STiR coffee and tea magazine

Volume 3, Number 4

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52 STiR tea & coffee industry international S oluble coffee finds itself in a challenging market position, one that is both expansive with opportunity and challenged to protect its current market. As soluble sales plateau in Western Europe and the United States, Asia holds promise as a valuable future market. Nestlé who essentially created the instant coffee segment in 1938 and other long- term market leaders are looking to reinvigorate their sales, while new entrants like Starbucks are coming on fast. Nescafé plays an important role in the Nestlé portfolio. It is estimated that close to 20% of Nestlé's entire operating profit is attributable to Nescafé. In 2013, Forbes reported its brand value at $17.7 billion. It is currently the largest of Nestlé's brands and is No. 27 on Forbes list of the World's Most Valuable Brands. Not surprisingly, Nestlé is highly committed to protecting this brand's power. The instant coffee, Nescafé, was launched in Switzerland, developed as a result of a coffee surplus in Brazil. Its spread was limited initially by World War II, but eventually it made its way across Europe and to the United States. Because it had been part of their regular rations, American soldiers in particular were considered important "brand ambassadors" sharing it with fellow soldiers in the United Kingdom and at home. It is now sold in 180 countries. As Europe and the United States began to value premium coffee experiences, this soluble coffee has lost some of its luster. In those locations it has gained a perception of being an inexpensive, but lower quality product. An influx of lesser coffees in the 1970s limited appeal to the new generation of coffee drinkers. Since 2004, Nescafé's share of the global solubles market fell 2.7%, but it should be noted, still stands at a weighty 44.3%. Ironically, as Nestlé made strides to improve its reputation in the convenience coffee segment, it may have been at Nescafé's expense. The launch of Nespresso ma- chines made younger consumers reconsider Nestlé coffee, but now they were drawn to the coffee pods, as opposed to their instant cousin. Nestlé is far from the only company struggling to balance the soluble coffee versus coffee pods pull between their product lines. Strong Prospects Globally for Soluble Coffee Strong Prospects Globally for Soluble Coffee Photos copyright NESTLE S.A./NESTEC S.A By Katrina Ávila Munichiello

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