Mystik monk

Father Daniel Mary has a clear vision for the monastery but not one for Mystic Monk Coffee (MMC).

His vision is to build a newer and more grand monastery for $8.9 million in Wyoming. Currently the Carmelite Monks have $250,000 in donations and through MMC earn about $75,000 per year in profit.

For Father Daniel Mary to realize his vision it would take almost 119 years to obtain the cash through profits of MMC.

Current monthly sales of $56,500 suggest that MMC sells about 5,678 bags of coffee each month at a retail price of $9.95 per 12-ounce bag or about 4250 lbs a month. The coffee is made by Brother Elias (Brother Java) who is able to work for 6 hours per day, which limits production of coffee to about 130-135 pounds per day. At a rate of 135 pounds per day, it appears that Brother Java is working 7 days per week to meet MMC’s current monthly sales!

MMC’s net profit margin is healthy within the industry at 11% however, affiliates earn 18% profit margin to sell MMC’s coffee through their distribution network.

CURRENT SITUATION (cont.)

The company’s cost of sales of 30 percent, broker fees of 3 percent, and inbound shipping costs of 19 percent contributed to a cost of goods sold of 52 percent. Indirect operating expenses (37 percent of revenues) are largely fixed and might go down as volume increases, most of these expenses are somewhat variable and will increase with volume.

Their current strategy does suggest that MMC has a sustainable competitive advantage,, the company’s $56,500 average monthly sales suggest MMC has a growing and loyal following among Catholic consumers and the coffee is made by Catholic Monks for Catholic customers (69 million member of the catholic church within the United States)

Analysis

Marketing (Distribution, Demand, Product)

Operations/Supply Chain/Production

Finance (Cash Flow, Land Investment, Profit)

Human Resources (Manpower, Culture)

Management/Business Model/Strategy

SWOT

STRENGTHS

Exclusive use of high quality fair trade Arabica and fair trade organic Arabic beans

Variety of blends, roasts, and flavors to appeal to a broad range of coffee preferences

Focus on U.S. Catholic consumers and those wishing to support the mission of the Carmelite Monks of Wyoming.

Word of mouth advertising among loyal customers in Catholic parishes across the U.S.

Majority of sales made through MMC’s Web site and telephone orders accepted

Product line extension that included sales of T-shirts, mugs, gift cards, and CDs featuring the monastery’s Gregorian chants

WEAKNESSES

Current profits insufficient to generate funds to purchase the Irma Lake Ranch

Only one person making the coffee

Monk culture does not have business acumen.

Limited marketing

Affiliate program that provided 18 percent commissions to secular Web site operators allowing MMC

ShareASale participation program that allowed affiliates to refer new affiliates and earn 56 percent of the new affiliate’s commission

SWOT

OPPORTUNITIES

MMC’s focus on the 69 million members of the Catholic Church in the United States makes the target market sufficiently large to earn attractive profits.

Market for specialty coffees had grown at an annual rate of 32 percent between 2000 and 2007 to reach $13.5 billion.

Retail sales of organic specialty coffee had grown to $1 billion by 2007.

THREATS