This document analyzes competitive strategies for coffee brands in the Russian market. It identifies Nescafe as the market leader with 40% share pursuing a differentiation strategy with quality products and memorable advertising. Jacobs and Tchibo each have around 20% market share as challengers, with Jacobs focusing on family warmth and Tchibo on professionalism. Carte Noire, with 10% share, focuses on differentiation through fashion and luxury positioning. The document also describes campaigns run by each brand to communicate their strategic positioning, such as Nescafe's street tastings, Jacobs' family events on ice rinks, and Carte Noire's sponsorship of a fashion week.

1. Competitive
strategies for
coffee brands
Maria Kharitonenko
Anna Gulyaeva, 2014

2. Introduction
 In our presentation we analyzed
Russian coffee market and its main
producers and identified their
competitive strategies

3. While eating
42
15
12
8
8
5
5
4 2 Wake up
Relax
Calm down
Have a break
Treat oneself
Improve state
of health When thirsty
Needs for coffee
Get prepared

4. Has low Coffee
education:
In most cases
choice is made
based on the
awareness of the
Brand.
Use several
Brands
simultaneously
for themselves
and for the guests
Wising Up:
Smart shopping
for value for
money solutions:
discounts, doy
packs, cheap FD,
economy packs.
Are not Coffee
lovers:
Functional
consumption with
key need to wake
up, keep going,
energetic…
Main Peculiarities of Coffee
Consumption in Russia
Source: Coffee Culture U&A Study , IPSOS, 2012

5. Coffee Market in Russia
Soluble coffee 2013
-2%
Spray-dried(22%)
-13%
Mixed(29%)
-4%
AC Nielsen, Sales volume dynamics vs YTD 2012
Premium (27%)
+11%
Super premium (2%)
-3%
Economy(19%)
-2%
Freeze-dried
(49%)
+5%

6. Sales of coffee brands
AC Nielsen Market value share

7. Generic Strategies matrix
Overall Cost Leadership Differentiation
Cost Focus Differentiation Focus
‘Stuck in the
middle'
Competitive advantage
Low Cost High Cost
CompetitiveScope
NarrowBroad

8. Coffee Market in Russia
AC Nielsen, Sales volume dynamics vs YTD 2012
We consider instant coffee brands on Russian market and place them
onto the Generic Strategies matrix :
1. jacobs monarch
2. nescafe
3. tchibo
4. carte noire
5. jokey
6. jardin
7. chernaya karta
8. maxwell house
9. ambassador
10.moskovskaya kofeinya na payakh
11.milagro
12.moccona

9. Porter’s model
Jockey
Café Pele
Maxwell House
Nescafe Gold
Jacobs
Tchibo
Jardin
Red Price Carte Noire
Davidoff
Ambassador
Chernaya
Karta
Competitive advantage
Low Cost High Cost
CompetitiveScope
NarrowBroad

10. Possible Market Structure
Market Leader
40%
Market Challenger 30% Market Follower 20%
Market Nicher
10%

11. Possible Market Structure
market leader 40% Nescafe
market challenger 21% Jacobs
market challenger 19% Tchibo
market nicher 10% Carte Noire Davidoff
market followers all other brands <10%

12. Brand Nescafe
Most famous on the market,
With largest history!
Quality, proved with time
Remarkable und unchangeable design
Memorable advertising
But Nescafe Classic used to be the historical
leader but it started losing its leadership in 2013
because of aggressive competition.
Market Leader

13. Expanding
Total Market
Defensive
Strategy
A market leader can provide
different strategies

14. NESCAFE Classic Relaunch

15. Giraffe project implementationRevolution! New NESCAFE Classic!
• Delicious taste
• highest quality coffee beans
• Win in blind consumer test
60/40 against Jacobs Monarch!
Renewed recipe
• Form positive image
• New modern design for which customers are
ready to pay little bit more
Ultramodern design
• New TV commercial
• Internet
• Degustation
Promotional activities
STRATEGIC RELAUNCH OF THE BRAND – PRIORITY OF 2014 YEAR
start of sales: April 2014 года

16. THE NEW VISUAL IDENTITY SYSTEM
16

17. THE NESCAFÉ
ACCENT IS OUR
SPARK OF
INSPIRATION
17

18. A STRONG, VERSATILE
GRAPHIC
DEVICE
18

19. MAKES
EVERYDAY
IMAGES AND
PHRASES
PROPRIETARY
19

20. VISUAL
AND PROVIDES
TO ALL OUR
BRANDED
MATERIALS
INTEREST
20

21. 21

22. 22

23. REMAINS
NESCAFÉ
MUG
THE
TIMELESS
ICON
OUR
23

24. 24
A RECOGNISABLE SIGNATURE

25. BRINGS
PLAYFULNESS
AND
UNEXPECTEDNESS
TO THE BRAND’S
PERSONALITY
25

26. 26

27. 27

28. FOCAL
THE
HUB IS A
POINT
FOR
COFFEE
NESCAFÉ
28
AND
HUMAN
CONNECTIONS

29. FROM
PRODUCT
GREAT
INTRINSICS
29

30. TO
PRODUCT
GREAT
EXPERIENCE
30

31. TO
BRAND
GREAT
EXPERIENCE
31

32. 32
32

33. 33
33

34. 34

35. 35
THE RESULT IS A FLEXIBLE BUT CONSISTENT BRAND STYLE

36. 36
36
IT ALL STARTS WITH A

37. Mission
Build an association around Nescafe Classic with the ideal morning
coffee and underline the high taste characteristics of the product.
Solution
On a dark winter’s morning, when a new day was dawning, consumers
on their way to work were greeted by a mobile Nescafe café with LED
flames cosily lighting up the dark streets. Everyone was offered a cup of
aromatic, hot Nescafe Classic to warm their walk to work with a ‘Good
Morning’ wish.
Happy end
13 cities, 6 weeks, 463 873 tastings on the streets and in trade centres
Nescafe Classic “hot tastings”

38. The Five Competitive Forces
Competitive
advantage
Power of
buyers
Power of
suppliers
Threat of
substitutes Threat
of new
entrants
Rivalry

39.  In order to resist to five competitive
factors a company need to build
strong long-term relationship with its
stakeholder
 keep price competitive
 brand loyalty to keep customers from
rivals
The Five Competitive Forces

40. key emotional benchmarks
• family warmth and
friendshipJacobs
• professionalism,
aromaTchibo
• fashion, premium
level, luxury
Carte
Noire

41. Warmth of communication with jacobs
monarch
from 8 January to 27 february 2011, russia
creative BTL activity realized on ice rink
goal:
create strong emotional link between consumers and core ideas
of brand, jacobs monarch, “family warmth and friendship”
9 cities, ice rinks
next to ice rink there was green branded tent where people
could get warm and enjoy drinking coffee jacobs monarch with
their family and friends, and even sing karaoke!
for karaoke singing everyone could get one of the following
prizes: knitted gloves, scarf or sample of coffee 47,5g and
chance to win tickets on ice show
entertainment team played with people on ice rink
also there was a big installation of steaming coffeecup.
results:
121 000 degustations
22 573 people with gifts

42. tchibo support of the museum night in the biggest
russian cities with the “poetic museum” activation
to communicate that tchibo is more than just coffee, but an art of
creating it (careful beans choice, tasting and packaging), the
brand decided to organize poetical readings by famous russian
actors in big museums and during the popular night, gathering
big audience.
julia menshova, viktoria tolstoganova, alisa grebenjikova and
other popular actors read their favourite poems in special tchibo
zones.
sampling
coffee zones where baristas brewed coffee for visitors.
results
over 500 000 participants at 5 towns
approx. 7 000 000 RUR
tchibo: museum night
2012, big russian cities

43. carte noire: ural fashion week sponsorship
2008, ekaterinburg
carte noire sponsored big fashion even to promote
thir brand and to reveal its core idea – fashion and
luxery
26-30 november ekaterinburg hosts ural fashion week
every year to show the season fashion for spirg/summer.
people could digustate coffee carte noire and to evaluate its
taste.
it was successful tool for promotion and attaching the idea of
luxury to brand among consumers

44. Conclusion
 To create a competitive advantage
businesses should review their strengths
and pick the most appropriate strategy cost
leadership, differentiation or focus.

45. thank you for your attention!