brand. Advertising in food magazine should be done frequently. Bolaven must start a European/American version of their website (currently, it has Laos and Hong Kong versions). The social cause of the company to should be publicized worldwide which may bring donors or aids to the company.
More Distribution Channels
It has to attract more retailers (especially departmental stores), wholesalers to buy the products. It can broaden the scope to market its product by hiring sales representatives. Direct marketing is also an option which can be done by sending flyers, brochures or post cards and thus open up direct mail channels. Ecommerce and telemarketing can also be used in this case. However, the company must open up to international market. In 2007, Europe was the largest consumer of coffee, accounting for 31% of worldwide consumption, followed by the United States with the consumption of 16% of the world’s coffee, and Brazil with the consumption of 13% of the world’s coffee. International market offers higher profit margin and big growth. If Bolaven opens up to international market, they have to use market development strategy. Market development is more risky than market penetration but the state of local market and Hong Kong make it a risk worth taking.
Tackling some challenges:
Laos is ranked 160 out of 176 countries in the list of the Transparency International’s Corruption Perceptions Index 2012 with a score of 21. In 2009 Laos was ranked 158 in the same list. Bolaven Farms have to adhere to strict discipline and moralistic organizational culture to wipe out corruption. They may follow the Grameen bank model of punishing or penalizing the defaulters. Lack of farming skills:
Laos is a country with lots of possibilities in terms of agriculture. Its lands are fertile and naturally are blessed with resources that make most crop cultivation a success. Though 80% of the population of Laos is directly or indirectly related to agriculture most people lack adequate knowledge about farming. The trained farmers lacked the necessary skills to transfer their trainings to work. Bolaven Farm is new and as the time passes the farmers will be fully able to comprehend the process and thus it’ll be more effective in their works after training in the future.
Political instability may hamper infrastructural growth. The machines that are to be imported for manufacturing purposes may take time due to legal issues. Once the company becomes successful and earns recognition for its altruistic attitude, these problems can be curtailed. Besides, from the quotes of the owner, his desire to be in politics can be understood which again would bring lots of benefits to the company.
Most of the people in Laos are accustomed to tea. But people are always attracted to new things. Bolaven can use innovative marketing campaigns to lure a new customer base which can include the entire tea customers plus people who usually not take caffeine drinks. Bolaven can offer something like Argo tea to meet a new market need of healthy drinks.
Laos is a small country in Asia with an area of 2,36,000 sq. kilometres. It has a population of 6,500,000. The infrastructure of the country is very weak with a per capita GDP of $ 1,320 only. Laos is one of the poorest countries in the world, ranked 143 among 196 (CIA World Factbook 2009-2011). It is apparent that a premium priced coffee cannot be a profitable venture focusing only in its local market so it has to be export oriented.