Coffee shop battle is raging Nestl é says instant coffee also has a chance to break out

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Article source: Aruhan, a reporter from the Economic Observer Network

Since Ruixing targeted Starbucks, the fierce battle in brick-and-mortar coffee shops has begun, and the instant coffee category, which is familiar to consumers before brick-and-mortar coffee shops, is also aware of the potential for industry growth and increased competition in the industry. On the morning of May 23, the head of the coffee business in Nestl é's Beijing office told reporters that Nestl é was trying to further share the market dividend through the innovation of its instant coffee business, which it is good at.

What is the development potential of China's coffee market? The Nestl é coffee business department has had a long insight into the market and consumers. According to their observation, the average annual consumption of coffee in China is only 6 cups per capita, while in Europe and the United States, and even in neighboring Japan, the annual per capita consumption of coffee can reach more than 300 cups. "this is the statistics of all categories, including instant, instant drinks, brick-and-mortar stores, and there is no doubt about the size of the coffee market." Li Ting, director of coffee marketing in Nestl é Greater China, introduced.

In the domestic coffee market, Nestl é is the leader in instant and instant drinks. According to Li Ting, Volkswagen instant coffee is the sales pillar of Nestle Coffee business unit. But this category, which has entered the Chinese market since the early 1990s, urgently needs to adapt to the new consumer groups and changes in consumption. Like many foods and drinks, they need to study how to capture the hearts of young consumers.

According to Nestl é, the market penetration of coffee among young consumers is still lower than that of 36-50-year-olds. In 2018, the penetration rate of coffee among consumers aged 15-20 was 29%. The penetration rate of coffee in the 21-25 age group was 33%. The penetration rate reached 37% in the 26-35 age group. The penetration rates of coffee between the ages of 36-45 and 46-50 were 42% and 43%, respectively.

Li Ting concluded: "Young consumers' perception of the coffee category is that drinking coffee is a cool thing, but compared to the refreshing effect of coffee, young consumers are more likely to identify with the drink label of coffee, so they have various requirements for taste." Another Nestl é report shows that taste is the most important driving force for consumers to choose coffee products on e-commerce platforms. According to 2018 sales data, annual sales of multi-flavor coffee products are growing rapidly, with an increase of nearly 70%, while young Chinese consumers are most fond of trying fresh and unique flavors.

On the basis of a lot of research work, Nestl é instant coffee category recently launched a special series of instant coffee, which will launch cross-border flavors irregularly to attract young consumers. For example, in the latest season, the product focuses on the cross-border of "fruit + coffee". Moreover, instead of drinking hot water in the past, some flavors of coffee have been brewed directly in cold water.

"compared with the special coffee in brick-and-mortar coffee shops, the price of this product is less than 2 yuan per cup." in Li Ting's view, the battle between Starbucks, Ruixing and other brick-and-mortar coffee shops in full swing has indeed affected other categories such as instant and instant drinks, but the current impact is positive. "Outdoor brick-and-mortar stores drive the improvement of the overall attention of coffee categories. As for the category of instant coffee, we are targeting cities below the third tier, which is the main battlefield of Nestl é instant coffee, which is different from physical coffee shops. "

Nestl é is a well-known global coffee manufacturer, and the coffee business has a history of more than 80 years. With the continuous evolution of the coffee industry, Nestl é has actually built a brand combination in the category of coffee. In addition to Nestle Coffee and Nespresso, Starbucks is also one of Nestle's coffee brands.

Just last year, Nestl é acquired the permanent right to sell Starbucks retail and catering products outside coffee shops worldwide for $7.15 billion, excluding the Starbucks store business, and the deal was closed. This has further strengthened Nestl é's position in the global coffee market.

Li Ting further introduced that with the release of the potential of the Chinese coffee market, Nestl é China coffee business will occupy a more important position in the world in the future. "for example, this new product is 100% local R & D and has a global debut. Now the markets in many neighboring countries are asking us for formulations, packaging designs, etc., and the Chinese market is likely to lead other markets in the future."

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