Market Situation and Consumption of Coffee Products in Abu Dhabi Marke Term Paper

Essays on Market Situation and Consumption of Coffee Products in Abu Dhabi Market Term Paper The paper â€Å"Market Situation and Consumption of Coffee Products in Abu Dhabi Market† is a   great version of a case study on marketing. Abu Dhabi is a federal capital located at the center of the (United Arab Emirates) UAE government and is said to be one of the most modernized cities in the world. The population is about 1.5 million and the headquarters of various oil companies and embassies are located in the city resulting in development. The city has about 420,000 citizens and the others are foreigners, among the citizens each one is worth about 17 million dollars and this conclusion made Abu Dhabi be described by CNN as the richest city in the entire world (Aaker 500). The city is beautiful featuring large gardens and parks along the roads and streets.There are also sophisticated buildings, the international luxurious chain of hotels and sumptuous shopping malls. For long Abu Dhabi has been viewed as a calm and bureaucratic city, unlike neighboring Dubai. To attract more tourists and investors, the 2004 ruler introduced the sale of lands to foreigners and the tight restrictions on alcohol were loosened. Massive projects are now underway, for example, the Yas Island and the Ferrari theme park are under construction. The city is currently experiencing a construction boom with the Saadiyat Island and Louvre Museums that are scheduled to be opened by 2013 (Aaker 501).A devastating storm has been brewing the world’s physical coffee market especially in the Middle East region (Hickman 56). This is because the firms that are responsible for the delivery of seeds are being hit by a double crisis. The soaring prices and increased margins have forces exporters and importers to take on more risks for example by abandoning hedges to avoid more financial costs. Coffee handlers have therefore been condemned for increasing their price margins which are the sum paid to maintain an open exchange relationship. The margins increased by about 150 percent f or the last six months of 2010, therefore, increasing the cost of evading purchases of coffee in the future.According to Aaker (503) in Guatemala, which is the highest producer of high-quality Arabica beans, for example, the financial squeeze became unbearable in a way that export and import trade came as at a standstill. This is because most exporters declared that it was impossible for them to hedge more purchases as this would bring them losses in shipment costs. In Colombia which is the top grower of Arabica coffee, exporters were selling as fixed prices to avoid destroying the future market. The world’s biggest supplier of coffee, Brazil is increasing hedges in order to avoid losses brought about by paying for the increased margins. With the continuing rise of prices, the firms that have not hedged their positions are undergoing losses in the market.The margin squeeze of coffee is compared to the surge in oil and grain prices which led to the collapse of most firms espec ially in 2008. Taback (78) shows the impact of this is being felt in smaller clubby coffee markets which have been left out when the commodity was at the boom stage. This affects the smaller local exporters who buy the beans from small farmers and sell them to big companies such as Folgers’ or Starbucks. The small amount of money got is usually not enough to maintain the position of these exporters in the market. The worry is in maintaining the position on exchange and what the position will be is not known.