Please rate my essay and kindly give me feedback. Thanks in advance!
Prompt:“Studies suggest that an average coffee drinker’s consumption of coffee increases with age, from age 10 through age 60. Even after age 60, coffee consumption remains high. The average cola drinker’s consumption of cola, however, declines with increasing age. Both of these trends have remained stable for the past 40 years. Given that the number of older adults will significantly increase as the population ages over the next 20 years, it follows that the demand for coffee will increase and the demand for cola will decrease during this period. We should, therefore, consider transferring our investments from Cola Loca to Early Bird Coffee.”
My Response:The author cites two trends that were observed over the past 40 years, one of which points towards increase in coffee consumption of a coffee drinker with age and the other towards a decrease in cola consumption with age. The author goes on to say that the older adult population is going to increase over the next 20 years, so will the demand for coffee and hence, investing in Early Bird Coffee may be a good idea. The author's conclusion is built on insufficient evidence and many assumptions, which may or may not be true. Thus, the author's argument suffers from several flaws , some of which are discussed below.
First, the author readily assumes that the number of older adults is going to increase while number of younger adults who prefer cola to coffee is not going to increase. There is no evidence to support this. The author can only safely assume this only if additional data on population forecast and demographic are known.
Second, the author does the mistake of assuming that the beverage preferences may not change over the next 20 years. The fact that the preferences haven't changed the last 40 years does, in no way, guarantee that the case will remain the same for forever or even for the next 20 years. In fact, the author does not even consider the fact that there might be other beverages that might be increasingly consumed in comparison to coffee and whose consumption is independent of age. The author's argument takes a very narrow binary approach in that it only compares coffee and cola, ignoring other potentially better options. This constitutes a critical flaw in the argument's reasoning.
Third, the author's quick conclusion also reveals another flaw of reasoning: demand of coffee in the next twenty years is the sole criteria for deciding to invest in coffee-related ventures. Obviously, linking investment decision to only one criteria rather than looking at other equally important factors like IRR, payback period, etc.
Finally, the argument is concerned with investing in Early Bird Coffee, presumably a coffee-oriented business and divesting from Cola Loca, presumably a cola-oriented business. Even if the statistics in the argument's premise point in favor of increase in demand of coffee in the next twenty years, how do we know if the statistics apply in favor of Early Bird Coffee and against Cola Loca. The assumption that the population the statistics are based on and the population that Early Bird Coffee is intending to serve is the same is by far the most dangerous assumption in the argument. Is Early Bird Coffee located in the same country where the trends related to coffee-drinking were observed? Is Cola Loca not going to expand and include coffee in its product line or introduce coffee-flavored cola that has potential to become a big hit? Answering these questions might add substance to the author's argument.
However, the author's conclusion of considering to transfer investments to Early Bird Coffee, presumably a coffee-oriented business, does have merit because it is clear that he/she hasn't decided to invest; he/she is merely suggesting to consider rather than proposing to invest right away. In order to strengthen the argument, the author would do well to fill the information gaps discussed above which will confirm or eliminate the assumptions he/she made, bringing him/her one step closer to better informed investment proposal.
In summary, the author's conclusion is based on insufficient statistics and questionable assumptions. Only by resolving the flaws discussed above, can the author's conclusion be valid, at best, and the plan of transferring investment open to further discussion.