PORTER's 5 FORCES MODEL for the US Coffee Industry (with data, numbers, and recent events) Industry Rivalry: High In 2023, the US coffee market is valued at $90.84 billion. The top 3 players in the US coffee market are Starbucks (22.1% market share), Dunkin' Brands (13.7% market share), and McDonald's (7.2% market share). In recent years, there has been a growing trend of new entrants to the US coffee market, such as Blue Bottle Coffee and Philz Coffee. This increased competition has led to a more fragmented market, with no single player having a dominant position. Threat of Potential Entrants: Low The barriers to entry to the US coffee market are relatively low. However, new entrants face a number of challenges, including establishing brand recognition, competing with established players, and securing prime locations. In recent years, there has been a slowdown in the growth of new coffee shop openings in the US. This suggests that the barriers to entry to the market may be increasing. Bargaining Power of Suppliers: Medium The coffee industry is concentrated among a few major suppliers, such as Brazil, Vietnam, and Colombia. This gives suppliers some bargaining power. However, the fact that there are multiple suppliers also limits their power. Additionally, coffee roasters can switch suppliers if necessary. In recent years, coffee prices have been volatile, with coffee suppliers facing a number of challenges, such as climate change and rising costs. This has reduced the bargaining power of coffee suppliers. Bargaining Power of Buyers: Medium-High Coffee buyers have a moderate level of bargaining power. This is because there are many different coffee brands and types available, and buyers can easily switch to a different brand if they are not satisfied with the price or quality of a particular product. Additionally, many consumers are now brewing their own coffee at home, which reduces the bargaining power of coffee shops and other coffee retailers. In recent years, there has been a growing trend of consumers demanding more sustainable and ethically sourced coffee. This has given coffee buyers more bargaining power, as they can choose to buy from suppliers who meet their sustainability and ethical standards. Threat of Substitutes/Alternatives: High There are a number of substitutes for coffee, including tea, energy drinks, and other caffeinated beverages. Additionally, many consumers are now choosing to drink healthier options, such as water and herbal tea. In recent years, there has been a growing trend of consumers reducing their caffeine intake. This has increased the threat of substitutes/alternatives to the coffee industry.
