4Ps Challenger

Case study 2015

OVERALL BEVERAGE LANDSCAPE OF INDIA:

The beverage industry of India is slated to grow around 20 percent over the next three
years as socio-cultural changes lead to increased demand for alcoholic and non-alcoholic
beverages. Although more people are shifting towards packaged drinks, the per capita
consumption of the same is still low.
Consumption of beverages in India is still driven by hot beverages which accounts for 70%
of total consumption volume. India traditionally remains a tea drinking major with the
average consumption hovering at around 10 cups per day per household. Studies reveal
that tea in India enjoys a penetration of more than 90% in the domestic market with 30% of
all tea produced globally being consumed in India.
COFFEE POTENTIAL IN INDIA:
Within the landscape of non-alcoholic beverages, coffee as a category is still at a nascent
stage. With a household penetration of only about 20%, it stands as a poor second to tea.
Coffee could be of different forms major ones being Pure soluble coffee (PSC), Roast &
ground (R&G) coffee and mixtures. PSC or instant coffee dissolves instantly in hot water (or
milk) thus scoring high on convenience over R&G (or filter coffee). Coffee and chicory
blends constitute the mixtures segment with chicory majorly used a flavor enhancing
constituent. It could be available in both instant and R&G formats.
At a country level, the coffee consumption landscape is drastically different across the
North and the South regions. In the North, coffee is still an underdeveloped category.
Despite housing nearly 80% of the population, it contributes to only about 10 % of the
coffee consumption in India (around 4 billion cups annually). Coffee in these regions is
viewed more as an occasional consumption and highly seasonal at times. South, on the
other hand has a rich coffee culture. Housing 20% of the population, it contributes to
around 90% of the total coffee consumption in India (around 36 billion cups annually). The
coffee consumption in the south is primarily in the mixtures segment.
However coffee as a category has seen traction especially with the entry of international
and domestic chained coffee outlets (such as Caf Coffee Day, Starbucks , Barista, Costa
Coffee etc.) leading to retail value growth of 16% in 2014.

As a beverage, coffee could serve different needs among different groups of consumers. For
certain groups, coffee could serve as a soothing drink helping them to relax at the end of a
day or enhance their moods in the middle of the day. For some others, coffee would be the
morning drink helping them to kick start the day and thereafter recharge them during
different times of the day. Coffee might also serve as a social drink to be shared with friends
and family alike.
NESCAF in India:
In the coffee market, NESCAF has always occupied an iconic stature. The product was
launched in India in 1963 in the pure soluble coffee form in 50g cans only to be sold in
select premium outlets. However over the years NESCAF has expanded its portfolio in
India to include the following segments:

SEGMENT

BRAND

Pure Soluble Coffee

NESCAF Classic

Mixes

Mixtures

NESCAF
Cappuccino

NESCAF Sunrise

NESCAF Gold
NESCAF
ChocoMocha

PRODUCT
SHOT

Exhibit 1: NESCAF Portfolio

NESCAF Sunrise Premium

The coffee market is primarily dominated by two players NESCAF & BRU
Total coffee cups consumed in India annually: 40 billion

4% 6%
4% 1%
5%

15%

30%

50%
40%

20%

25%

Pure Soluble Coffee

Roast & Ground Coffee
Vending

Mixtures
Cafes

NESCAF CLASSIC
BRU INSTANT
NESCAF Cappucino

TOTAL SUNRISE
BRU GOLD
Others

EXHIBIT 2: ALL INDIA SHARE OF CUPS

The consumers could majorly be bucketed in three segments basis their beverage
consumption habits:
Youth (late teens): In this segment, the imagery of coffee is majorly driven by the
cafs. This particular group likes to experiment and has not developed any fixed
beverage consumption habit.
Young Adults (Late twenties): In terms of beverage habits, this would be a mixed
group. While a certain section might be still experimenting with their beverage
choices, for some the beverage choices would have been formed.

 Adults: People in this particular age group would have well trenched beverage habits
and in most cases are looking to indulge in premium products resulting in superior
experience.
Across the above mentioned consumer segments, coffee would serve different needs basis
the time and place of consumption. At the same time, there would also be barriers to
consumption of coffee across all age groups which could either be habit related, taste
related or health & nutrition related.
Considering the current scenario, one of the major task which lies ahead for the brand team
is to accelerate the coffee consumption habit in India. Among the many ways of doing this,
the team wanted to focus on carrying out a product development exercise. They are
considering the option of either repositioning the existing NESCAF portfolio or providing a
new product offering. Coffee currently did not relate strongly to any consumption occasion
and hence this could serve as an opportunity to address the same.
Basis in depth consumer understanding, provide the following analysis:
a. Identify the right target segment for brand NESCAF
b. Define a consumer proposition for the existing NESCAF portfolio
c. Provide suggestions for new product offering. Should include
a. Target segment
b. Product information
c. Format (including packaging)
d. Pricing strategy