nestle case study
TRANSCRIPT
Case Study
NESCAFÉ
Indian Coffee Market - Overview
All India (cups)
100%
Roast & Ground (R&G)
43%
100% Coffee
18%
NESCAFÉ SUNRISE
45%BRU
55%
INSTANT COFFEE
57 %
BLENDS (Coffee-chicory)
77 %
NESCAFÉ CLASSIC
100%
COFFEE MIXES(Just add water)
5 %
All Coffee = In-home + Out-of-home
In-home coffee market snapshot
All India (cups)
100%
R&G
32% @ -10%
100% PURE
23% @ +10%
NESCAFÉ SUNRISE
43%BRU
57%
INSTANT COFFEE
68 % @ +7%
BLENDS (Coffee-chicory)
76 % @ +4%
NESCAFÉ CLASSIC
100%
COFFEE MIXES
(Just add water)
1% @ +50%
How to read figures – a% @ b%:a% = Market Shareb% = Annual Growth Rate
‘Café style coffee’ Mixes Segment
Coffee Mixes
Cold
27%
BRU
Ice Cappuccino
100%
Hot
73%
BRU Cappuccino
23%
NESCAFÉ Cappuccino
77%
M. Shares (By Volume)
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 – Consumer LandscapeSOUTH NORTH-EAST-WEST
Coffee in India – Category Landscape
SOUTH INDIA
Coffee growing region, developed coffee culture
► Tea-Coffee ratio = 4:1► No seasonality
► Coffee loyal consumers► Understand a good cup of coffee (aroma, flavour)
NORTH-EAST-WEST INDIA
Coffee is still an under-developed category
► Tea-Coffee ratio = 60:1► Highly seasonal
► Mostly light/infrequent users► Coffee used as a milk-modifier
PENETRATION SNAPSHOT NORTH+EAST+WEST
►Urban (SEC A-E): 62% of population drinks coffee►Rural (R1-R5) 27.5% of population drinks coffee
(< Half of Urban)
►Urban (SEC A-E) 29% of population drinks coffee►Rural (R1-R5) 1.2% of population drinks coffee
PENETRATION SNAPSHOT SOUTH
NESCAFÉ: Brands-Geographical Distribution
SUNRISE Premium
SUNRISE Special (Andhra Pradesh Only)
NESCAFÉ Classic
RegionNorth-East-West
Household Penetration (North-East-West)
Source :HHP 2007-2009, IMRB
28.5% 27.1% 29.5% 29.3% 28.2%
2005 2006 2007 2008 2009
Coffee Penet.% (Urban)
16.8%
8.8% 9.3%
16.7%18.0%
9.6% 9.5%
15.7%
15.9%
9.3% 9.2%
15.4%
Q1 Q2 Q3 Q4
Coffee Penet.% (Urban)
2007 2008 2009
N-E-W: Coffee preparation & purchase
22
78
Milk+Water
Only Milk
How is coffee prepared ?
Consumer Method of Preparation
0.8g coffee9g sugar
105 ml milk15 ml water
46% whip for froth
Who prepares coffee ?
Students YWA* CWE* HW*
Self 22% 19% 7% 87%
Spouse - - 84% 1%
Parents 63% 64% 4% -
Know how to prepare 74% 75% 64% 99%
HW primarily prepares coffee at home
Who purchases coffee ?
Students YWA* CWE* HW*
Self 47% 47% 59% 89%
Spouse - - 75% 16%
Parents 77% 77% 8% -
HW primary purchasers, shared by the CWE
Where is coffee purchased? How frequently?
Grocery/General Store/Local Kirana
82%
Supermarket/Hypermarket
14%
Wholesale store 2%
54%36%
10%
Monthly grocery Stock overEmergency
* GlossaryYWA – Young Working AdultsCWE – Chief Wage EarnerHW – House Wife
Category User-ship: North-East-West
2
53
45
0%
20%
40%
60%
80%
100%
% H
HL
D D
istr
ibu
tio
n
LIGHT
MEDIUM
HEAVY
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
Majority of Consumers are infrequent users of coffee in North-East-West Regions.
RegionSouth
Household Penetration (South)
Source :HHP 2007-2009, IMRB
79.3% 78.5% 79.9% 78.6% 79.5%
2005 2006 2007 2008 2009
Coffee Penet.% (Urban)
62.8%
61.0%
63.5% 63.6%
62.7%
60.3%
62.8%62.3%
63.2%
60.9%
63.9%64.5%
Q1 Q2 Q3 Q4
Coffee Penet.% (Urban)
2007 2008 2009
Household Penetration (South)
South: Coffee preparation & purchase
< 13 years
School students
15
83
Black
Milk+Water
Only Milk
Cant say
How is coffee prepared ?
Consumer Method of Preparation
1.3g coffee9g sugar
120 ml milk40 ml water
Tumble for froth
Who prepares coffee ?
Students YWA* CWE* HW*
Self 11% 21% 15% 96%
Spouse - - 76% -
Parents 80% 74% 6% 1%
Know how to prepare 54% 47% 38% 99%
House wife primarily prepares coffee at home
Who purchases coffee ?
Students YWA* CWE* HW*
Self 19% 36% 35% 65%
Spouse - - 59% 34%
Parents 77% 59% 9% 3%
House wife is the primary purchaser
Where is coffee purchased? How frequently?
Grocery/General Store/Local Kirana
84%
Supermarket/Hypermarket
15%
Wholesale store 5%
54%37%
9%
Monthly grocery Stock overEmergency
Coffee is mostly prepared with a mix of milk and water
* GlossaryYWA – Young Working AdultsCWE – Chief Wage EarnerHW – House Wife
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 mmmcampaign’
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 formatFOR . . .
THAT MAKES ME FEEL …
IS . . .
AND OFFERS …
WHO . . .
BY …
I BELIEVE THAT …
DOES THIS BY PROVIDING …
UNLIKE …
WHO IS NOT OFFERING …
TARGET CONSUMER
EMOTIONAL BENEFITS
BRAND PERSONALITY
CORE ESSENCE
BRAND
FUNCTIONAL BENEFIT
BRAND
REASON TO BELIEVE
MAIN COMPETITOR
COMPETITIVE DIFFERENTIATION
E.g. Coca-Cola ZeroFOR . . .
THAT MAKES ME FEEL …
IS . . .
AND OFFERS …
WHO . . .
BY …
I BELIEVE THAT …
DOES THIS BY PROVIDING …
UNLIKE …
WHO IS NOT OFFERING …
TARGET CONSUMER
EMOTIONAL BENEFITS
BRAND PERSONALITY
CORE ESSENCE
BRAND
FUNCTIONAL BENEFIT
BRAND
REASON TO BELIEVE
MAIN COMPETITOR
COMPETITIVE DIFFERENTIATION
active, individual young men
Coca-Cola Zero
fit, tough, original and masculine
deep down refreshment for the body, mind and spirit
like a man
not having to compromise on my self-image or taste for the sake of diet
Coca-Cola Zero
the real taste of Coca-Cola with zero calories in packaging more suited to me
Pepsi MAX
the real taste of Coca-Cola.
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 DevyaniInternational, 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
1270, 56%
42, 2%
803, 35%
120, 5%
38, 2%
No of outlets
CCD
Costa Coffee
NESCAFE Touchpoint
Barista Lavazza
Lipton Café
Beverages dispensing system market share of major players
49000, 42%
11667, 10%
42000, 36%
14000, 12%
No of machines
Nestle
CCD
HUL
Others
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
Multi Pack(5X15g sachet)
Single Serve Pack15g 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