Business Proposal
Chris Chenoweth
ECO/561
Dr. Ray Wooden
May 02, 2016
Introduction
This economic analysis will focus SaniTea (Sanity), a high end specialty tea company. SaniTEA operates within the retail and wholesale ready to drink tea industry. The company is a subsidiary of Bozeman Holdings Incorporated. SaniTea headquarters is located in Newark, New Jersey. We operate an online website where customers can choose from our assortment of high end premium teas. There are also six storefront locations within the New York metropolitan area. The company is looking to expand its reach on the retail business side, down the east coast into the southeast. We are also looking to partner with an upscale national supermarket chain to carry our branded specialty teas. These strategic moves will allow our company to grow and gain a further share of the market.
Market Structure
The ready to drink tea market structure is monopolistic in nature. There are a fairly large number of companies within the industry. Companies such as Teavana (owned by Starbucks) and Stash Tea Company have already made a name for themselves within the industry. Each company looks to differentiate from the next by providing a wide variety of flavors and craft selections. Entry into the market is relatively easy. Firms can leave without liquidation cost.
Elasticity of Demand
Tea is seen by consumers as a healthier choice to coffee. The industry is projected to grow along with health and wellness trends. “Global tea polyphenol market size was estimated at USD 209.3 million in 2012 and the market is expected to grow at a CAGR of 7.4% over the forecast period. Rising consumer awareness regarding the various advantages of the ingredient coupled with increasing health consciousness of consumers are key factors driving the market”
(Grand View Research, Inc., 2016). This environment gives SaniTea an opportunity to gain market share and differentiate ourselves from...