Case Study NESCAFÉ
Indian Coffee Market - Overview All India (cups) 100% INSTANT COFFEE 57 %
100% Coffee 18%
NESCAFÉ CLASSIC 100%
Roast & Ground (R&G) 43%
COFFEE MIXES
BLENDS (Coffee-chicory) 77 %
NESCAFÉ SUNRISE 45%
(Just add water)
5%
BRU 55%
All Coffee = In-home + Out-of-home
In-home coffee market snapshot How to read figures – a% @ b%: a% = Market Share b% = Annual Growth Rate
All India (cups) 100%
INSTANT COFFEE 68 % @ +7%
R&G 32% @ -10%
COFFEE MIXES BLENDS (Coffee-chicory) 76 % @ +4%
100% PURE 23% @ +10%
NESCAFÉ CLASSIC 100%
NESCAFÉ SUNRISE 43%
(Just add water)
1% @ +50%
BRU 57%
‘Café style coffee’ Mixes Segment
Coffee Mixes
Cold 27%
Hot 73%
NESCAFÉ Cappuccino 77%
BRU Cappuccino 23%
BRU Ice Cappuccino 100% M. Shares (By Volume)
Coffee in India – Consumer Landscape NORTH-EAST-WEST
SOUTH WHO
►Initiation at young age (high school)
WHAT
►Youth prefers Instant coffee to R&G ►Prefer a strong coffee cup with great aroma
WHEN
►All day, but key time of day is Morning
WHERE
►Majority at home but out of home also is significant ►Coffee excitement through cafés, new types of coffee beverages being introduced
WHY
►Aroma, Stimulation ►Instant coffee for convenience
WHO
►Initiation at young age (high school)
WHAT
►100% Pure soluble coffee preferred ►Coffee used as a milk modifier with lighter strength
WHEN
►Coffee consumption skewed towards cold season ►Key time of day: Breakfast & Evening
WHERE
►Majority at home but out of home also is significant ►Café culture spreading fast (top cities)
WHY & WHY NOT
►Alertness, Stimulation, Conversations, Social Impress ►Barriers (aided): Heat perception, expensive
Coffee in India – Category Landscape SOUTH INDIA
NORTH-EAST-WEST INDIA
Coffee growing region, developed coffee culture
Coffee is still an under-developed category
► Tea-Coffee ratio = 4:1 ► No seasonality ► Coffee loyal consumers ► Understand a good cup of coffee (aroma, flavour)
► Tea-Coffee ratio = 60:1 ► Highly seasonal ► Mostly light/infrequent users ► Coffee used as a milk-modifier
PENETRATION SNAPSHOT SOUTH ►Urban (SEC A-E): 62% of population drinks coffee ►Rural (R1-R5) 27.5% of population drinks coffee (< Half of Urban)
PENETRATION SNAPSHOT NORTH+EAST+WEST ►Urban (SEC A-E) 29% of population drinks coffee ►Rural (R1-R5) 1.2% of population drinks coffee
NESCAFÉ: Brands-Geographical Distribution
NESCAFÉ Classic
SUNRISE Premium
SUNRISE Special (Andhra Pradesh Only)
Region North-East-West
Household Penetration (North-East-West)
Coffee Penet.% (Urban) 28.5% 27.1% 29.5% 29.3% 28.2%
Coffee Penet.% (Urban) 2007
2006
2007
2008
2009
2009
15.9% 16.8% 18.0%
15.4% 16.7% 9.3%
2005
2008
Q1
15.7%
8.8% 9.6%
9.2% 9.3% 9.5%
Q2
Q3
Q4
Source :HHP 2007-2009, IMRB
N-E-W: Coffee preparation & purchase Who prepares coffee ?
How is coffee prepared ? Milk+Water
Self Spouse Parents
Students
YWA*
CWE*
HW*
22% 63%
19% 64%
7% 84% 4%
87% 1% -
Only Milk
Consumer Method of Preparation
78
0.8g coffee 9g sugar 105 ml milk 15 ml water 46% whip for froth
22
Know how to prepare
74%
75%
64%
99%
HW primarily prepares coffee at home Who purchases coffee ?
Self Spouse Parents
Where is coffee purchased?
Students
YWA*
CWE*
HW*
47% 77%
47% 77%
59% 75% 8%
89% 16% -
Grocery/General Store/Local Kirana
82%
Supermarket/Hype rmarket
14%
Wholesale store
2%
How frequently? 10%
36%
54%
HW primary purchasers, shared by the CWE
* Glossary YWA – Young Working Adults CWE – Chief Wage Earner HW – House Wife
Monthly grocery Emergency
Stock over
Category User-ship: North-East-West
Majority of Consumers are infrequent users of coffee in North-East-West Regions.
% HHLD Distribution
100%
80%
LIGHT
45
60%
MEDIUM
40%
HEAVY
53 20%
2 0%
Light: up to 2 cups per HouseHold per month Medium: 2 to 48 cups per HouseHold per month Heavy: 48+ cups per HouseHold per month
Region South
Household Penetration (South)
Household Penetration (South) Coffee Penet.% (Urban)
Coffee Penet.% (Urban) 2007
79.3% 78.5% 79.9% 78.6% 79.5%
2008 63.9%
63.2% 62.8% 62.7%
2009 64.5% 63.6%
63.5% 60.9% 61.0%
62.8%
62.3%
60.3%
2005
2006
2007
2008
2009
Q1
Q2
Q3
Source :HHP 2007-2009, IMRB
Q4
South: Coffee preparation & purchase How is coffee prepared ?
Who prepares coffee ?
Self Spouse Parents
Students
YWA*
CWE*
HW*
11% 80%
21% 74%
15% 76% 6%
96% 1%
Black Milk+Water
< 13 years
Know how to prepare
54%
Only Milk
47%
38%
83
School 99% students
House wife primarily prepares coffee at home Who purchases coffee ?
Self Spouse Parents
Consumer Method of Preparation
15
Cant say
Coffee is mostly prepared with a mix of milk and water Where is coffee purchased?
Students
YWA*
CWE*
HW*
19% 77%
36% 59%
35% 59% 9%
65% 34% 3%
1.3g coffee 9g sugar 120 ml milk 40 ml water Tumble for froth
Grocery/General Store/Local Kirana
84%
Supermarket/Hype rmarket
15%
Wholesale store
5%
How frequently? 9%
37%
54%
House wife is the primary purchaser
* Glossary YWA – Young Working Adults CWE – Chief Wage Earner HW – House Wife
Monthly grocery Emergency
Stock over
Café Culture
The Opportunity 50% of India’s population is below 30 years of age, making India the country with youngest population in the world Young are earning high income at earlier stages of their career than compared to previous generations High disposable income, a desire to spend on better things, and a desire for change Increased relevance of Café culture – Opened to different formats of coffee that can be consumed apart from the regular hot and cold – Different variants, earlier not known at all are becoming familiar; such as Lattes, Cappuccinos, Espressos… – Cafés becoming synonymous as meeting/hangout places where one can share great moments over a cup of coffee
Out of Home CCD, Barista, Mocha & Costa Coffee are the key players in the OOH segment – 2000 outlets across the country – Huge expansion plans over the next 3-5 years; mainly in tier-II cities – Also forayed into retailing of packaged coffees
New Entrant -
Starbucks expected to open café’s in the Indian market soon
Nestlé’s presence in OOH segment - Café NESCAFÉ’s - NESCAFÉ Café Corners - Vending points across educational institutions & corporate/commercial establishments
Coffee mixes (In-Home): A Brief History First launched as a basic 3-in-1 coffee by NESCAFÉ in 1998, targeted at youth – Met with limited success, withdrawn next year
BRU launched the first foaming 3-in-1 coffee in 2005, targeted primarily at aspiring, trendy, upwardly mobile youth BRU strategy : Focus in driving “Image” – Leverage Cappuccino imagery of “Trendy”, “Youthful”, “Modern” Beverage – Growth in Volumes but base still low – Significant investments behind Cappuccino (both ATL & BTL)- ‘Sip Lick mmm campaign’
NESCAFÉ launched NESCAFÉ Cappuccino in 2008, with the proposition of ‘Bring home the café experience’ – This was followed with launch of the variants: NESCAFÉ Choco Mocha & NESCAFÉ Vanilla Latte
DELIVERABLES (STAGE 1) Does ‘Café style’ coffee (in-home) have a role to play in developing the coffee category? • If Yes – How? • If No – Then what do you see as the way to grow Coffee Category? • You may use graphs & charts to support the same Limit: 1 slide
Give a Brand Positioning Framework for a Product (within the current portfolio or outside) that you will look to support/launch. Only one product may be selected. (Use the Brand Positioning Frame work given in the next two slides strictly – to provide your inputs) Limit: 1 slide
Brand Positioning Framework format FOR . . .
TARGET CONSUMER
WHO . . .
BRAND
IS . . .
BRAND PERSONALITY
AND OFFERS …
CORE ESSENCE
THAT MAKES ME FEEL …
EMOTIONAL BENEFITS
BY …
FUNCTIONAL BENEFIT
I BELIEVE THAT …
BRAND
DOES THIS BY PROVIDING …
REASON TO BELIEVE
UNLIKE …
MAIN COMPETITOR
WHO IS NOT OFFERING …
COMPETITIVE DIFFERENTIATION
E.g. Coca-Cola Zero FOR . . .
active, individual young men
TARGET CONSUMER
WHO . . .
Coca-Cola Zero
BRAND
IS . . .
fit, tough, original and masculine
BRAND PERSONALITY
AND OFFERS …
deep down refreshment for the body, mind and spirit
CORE ESSENCE
THAT MAKES ME FEEL …
like a man
EMOTIONAL BENEFITS
BY …
not having to compromise on my self-image or taste for the sake of diet
FUNCTIONAL BENEFIT
I BELIEVE THAT …
Coca-Cola Zero
BRAND
DOES THIS BY PROVIDING …
the real taste of Coca-Cola with zero calories in packaging more suited to me
REASON TO BELIEVE
UNLIKE …
Pepsi MAX
MAIN COMPETITOR
WHO IS NOT OFFERING …
the real taste of Coca-Cola.
COMPETITIVE DIFFERENTIATION
DELIVERABLES (Stage – II) Instructions Complete Marketing Plan: – Slide 1: 4Ps in detail – Slide 2: Broad-level Sales & Distribution Strategy – Slide 3: A Five-year development plan for the brand • Targeted annual Volume Growth figures. Rationale (may be supported with statistical data). • Marketing Inputs to be given, year-wise. Estimated spends. • Assume a Marginal Contribution in the range of 30-35%. How long will the brand/portfolio take to break even?
Slide 4: Articulation of insight (from positioning framework) Slide 5: Give the tagline for the Product. Any creative designed will be given brownie points!
Additional Data
Out of Home: Café Coffee Day Background
Café Coffee Day is a division of India’s largest coffee conglomerate, the Amalgamated Bean Coffee Trading Company Limited (ABCTCL). Popularly known as Coffee Day, it’s a Rs. 750 crore, ISO 9002 certified company. With Asia’s second-largest network of coffee estates (10,500 acres) and 11,000 small growers, Coffee Day has a rich and abundant source of coffee. This coffee goes all over the world to clients across the USA, Europe and Japan, making it one of the top coffee exporters in the world. ABCTCL’s retail division Café Coffee Day (CCD) pioneered the café concept in India in 1996 by opening its first café at Brigade Road in Bangalore. Café Coffee Day is now the largest organized retail café chain in India with cafes across top ninety cities in the country. It also has cafes in Vienna, Austria and Karachi
Operation in India
ABCTCL at present has 970 CCD outlets. The company plans to spend Rs 130-150 crore on expanding its store network and changing the look and feel of existing stores in this financial year. The Route To Market for Café’s is mainly through company owned, company operated Cafes. The chain is also trying to capture a slice of spends on in home consumption of coffee by retailing its own coffee and related products through food and grocery chains.
Out of Home: Costa Coffee British coffee chain Costa Coffee has reworked its India strategy to turn profitable and expand its footprint. The new strategy involves closing unprofitable locations, segmenting strategy for different locations, changing the look and feel of outlets and customising the menu to better suit the Indian palate. The chain, which has a master franchisee agreement with Devyani International, a subsidiary of Ravi Jaipuria owned RJ Corporation, is looking to expand only at metros. According to Santhosh Unni, the company went through its share of mistakes before setting the model right. As part of the restructuring, Costa will have four key formats situated at airports, malls, high streets and IT parks. They have also introduced something called the off premise business where they are setting up kiosks in marriages, and seminars meetings.
Outlets market share of major players 38, 2% 120, 5%
No of outlets CCD Costa Coffee NESCAFE Touchpoint
803, 35%
Barista Lavazza 1270, 56%
42, 2%
Lipton Café
Beverages dispensing system market share of major players 14000, 12%
No of machines 49000, 42%
42000, 36%
Nestle CCD HUL Others
11667, 10%
NESCAFÉ Cappuccino Targeting youth (between 18-30) by offering a great alternative to expensive cappuccino’s available at Cafés NESCAFÉ brand name lends credibility
Objectives To become an image driver amongst the youth by establishing the versatility of NESCAFÉ as a brand To provide an affordable café experience to those who aspire for it Single Serve Pack 15g Sachet
Multi Pack (5X15g sachet)
NESCAFÉ Cappuccino: New Variants New variants were launched in October 2009: – NESCAFÉ Choco Mocha – NESCAFÉ Vanilla Latte
Launched in select cities Limited exclusive consumer communication done since launch. – Only In-Store communication through Point of Sales
