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INTRODUCTION
Introduction to the topic
In today’s market the sales of the product is not the only way to get
success the services and the customer satisfaction is also important. The
companies NESCAFE & BRU are the world class companies in the coffee
as a beverage.
Those all are the highest coffee producing companies in India. But the
customer approach towards those companies is important
FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks
and confections) or because they are perishable (e.g., meat, dairy products, and
baked goods). These goods are purchased frequently, are consumed rapidly, are
priced low, and are sold in large quantities. They also have a high turnover when
they're on the shelf at the store.
Non - durable goods have a shelf life of less than one year
. Fast-moving consumer goods are the largest segment of consumer goods. They
fall into the nondurable category, as they are consumed immediately and have a
short shelf life.
Nearly everyone in the world uses fast-moving consumer goods (FMCG) every day.
They are the small-scale consumer purchases we make at the produce stand,
grocery store, supermarket, and warehouse outlet.
Examples - milk, gum, fruit and vegetables, toilet paper, soda, beer, and over-the-
counter drugs like aspirin.
FMCG in India
Introduction
Fast-moving consumer goods (FMCG) sector is the 4th largest sector in the Indian
economy
There are three main segments in the sector – food and beverages which accounts for 19%
of the sector, healthcare which accounts for 31% and household and personal care which
accounts for the remaining 50%.
The urban segment (accounts for a revenue share of around 55%) is the largest
contributor to the overall revenue generated by the FMCG sector in India
However, in the last few years, the FMCG market has grown at a faster pace in rural India
compared with urban India. Semi-urban and rural segments are growing at a rapid pace
and FMCG products account for 50% of total rural spending.
Market size
The FMCG sector has grown from Rs 2,20,852.4 crore in 2011 to Rs 3,68,669.75 crore in
2017-18. The sector is further expected to grow at a Compound Annual Growth Rate
(CAGR) of 27.86% to reach Rs 7,24,759.3 crore by 2020. FMCG market is expected to
grow at 9-10% in 2020. FMCG urban segment witnessed growth rate of 8% whereas rural
segment grew at 5% in quarter ended in September 2019; supported by moderate inflation,
increase in private consumption and rural income
INVESTMENTS/DEVELOPMENTS
Fast moving consumer goods (FMCG) are the fourth largest sector in the Indian
economy. There are three main segments in the sector –
Food and Beverages which accounts for 19% of the sector
Healthcare which accounts for 31%.
Household and personal care which accounts for the remaining 50%
The FMCG sector has grown from Rs 2,20,852.4 crore in 2011 to Rs
3,68,669.75 crore in 2017-18. The sector is further expected to grow at a
Compound Annual Growth Rate (CAGR) of 27.86 per cent to reach Rs 7,24,759.3
crore by 2020.
FMCG market is expected to grow at 9-10 % in 2020. FMCG urban segment
witnessed growth rate of 8 %whereas rural segment grew at 5 % in quarter ended in
September 2019
Accounting for a revenue share of around 45 % rural segment is a large contributor
to the overall revenue generated by the FMCG sector in India. Urban segment
accounted for a revenue share of 55 % in the overall revenues recorded by FMCG
sector in India.
FMCG Companies are looking to invest in energy efficient plants to benefit the
society and lower costs in the long term. Patanjali will spend Rs 5,197.85 crore in
various food parks in-
- Maharashtra
- Madhya Pradesh
- Assam
- Andhra Pradesh
- Uttar Pradesh
Dabur is planning to invest Rs 250-300 crore in FY19 for capacity expansion and
is also looking for acquisitions in the domestic market
Tata’s are also planning to expand its home and personal care products in FMCG
sector.
In FY19, ITC made more than 60 launches in the fast-moving consumer goods
(FMCG) segment in India
Investment intentions related to FMCG sector, arising from paper pulp, sugar,
fermentation, food processing, vegetable oils and vanaspati, soaps, cosmetics and
toiletries industries, worth Rs 15,961 crore were implemented between January
2017 to July 2019. In 2019
RP-Sanjiv Goenka Group to invest capital fund of Rs 103.01 crore in
FMCG start-ups
Nestle plans to invest Rs 700 crore to open a new plant in Sanand for
Maggi.
ITC plans to invest Rs 700 crore in food park in Madhya Pradesh.
Government Initiatives
Some of the major initiatives taken by the government to promote the FMCG sector in India
are as follows:
The Government of India has approved 100 per cent Foreign Direct
Investment (FDI) in the cash and carry segment and in single-brand
retail along with 51 per cent FDI in multi-brand retail.
The Government of India has drafted a new Consumer Protection Bill
with special emphasis on setting up an extensive mechanism to ensure
simple, speedy, accessible, affordable and timely delivery of justice to
consumers.
The Goods and Services Tax (GST) is beneficial for the FMCG industry
as many of the FMCG products such as Soap, Toothpaste and Hair oil
now come under 18 per cent tax bracket against the previous 23-24 per
cent rate. Also rates on food products and hygiene products have been
reduced to 0-5 per cent and 12-18 per cent respectively.
The GST is expected to transform logistics in the FMCG sector into a
modern and efficient model as all major corporations are remodeling
their operations into larger logistics and warehousing
Coffee
The Beginning of Coffee
As far as Americans are concerned, coffee is a merely 300 years old. In other places and
cultures it has been a widespread phenomenon for a much longer time. There are records
indicating the use of coffee as early as 800 B. C. In fact, Homer speaks of a bitter black
beverage that has powers of stimulation and for all we know Homer might have been speaking
of coffee
In the year 1000 A.D., coffee was mostly used for medicinal purposes. It has been reported than
in 1400 a Yemeni goat herder saw his flock eating some reddish berries and consequently
becoming excited and restless. When this goat herder told a monk about this they gathered the
berries together and boiled them in water. They found that the resulting beverage could get rid of
sleep and weariness. It looks as if the first trace came out of Abyssinia and was also
sporadically in the vicinity of the Red Sea around 700 AD.
Coffee began to get more attention when the Arabs began cultivating it in their
peninsulas around 1100 AD. It is speculated that trade ships brought the coffee their
way. The Arabs started making a drink that became quite popular called GAHWA---
MEANING TO PREVENT SLEEP. Roasting and boiling the bean was how they made
this drink. It became so popular among the Arabs that they made it their signature
Arabian wine and it was used a lot during rituals.
Around 1475 the first coffee shop opens in Constantinople called Kiv Han,
after two years coffee was introduced to Turkey, in 1554 two coffee houses open there.
In the early 1600 coffee is presented to the New World by man named John
Smith. The word "TIPS" (for service) has its origin from an English coffee
house.
The Dutch became the first to commercially transport coffee . The first
Parisian café opens in 1713 and King Louis XIV is presented with a lovely coffee
tree. Sugar is first used as an addition to coffee in his court
The first commercial espresso machine is developed in Italy. Melitta Bentz makes a filter
using blotting paper. Dr. Ernest Lily manufactures the first automatic
espresso machine.
It may even account for more than 50% of all coffee consumption in some countries.
Instant coffee is also faster, cheaper, and easier to make than regular coffee
Coffee in India
I. ORIGIN OF COFFEE IN INDIA
The history of coffee in India dates back to around 1600 AD, when the Indian Sufi
saint, Baba Budan, went on a pilgrimage to Mecca. He made his 'legendary'
journey from Mocha, a port city of Yemen that overlooks the Red Sea, to his
homeland. Besides being a trading hub for coffee, Mocha was the source of the
popular Mocha coffee beans. Baba Budan discovered coffee in the form of a dark
and sweet liquid called Qahwa1 on the way. He found the drink refreshing and
secretly brought back seven coffee beans from Mocha by strapping them to his
chest, since the Arabs were extremely protective about their coffee industry.
After returning from his pilgrimage, Baba Budan planted the Seven Seeds of
Mocha1 in the courtyard of his hermitage in Chikmagalur, Karnataka – the
birthplace and origin of coffee in India. The coffee plants gradually spread as
backyard plantings, and later on to the hills of what is now known as Baba Budan
Hills.
II. Introduction
Coffee is a very important plantation crop in India, mainly cultivated in Karnataka, Kerala
and Tamil Nadu. Non-traditional cultivation of coffee is found in Andhra Pradesh, Orissa,
and some North Eastern States. The major coffee growing destinations are Hassan,
Chikmagalur and Coorg in Karnataka, Wayanad, Idukki and Nelliyampathy in Kerala, And
Shevaroys , Anamalais and Nilgiri hills in Tamilnadu (Coffee Board, 2017).India is not
only the world’s seventh largest exporter of coffee, but is also the third largest exporter of
coffee in Asia(Coffee Board, 2017). Currently, the Indian coffee industry accounts for
3.67% of the global production.
Out of the total Indian coffee production, 70% is exported while only 30% consumed
domestically. The largest importers of Indian coffee are: Italy, Russia, Germany, Belgium,
Turkey, USA, Poland, Libya, Spain (Coffee Board, 2017). Coffee is the second most traded
commodity in the world, after oil.
The Indian Coffee market is largely dominated by two firms- Nestle and Hindustan
Unilever Limited. Their subsequent coffee brands, Nescafe and Bru are easily the most
popular in the domestic market. The entry of a new brand, Tata Grande has created more
competition in the industry. There is a high level of competition in the industry, especially
in the instant coffee segment since advertisement costs and capital requirements are
extremely high.
ARABICA COFFEE
Arabica coffees (or Arabicas) have a delicate flavour and balanced aroma coupled with a
sharp and sweet taste. They have about half the amount of caffeine compared to Robustas.
Arabicas are harvested between November to January, and are typically grown on higher
altitudes ranging from 600 to 2000 metres in cool, moisture-rich and subtropical weather
conditions. They require nutrient-rich soil to be able to conform to the highest international
coffee standards.
Kents Coffee
S.795 Coffee
Cauvery Coffee
ROBUSTA COFFEE
Robusta coffees (or Robustas) have twice the level of caffeine compared to Arabicas.
Robusta coffees have a very strong taste, a grainy essence and an aftertaste somewhat
similar to that of peanuts. It is possible to grow this variety at lower heights. Robusta
coffee plants are harvested from December to February, and can better withstand the
onslaught of unfriendly weather and plant pests. Robustas have a better yield and take less
time to bear fruit than Arabicas. Although the Arabica variety is preferred in international
markets, high quality Robustas are also highly sought after in espressos due to their strong
taste and the crema1 that they help generate.
S.274 Coffee
CxR Coffee
V. Market History
When it comes to coffee, India is an export driven economy, where around 70% of the coffee
produced is exported. Before 1996, there was a different bureaucratic arrangement to manage
the sales of coffee. The coffee board, back then held different auctions for the domestic and
export market. The produce was collected through the Coffee Board’s pool depots, after
which it was stored in secondary processing facilities. Strict quality control norms were
imposed on these and payments were made on the basis of quality. The Fair Average Quality
(FAQ) was seen as an industry standard for pricing coffee. If the quality falls below the
FAQ, the produce was penalized and if the quality was above the FAQ, producers were
encouraged by ‘premium points’ ( Pazhanilath, 2002).
Today, India exports coffee to around 45 countries. The export earnings have increased
4139.58 metric tons
In the study of Bain (Bain, 1949) stated that the instant coffee market is a duopoly, as Nestle
and Hindustan Lever have been the 2 most prominent firms operating in the market. There is
a certain degree of brand loyalty and product differentiation offered by both via branding. As
a consequence, there is high level of market concentration availed by both firms. Some
degree of collusion can be expected from these two firms, to prevent new firms from
entering the market.
VII. Trends
Around 2.25 billion units of coffee are consumed everyday. However, in emerging markets
like India, where coffee drinkers are mostly affluent, coffee consumption is rarely just about
the caffeine intake, and has much more to do with the attached social perception of the same.
Even among the instant or soluble coffee business, different branches identify themselves
with different demographic groups. For instance, Nescafe has larger market share in the
Northern region as opposed to Bru, which is popular in South India. Bru has projected itself
as more of a ‘family oriented’ brand as opposed to nestle, which tries to position itself as
something desirable to the increasingly affluent urban youth.
While filter coffee variants are popular in Southern India, instant coffee is popular all over
the country. Main distributional chain for packaged coffee is traditional retail stores, mostly
large and small convenience store. Currently, market variants like ready to drink alternatives
and decaffeinated coffee accounts for just over 1% of the total industry. This means that
there scope for growth in this segment.
There has been a bean to cup trend which is present in coffee shops and this was exploited by
firms like Cafe Coffee Day, Barista Coffee etc. However, these trends are only present in the
cafe retail segment, as Indian homes traditional do not have equipment required for the same.
However, coffee consumption is largely limited to the urban Indian populace. As most
Indians (70%) live in rural areas, there is a growing urgency to ensure that market
penetration to rural areas happen soon.
COMPANY
PROFILE
Nescafe Coffee
Founded:1938
Headquarters: Vevey, Vaud
CEO: Mark Schneider
Brand ambassador: disha patani
At the heart of the home for six generations,
NESCAFÉ has lived through a world war and
even been to the moon.
The beginnings of our famous coffee brand can be traced back to 1930, when a
group of Brazilian bankers asked Nestlé to help find a way to increase coffee
consumption and decrease the enormous surplus of coffee production in
Brazil.
At the end of the 1920s, coffee prices were at rock-bottom and coffee was
sometimes only good enough to be used as fuel. The Brazilian bankers
wanted a popular coffee to be developed that could be consumed where a cup
of coffee was otherwise not so easily available. From this, the idea of a
soluble coffee in the form of cubes or tablets originated. This was supposed to
boost sales without harming the traditional form of coffee consumption, but
instead to make it more popular.
Nestle agrees and begins several years of research into the problem.
The coffee specialist, Max Morgenthaler, was on a mission to create
a delicious cup of coffee simply by adding water. Max and his team
worked hard to find a new way to make instant coffee that would retain
the coffee’s natural flavour.
After 7 years of development in 1937, they found NESCAFÉ. Named
by using the first three letters in Nestlé and suffixing it with ‘café’,
NESCAFÉ became the new name in coffee. The first commercially
successful soluble coffee, Switzerland, on APRIL 1st 1938.
Today more than 5,500 cups of NESCAFÉ instant coffee are consumed every
second with different varieties catering to different tastes and preferences
around the globe.
For the first half of the next decade, however, World War II hindered its
success in Europe. NESCAFÉ was soon exported to France, Great
Britain and the USA. American forces played a key role in re-
launching NESCAFÉ in Europe by virtue of the fact that it was included
in their food rations. Its popularity grew rapidly through the rest of the
decade.
By the 1950s, coffee had become the beverage of choice for
teenagers, who were flocking to coffee-houses to hear the new rock ’n’
roll music.
In 1965 NESCAFÉ continued to bring the world’s best cup of coffee by
introducing freeze-dried soluble coffee with the launch of Gold Blend
A few years later, a new technology was invented to capture more
aroma and flavor from every single coffee bean. In 1994 the ‘full
aroma’ process was invented to make the unique quality and character
of NESCAFÉ even better.
It is also the 3rd most valuable brand in the entire drinks sector.
Goals /Achivements
Giving people the unique moments (comfort, relaxations) through Nescafe.
Stress, pressure, working overtime has led the people to have at least a cup of
Nescafe coffee to relax them, having chit-chat with friends/colleagues as well,
to prevent from emotional influences
Promotion of Nescafe in India
Availability of NESCAFE enhanced through an expansion of the
vending machine network in India.
Nescafe has been doing 360 degree promotional activities like
Crm, pop, vending machine network etc in India
Nestle set up ‘Café Nescafe’ and ‘Coffee Corners’ across metros
and mini-metros of India
Price Promotion of Nescafe is also playing a price game in
coffee.
Weight price
sunrise 50 gm Rs.33.50
Target Audiences:
1. Working Adults (Primary)
Positioning
“Nescafé is a contemporary, up-beat brand of distinctive quality
that offers me a rewarding coffee experience every time,
everywhere.”
Bru Lite- Introduced in the year 2011 it is light-tasting and has classic-mocha
flavor
Bru Exotica- It is a premium-freeze-dried-coffee
Bru Cappuccino- Hard flavor for actual coffee lovers
Bru Gold – Is purely granulated with superior taste and uplifting aroma
Bru Gold Coffee
Bru Roast & Ground- Is aromatic filter coffee
Bru Instant – Made from robust beans it ensures best and instant coffee with fresh
aroma
Bru Select- Filter coffee at its best that is roasted slowly with patience to guarantee
perfection
SWOT