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Do you want to start Tobacco Shops business plan?
Starting a venture in the tobacco industry can be quite daunting as there are so many competitors present. One of the major blunders you can make when starting a tobacco business is going into the market blindly without any prior research. Like other businesses, a tobacco business launch must also be preceded by a tobacco shop business plan. Similarly, a vape shop will also have a vape shop business plan developed before the business starts.
Your business plan for investors needs to contain all the relevant and necessary details for starting a tobacco business in the current market. This will help make your case and enable you to gain investors for your venture. Therefore, if you want to learn how to start a tobacco business, you can follow along with this business plan for The Joint, a tobacco shop started by Helen Karl.
Executive Summary
2.1 Business Brief
The Joint will be a tobacco shop venture owned and operated by Helen Karl. The business will provide various tobacco products such as cigarettes, pipes, e-cigs, chewing tobacco, and so on. The business will aim to provide top-quality nicotine products for its customers.
2.2 How Will the Shop be Managed?
A tobacco outlet business needs to be very well-managed from the ground up. To ensure that everything runs smoothly, Helen developed this sample business plan for a tobacco shop. It will contain all the operations of the tobacco shop pre-planned for efficient management.
This business plan for tobacco shop has been developed by Helen herself after a lot of research. So, if you are looking to learn how to open a tobacco shop, you can get guidance from this sample. You can alternatively hire a business plan consulting service if you are not well-versed in business planning specifics.
2.3 Customers of Tobacco Shops Company
Our customers will be very specifically targeted to ensure maximum sales. As such, the target customers groups for The Join will be as follows:
- Young Adults
- Chain Smokers
- Recreational Users
- People Trying to Quit
2.4 Business Target
The target of our company is to become a standard model for organic tobacco shops in Florida. We will offer our customers a wide variety of products so that they can choose the options that work best for them.
The financial targets that we want to achieve within the first 3 years of operations are shown below for reference.
Company Summary
3.1 Shop Owner
The Joint will be started by Helen Karl, who completed her MBA three years ago. Afterward, she worked in a vape company for two years before she realized that the market demanded a more versatile, organic product-based company. Therefore, she decided to start working on her idea for The Joint.
3.2 Company History
Note
Helen worked as a sales manager in a vape company. This enabled her to not only research the market in-depth but also realize important facts such as the provision for potent, organic products demanded by the customers. She decided to tap this need and start a company that could serve all.
3.3 How the Tobacco Shops company will be started
Step1: Refine Your Idea
Just like any other business, opening a tobacco shop also starts with an idea. Though vague and unshaped in the beginning, ideas grow to become the businesses we see. The Joint also started with an idea which Helen then refined till it could take the shape of a comprehensive tobacco store business plan.
Step2: Investigate the Market
The next step to starting a tobacco company is to look at the market, its current trends, and predictions. Helen researched the market, found a gap, and looked into how it could be filled. Strengthening your idea with market research is a very important step in learning how to start a tobacco company.
Step3: Plan the Business
Once Helen knew she had a viable idea for a tobacco store open now, she decided to start planning the different aspects of the business. This is the step where business plans usually start taking shape.
Step4: Find a Location
Another important aspect of starting a business is to find a suitable place for its physical existence. This can be in the form of an office or store. In this case, Helen rented out a small store in the commercial market so that there would be ample visibility.
Step5: Marketing
One of the final steps of learning how to open a tobacco store is to learn how to market the business so it attracts the maximum number of customers. For The Joint, Helen decided to invest time in analyzing the market and developing a marketing plan suited to the conditions.
| Start-up Expenses | |
| Legal | $101,400 |
| Consultants | $0 |
| Insurance | $25,100 |
| Rent | $30,100 |
| Research and Development | $10,000 |
| Expensed Equipment | $52,200 |
| Signs | $3,400 |
| TOTAL START-UP EXPENSES | $222,200 |
| Start-up Assets | $251,400 |
| Cash Required | $181,000 |
| Start-up Inventory | $35,100 |
| Other Current Assets | $201,000 |
| Long-term Assets | $217,000 |
| TOTAL ASSETS | $885,500 |
| Total Requirements | $1,107,700 |
| START-UP FUNDING | |
| Start-up Expenses to Fund | $222,200 |
| Start-up Assets to Fund | $885,500 |
| TOTAL FUNDING REQUIRED | $1,107,700 |
| Assets | |
| Non-cash Assets from Start-up | $1,172,000 |
| Cash Requirements from Start-up | $105,000 |
| Additional Cash Raised | $50,000 |
| Cash Balance on Starting Date | $30,000 |
| TOTAL ASSETS | $1,357,000 |
| Liabilities and Capital | |
| Liabilities | $18,200 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $60,500 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $78,700 |
| Capital | |
| Planned Investment | $1,107,700 |
| Investor 1 | $0 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $1,107,700 |
| Loss at Start-up (Start-up Expenses) | $170,600 |
| TOTAL CAPITAL | $1,278,300 |
| TOTAL CAPITAL AND LIABILITIES | $1,357,000 |
| Total Funding | $1,107,700 |
Services
The base of any business is its products. If you want to open tobacco shops, you will need to be clear about the products you will be selling to your customers. For instance, for this smoke shop business plan, Helen had to decide what tobacco products her shop would be selling.
Therefore, if you want to learn how to start a tobacco shop, you can take help from the list of services mentioned here. This smoke shop business plan template contains the list of services that Helen thought would be best to start up her business. She decided to cater to a wide range of services to target most customers. These services are detailed below in this tobacco shop business plan for reference.
- Cigarettes
The main product provided by The Joint as per our sample business plan for tobacco shop will be cigarettes. For this product, we will have classic cigarettes as well as flavored ones.
- E-Cigs
There is a lot of popularity among millennial users to use e-cigarettes instead of normal ones. These are one-time products that users can use until they run out, so instead of a pack of cigarettes, customers only have to carry one cigarette.
- Vapes
Staying with the times, The Joint will also sell vapes as they have become quite popular among young users. They are like e-cigarettes but with a rechargeable battery which means they can last longer.
- Pipes & Cigars
To cater to our older customer base, we will also manufacture and sell good quality cigars and pipes for important occasions as well as for regular use.
- Chewing Tobacco
We will also sell chewing tobacco to people who don’t prefer cigarettes and smoke.
Marketing Analysis of Tobacco Shops Company
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If you want to open tobacco shops, you must remember that it involves a lot of planning and research. To open a tobacco outlet business, you not only have to manage all the logistics of operations in your smoke shop business plan, but you also have to look at the market. Helen decided to look into all smoke shops open today to find the strategies adopted by them, learn from them, and devise a strategy of her own.
In this smoke shop business plan sample, Helen used market research and analysis of market trends to arrive at a marketing strategy that would help her business attract customers. This smoke shop business plan outline assessed the market prices with financial goals to set the product prices for The Joint.
5.1 Market Trends
According to Statista, the export value of tobacco manufactures in tobacco was $843.4 million in 2021, which was an increase from $694.72m in 2020. This means that the demand for tobacco has increased. Therefore, it is possible to tap into the growth rate of the market and develop a tobacco store business plan that learns from the mistakes of suffering companies in the market.
5.2 Marketing Segmentation
The customers that will be targeted by The Joint as described by its online smoke shop business plan are as follows:
Business plan for investors
5.2.1 Young Adults
The primarily targeted customers of The Joint will be young adults who are under a lot of pressure and going through a lot of significant changes in their life. We will offer them products like vapes and e-cigarettes so that they can take the edge off.
5.2.2 Chain Smokers
Our second group of customers will be people who are already used to smoking and are considered chain smokers. As these people require a constant and regular supply of cigarettes, so we expect them to be one of our most frequent customers.
5.2.3 Recreational Users
We will also be catering to recreational smokers and tobacco users. The products directed toward these customers will be flavored cigarettes, vapes, pipes, and cigars.
5.2.4 People Trying to Quit
There are a lot of people who try to decrease their tobacco and cigarette use. These people require toned-down products to decrease their use little by little. Therefore, we will also serve these customers through vapes and e-cigarettes.
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Young Adults | 40% | 50,000 | 60,000 | 72,000 | 86,400 | 103,680 | 10.00% |
| Smokers | 35% | 40,100 | 48,120 | 57,744 | 69,293 | 83,151 | 10.00% |
| Recreational Users | 17% | 20,100 | 24,120 | 28,944 | 34,733 | 41,679 | 10.00% |
| Quitters | 8% | 9,100 | 10,920 | 13,104 | 15,725 | 18,870 | 11.00% |
| Total | 100% | 119,300 | 143,160 | 171,792 | 206,150 | 247,380 | 10% |
5.3 Business Target
- To become a versatile tobacco shop in Texas offering different products.
- To set up a standard as an organic tobacco shop that manufactures its products from scratch.
- To become profitable enough to earn $10k/ month by the end of the second year.
5.4 Product Pricing
As our products are organic instead of mass-produced, so they will be a little higher in price as compared to the market baseline. However, our products will offer the luxury of uniqueness that a lot of people prefer.
Marketing Strategy
The market today is filled with tobacco products and businesses. To survive in such a saturated market, you will need to come up not only with products that you will be selling but also with ways to profitably market these products.
To open a tobacco shop, Helen decided to use her market research to identify gaps and enhance the importance of filling them. Therefore, in her tobacco shop business plan, Helen laid out some marketing strategies to make her business seem more attractive to the customers in the face of the competition.
If you want to open a business in the tobacco industry, this business plan for a tobacco shop can be a great way to understand the market and how to make your place in it.
6.1 Competitive Analysis
- We have multiple options for our customers, thus we can serve the maximum number of needs.
- We produce organic products that are unique and provide better quality than other mass-produced tobacco products.
- We provide our customers with the option to get a product customized to their needs.
6.2 Sales Strategy
- We will advertise specific products to specific target customers. For instance, vapes and flavored cigarettes will be marketed to young adults through social media, while normal cigarettes will be advertised on TV and billboards.
- We will offer affordable, customizable products to our customers.
- We will regularly send gift packages to our regular customers.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Cigarettes | 15,000 | 15,900 | 16,854 |
| E-Cigs & Vapes | 13,500 | 14,310 | 15,169 |
| Pipes & Cigars | 14,000 | 14,840 | 15,730 |
| Chewing Tobacco | 10,000 | 10,600 | 11,236 |
| TOTAL UNIT SALES | 52,500 | 55,650 | 58,989 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Cigarettes | $25.00 | $29.00 | $33.64 |
| E-Cigs & Vapes | $30.00 | $34.80 | $40.37 |
| Pipes & Cigars | $30.00 | $34.80 | $40.37 |
| Chewing Tobacco | $50.00 | $58.00 | $67.28 |
| Sales | |||
| Cigarettes | $375,000.00 | $461,100.00 | $566,968.56 |
| E-Cigs & Vapes | $405,000.00 | $497,988.00 | $612,326.04 |
| Pipes & Cigars | $420,000.00 | $516,432.00 | $635,004.79 |
| Chewing Tobacco | $500,000.00 | $614,800.00 | $755,958.08 |
| TOTAL SALES | $1,700,000.00 | $2,090,320.00 | $2,570,257.47 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Cigarettes | $8.00 | $8.80 | $9.24 |
| E-Cigs & Vapes | $12.00 | $13.20 | $13.86 |
| Pipes & Cigars | $10.00 | $11.00 | $11.55 |
| Chewing Tobacco | $13.00 | $14.30 | $15.02 |
| Direct Cost of Sales | |||
| Cigarettes | $120,000.00 | $139,920.00 | $155,730.96 |
| E-Cigs & Vapes | $162,000.00 | $188,892.00 | $210,236.80 |
| Pipes & Cigars | $140,000.00 | $163,240.00 | $181,686.12 |
| Chewing Tobacco | $130,000.00 | $151,580.00 | $168,708.54 |
| Subtotal Direct Cost of Sales | $552,000.00 | $643,632.00 | $716,362.42 |
Personnel plan
If you are learning how to start a tobacco business that operates out of a shop, you will need to pay significant attention to your employee selection. For her tobacco shop business plan, Helen decided to list a set of required employees along with a hiring criterion. This kind of information can also be seen in other plans, such as a retail discount store business plan.
7.1 Company Staff
- 1 Co-Manager to manage the production department
- 8 Production Workers
- 1 Sales Manager
- 1 Accountant
- 1 Receptionist
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Manager | $30,000 | $33,000 | $36,300 |
| Production Workers | $245,000 | $269,500 | $296,450 |
| Sales Manager | $23,500 | $25,850 | $28,435 |
| Accountant | $23,500 | $25,850 | $28,435 |
| Receptionist | $23,500 | $25,850 | $28,435 |
| Total Salaries | $345,500 | $380,050 | $418,055 |
Financial Plan
To make sure that her business didn’t end up as a tobacco business for sale like so many others, Helen paid special attention to the financial affairs of the business from the very beginning.
In her tobacco store business plan, Helen identifies the costs to manage the business along with the revenue earned to set a price for products that balances the expenses out. This allowed her to stay on the ground even if sales didn’t go as planned.
To make sure that a business survives not only in good times but also in trouble, you should always include a financial plan in your business plan.
Following is the financial plan for The Joint:
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.12% | 8.20% | 8.26% |
| Long-term Interest Rate | 8.40% | 8.44% | 8.47% |
| Tax Rate | 24.03% | 24.21% | 24.60% |
| Other | 0 | 0 | 0 |
8.2 Break-even Analysis
| Break-Even Analysis | |
| Monthly Units Break-even | 5340 |
| Monthly Revenue Break-even | $132,500 |
| Assumptions: | |
| Average Per-Unit Revenue | $231.00 |
| Average Per-Unit Variable Cost | $0.62 |
| Estimated Monthly Fixed Cost | $163,800 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $1,700,000 | $2,090,320 | $2,570,257 |
| Direct Cost of Sales | $552,000 | $643,632 | $716,362 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $552,000 | $643,632 | $716,362 |
| Gross Margin | $1,148,000 | $1,446,688 | $1,853,895 |
| Gross Margin % | 67.53% | 69.21% | 72.13% |
| Expenses | |||
| Payroll | $345,500 | $380,050 | $418,055 |
| Sales and Marketing and Other Expenses | $145,000 | $148,000 | $156,000 |
| Depreciation | $2,300 | $2,350 | $2,500 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $2,900 | $3,000 | $3,100 |
| Insurance | $2,100 | $2,100 | $2,100 |
| Rent | $2,900 | $3,000 | $3,200 |
| Payroll Taxes | $24,000 | $25,000 | $27,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $524,700 | $563,500 | $611,955 |
| Profit Before Interest and Taxes | $623,300 | $883,188 | $1,241,940 |
| EBITDA | $623,300 | $883,188 | $1,241,940 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $124,660 | $176,638 | $248,388 |
| Net Profit | $498,640 | $706,550 | $993,552 |
| Net Profit/Sales | 29.33% | 33.80% | 38.66% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $51,000 | $55,080 | $59,486 |
| Cash from Receivables | $22,000 | $23,760 | $25,661 |
| SUBTOTAL CASH FROM OPERATIONS | $73,000 | $79,570 | $85,936 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $74,000 | $79,000 | $85,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $42,000 | $42,000 | $45,000 |
| Bill Payments | $27,000 | $28,000 | $31,000 |
| SUBTOTAL SPENT ON OPERATIONS | $69,000 | $70,000 | $76,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $69,000 | $74,520 | $80,482 |
| Net Cash Flow | $21,000 | $23,000 | $25,000 |
| Cash Balance | $27,000 | $30,000 | $33,000 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $275,000 | $308,000 | $338,800 |
| Accounts Receivable | $24,000 | $26,880 | $30,213 |
| Inventory | $4,300 | $4,816 | $4,900 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $282,000 | $315,840 | $355,004 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $19,400 | $21,728 | $24,444 |
| TOTAL LONG-TERM ASSETS | $24,400 | $27,328 | $30,744 |
| TOTAL ASSETS | $294,000 | $329,280 | $370,440 |
| Liabilities and Capital | Year 4 | Year 5 | Year 6 |
| Current Liabilities | |||
| Accounts Payable | $18,700 | $20,944 | $23,541 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $19,000 | $21,280 | $23,919 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $15,000 | $16,800 | $18,883 |
| Paid-in Capital | $30,000 | $30,000 | $31,000 |
| Retained Earnings | $53,000 | $57,770 | $63,547 |
| Earnings | $193,400 | $210,806 | $231,887 |
| TOTAL CAPITAL | $285,000 | $310,650 | $341,715 |
| TOTAL LIABILITIES AND CAPITAL | $300,000 | $329,280 | $370,440 |
| Net Worth | $293,400 | $319,806 | $351,787 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 7.25% | 8.03% | 8.90% | 3.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 9.21% | 10.20% | 11.31% | 9.80% |
| Inventory | 5.39% | 5.97% | 6.62% | 9.90% |
| Other Current Assets | 2.11% | 2.34% | 2.59% | 2.40% |
| Total Current Assets | 149.80% | 151.00% | 152.00% | 158.00% |
| Long-term Assets | 11.55% | 11.60% | 11.64% | 12.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.90% | 4.94% | 4.98% | 4.34% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
| Total Liabilities | 7.59% | 7.65% | 7.72% | 7.38% |
| NET WORTH | 100.45% | 101.25% | 102.19% | 110.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.60% | 97.15% | 99.87% | 99.00% |
| Selling, General & Administrative Expenses | 93.56% | 96.09% | 98.78% | 97.80% |
| Advertising Expenses | 1.52% | 1.56% | 1.60% | 1.40% |
| Profit Before Interest and Taxes | 41.50% | 42.62% | 43.81% | 33.90% |
| Main Ratios | ||||
| Current | 34 | 35 | 36 | 32 |
| Quick | 33 | 33.8 | 34.645 | 33 |
| Total Debt to Total Assets | 0.18% | 0.18% | 0.17% | 0.40% |
| Pre-tax Return on Net Worth | 74.08% | 74.89% | 75.00% | 75.00% |
| Pre-tax Return on Assets | 96.30% | 101.12% | 106.17% | 111.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 33.56% | 34.60% | 35.67% | N.A. |
| Return on Equity | 55.80% | 57.53% | 59.31% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7.7 | 7.8 | 7.8 | N.A. |
| Collection Days | 100 | 100 | 100 | N.A. |
| Inventory Turnover | 32.4 | 34.02 | 35 | N.A. |
| Accounts Payable Turnover | 15.6 | 16 | 16.3 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 2.5 | 2.5 | 2.6 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | -0.04 | -0.03 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $244,000 | $257,664 | $272,093 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.85 | 0.87 | 0.89 | N.A. |
| Current Debt/Total Assets | 1% | 0% | 0% | N.A. |
| Acid Test | 29 | 29.12 | 29.16 | N.A. |
| Sales/Net Worth | 2.1 | 2.2 | 2.2 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
FAQs
- Is a tobacco shop profitable?
Opening a tobacco shop can be quite profitable if you develop your idea through a strong business plan.
- How much money do tobacco stores make?
Depending on the quality of business management and tobacco shop business plan, tobacco stores can make up to $300,000 a year.
- How much does it cost to start a cigarette business?
The cost to start a business depends on the scale, business model, and location. You can learn how to start a tobacco business and how much will be the costs through developing a business plan.
- What is the profit margin of a smoke shop?
The profit margin of a smoke shop depends on tobacco store business plan and details like scale, products, and location.
Download Tobacco Shop Business Plan Sample in pdf
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This plan includes reducing costs, improving efficiencies, new distribution and marketing channels and a new venture into a combined cafe and tobacco store. This premium retailer of cigars, fine wines, and gourmet coffee has made an effort to capitalize on several complementary niche markets.
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