Suski 1

Luciano Suski

MKBU-3435

Dr. Michael Chatallas

29 October 2008

Brand Study: Nescafé

Introduction

The start point of this study is both the Interbrand and Financial Times Global Brands

reports issued in 2008. Among the 100 Global brands, Nescafé was chosen for being directly related

to the consumer, making the consumer behavior analysis much clearer and more interesting.

Nescafé brand is owned by Nestlé and it is worth around 13 billion dollars. Each year

approximately 94 billion Nescafé cups are sold around the word, which is around 3,000 cups every

second. According to the Interbrand study, the brand “has benefitted from the increase in demand

for premium coffees”, and has also educated its consumers about the health benefits of the

beverage. On the other hand, the Financial Times Special Report does not bring the Nescafé brand

in its global ranking, but in the sectors ranking, more specifically the coffee rank, this brand is the

most valuable. The Financial Times Report also claims that instant coffee market is losing space to

the ground coffee. What is shown in this study is less related to market share struggles and more

focused on the brands effort to increase consumer awareness and value addition. Moreover, this

study focuses on the identification and description of the psychological application of the Nescafé

brand strategy.

Brand Perception, Hedonic Consumption

Along the years, the Nescafé has changed a lot. The first versions of the product did not

taste very well and the package was very simple. Actually, only in 1954, twenty two years after its

creation, it was made with 100% coffee, since its previously version used carbohydrates to stabilize
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the product. One year later, the Nescafé Blend 37 was introduced and it took nine more years for the

product effectively retains the coffee flavor (in 1964). But during the 80’s the brand had a dramatic

improvement in its product line, introducing different versions. For example, in 1984 the first

premium, freeze dried coffee, Gold Blend, was launched, it had a rich smooth flavor. The following

year, Nestlé launched Alta Rica, which was made from a combination of top grade “A” beans from

Latin America. It was described as “a full bodied, rich, after dinner coffee”. Nowadays, Nescafé has

wide range of choice, from cappucinos, lattes and mochas, to a rich coffee flavor brand named

Nescafé Gold Blend. In UK, the most developed brand market in the world, there are around 20

different Nescafé products. Thus, there is a transition from the exclusively utilitarian consumption,

when Nescafé was just an instant coffee, to a more hedonic consumption, when the brand started to

diversify, creating dozens of different blends.

Brand Perception, Semiotics

Besides some packages and products changes, Nescafé logotype was always the same since

its origin. The logotype borrowed the same Nestlé format, and the word Nescafé is a combination of

the three first letters of Nestlé and “café”, which is “coffee” in portuguese. The semantics of the

brand name basically describe the product, and also the phonetics are smooth for most languages.

Basically the logotype improvements followed the same improvements made on the Nestlé

logotype. The symbol added to convey the brand meaning was the red mug. Most commercials

scenes show someone holding the red mug with the Nescafé logotype written in the vertical

position. Probably the red color of the mug was chosen to emphasize the energy of the drink, since

coffee is a stimulating drink and red is perfect to describe this state of mind. Therefore, the

semiotics triangle would display on the sign side, the red mug, on the object side, the granulated

instant coffee, or the product itself, and on the interpretant side, the wellness state of a good cup of

coffee.
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Pictures - Nescafé Logotype on the Red Mug, and people enjoying coffee with the Red Mug

Object
Product

Nescafé
Instant
Object
Coffee
Product

Nescafé Person
Red Enjoying
Mug Coffee
Sign Interpretant
Image Meaning

Picture - Nescafé Semiotics Triangle

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Brand Learning, Stimulus Generalization

Nescafé is such a well known brand that in some countries that it tends to be generalized. In

the Middle East, in 2005, the brand sales increased 15%, which represented 1.3 billion cups. The

region already had coffee drinking as a cultural identity, but instant coffee was not usual. Now, the

kick-start of the day and the friends meetings have Nescafé. In Egypt, for instance, it is very

common to hear people using the word Nescafe to describe every soluble coffee.

Another application of the stimulus generalization is the fact that the brand has more than

200 different products worldwide under the same name. The company strategy around all this

different products is being a big success, since each product has its own features, but all contribute

to add value to the brand.

Brand Learning, Associative Networks

The channel used to construct this net of concepts for Nescafé was based on the

brandstag.net. This website allows internet surfers to add any word they have in their mind to the

brand they see on the screen. After that, an internal website database register all words typed to the

specific brand, counts them and constructs a visual tag net, enlarging and bolding the most repeated

tags. So far the website has 77,000 tags of hundreds of brands, and Nescafé is included. Besides

that, is also possible to divide the tags by nationality, giving a different perspective over the

concepts associated to the brand.

Over a global perspective, the main concept associated to the brand is “coffee” and the

second is “instant”, after these comes “chocolate”, “cheap”, “hot” and “morning”. The concept “bad

coffee” is also emphasized, maybe showing that the quality of the product is not that satisfying.

In Brazil, for instance, “coffee” is also the main concept, followed by “delicious” and “bad”.

Another interesting concept is “coffee machine”. The brand was associated with the purchase

experience. In fact, most coffee machines in Brazil are Nescafé, what explains the association.
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Even being a very basic analysis, the concepts “coffee” and “instant” are rooted in peoples

mind, whether if it is good or bad, the brand that instantly comes to peoples mind when they think

about instant coffee is Nescafé.

Motivations, Product Involvement

When it comes to consumer experiencing the product, Nestlé’s strategies around the brand

are aggressive. The company wants to broaden consumption opportunities for coffee, getting the

product to the consumer whenever, wherever and however is wanted. According to the Food &

Drink Weekly article of September 1999 “The goal is to be within arm's reach wherever consumers

go. This means setting up coffee bars in malls, movie theatres, on campus and setting up coffee

outlets in convenience stores and gas stations. Even transforming the traditional vending machine

coffee, which can sometimes be compared to molten-hot liquid mud, Nescafe is redefining the

automated coffee dispenser into a gourmet delight.” In Asian and Europe markets, the main idea is

to add new ready to drink coffee beverages. Nestlé also want to implement coffee shops with the

Nescafé brand as a franchising chain. Thus, Nestlé wants with Nescafé brand to develop alternative

channels, other than supermarket, to offer to the consumer high quality products whether hot or cold

drinks.

Motivations, Consumer Values

This study already shown the history the changes of Nescafé’s along the years. During this

period, the values related to the consumer also have developed. During the 50’s and 60’s, the brand

values were more family oriented. Advertisements usually shown family reunions, special around

the table during the time of the meals. Initial campaigns created awareness of hot instant coffee, its

invigorating qualities, and the easy and fast way of making it. The period between the 60’s and the

70’s was more youth oriented. The brand was more focused on the young people, specially the
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groups who had relation with the music. Hippies and rock fans were targeted with specific

advertisements. The youth oriented values followed the 80’s and 90’s, but as the Nescafé product

array broaden, different values were added, such as sophistication (with the Gold Blend) and

differentiation (with cappucinos and mochas). The brand has built tradition for being such a long

time in the market. In addition, when the head of marketing for beverages at Nescafe in Australia,

Tanya Marler, talks about the instant coffee taking over the green tea market, she says that the brand

“has a focus on health and wellness and it is really moving to meet a consumer need.” So

nowadays, this “wellness” concept, which is based on a healthy lifestyle, is the main value that

bond Nescafé to consumers.

Brand personality, General Traits

The Nescafé brand usually had a relation with an atmosphere of tasteful coffee pleasure,

warm and friendly. According to the article written by Reg Butler to the Tea & Coffee Trade Journal

in 1999, “to match the personality of the product, advertising for the past 10 years has concentrated

on the present television theme of "the magic world of endless pleasure" precisely targeted to the

core target audience aged 17-30. Clever visuals are used to show a transformation into a happy and

trendy world of parties and dancing with everything going well. The campaign offers stylish living

for the younger generation.”

During the 80’s in Greece, for instance, Nescafé tried to differentiate promotion of the

soluble product from hot to cold. Nescafe Frappe seemed to be more related to a world of freshness,

youth, and pleasure, while Nescafe Classic wanted to target audience aged 25 and older. Today, in

Greece, the two age groups overlap, even people in their 50s drink Frappe.

The global brand relies more on the coffee tradition, its historical value. It is also down-to-

earth, what means that is very sincere, warm and honest. Another personality dimension, according

to Aaker studies, could be excitement, mainly related to qualities such as friendly, youth and energy.
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Brand personality, Nescafé Worldwide

As said before, Nescafe has a wide range of products, and in some way some variables in its

personalities. But besides this variety, Nescafé has maintaining very well its unity. Across the

countries, the brand has being working to respond to all different demands that are based in

differences about the culture of drinking coffee.

In UK, for instance, although the traditionally tea market, Nescafé coffee market is the

number one in the world. The people's favorite flavor is the Original, and it is the clear leader. But

there are also other products, such as Gold Blend, Alta Rica, Cap Colombie, Kenjara, Fine Blend,

Blend 37, Black Gold, Cappucino, Espresso, Original Decaffeinated and Half Caff. Most of them

are hot and strong types of coffee. The main competitor in UK is Kenco

In France the brand faces a large Roast & Ground market. Even though, soluble coffee is

around one third of all coffee drunk. Most of soluble consumption there is based in chicory mix

products. The brand most common products there are Special Filtre (equivalent to Gold), Nescafé

Selection and Braséro. The main Nescafé competitors in France are Maxwell, Jacques Vabre, Carte

Noire.

In Japan, according to the information available on the Nescafé website, the level of coffee

consumed is similar to the UK, but, liquid ready to drink coffee in cans & bottles is significant. The

majority consumption is of cold soluble coffee, equating to one in five cups, and most of their hot

coffee is drunk with creamer. The main competitiors there are Blendy, Maxim.

Even traditional coffee drinking cultures faces changes with the Nescafé brand. In Greece,

for instance, the traditional Greek Coffee, which is served in a tiny cup with a glass of cold water to

be drunk first to emphasize the coffee taste, was substituted in many cases by the coffee-colored

beverage in a tall glass with a drinking straw called Nescafé Frappe. The volume of coffee

consumption in this country is around 23,000-25,000 tons. Of this total, between 30-35% goes into
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soluble, and out of the total soluble market, Nescafe has a 90% share and Nescafe Frappe represents

about 60%.

In the USA Nescafé has been struggling to get a bigger market share. Roast and Ground

dominates, and the advent of Starbucks and coffee house chains has added glamour to the whole

coffee market. The largest coffee consumption market in the world still does not drink much

Nescafé. Americans have a special interest in flavored coffees and coffee specialities, so the

products sold here are Nestlé Taster's Choice, and Nescafé Classico - which is specially imported

for the hispanic population. The main competitors are Folgers, Maxwell House.

Recommendations

Nescafé is a traditional and historical brand that successfully spread worldwide responding

to most consumer needs, on an innovative and creative way. Besides having a considerable variety

of products, the brand goes on with its unity. The brand is strong, and it has, by far, the biggest

market share among its instant coffee competitors, around 80%. But this fact does not guarantee an

eternal profitability. Such as Coca-Cola, which is the number one brand in the World, Nescafé has

to work hard on its marketing strategies and develop even more innovative and creative attributes to

maintain its position. Specially these days, when the market tends to be taken, ironically, by the old

fashioned way of drinking coffee. Maybe, the wellness concept is not the best way to sell coffee. A

healthy lifestyle would certainly prefer whole ground coffee to the industrialized instant one, even if

it has more anti-oxidants. In such a skeptical and nature oriented society, industrialized and instant

are not so positive attributes. On the other hand, hedonic consumption and purchases experiences,

specially with services, creates a whole new dimension. The brand seems to be aware about this fact

and gradually is building a new way to enjoy coffee. The idea of creating service with franchising

stores selling instant coffee based drinks sounds very good. And as innovative as it happened in

Greece, with the “Frappe Nescafé”, which changed the way people enjoy coffee, the company can
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come up with something completely new, which can drive Nescafé to another direction, maintaing

its brand leadership and success.

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Works Cited:

AAKER, Jennifer Lynn “Consumption Symbols as Carriers of Culture: A Study of Japanese and

Spanish Brand Personality Constructs” Journal of Personality and Social Psychology. Vol. 81, No.

3, 2001, 492-508

BNET (1999) Nescafe Rolls Out New Line to Appeal to Younger Consumers [online] New York,

NY, USA. BNET Business Network Available from: http://findarticles.com/p/articles/mi_m0EUY/

is_35_5/ai_55756581/pg_1?tag=artBody;col1 [accessed 24 October 2008]

BRABECK, P. (2001) Winning and Maintaining Leadership [online] Zurich, Switzerland. News

Conference Available from: http://www.nestle.com/Resource.axd?Id=33CA82ED-8F2A-4FA2-

B035-FAD242E6C368 [accessed 24 October 2008]

BRANDTAGS (2008) Brand Tags [online] New York, NY, USA. Available from: http://

www.brandtags.net/browse.php?id=427 [accessed 24 October 2008]

BRANDTAGS (2008) Brazil Brand Tags [online] New York, NY, USA. Available from: http://

brazil.brandtags.net/browse.php?id=1238 [accessed 24 October 2008]

BUTLER, Reg (1998) How Nescafe frappe swept the Greek market [online] San Franciso, CA,

USA. All Business.com Available from: http://www.allbusiness.com/manufacturing/food-

manufacturing-food-coffee-tea/681448-1.html [accessed 24 October 2008]

CANNING, Simon (2008) Nescafe blend takes on green-tea market [online] Sydney, AU. The

Australian Business. Available from: http://www.theaustralian.news.com.au/story/

0,25197,24344985-7582,00.html [accessed 24 October 2008]

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FINANCIAL TIMES, Global Brand Special Report, Financial Times, 2008, New York, NY

INTERBRAND, Best Global Brands 2008, Creating and Managing Brand Value, 2008, New York,

NY

NESTLÉ (2008) Nescafé Around the World [online] Hayes, UK. Nestlé UK Ltd Available from:

http://www.nestle.co.uk/OurBrands/AboutOurBrands/Beverages/History+of+Instant+Coffee.htm

[accessed 24 October 2008]

NESTLÉ (2008) History of Instant Coffee [online] Hayes, UK. Nestlé UK Ltd Available from:

http://www.nestle.co.uk/OurBrands/AboutOurBrands/Beverages/History+of+Instant+Coffee.htm

[accessed 24 October 2008]

NESTLÉ (2006) Nescafé.com [online] Zurich, Switzerland Société des Produits Nestlé S.A

Available from: http://www.nescafe.com/ [accessed 24 October 2008]

SOLOMON, Michael R. “Consumer behavior: buying, selling, and being” 7th Ed. 2006, Prentice

Hall