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Thé Store Manufacturing and Distribution Inc.
Exporting Specialty Tea to the U.K. or the U.S.
International Trade Research
FITT ID 317053
March 4th, 2016
Table of Contents1.0 Executive Summary.................................................................................................................1
2.0 About the Company.................................................................................................................1
3.0 Research Plan.........................................................................................................................2
3.1 Strategic Objectives.............................................................................................................2
3.2 Research Topics..................................................................................................................3
3.3 Research Objectives............................................................................................................3
4.0 Research Methodology............................................................................................................3
4.1 Objective I: Political, Legal, and Business Environment......................................................4
4.2 Objective II: Market Intelligence...........................................................................................5
4.3 Objective III: Competitive Intelligence..................................................................................5
5.0 Relevance, Reliability, and Currency of Data..........................................................................6
6.0 Logic & Analysis of Data..........................................................................................................6
6.1 Logic.....................................................................................................................................6
6.2 Analysis................................................................................................................................7
Demographic.......................................................................................................................................7
Government........................................................................................................................................7
Trade Agreements...............................................................................................................................7
Economy..............................................................................................................................................8
Currency and Exchange rate................................................................................................................9
Market Entry......................................................................................................................................10
Logistics.............................................................................................................................................11
7.0 Market and Competitive Intelligence.....................................................................................13
7.1 Market Intelligence.............................................................................................................13
Target Market....................................................................................................................................13
Government......................................................................................................................................13
Economy............................................................................................................................................13
7.2 Demographic Characteristics.............................................................................................14
Demographic.....................................................................................................................................14
Economy............................................................................................................................................14
7.3 Product-Specific Market Data............................................................................................14
7.4 Pricing Strategy..................................................................................................................18
8.0 Conclusion.............................................................................................................................19
8.1 Action plan.........................................................................................................................19
9.0 Bibliography...........................................................................................................................21
10.0 Appendices..........................................................................................................................22
10.1 Appendix A - Thé Store Research Process.....................................................................22
10.2 Appendix B - Thé Store Survey Sample..........................................................................23
10.3 Appendix C – Thé Store Information Management Cycle................................................24
10.4 Appendix D – Great Lake Ports Travel Time...................................................................25
List of Tables
Table 1 – Research Team........................................................................................................4
Table 2 – Research Budget......................................................................................................4
Table 3 – Websites...................................................................................................................6
Table 4 – Demographic.............................................................................................................7
Table 5 – Government..............................................................................................................7
Table 6 – Regulation & Trade Agreements...............................................................................8
Table 7 – GDP..........................................................................................................................8
Table 8 – GDP Growth Forecast...............................................................................................8
Table 9 – Currency Exchange Rate..........................................................................................9
Table 10 – Market Entry Costs...............................................................................................10
Table 11 – UK Sales Tax........................................................................................................10
Table 12 – US Sales Tax by State..........................................................................................10
Table 13 – Technology, Infrastructure, and Shipping.............................................................11
Table 14 – Target Market........................................................................................................13
Table 15 – Government..........................................................................................................13
Table 16 – Economy...............................................................................................................13
Table 17 – Demographic.........................................................................................................14
Table 18 – Economy...............................................................................................................14
Table 19 – Target Market Research Survey...........................................................................14
Table 19 – Survey Results US................................................................................................15
Table 20 – Survey Results UK................................................................................................16
Table 21 – Sample Pricing Strategy US.................................................................................18
Table 22 – Sample Pricing Strategy UK.................................................................................18
Table 23 – US Competition $/100g.........................................................................................19
Table 24 – UK Competition $/100g.........................................................................................19
List of Figures
Figure 1 – GDP Growth............................................................................................................9
Figure 2 – Toronto, ON to Buffalo, NY: 159 km, 1.75 hrs.......................................................13
Figure 3 – Toronto, ON to Southampton, UK: 5655 km, 10.2 hrs...........................................13
Figure 4 – US Survey Results Major Demographics Breakdown...........................................18
Figure 5 – UK Survey Results Major Demographics Breakdown...........................................18
1.0 Executive SummaryThé Store Manufacturing and Distributing Inc. is a specialty tea manufacturing company
based in Toronto, Ontario with 30 employees and several plantations in Southern China and
India. The company was incorporated in 2010 with only 5 employees and over time grew into a
major industry force that now controls over 75% of the Canadian market share, with 37M
revenues from Canadian markets. Because of the huge success in the domestic markets, the
company is now considering an international expansion.
The company is considering an expansion to one new market, U.K. or the U.S., due to
the financial considerations of sponsoring the expansion from within. The purpose of this
research plan is to determine which of these two potential markets, the U.S. or the U.K., would
be more suitable for exporting the company’s specialty teas.
Through a carefully planned research process, conducted by the team of internal
researchers, data has been collected from both primary and secondary sources. Researchers
conducted a survey over the course of three months, from November 7, 2015 to February 7,
2016, using the population sets of 300,000 people, in each country, by a method of random
sampling. Surveys uncovered that the U.S. customers are currently more inclined to purchase the
company’s specialty tea, at higher prices and with more frequency. Secondary research revealed
that the U.S. political, economic, social, technological, legal and regulatory environment also
yields higher profits and better long-term position for the company, internationally. Competitor
analysis in both potential countries revealed that both countries offer similar competitive
circumstances, where no country would be eliminated or favored for this factor alone. Due to an
exceptional demand for the company’s tea in the U.S. market, proximity of the market to Canada
and the favorable market conditions in that country, this research plan is making a
recommendation to export to the U.S. market at this time. It is further recommended that the
expansion project start within 6 months from issuing this research plan, as to retain the currency
and relevancy of the report.
Thé Store Inc. 1
2.0 About the CompanyThé Store Manufacturing and Distribution Inc. is a Canadian manufacturer and distributor
of premium specialty teas. The idea of Thé Store was born by Nevena Plumereau when she
became fascinated with the tea plants growing in her mother’s garden. It started as a hobby in her
backyard with experiments of great detail, and picked up funding by her business partner Orida
Keewatin in 2009. Curious how they could grow a tea business where coffee was around every
corner everywhere, they took to the streets and asked people. They found there was a
disappointing number of options when it came to tea that could be competitive with other drinks.
Nevena with her sense of humor in packaging Thé Store and products, and Orida’s ability to not
only keep up with current trends, but create them, they were confident they could win a
following among the young, trendy population that found the habit of having a cup of beverage
on the go. They opened their first humble storefront in Toronto, Ontario in 2010 under the name
“Northé” combining the start of Nevena and Orida’s names with Thé before changing to “Thé
Store” playing on the French word for tea and the popularity of English in their dialect.
Thé Store currently has 30 employees based in Toronto, Ontario, overlooking plantations
in Southern parts of China and India, where the climate can be wet and humid but also dry in
other seasons, as this is the best type of climate to create different types of flavors from the same
tea plant. Competition from similar tea businesses started around the same time only helped push
the Canadian public to really consider the option of tea. An annual revenue of $90 million selling
to the growing population of tea lovers in North America, Thé Store was first picked up by the
“hipster” crowd and over time became a hit with busy young professionals everywhere. Not only
earning a place on every desk in offices and break rooms of Eastern Canada, but was also picked
up in the West through word of mouth and as a premium gift to friends and family. It was not
long before Thé Store’s expansion to all parts of Canada became a reality.
Success in Canada has built up a small but growing empire that needs to conquer new
land. There is potential in expanding to the UK where tea consumption is a normality and
presents no need for as strong a push in the marketing of tea to the public. Expanding to the
much larger population of the US, not to mention being the geographical neighbor would also be
a very viable choice as the first step in international expansion.
Thé Store Inc. 2
3.0 Research PlanThé Store is looking to expand its growing business internationally. In order to have a
presence on a global scale they will have to expand to other countries that have larger markets
with consumers that are interested in mid to high-grade quality teas. Thé Store has looked at the
U.S. and U.K. for possible expansion due to larger populations and geographical benefits or
simply a steady demand for tea in the country.
3.1 Strategic Objectives
The company's strategic objectives are to:
Have a working distribution system planned for every step of the expansion, with the
preliminary and initial steps up and running by mid-2016
Expand beyond Canada and into foreign markets to increase sales revenue of all
merchandise by 20% by 2017
Research what foreign markets would like, in order to penetrate into them and create a
globally recognized branding to further arouse demand for a well-known product by 2018
3.2 Research Topics
Determining which country would be more profitable and realistic in business operations
is the most important concern when considering international expansion. The U.K. has more
buying power with their stronger currency but crossing the Atlantic Ocean would present some
difficulties when compared to the geographical ease in distribution of the U.S.
3.3 Research Objectives
The research objectives are to:
Produce an in-depth analysis of the political, legal, and business environment and
determine country-specific risks and opportunities
Explore the tea industry in the U.S. and U.K. and learn where the buying power lies and
what teas and form factor this demographic would enjoy
Study the competition and the market, and where Thé Store can capitalize on competitive
advantages
Thé Store Inc. 3
4.0 Research MethodologyThe research methodology relies on the specific research process (Appendix A -
Research Process). Primary research was completed using survey (Appendix B - Survey
Sample) and secondary research through online resources, conducted by in-house researchers
Benjamin Lee, Alfred Venkatesh, and Hannah Price, over a three-month period from November
7, 2015 to February 7, 2016 with a budget of $40,000. The research will be executed by
collecting qualitative and quantitative data from the primary and secondary resources and have
conclusions presented for further decision making.
Table 1 – Research Team
TEAM FUNCTION SKILLS
Benjamin Lee Research Lead Project management / Communication / Language
Alfred Venkatesh Analyst Research / Data Processing / Organization
Hannah Price Moderator Research / Moderator / Language
Table 2 – Research Budget
BUDGET EXPECTED ESTIMATE
Realistic Research Budget Expected Return Estimate of Reduced Changes
CEO Approved 20K 2
Budget = Expected * Estimate = 40K CAD
A survey will serve as the primary research tool in gauging the market in preference of
tea type and price range, as well as demographic demand and buying power. The researchers will
analyze the data and make suggestions from the company’s line of products, which product at
what pricing would make the most effective impact in penetrating the targeted market. Online
and other secondary resources such as compiled statistics and government websites will act as
supplementary information to the primary research in terms of market preference, but important
in understanding international regulation in relation to importing/exporting, as well as market
environment.
4.1 Objective I: Political, Legal, and Business Environment
Key information required:
Thé Store Inc. 4
Qualitative:
Political: Government Stability
Legal: International Import/Export Regulations
Business: Economic Factors Affecting Tea Industry
Quantitative:
Political: Government in Office Duration
Legal: Market Costs: Tariffs, Duties, Sales Taxes
Business: Currency Fluctuations
Sources:
Websites: CIA World Book, Britishchambers.org.uk, CBP.gov, Duty Tax Calculator
Books: The Regulation of International Trade1, Breaking into New Markets2
4.2 Objective II: Market Intelligence
Key information required:
Qualitative:
Demographic Profile
Demographic Preference
Attitude toward Foreign Goods/Services
Quantitative:
Size of Potential Customer Base
Demographic Annual Income
Optimal Tea Pricing
Sources:
Websites: CIA World Book, WTO, Gov.uk, Tea.ca, Tea.co.uk, Teausa.com
Survey: Conducted in the U.S. and the U.K. from November to December, both using data
sets of 300,000.
4.3 Objective III: Competitive Intelligence
Key information required:
Qualitative:
1 Trebilcock, M. J., and Robert Howse. The Regulation of International Trade. (London: Routledge, 1999) 2 Newfarmer, Richard S., William Shaw, and Peter Walkenhorst. Breaking into New Markets: Emerging Lessons for Export Diversification. (Washington, D.C.: World Bank, 2009)
Thé Store Inc. 5
Major Competitors Profile
Market Characteristics and Opportunities
Industry Trends
Quantitative:
Major Competitors
Competitor Market Share
Competitor Pricing Strategy
Sources:
Websites: Competitor Websites
UK: Taylors of Harrogate, Glengettie Tea, Ahmad Tea
US: Stash Tea, Teavana, Honest Tea
5.0 Relevance, Reliability, and Currency of DataThe use of government websites, as well as those from industry associations, research
databases, and even competitors’ websites show information gathered from databases,
interviews, focus groups as well as surveys and documents on incurred sales, all of reliable
source with only a select few websites that do not update regularly. Such information detail
statistics to show trends in demographics on subjects like population, birth rate, employment
rate, income levels, GDP, to gain insight and better target their demographic.
The key websites used in secondary research:
Table 3 – Websites
WEBSITES DATE ACCESSED LAST UPDATE
https://www.cia.gov/library/publications/resources/the-world-factbook/index.html 03/04/2016 02/26/2016
https://www.wto.org/ 03/04/2016 02/04/2016http://www.imd.org/wcc/ 03/04/2016 02/26/2016http://www.euromonitor.com/ 03/04/2016 02/26/2016http://www.europaworld.com/pub/ 03/04/2016 02/26/2016http://www.britishchambers.org.uk/ 03/04/2016 02/26/2016https://www.gov.uk/ 03/04/2016 02/26/2016https://www.commerce.gov/ 03/04/2016 02/26/2016http://www.cbp.gov/ 03/04/2016 02/26/2016http://www.dutycalculator.com/ 03/04/2016 02/26/2016http://taylorsofharrogate.com/ 03/04/2016 02/26/2016
Thé Store Inc. 6
http://www.glengettietea.co.uk/ 03/04/2016 02/22/2013http://www.ahmadtea.com/ 03/04/2016 02/26/2016https://www.stashtea.com/ 03/04/2016 02/26/2016http://www.teavana.com/ 03/04/2016 02/26/2016https://www.bigelowtea.com/ 03/04/2016 02/26/2016
6.0 Logic & Analysis of Data
6.1 Logic
In order to realize the potential for international expansion Thé Store will employ
information gathered from both test markets in the U.K. and U.S. as well as those from
government websites and databases. The data will be presented in tabular or graphic form to
show trends, forecasts, and assist Thé Store with long-term revenue estimates. All data in tabular
format will be referenced in comparison to the data of both countries for clarity of presentation.
6.2 Analysis
The research showed that in terms of per capita income levels the two countries were
similar. What was not similar though was the size of the population.
Demographic Table 4 – Demographic
Demographic US UK Year
Population 321,368,864 64,088,222 2015
Growth Rate 0.78% 0.54% 2015Source: CIA World Factbook
The U.S. has a population five times that of the U.K. as well as a growth rate that is higher. This
directly shows to what extent a proportion of a market the company can grow into.
Government Table 5 – Government
Government US UK Year
Type Constitution-based Federal Republic
Constitutional Monarchy Present
Political Stability Index3 0.62 0.44 2014
Thé Store Inc. 7
Corruption Perception Index4 76 81 2015Source: The World Bank, Transparency International
While the U.S. government looks to be more corrupt, it is interestingly more stable than that of
the U.K. government.
Trade Agreements Table 6 – Regulation & Trade Agreements
Trade Agreements US UKMajor Agreements NAFTA CETA
Signed Date 1994 2013Source: Government of Canada WebsiteNAFTA is an agreement that directly impacts trade between the three North American countries,
mainly in elimination of tariffs for industrial goods, and food and agriculture. CETA is an
agreement that gives Canadian Exporters preferential access to the EU.
Economy Table 7 – GDP
Economy US UK Year
GDP
$17.10 trillion $2.524 trillion 2013
$17.52 trillion $2.594 trillion 2014
$17.97 trillion $2.66 trillion 2015
GDP Growth Rate
1.5% 2.2% 2013
2.4% 2.9% 2014
2.5% 2.4% 2015Source: CIA World Factbook
Table 8 – GDP Growth Forecast
Forecast US UK Year
GDP Growth Forecast
2.7% 2.4% 2016(f)
2.4% 2.2% 2017(f)
2.2% 2.1% 2018(f)Source: CIA World Factbook
3 -2.5 weak; 2.5 strong4 100 = No corruption
Thé Store Inc. 8
Figure 1 – GDP Growth
Based on the current data, both countries’ GDPs are growing at a steady rate. The World Bank
has their own forecasts estimating that the growth in GDP will level off and even decline in the
future. There is no noticeable difference between the two’s GDP other than the sheer proportion,
as such it is hard to determine which economy looks to be more stable.
Currency and Exchange rate Table 9 – Currency Exchange Rate
Rate Canada US UK Year
Currency Exchange Rate CAD$1.00 CAD $0.90 USD £0.54 GBP 2013$1.00 CAD $0.80 USD £0.52 GBP 2014$1.00 CAD $0.74 USD £0.53 GBP 2015
InflationN/A 1.5% 2.6% 2013N/A 1.6% 1.5% 2014N/A 0.2% 0.1% 2015
Source: CIA World Factbook, Inflation.eu
As the US Dollar is the most often used currency for referencing exchange rate, USD in
the above Table 9 is not referenced, but instead with both USD and GBP compared to the CAD.
The GBP is the more stable currency with a decline in inflation from the data given above and is
favored for business partnership transactions to be dealt in. For cautionary sake, forward
contracting will be employed to ensure there are no confusion or miscommunication in regards to
discussed sales prices.
Thé Store Inc. 9
Source: World Bank, IMD World Competitive Yearbook
1.5
2.4 2.52.7
2.42.22.2
2.9
2.4 2.42.2 2.1
2013 2014 2015 2016(f) 2017(f) 2018(f)
GDP
Gro
wth
Rat
e Pe
rcen
tage
Year
Market Entry Table 10 – Market Entry Costs
Market Entry US UK Year
Average Duty Rate 0~10% 0~20% 2015Source: DutyCalculator
Table 11 – UK Sales Tax
State Sales Tax Year
England 20% 2015Source: DutyCalculator
Table 12 – US Sales Tax by State
State Sales Tax Year State Sales Tax Year
Alabama 8.91% 2015 Montana None 2015
Alaska 1.76% 2015 Nebraska 6.80% 2015
Arizona 8.17% 2015 Nevada 7.94% 2015
Arkansas 9.26% 2015 New Hampshire None 2015
California 8.44% 2015 New Jersey 6.97% 2015
Colorado 7.44% 2015 New Mexico 7.35% 2015
Connecticut 6.35% 2015 New York 8.48% 2015
Delaware None 2015 North Carolina 6.90% 2015
Florida 6.65% 2015 North Dakota 6.56% 2015
Georgia 6.96% 2015 Ohio 7.10% 2015
Hawaii 4.35% 2015 Oklahoma 8.77% 2015
Idaho 6.01% 2015 Oregon None 2015
Illinois 8.19% 2015 Pennsylvania 6.34% 2015
Indiana 7.00% 2015 Rhode Island 7.00% 2015
Iowa 6.78% 2015 South Carolina 7.13% 2015
Kansas 8.20% 2015 South Dakota 5.83% 2015
Kentucky 6.00% 2015 Tennessee 9.45% 2015
Louisiana 8.91% 2015 Texas 8.05% 2015
Thé Store Inc. 10
Maine 5.50% 2015 Utah 6.68% 2015
Maryland 6.00% 2015 Vermont 6.14% 2015
Massachusetts 6.25% 2015 Virginia 5.63% 2015
Michigan 6.00% 2015 Washington 8.89% 2015
Minnesota 7.20% 2015 West Virginia 6.07% 2015
Mississippi 7.07% 2015 Wisconsin 5.43% 2015
Missouri 7.81% 2015 Wyoming 5.47% 2015Source: TaxFoundation.org
Thé Store Inc. 11
LogisticsTable 13 – Technology, Infrastructure, and Shipping
Logistics US UK
Technology
317.4 million cell phone users
129.4 million land line users
276.6 million internet users
(86.8% of population)
78.5 million cell phone users
33.24 million land line users
57.3 million internet users
(89.8% of population)
Infrastructure
Queen Elizabeth Way
Welland Canal
Port of Buffalo
National Distribution Center
Southampton Port
Quay Warehouse
Railway System:
Cross Country, Great
Western Railway
Princess Royal
Distribution Centre
Shipping
I. Cargo truck importing goods
from Toronto, onto Queen
Elizabeth Way, into Buffalo,
settling goods in National
Distribution Center
II. Cargo Ship from Port of
Toronto, through the Welland
Canal, docking at Port of
Buffalo, settling goods in
National Distribution Center
I. Large Cargo Ship from
Port of Toronto across
Atlantic Ocean to Port of
Southampton, settling
goods in Quay Warehouse.
Railway system takes
goods to Princess Royal
Distribution Centre
InternetTime Warner Internet
Verizon
Sky Broadband
PlusNet
Source: World Bank, CIA World Factbook
Thé Store Inc. 12
Figure 2 – Toronto, ON to Buffalo, NY: 159 km, 1.75 hrs.
The geographical distance between Canada and the U.S. holds great benefits for quickly
addressing and adapting to market trends when emerging into the new market in order to take
foothold. Shipment would simply be cargo-truck driven 2 hours, crossing the border to reach
Buffalo, where an established packaging and distributing warehouse is located. The merchandise
is then land-transported to major cities like New York.
Figure 3 – Toronto, ON to Southampton, UK: 5655 km, 10.2 hrs.
Having a distribution centre in North America poses difficulties when shipping cross the
Atlantic Ocean. Shipment would first be from the Toronto seaport to the Southampton seaport,
arriving approximately 6 days after departure, then stored in a warehouse at Southampton until
freight transferred to the major cities for packaging and distributed to retail stores.
Thé Store Inc. 13
5,655 km
Toronto, ON to Southampton, UK
10.2 hrs by Travel Time
Distance
159 km
Toronto, ON to Buffalo, NY
1.75 hrs by Travel Time
Distance
7.0 Market and Competitive Intelligence
7.1 Market Intelligence
Target Market Table 14 – Target Market
Target Market US UK YearLanguage English English 2015Population 321,368,864 64,088,222 2015
Source: CIA World Fact book, IMD World Competitive Yearbook
Government Table 15 – Government
Government US UK YearPolitical Stability Index 76 81 2015
Corruption Perception Index 0.62 0.44 2014Source: World Bank, CIA World Factbook
Economy Table 16 – Economy
Economy US UK YearCapital Washington, DC London 2015
Population 321,368,864 64,088,222 2015
GDP$17.1 trillion $2.524 trillion 2013
$17.52 trillion $2.594 trillion 2014$17.97 trillion $2.66 trillion 2015
GDP Growth Rate1.5% 1.7% 20132.4% 2.8% 20142.6% 2.5% 2015
Export$1.633 trillion $480.8 billion 2014$1.598 trillion $442.0 billion 2015
Import$2.374 trillion $680.4 billion 2014$2.347 trillion $617.1 billion 2015
Exchange RateCAD
$0.90 USD £0.54 GBP 2013$0.80 USD £0.52 GBP 2014$0.74 USD £0.53 GBP 2015
World Ranking 1 5 2015Source: CIA Yearbook 2016
Thé Store Inc. 14
7.2 Demographic Characteristics
Demographic Table 17 – Demographic
Demographic US UK Year
Population 321,368,864 64,088,222 2015
Urban population 81.6% 82.6% 2015
Language English English 2015Source: World Bank, CIA World Factbook
Economy Table 18 – Economy
Economy US UK Year
Gross National Income 52,947 39,267 2015
Human Development Index 0.915 0.907 2015
Income Level(GDP Per Capita) 54,629.5 39,762.1 2011-2015
Education (Yrs of Schooling) 12.9 13.1 2015Source: World Bank, CIA World Factbook
7.3 Product-Specific Market DataTable 19 – Target Market Research Survey
Survey
Target Markets US & UK
Sample Size 300,000 each
Methodology Random Sampling
Research Time Period November 7, 2015 – February 7, 2016
Research Topics Age group, Annual income, Caffeine intake, Tea preference, Consumption frequency
Table 19 – Survey Results US
Thé Store Inc. 15
Survey US
Age Group
Out of the 300,000 randomly surveyed population:53% were ages 20-34,24%were ages 35-45,12% were ages 46+,And 11% were 15-19.
Annual Income
75% of age group 20-34 had annual income between $50,000 ~ $74,999;
80% of age group 35-45 had annual income between $75,000 ~ $99,999;
7% of age group 46+ had annual income between $100,000 ~ $149,999,
2% had $150,000+.
Consumption Frequency
70% of “20-34:25-50K” had tea often, 27% sometimes, and 3% everyday;
62% of “35-45:75-100K” had tea sometimes, 9% often, and 7% rarely;
88% of “46+:100-150K” had tea often, 12% sometimes.
Caffeine Intake
85% of “20-34:25-50K:Often” liked caffeinated, 72% of who drank sometimes liked organic, and 41% who drank everyday liked caffeinated.
70% of “35-45:75-100K:Sometimes” liked caffeinated.
60% of “46+:100-150K:Often” liked organic.
Preference in Type
50% of”20-34:25-50K:Often” chose Black Tea, 25% chose Herbal, 10% chose Green, and 5% chose Oolong.
67% of”35-45:75-100K:Sometimes” chose Black Tea, 23% chose Herbal, 5% chose Green, and 5% chose Oolong.
30% of”46+:100-150K:Often” chose Black Tea, 55% chose Herbal, 10% chose Green, and 5% chose Oolong
Willingness to Spend
70% of”20-34:25-50K:Often” were willing to spend $20-30
60% of”35-45:75-100K:Often” were willing to spend $30-40
80% of”46+:100-150K:Often” were willing to spend $50-60
Table 20 – Survey Results UK
Survey UK
Thé Store Inc. 16
Age Group
Out of the 300,000 randomly surveyed population:46% were ages 35-45,37% were ages 20-34,11% were ages 46+,And 6% were 15-19
Annual Income
87% of age group 20-34 had annual income between $50,000 ~ $74,999; the rest of age group 20-34 had annual income between $25,000 ~ $49,999;
60% of age group 35-45 had annual income between $75,000 ~ $99,999, 14% had $100,000 ~ $149,999, 1% had $150,000;
78% of age group 46+ had annual income between $50,000 ~ $74,999, 12% had $75,000 ~ $99,999, 2% had $150,000+.
Consumption Frequency
76% of “20-34:25-50K” had tea often, 17% sometimes, and 2% everyday;
82% of “20-34:50-75K” had tea often, 12% sometimes, 6% rarely.
73% of “46+:50-75K” had tea every day; 76% of “46+:75-100K” had tea every day, and interestingly 92% of “46+:150K+” had tea every day.
Caffeine Intake
87% of “20-34:25-50K:Often” liked caffeinated.
82% of “20-34:50-75K” who drank often liked caffeinated.
70% of “35-45:75-100K:Sometimes” liked caffeinated.
60% of “46+:100-150K:Often” liked organic
Preference in Type
75% of”20-34:25-50K:Often” chose Black Tea, 5% chose Herbal, 10% chose Green, and 10% chose Oolong.
67% of”35-45:75-100K:Sometimes” chose Black Tea, 23% chose Herbal, 5% chose Green, and 5% chose Oolong.
30% of”46+:100-150K:Often” chose Black Tea, 55% chose Herbal, 10% chose Green, and 5% chose Oolong
Willingness to Spend
85% of”20-34:25-50K:Often” were willing to spend $20-30
80% of”35-45:75-100K:Often” were willing to spend $20-30
90% of”46+:100-150K:Often” were willing to spend $30-40
Thé Store Inc. 17
Analysis Results: Figure 4 – US Survey Results Major Demographics Breakdown
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In the US Market, from the sample population, the majority who were willing to
participate in the survey were those ages 20-34, with ages 35-45 behind them. 20-34ers seem to
have tea more frequently than 35-45ers, yet interestingly of those surveyed, 46+ers were the
group that had tea the most frequently. 20-34ers liked black tea the most, with herbal teas
following closely behind; this trend interestingly looks to be the same for most age groups. The
sections of each age group seem to have the recurring theme that most of those that are employed
fulltime usually get a cup of beverage for work, with those who spend less time at work less so.
The portions of the age groups who drank tea the most often were all willing to pay a mid to high
level of pricing for adequately mid to high level quality teas.
Figure 5 – UK Survey Results Major Demographics Breakdown
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In the UK market, from the sample population, the majority who were willing to
participate in the survey were those ages 35-45, with ages 20-34 behind them. While there is a
larger population of tea drinkers in the age group 35-45 in comparison to 20-34, the portion of
those who drink “often” is interestingly larger in the age group of 20-34 and it must be noted that
the majority of the 46+ers had tea every day. A similar trend for favouring black and herbal teas
from the US market is seen here in the UK as well. The portions of the age groups who drank tea
the most often were willing to pay a low to mid level of pricing for their teas in proportion to
competitor tea pricings in the UK.
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7.4 Pricing StrategyTable 21 – Sample Pricing Strategy US
Product Black Herbal
Retailer Price Before Tax 4.55 4.55
Duty Tax Rate 8.48% 8.48%
Price After Tax 4.94 4.94
Markup 35% 35%
Total 6.67 6.67
Table 22 – Sample Pricing Strategy UK
Product Black Herbal
Retailer Price Before Tax 4.55 4.55
Duty Tax Rate 10% 10%
VAT Rate 20% 20%
Price After Tax 5.99 5.99
Markup 30% 30%
Total 7.79 7.79
Product
Thé Store will offer a simple selection of Black Tea and Herbal teas in loose leaf or tea sachet
form. The selection is simple for those who are interested in tea but intimidated by the vast
amounts of tea to be introduced to some major tea lines.
Place
Tea sachets would be seen at supermarkets and grocery stores, with loose-leaf packages
displayed in dedicated retail stores. Both options will be available through the online The Store
as well. Customers can also download the Thé Store App to order online for shipment or pickup.
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Price
The product is premium tea, and so will its pricing be reflected on that, playing on the buyer’s
tendency to associate higher price with higher value and higher quality. With that in mind, the
pricing will need to remain competitive to existing U.S. companies.
Promotion
Creating a relaxing atmosphere and lasting brand image. Implement mobile phone technology
into business. Social Media awareness through Facebook, Twitter, Instagram, etc. Free Wi-Fi at
locations.
Table 23 – US Competition $/100g
Product Domestic Price Export Price to US Stash Tea Teavana Bigelow
Black Tea 4.55 CAD 6.25 CAD=4.66 USD 9.97 USD 6.95 USD 5.79 USD
Herbal Tea 4.55 CAD 6.25 CAD=4.66 USD 9.97 USD 6.95 USD 5.79 USD
Table 24 – UK Competition $/100g
Product Domestic Price Export Price to UK Taylors of Harrogate
Glengettie Tea
Ahmad Tea
Black Tea 4.55 CAD 7.79 CAD=4.09 GBP 0.84 GBP 0.796 GBP 1.4 GBP
Herbal Tea 4.55 CAD 7.79 CAD=4.09 GBP 0.84 GBP 0.796 GBP 1.4GBP
8.0 ConclusionThe research has revealed that both countries, the U.S. and the U.K., have potential for
the consumption of teas. Nevertheless, the U.K. customers have also demonstrated some
indications that they would not be willing to pay the price that would justify shipping costs from
the North America to Europe. This market has lesser population, which means lesser
consumption and most importantly, the sales taxes are higher than in the U.S. It is clear that
expanding to the U.S. market is a natural choice for the company, out of these two markets
considered.
Primary research indicates that there is a great demand for tea in the U.S.markets.
Demand for teas from the U.S. is documented throughout all ages from young professionals to
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the older work force population. The majority of the age groups enjoy black caffeinated teas as
well as organic herbal teas. From what is shown in the research, it is advised that the company
market the black and herbal teas to the U.S. demographics in a fashion that is tailored to the busy
professionals, “on the go.” Pricing considerations including shipping and taxation costs still
show that with a similar quality in product, it is possible to undercut the general industry
standard pricing in the U.S. market.
Secondary research further helps conclude that this country is primed for the company’s
market entry. While the analysis of the political, economic, technological, social and regulatory
framework reveal that the U.S. is a suitable market for the company’s exports of the selected tea
brands at this time, it also points out at some difficulties such as exchange rates fluctuations. To
address the challenges with the exchange rates and eventual losses of the Canadian company
when it comes to collection of payments from the U.S. consumers, the company may employ
forward contracting. This option will provide some assurances that the business remain
profitable throughout the course of expansion.
The research has shown that the U.S. has a stable government, a strong currency,
declining trend of inflation, growing economy, as well as lesser taxes to pay when importing.
The majority of the U.S. is continually growing, has been urbanized, and has English-speaking
population with a high GDP per capita. There is a growing market for tea in the U.S. as a number
of tea shops continue to rise. The city of Buffalo, the major U.S. city that is also closest to the
company’s headquarters in Toronto, is similar to Toronto in that it borders a great lake, and can
be travelled to by either highway or ship within a day.
This research plan’s limitations are that all the primary research points to the general
consumer preferences. Future research should be conducted to gain additional consumer
preferences statistics related to state demographics. It is recommended that the company
implement the expansion to the U.S. within the next 4-6 months, in order to ensure data currency
and reliability.
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8.1 Action plan
Commission additional research in the U.S. market to be completed within the next 3-4 months
Once the company has expanded to most major cities in the state of New York, it needs to plan for the all-state penetration around the U.S.
Complete a full business plan for the international expansion to the U.S. to measure the costs of the project implementation and consider the needs of opening an office in the New York city
Carefully evaluate human resources and other resources the company needs for the expansion, to uncover hidden problems with the expansion.
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9.0 Bibliography1) https://www.cia.gov/library/publications/the-world-book
2) https://www.wto.org
3) http://www.britishchambers.org.uk
4) https://www.gov.uk
5) https://www.commerce.gov
6) https://www.cbp.gov
7) https://www.dutycalculator.com
8) https://www.taylorsofharrogate.co.uk
9) https://www.glengettietea.co.uk
10) https://www.ahmadtea.com
11) https://www.stashtea.com
12) https://www.teavana.com
13) https://www.bigelowtea.com
14) https://www.worldbank.org
15) http://www.imd.org/wcc/
16) http://www.euromonitor.com
17) http://www.theglobaleconomy.com
18) http://www.international.gc.ca
19) http://www.europaworld.com
20) Trebilcock, M. J., and Robert Howse. The Regulation of International Trade. London:
Routledge, 1999.
21) Newfarmer, Richard S., William Shaw, and Peter Walkenhorst. Breaking into New
Markets: Emerging Lessons for Export Diversification. Washington, D.C.: World Bank,
2009.
22) United Nations: Department of Economic and Social Affaris, Statistical Yearbook 2012
Fifty-Seventh Issue, United Nations Publication 2015.
23) Whitaker’s, Whitaker’s 2015: Today’s World in One Volume, Bloomsbury Publishing Plc.
2014.
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10.0 Appendices
10.1 Appendix A - Thé Store Research Process
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10.2 Appendix B - Thé Store Survey Sample
THÉ STORE 439 University Ave, Toronto, ON M5G 2N8 (437) 836-3100
Thé Store is conducting a survey to offer the Northern teas in your area. We are only asking for a few minutes of your time. No personal information will be asked in this survey. Which age group do you belong? 10-14 15-19 20-34 35-45 46+
What is your income level? Less than $25,000 $25,000 ~ $49,999 $50,000 ~ $74,999 $75,000 ~ $99,999 $100,000 ~ $149,999 $150,000 or more
How often do you drink tea? Everyday Often Sometimes Rarely Never What kind of tea do you drink? Regular Caffeine-free Organic
What type of tea do you prefer? White Green Oolong Black Herbal How much would you spend on quality tea? $20 ~ $30 $30 ~ $40 $40 ~ $50 $50 ~ $60
THANK YOU FOR YOUR TIME!
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Pu-erh
10.3 Appendix C – Thé Store Information Management Cycle
Need for information Perform research Analyze and process information
Share and apply information
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10.4 Appendix D – Great Lake Ports Travel Time
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