Kraft Foods Inc. is the second largest global brand in the food and drink sector. The group markets its products in 149 countries, representing more than 114,000 employees, and has a portfolio of 61 brands achieving a turnover of over 100 million dollars anually. Kraft Foods France, a subsidiary of the food group, is a leader in the two markets of fun products, namely coffee and chocolate, with a portfolio of 10 complementary brands.
The French branch of Kraft Foods will perhaps not have much to say to the consumer, but brands in its portfolio have a high reputation:
- Coffee: Carte Noire, Black Velvet, Jacques Vabre, Grandma, Maxwell House.
- Chocolate Passion: Milka, Suchard, Cote d'Or, Toblerone, Daim.
This multinational brand launched a machine with branded pods Tassimo in partnership with the home appliance company Braun, in July. This machine is special as it not only manufactures individual coffee pods, but also hot chocolate (Suchard) and tea (Twinnings). In addition, the pods (or T Disk) contain barcodes that allow the machine to identify the desired beverage and water is dosed accordingly.
Though the market for pods is more promising than that of coffee packets, it has nevertheless been the focus of two main companies: Nestle with its chic and expensive espresso Nespresso, and Sara Lee with Senseo. We will analyze the launch of Tassimo by looking at the trends of the market and its actors, and then we will establish a diagnosis of the current situation using SWOT analysis.
Key figures of the Market:
-The coffee market is in a slump: The market has dropped by 3.9% in volume, despite an increase of 0.6% in value in 2003. There was also a decrease of 15,500 tons in sales volume across seven years. If we consider the coffee market outside pods, the growth rate dropped by 5.2% in volume.
-Market for coffee pods: This market represents only 2% of the total market which recorded an increase of 126.3% in volume in 2003, representing a turnover of 67.3 million Euros.
-Retail market for hot drinks: While home consumption is declining, it is progressing in the related networks, and between 1997 and 2002, the average growth of the distribution of hot drinks (including 80% corresponding to the bar) was 9%.
-The market for coffee machines is down:
Coffee filter: After a 5% drop in volume in 2003, the market recorded a decline in sales (-16.9% in volume in late April 2004)
Espresso Machine: This market also underwent a decrease in sales volume of up to 8% in 2003 and -4.1% at end April 2004.
Tags: Kraft Foods France, coffee, chocolate, multinational brand, coffee pods, Nespresso, and Sara Lee with Senseo, Coffee filter.
[...] The main advantage of this coffee machine is its speed and ease of use. It does not use ground coffee in sachets, but has pods which do not need to be assayed. The same may be said for water, as the quantity is pre determined by the number of cups that you want. Moreover, the taste remains distinct (consumers' opinions on ciao) and the foam made by the machine lends more to the natural coffee. Key Factor: speed of use, ease of use, design and taste. [...]
[...] - The first pod machine (coffee maker) was launched by Nespresso in 1991 - Labeling of ATMs (Carte Noire, Douwe Egberts, Nescafe) 3. Major trends - Young people are appreciating coffee more and more lately (this drink is usually discovered for the first time in a company) and they prefer it over soft drinks. - Older people are reducing their consumption of coffee for health reasons. - Coffee has a more or less negative image of a product intended for "people under stress"; - The Cocooning trend: the French prefer to spend time at home instead of going to cafes, and bars. [...]
[...] these are the disadvantages it faces as a new entrant Match between consumer expectations and the characteristics of Tassimo Barriers to purchase: product awareness and incompatibility with other pods. Typical profile of the consumer: The typical consumer is a single man/woman or a couple (single dose). The multi beverage feature of Tassimo expands the target audience to families (Coffee for the husband, Espresso for the wife, and chocolate and tea for the children). 3.Matrix Strong competitive pressure: Competitive pressure: The competitive pressure is very light due to: - diversity of products - strength of competitors (Nestle & Senseo) Horizontal Analysis: The customers place considerable pressure on the market since they have a large number of choices. [...]
[...] To investigate major competitors for the Tassimo, we selected Senseo and Nespresso. Here are some general comparative data on these three brands: Date of entry Price of Price of Quantity Turnover the the pod Sold Machine Part 2 : Current status of Tassimo 1. An Analysis of the characteristics of Tassimo, compared to its competitors It has an intermediate positioning, with a differentiated product (multi character drinks) with strengths in value, offers of pods, and innovation. However, Tassimo does not have the seniority of its two competitors. [...]
[...] The main advantage of this machine is its design and simplicity. Key Factor: design, simplicity - De'Longhi Espresso Each coffee is different. This apparatus uses the same system as the coffee maker released earlier, but is more inclined towards quality and taste. Indeed, its main asset is the taste it produces and its foam. This is the only range of five coffee makers that take up space and have a common design. Key Factor: taste - Moulinex Crystal, Moulinex Cocoon: Both machines are similar, and are thus studied together. [...]
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