Competitive war : a tight market competition environment

An interesting article about the present war going on between Nespresso and Ethical Coffee Company (which sues Nespresso for smear campaign and unfair competition practices) http://www.bloomberg.com/news/2012-12-05/nespresso-sued-in-paris-by-ethical-coffee-for-smear-campaign.html

Press Articles

Two very interessting articles to read in CB News (January 2012) :

Le café noir du désir à la dosette, pourquoi la relation avec le café est passée d'une liaison corsée, sensuelle à grands coups de volutes et de velours, à...la quête du temps. (étude de cas)

Le café promu grand cru, la responsable de la com' Nespresso France revient sur la valeur émotionnelle du café. (interview)

Coffee rituals... All around the world

         It has been said many times that coffee is a common beverage, drunk all over the world. In Western countries, coffee is mainly associated with the morning ritual : waking up, having breakfast and starting a new day. However we have no idea of all the different ways of drinking coffee all over the world.
Let us do a quick travel in the world of coffee!

        According to the website of the coffee brand "Illy", we can observe diverse ways of drinking coffee.

- In Italy, for instance coffe is part of the cultural legacy, coffee is taken seriously. In 1645, the first

"house of coffee" has been inaugurated in Venizia. Coffee is often taken at a "bar" (invented as well in Italy) in the morning. 

- Meanwhile in France, coffee is really appreciated in the morning at home, and softer than in Italy. 

- In the US, the context in which you drink coffee is less important: you can drink it whenever you want, wherever you want in paper cup or big mugs. 

- In Turkey, coffee play an important an important role in the social, political and religious spheres. For instance, women will be judgent before marriage to prepare a good coffee.

 - In Japan, coffee is considered for its physical virtues. Japanese people use to drink it cold in small cans.  

- In Sweden, coffee is associated to a relaxing and sharing moment called "fikka". During a fikka, either at school or at work, swedes have to drink coffee and to eat a piece of cake or "cannelbulla". It is a ritual of socialization and you cannot escape it unless you will be considered as rude by yours collegues. 

       All these histories and habits around coffee show us well that depending on the national or social background, coffee means differents things: energy, coolness, classiness, cosiness, moment of sharing. 

These associated words and ideas to coffee are important for a brand while implementing its strategy. Premium brands such as Nespresso or Lavazza tends for instance to regard coffee as a sacred and sophitiscated product, like it has been looked at, in the Italian tradition. 

Coffee, first worldwide commodity

Before taking a close look to our premium brands (Lavazza and Nespresso), we want to have an idea of the global framework in which these two brands evolve.

Coffee is present in our everyday life: while taking our breakfast, at work with colleagues, after having lunch, in the afternoon with friends etc.… In short, it is a common good that rhythms our day.

Despite all cultural habits and differences existing, coffee is massively consumed worldwide. Indeed it is the second consumed beverage after water: 2 out of 3 people in the world are coffee drinkers.

These simple facts and figures give us a good idea of the huge potential that coffee market can represent for brands.

However, this is not an easy market to enter. Prices are very volatile and coffee production is hard to forecast (due to climate change for instance).

Coffee Importation in 2005

Also the coffee consumption has evolved a lot since World War II.  Geographically speaking USA are still the biggest coffee consumers, however Europe has become the first continent in terms of consumption by inhabitants

Now that we have seen the major trends in terms of ‘quantitative’ consumption we are going to take a look at ‘qualitative’ consumption trends. Consumers are nowadays more demanding on new varieties and tasting. In order to get the best coffee, more and more consumers choose to invest in pod coffee machines, which insure a great quality. 

For coffee brands it is thus important to listen to these consumer’s desire, to keep on innovating and not to take coffee market as an ever-growing market (whatever the quality of the product delivered). 

THE GREAT POTENTIAL OF FRENCH MARKET

THE GREAT POTENTIAL OF FRENCH MARKET

 

French people are crazy about coffee. According to a study run by Starbucks, 40% of French people drink coffee which is, from far, one of the highest rate in Europe.  For French people, drinking coffee is a lot more than a simple way to be “boosted” .

For 27% of them, drinking coffee is a social ritual, they enjoy the moment of sharing with friends, have a break. They enjoy the situation as well as (not to say more) than the coffee itself.
They drink coffee essentially in coffee places (61%) or at home (60%) and some of them at work (28%). That is probably why coffee drives are not spreading that much in France compared to America, Australia or all the Americanized countries. In the French life style, coffee is less a take-away associated with work than a good espresso associated with home comfort. We often read that the future of the coffee market is in take-away brands like McCafé or Starbucks and that the French consumer is becoming more and more a « go with » consumer. But France is not there yet and maybe never will. Marketers need to pay attention to rituals associated with coffee in the country they want to target.

Some brands, like Nespresso, succeeded in increasing their market share in France with the launch of espresso coffee machine and “dosettes”. This kind of coffee is really appreciated in France because it goes with the French vision of coffee : fancy, relaxing, associated with the home comfort …

According to the same study, 75% of French people would stop spending money on other things to keep on consuming coffee. They rank coffee before CD/DVD, concert, theatre, shopping, hair dresser spending. And, how crazy, they could do easier without facebook or twitter (72%), without desert (58%) or without wine (66%) than without coffee ! Sex is the only thing that still remain before their coffee addiction !

Such a product seems to be the easiest thing to market as regard as how much consumers love it but the real stake on this market is to increase market share. Why? Because 94% of the French population already drink coffee, this is the second more consume beverage after water. The coffee consumption has remained stable for years (300 000 tons per year) because the coffee market is a “close market” which means that everyone knows about coffee (it is not a matter of awareness) and consumers are not going to drink more coffee. 

Thus, brands have to be innovative and France remain a great market to launch new machines or new types of coffee. No need to convince French people to drink coffee, they already buy it and love it. What is important to do is to develop a offer which go with their consumption habits.