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The emergence of Starbucks in Ecuador and neighbouring Count

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Jennifer Schlagheck

on 26 October 2015

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Transcript of The emergence of Starbucks in Ecuador and neighbouring Count

The Emergence of Starbucks in Ecuador

Ecuador is a small, emerging country located in South America. It has been recognized for its huge potential for exporting and importing.
Coffee Trends
Coffee is currently the most popular hot beverage in the country and is consumed at work, social gatherings and with meals & is now a staple of local cultures.
Ecuador offers many growing opportunities for tourism including the Armendian ruins and Galapagos Islands.
Ideal communities for expansion
Economic Survey
Expansion has been marked, with a growth in GDP of 5.0%, due to increased demand in private and public consumption.
Follow successful Peruvian model
Placement in high tourism destinations
Produce locally grown product lines (including neighboring countries)
Should we expand into Ecuador?
Ecuador is an emerging market which presents our firm with the opportunity for vast expansion and a first mover advantage. Yet we must ask ourselves if the market is strong enough to support the level of patronage that would be required for success.
Small yet culturally diverse
Twenty Four provinces
Pop. 15,223,680
Main language is Spanish
English secondary language
Developing country
Coastal Style
Laid back lifestyle, similar to west coast North America
Time restraints not as intense
Strong sense of Pride of place
Very welcoming, outgoing, personable and accepting population
Major Exports
Cocoa Beans
Population Growth
Population: 15, 223, 680

Population Growth Rate: 1.419%
Age Structure
Ethnic Breakdown
Monetary Policy
Slow down in growth of consumer credit
Lending rates held at constant levels
Food price controls
Limit the rise in cost of staple foods
Effects 46 food products
Using historically bench marked price
Monitored by market administrators
Prices, wage & employment
Restaurant prices rose 6.5%
Reduction in inflation for food and non-alcoholic beverages
Declined unemployment rate
Rise of minimum wage 8.9%
Regulated working hours and days of rest for domestic workers
Increased purchasing power
Driven to consume more fresh coffee
Coffee culture increasingly developing with popularity of coffee shops
Low per capita consumption
Nestle is a western competitor
Nestle 34% retail volume share
Established relationship with consumers
Tourist Statistics
As of the year 2010, there were 1, 047, 000 arrivals into Ecuador
Accounting for international inbound tourists (overnight visitors)
Growing to 1.14 million is 2011
11% increase of tourist arrivals in 2012
Increasing tourism statistics increases the potential consumers of product

US consumers being the second largest provider to tourism, already a large Starbucks consumer

Main airports in Quito and Guayaquil that are base for Galapagos Islands, creating an opportunity to expand in airports

Expanding opportunities to reach consumers from all countries
Large Population
Biggest city in Ecuador
High tourism
Central to most travels
High WTP value
Large business community
High tourism
High levels of North American retirees
Population 329,928
Historical city
One of 15 countries in the world to grow both Arabica and Robusta Coffee
Different ecosystems equals growth of various coffee cultures
Total estimated coffee production as of 2012 is 650,000 bags of 60 kg
First mover advantage
Establish own supply chain/ease of access
Increased consumer spending and ability to pay
Growing tourism market
Large retired market with ability to spend
Increasing sophistication of residents
Rising ability to pay
Rise in employment and minimum wage
Willingness of consumers to trade up to fresh coffee
Most popular hot beverage in the country, incorporated culture
Success in similar markets
10 year anniversary in Peru and Chile
Allows us to use already created South American brand model
Already involved in partnerships with South American suppliers
High taxation at 12%
Trade barriers (restrictive trade regime)
Repressive government
Rising yet not fully developed economy
Established, seasoned competitors
Based on Jim Harvey's speech structures
The Galapagos
Urbanization in Ecuador has seen consistent
growth in the past quarter decade. Due to migration and high birth rates, the country has transformed with high population cities.
0-14 years: 29.5% (male 2,293,743/female 2,202,203)
15-24 years: 18.8% (male 1,444,763/female 1,414,227)
25-54 years: 38.4% (male 2,847,576/female 2,998,086)
55-64 years: 6.7% (male 504,977/female 518,152)
65 years and older: 6.6% (male 479,718/female 520,235)
Median Age
Total:26 years of age
Male: 25.4 years of age
Female: 26.6 years of age
Capital of Ecuador
Second most popular city in Ecuador
Growing affluence
Population 1.6 million
International businesses catering to the tourist, expat and local people
Mestizo (mixed Amerindian and white): 71.9%
Montubio: 7.4%
Afroecuadorian: 7.2%
Amerindian: 7%
White: 7%
Other: 0.4%
Tourist town
Population 9,501
Adventure capital of Ecuador
Accounts for the majority tourism in Ecuador
Top 3 Countries Visiting
Columbia: 238,436 tourists
United States: 177,888 tourists
Peru: 90,569 tourists
Growth in Tourism
Luxury destination
Tourism is high as it Accounts for nearly 20% of Tourism
Grows own specific coffee bean
Locals want a taste of western culture
Communicate with local farmers to determine supply sources
Determine best marketing strategies for certain regions
Have pilot stores in cities of higher populations
Introduce wet sampling market strategies
Establish what products are making the most profit
Establish what demographics are most popular and profitable
Expand if successful in areas of promising success
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