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Estimate the sales in volume of instant coffee in UK for the next 4 years

estimation Guessestimation market estimation
New answer on Mar 13, 2023
4 Answers
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Riccardo
Proficient
asked on Sep 15, 2018

Hey guys,

Do you know how to estimate the sales of instant coffee in UK for the next 4 years? I don't have any historical data, I just have the sales of the current year 47,000 tonnes. My approach would be to multiply the sales of the current year per (1+@*GDP pro capita growth rate) where @ is a a factor between -1 and +1 that indicates how much the sales of instant coffee is correlated to the GDP pro capita growth rate, I assume that is positive and around 0,5

Do you think my approach is correct?

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Angelo replied on Sep 16, 2018

Hi, I think that the correlation to GDP is a good point but it is not the only factor. Try to develop the problem by using more Marketing notions (customer segments, competition, trends for each factor etc.).

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Anonymous replied on Sep 17, 2018

It can't be said often enough: With market sizing, the old Confucius saying is gospel:

'The journey is the destination’

It is not key to come up with THE answer but a plausible and intelligent way to AN answer.

So: Yes, your approach would be a good starting point. Instead of GDP you might also use population growth. But then I would also go in the direction of modifying this initial assumption (instant coffee consumption is closely correlated to GDP or population) and discuss why that may or may not be the case (market trends towards ground or whole bean coffee, fewer coffee drinkers, fully automated coffee machines becoming cheaper...).

Again: The goal is an insightful discussion about why you are picking the assumptions you are making, much less whether they are true or not.

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Anonymous replied on Sep 17, 2018

Hi Riccardo,

I don't think that's a bad approach - is GDP change specifically provided? It is not what I would instinctively have gone for, but it does make sense.

I agree with Angelo's point about market trends, as I suspect this may impact the total volume more than GDP change. GDP change may show a correlation with spending, but doesn't shed light on what customers are buying. For example, could an increase in GDP mean that more people are going for ground coffee or specialty coffees? With the advent of coffee snobs and hipsters and the relatively low cost of coffee, I would imagine the trend for instant coffee purchase is on the decline, even with GDP growth.

You could also segment your data and make some assumptions about the factors e.g.

Private customer vs companies (e.g. firms providing free coffee for employees, cafes or restaurants using instant coffee)

Generally you'd segment if you thought there was a difference in purchasing habits, so whatever comes to mind is fine.

Hope that's helpful!

Kay

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Jackson000 replied on Mar 13, 2023

As an AI language model, I cannot perform Google testing or access real-time data. However, you can use Google Trends or other market research tools to gather data on past trends and consumer behavior related to instant coffee sales in the UK.

With this data through google testing, you can make an informed estimate of future sales in volume for the next four years. It's important to consider various factors that may impact sales, such as changes in consumer preferences, economic conditions, and competition from other coffee products.

Ultimately, any sales estimate will be a prediction and should be treated as such, rather than a certainty.

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