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INTRODUCTION This is an account of how market researchers can apply the expertise of data analysis in non-traditional research to deliver leading-edge insight. The issue explored is slow growth in the coffee category. Going beyond primary research, three dimensions were explored: the coffee experience in tea drinking countries; how other similarly poised categories have grown in India; and India’s bond with tea. The approach yielded understanding that helped chart a new direction. THE BACKDROP India is merely a geographic expression. It is no more a single country than the equator”, said Winston Churchill close to a century ago. Much in India still lives true to this pronouncement. The consumption of coffee is no exception. While tea drinking sweeps India with one broad brush, coffee splits the country into two. In the north, tea is the primary and almost only hot beverage of choice, consumed across classes and subcultures, while in the south, coffee and tea share turf. Coffee drinking in the south preempted tea and rode the high ground of being a Brahmanical beverage, with tea long regarded as the blue collar drink. North India, which can loosely be understood as north of the Vindhyachal mountain range, remained largely insulated to coffee until it was formally introduced by Nescafé in 1964 followed by Bru (Unilever) in 1968. FIGURE 1. COFFEE VS. TEA IN INDIA

Source: Nielsen, HHP, Census

This half century has seen growth in coffee consumption in the north but it pales when compared to the overwhelming dominance of tea: 120,00 tons of coffee vs. 400,000 tons of tea.

SLOW BURN TO FIERY FLAMEHOW CROSS FERTILIZING DATA CAN GENERATE FRESH INSIGHT TO REIGNITE A LANGUISHING CATEGORY Ritanbara Mundrey


FIGURE 2. BEVERAGE VOLUME MILLIONS SERVED

Source: Euromonitor HAUNTING QUESTIONS Why is coffee such a small category in a country the size of India? What can Nescafé, holding the mantle of category development, do to infuse fresh aroma into the coffee business? How to tackle the new challengers on the block? In a market where in-home coffee consumption is still occasional, the onslaught of cafés are redefining coffee for the emerging consumer. What can Nescafé do as the coffee expert? REAMS OF RESEARCH It isn’t as if the category and cross category play had not been investigated. Research data showed that there are barriers to regular consumption. The beverage is seen as “heaty” and hence “unhealthy” to consume in the hot tropical summer months. Consumers suspect its “overstimulation” to have negative health properties that could lead to high blood pressure. And the price per cup pulls down the frequency of occasions. Interestingly, these negatives coexist with strong sensorial and image led benefits. The taste of coffee is liked, proven beyond doubt by the ubiquitous use of coffee outside the core hot beverage format. Coffee confectionery, to coffee flavoured biscuits, pastries, chocolates, ice cream, as a milk modifier and a milk shake. Laced on this is a premium “cool”, “western” image that makes the category aspirational – particularly to youth. Yet, with so much to play on coffee, continues to operate in the periphery, unable to break into mainstream regular consumption. How does a category become a habit, how does a category displace another big category, how does a category cease to be an outsider and “wear home clothes”? THE LENS OF THE LOOKING GLASS Current research was a good and steady reminder of “where we are” but was unable to provide a leaping insight on “how to shake the status quo”. Thus the task of tackling tradition had to start with the approach to research itself. The first step was to change the lens of the looking glass – looking outward rather than inward. We made tea (the key category competitor) the take off point and examined its DNA more closely. What is tea today? At its very heart, tea is “habit” and tea is “Indian” – attributes that give it pervasive permissibility in every moment of hot beverage consumption. Coffee is “western” and “occasional”. What is habit? In the American Journal of Psychology (1903) it is defined in this way: "A habit, from the standpoint of psychology, is a more or less fixed way of thinking, willing, or feeling acquired through previous repetition of a mental experience." The process by which new behaviours become automatic is habit formation. Old habits are hard to break and new habits are hard to form because the behavioural patterns we repeat are imprinted in our neural pathways but it is possible to form new habits through repetition. The task for coffee was clear – we needed to find ways to break old habits and form new ones. Three dimensions of analysis were coalesced to unravel new insight. a) Cross country - How coffee became “habit” in other tea terrains? b) Key competitor – What makes the habit of tea so strong? What can we learn? c) Cross category – What can we glean from the experience of other categories sailing similar seas?


FIGURE 3.

CROSS COUNTRIES We scanned the globe for other countries that have strong tea drinking cultures where coffee has succeeded in making significant inroads. Four countries surfaced: The U.K., Russia, Turkey and Japan. We chose U.K – because of its quintessential patronage of tea and Japan – diametric from a culture perspective for a closer investigation. The examination was effected at three levels– the historical evolution of tea and coffee in these markets, the course followed by communication, current consumption metrics and trends via household panel data and quantitative share of throat tracking. Experience in both these tea strong markets had commonalities, but many differences as well. The UK Historical evolution: Tea was a comparatively late entrant to Britain’s beverage landscape. Coffee was introduced in the 1600s to pre-industrial Britain. Coffee houses were hubs of business, news, patronized by men. Women were excluded from entering the coffee houses and did not drink coffee in the home. Catherine of Braganza was the first royal patron of tea and popularized it as a court drink. But not until the 19th century, when Britain was at the height of its imperial power, did tea attain full glory. England abandoned coffee as the demands of the East India Company to exchange its preferred stimulants pushed the domestic market into tea consumption. The government restricted coffee imports by high import taxes. However, tea remained an upper class drink for long. Until tea prices dropped, the working class in Britain bought second hand tea leaves from the bourgeoisie and let the tea steep longer to compensate. The early twentieth century saw tea firmly established as the mainstream beverage. By 1910 hotels began to host afternoon tea dances. It was rationed during WWII until 1952. The war gave coffee a new lease of life when American forces arrived in Britain carrying coffee in their rations. The launch of Nescafé’s “instant coffee” in England provided an easy, convenient option and in some cases, when compared with tea, even a cheaper option. The late twentieth century saw coffee houses led by Costa Coffee resurrect the coffee café experience. Nespresso machines catered to the in-home need of coffee. FIGURE 4.

Communication landscape: No singular line was followed. Communication for coffee exploited different need states of consumption – Stimulation and Refreshment, Bonding and Social Connect, and Sophistication.


Cohabiting with tea: Despite four scores of marketing, coffee is still just 50% of tea consumption (in home). Habits are indeed hard to break! For the vast masses it continues to be the convention who “with tea amuses the evening, with tea solaces the midnight, and, with tea, welcomes the morning” (Dr. Samuel Johnson). Not only that, tea is today breaking fresh ground via its herbal, natural, antioxidant discourse. Where then is the space for coffee? Well, in the ocean of tea the space that it has carved out has come from definition and relevance. For the coffee drinker, coffee stands for something specific – stimulation and resolve (morning / at home / at work) and sociability outside. FIGURE 5. TEA BEING DOMINANT BEVERAGE, COFFEE AT 50% OF TEA

Source: KANTAR World Panel

Japan A tea drinking nation, Japan adopted coffee post the war - amongst other things American. Historical evolution: Tea was first introduced to Japan from China in the 700s. Tea was esteemed in China both for its medicinal value (it contains tannic acid, which is good for one’s health) and as an elegant drink. The Japanese emperor’s court also extolled tea’s elegance, praising in poetry its purported “spiritual” qualities; and monks in Buddhist temples made special use of tea to prevent drowsiness during meditation. During the 14th – 16th century, tea gained popularity among people of all social classes – spurred by tea cultivation and affordability. In cultured circles drinking tea became recognized and valued as a way to transcend the mundane without participating in the vulgarity of wine’s drunkenness. The luxury of tea eventually became regarded as a necessity in Japanese daily life. But the complexion and character of Japanese tea is fundamentally different from coffee. Japanese partake of a wide variety of green teas. Colour and delicacy of taste are important, and brews of fine fragrance and greenish–golden hues are prevalent. Coffee was introduced by the Americans post the war as the beverage of the conquerors. Defeat in the war hurt Japanese pride and induced them to embrace Americanism. Coffee was seen as a drink of the elite and powerful. Its gradual assimilation went along with the acceptance of western breakfasts. Nescafé led the charge with instant coffee for in-home consumption. In the latter half of the twentieth century, Doutour started their chain of coffee shops in Japan. FIGURE 6. JAPANESE ELITE DRINKING COFFEE

Communication landscape: Similar to the UK, coffee has had varying communication in Japan. “Convenience” in the 1950s-60s – lowering barriers to what would have been an alien drink. And later pushing multiple benefit territories, from stimulation to energy. Coffee imagery transcended from a drink of the powerful business suited persona to a casual social drink for the youth, for the masses by the close of the century.


FIGURE 7. SHARE OF MARKET BY THE RESPECTIVE BEVERAGE (ALL PLACES / ALL TIMES OF DAY)

Source: Drink Survey Cohabiting with tea:: As in the UK, coffee has learned to coexist with tea. From a share of throat perspective, coffee still plays second fiddle to tea. In Japan, the task for coffee has been even harder as tea has strong partnership with Japanese food. For coffee to find its preferred space in the morning breakfast, the breakfast itself had to change. This draws parallel to the India situation where coffee has had to struggle to find a singular occasion of consumption. Tea is drunk on auto pilot while coffee is the drink with a purpose. The first important learning was more of a realization. That in a tea drinking population, coffee can find a role but will need to learn to live with tea. This then requires consistent efforts to build a meaning, a place, an occasion and a reason to consume. Brands have attempted multiple positionings, to identify one which syncs well with the product properties. Cafés have a positive role to play – they create imagery for the beverage, making it socially the best alternative to alcohol and thus far more ubiquitous in the time of consumption and the universality of the consuming set. But in-home is a different ball game. To find a place in the in-home repertoire, the drink has to define a purpose and a place for itself. KEY COMPETITOR What makes the habit of tea so strong in India? What can we learn? The product characteristics of coffee and tea bear close resemblance – substitution between the two is testimony to this. But the scale of consumption is vastly dissimilar. How did tea reach this position? We delved into the history of tea – how it grew from niche to dominant, how it targeted need states, attitudes, individuals. Historical evolution Contrary to popular belief, India’s love affair with tea postdates British imperial rule. Pre-World War II, tea was virtually unknown to the vast majority of Indians. Farmers had rice water/ unfermented toddy/palm juice. Brahmins directly had lunch after their daily rituals. The middle class had a variety of curd/spice drinks for their cooling or digestive properties. The popular drinks were milk and buttermilk with spices/sugar, ‘Kashayam’ prepared with spices and herbs, ‘Kanji’ or gruel prepared with rice, barley, grains and wheat, lemon juice with spices and jiggery. The East India Company began commercial production of tea in the 1900s for export to Britain. Consumption in India remained limited to the anglophile elite. Lipton – the leading brand of the time – also catered to the British living in India (as depicted in advertisements showcasing Indians serving tea to British ladies).


FIGURE 8. TEA BEING SERVED BY INDIAN SERVANT IN COLONIAL INDIA

Source: GlobalWebIndex Q2-Q3 2015

The leaders of the movement for independence from Britain condemned the beverage in no uncertain terms. Acharya Ray, an eminent nationalist, equated tea with poison. Gandhi felt tannin was bad for health and called tea an intoxicant, in the same class as tobacco. Another widely held belief was that tea made the skin darker, anathema in a country obsessed with fair skin! It was seen as an imperial product subjugating labor at tea plantations. There was evidently no understanding of the product and even less of the method of preparation. No giving up! Lord Curzon formed the Tea Marketing Expansion Board in 1933. The tea board and private companies advertised extensively and undertook relentless sampling spanning decades with a few key messages. FIGURE 9. COMMUNICATION FOR TEA – EARLY 1950s

Source: tasveerghar, priya paul collection

However, the combined efforts of early advertising and country wide sampling yielded poor results - in 1950, 70% of the 280 million kg (617 million lbs) produced in India was still exported. Cost of full-leaf tea and its accoutrements kept tea out of reach for much of the populace. Imagery remained elitist ̵ depicting a comfortable bourgeois domesticity, modernity in costume and the elaborate and expensive (by Indian standards) equipment required to brew a "proper" cup of tea.


FIGURE 10. COMMUNICATION FOR TEA – STILL UPPER CLASS

Source: Tasveerghar, Priya Paul Collection Advent of CTC (Crush, Tear, Curl) in the 1960s was the turning point in tea’s journey into the Indian subconscious. Suddenly tea was affordable and exploded across the country. CTC tea, mainly produced in Assam, became abundantly available in retail shops in urban areas. Packets were distributed as free samples by bicycle-riding promoters employed by tea blending companies, who visited small towns and villages.

CTC tea is processed using the "crush, tear and curl" (CTC) method. Leaves processed using the CTC method are not rolled, but are placed through cylindrical rollers with small teeth. The rollers crush, tear and curl the tea leaves, hence the name of the method. CTC tea was developed during the Second World War to increase the weight of tea that can be packed into a bag or sack. With the popularity of tea bags, this method has also grown in popularity. Tea processed using CTC tends to brew faster and yields more cups of tea per kilogram. The brewed tea often tends towards a red color, such as the case with Nilgiri tea.

FIGURE 11. COMMUNICATION FOR TEAM – BID TO BE INDIAN

Source: Tasveerghar, Colleen Sen

Chai (tea) stalls came up in every corner of the country — a new space for male camaraderie. Tea became the all-day fuel of both blue and white collar workers. Kadak ("strong, flavorful") chai (tea) was adopted as a domestically-prepared beverage, suitable for consumption at all hours of the day. A cup of tea became the default symbol of hospitality across Indian homes.


FIGURE 12. TODAY, EVEN THOUGH TEA EXISTS ACROSS NEED STATES, IT STILL STANDS OUT ON STIMULATION

Source: Internal Research 2010

All key brands consistently communicated on strength of tea and stimulation. Today, even though tea exists across need states, it still stands out on stimulation.

Teachings from the cup! 1. Tea did not replace a universal beverage in India, there were multiple sources of gain 2. Despite decades of promotion, adoption was slow 3. It was first a drink of the elite – movement was top down 4. Product familiarization via extensive sampling had a pivotal role to play 5. Affordability drove adoption of tea by the masses 6. Positioning of tea as a stimulant was constant and emphatic – even as it entered all occasions by default FIGURE 13. BEVERAGE NEED STATES


CROSS CATEGORY What can we glean from the experience of other categories sailing the same boat as coffee? Were there parallels to be drawn? In a country where processed food is still in its first blush of youth there are fewer foods with a history to inspire. Two categories did find resemblance with ours on many aspects – Chocolate and Breakfast Cereal. FIGURE 14. SAMPLE SNAPSHOTS OF THE SURVEY FLOW

Coffee Chocolate Breakfast Cereal Foreign persona– no Indian name

Been around for long

Still peripheral to the repertoire

Led by a single / dual player

This led to the third thread of the analysis - how are these categories growing and integrating with India. KELLOGG’S PASSAGE TO INDIA In the Rs 700-crore Indian organized breakfast cereal market, Kellogg's holds more than 60% share. In 2013, Kellogg’s India crossed Rs 500-crore sales mark in India after growing 31% in the last fiscal period and more than doubling its business in three years. However, growth over the past 15 years has been only 8.4% per annum. Kellogg’s had a bumpy start in India. It launched in 1994 with cornflakes, wheat flakes and rice flakes with a “lift and shift” approach, at a premium with large packs with the underlying assumption that middle class India was awaiting liberation from the shackles of traditional food. There was a frontal attack on the Indian breakfast as “unhealthy”. The communication antagonized the consumer (who wants to be told that you and your family have been eating wrong for a generation?). So absolute was the flop that the brand suffered the ignominious distinction of featuring in the book “Brand Failures”. FIGURE 6. KELLOGG’S LAUNCH DISMISSING TRADITIONAL FOOD

Source: ICMR Amend and adapt The unspectacular start called for some serious soul searching and the next 10 years saw the brand try a variety of things that would gain permissibility and acceptance into the Indian household. It aligned to the Indian obsession with children’s academic performance. It was repositioned as a source of iron for higher mental acumen (iron deficiency impacts Indians across social classes) and a tasty and fun solution for kids refusing to have breakfast. (Kids are usually sleepy at breakfast and often leave for school without an adequate breakfast, a cause of stress for the mother.) Kellogg’s customized its portfolio and launched Indian flavors. Awareness was generated through community based “Kellogg’s breakfast week” initiatives partnered with the Indian Dietary Association. Prices were reduced, smaller pack sizes were launched to induce trials, coupled with sSupport by heavy in-pack promotions and extensive sampling. Replace to embrace A new communication was choreographed, respecting the pivotal position of the homemaker. From the earlier approach of “talking down” to her, it sought partnership. The communication encouraged the homemaker to customize cornflakes to suit her family preferences, expanded an India specific portfolio in different sub categories – oats, special K, All Bran, launched smaller packs at affordable price points to take share in impulse snacking (Chocos Rs.10 pack). Iron and vitamin fortification was highlighted, reassuring benefits and reminders of the health delivery.


FIGURE 11.

What’s working:

Adaptation to existing habits. Embrace the Indian instead of trying to replace it. Brought concept of “Annaj” (grain) to breakfast cereals (traditionally associated with Indian food). Your way is the best way. Addressing a core unmet need

THE CHOCOLATE STORY Chocolate – a bequest from the British Raj (along with tea and cricket), is an interesting category for India, given its irresistible sensorials. Indians are known for their sweet tooth and passion for sweetmeats. Chocolates were largely imported in the country in the post-independence years until Cadbury’s chocolates officially launched 5 Star and Gems in 1967/68 a few years after Nescafé. Cadbury’s Dairy Milk’s (CDM) local production commenced in 1984. By 1995, the category was salient amongst kids but unable to expand further. The category was seen as foreign / non-Indian. Consumption was highly occasional even amongst the core target group. Most unfavorable of all was the fact that kids grew out of chocolate as teenagers despite high consumption of Indian sweets. And adults were not comfortable consuming a ‘kiddie category’. TABLE 1. PENETRATION OF CHOCOLATE

Source: WARC The challenge a) Sweet consumption did not stop as consumers grew up – it shifted to “mithai” b) Chocolates not in consideration on occasions when mithai was being consumed c) The questions of course were “why” and “how” to overcome these barriers.

The world of sweets Cadbury’s embarked on a deep understanding of the world of chocolates and sweet consumption. Globally, Pleasure and Reward are the core platforms for chocolate With key elements of Indulgence / craving / individual. Indian sweets operate on a different plane. Indian sweet tradition is influenced by religion. Sweets are offered to gods. “Meetha” (sweet) is a signifier and marker of happy occasions. People “sweeten” other people’s mouth when something good happens to them or before an auspicious or important event – exam, marriage. It is a shared happiness ritual where the symbolism is greater than the sensorials. To take share from “Mithai” chocolate had to incorporate the Indianness of sweets.


Changing the Set of the Sail

An analysis of Cadbury’s communication shows the results of some serious introspection. The early “English” scripting of communication, en famille, with no clear slant (a bit of bonding, a bit of romance) gave way to scenes rooted in Indian customs using local language. . Real breakthrough came via two strategic campaigns. The first called “kuch meetha ho jaye” (let’s have something sweet) resonated with both the letter and spirit of the way Indian sweets are consumed. Cadbury’s Dairy Milk was positioned as a celebratory sweet for big and small markers of life - passing an examination, buying a new bike, etc. and inculcated the collectivist, sharing rituals that are part of the Indian’s genetic coding. The “Shubh aarambh” (Auspicious Beginnings) campaign based on the Indian tradition of having something sweet before auspicious occasions for a favourable outcome, elevated the brand from merely celebratory to propitious. FIGURE 12. CADBURY CHOCOLATES “KUCH MEETHA HO JAYE”

Source: Cadbury website TABLE 2. PENETRATION OF CHOCOLATE

Source: WARC THE WHOLE IS GREATER THAN THE SUM OF ITS PARTS Weaving cloth from the three threads of investigation yielded insights beyond the means of regular consumer research. The country analysis contained some valuable lessons. The first – not to be despondent! The journey of “the second beverage” is not an easy one anywhere. But there was plenty to learn from an action point of view as well. The importance for the beverage to dig deep and deliver on a relevant consumer need came through clearly. Messaging needs to be consistent and distinct. The role of cuisine as a facilitator to adoption in non-western markets was highlighted. Tea had aligned itself well with local Japanese food. To a large extent this is true for India, where tea time victuals enjoy a strong and natural fit with it. Coffee, like its name, character and food partnerships, is far more western in its orientation. Alliance with a key consumption moment and a key consumption benefit puts the beverage in a context that consumers can relate to. This worked well in both the countries reviewed. Lastly on the cafés – given the experience and variety they offer, cafés get automatic ownership of coffee’s social dimension. The country analysis showed that this is only helpful to elevate the buzz on the category. The best bet for the retail brands is to become the beverage/brand of choice in home for all that the cafés are creating out of home. Tea’s journey of democratization in India illustrated both the challenges and opportunities in the quest to being mainstream. A long and sustained campaign of “clearing misconceptions” about its “evils” (tea had been denounced by Mahatma Gandhi as an imperialist intoxicant), bringing home its benefits and explaining method of preparation was taken from cities to towns to villages. Communication played a key role – upper class tea service imagery was replaced by subaltern scenes that the common people could relate to. And actions on reducing price made it that much more accessible. The guidance was clear: Don’t attack tea – valorise your strengths, democratize the communication, remove misconceptions and increase familiarity by sustained sampling.

Adopting a culturally desirable language: The examination of Chocolate and Breakfast Cereal as analogies revealed the importance of embedding a category into the consumer sub-conscious. Approaching the consumer with language and symbolism that belongs to the outside world as opposed to the home keeps the category at the periphery. To find the heartbeat of Indians, Cadbury’s had change its perspective from the microscope of pure chocolate and delve into the source and soul of “sweetmeats” consumption. Learnings are there to be seen in the way communication changed.


Breakfast Cereal latched onto the “low hanging” needs of Indians – performance at school and “healthier” snacking. Its first inroads came via the evening nibbles rather than as a classic breakfast cereal. HOW DID WE WEAVE NESCAFE’S FUTURE STRATEGY? For long, coffee has played second fiddle to tea in the “Pleasure” Space. The country analysis clearly brought out the need to leave this space to the cafés and focus on a space where the product truth had a natural fit and could build habit for the category. Hence a conscious decision was taken to target “Stimulation”. FIGURE 13. CADBURY CHOCOLATES “KUCH MEETHA HO JAYE”

Learning from the tea experience, sampling coffee to the youth has been taken up with vigour. The biggest change was in the brand’s positioning. Hitherto, as in the case of tea’s original overture’s with the Indian consumer, coffee was western and upper class, in positioning and imagery. Learning from the experience of Chocolates and Breakfast Cereal, Nescafé took a fundamental shift and churned out a very different sort of communication – rooted in the middle class conversations of the youth. The brand is well on its way in this new journey, with encouraging first results. FUTURE APPLICATION Occasionally a problem comes along when conventional thinking no longer serves. This approach demonstrates how connecting data from diverse discourses can amplify the quality of insight beyond the ability of regular primary research.

THE AUTHORS Ritanbara Mundrey is Head Consumer and Customer Insights, Nestlé, India.

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