In its early years, coffee was considered a luxury product reserved for the rich. Then in the 80s, this changed and coffee became a common beverage that the everyone could afford. Because of this changed image, sales plummeted and coffee companies had to work hard to restore coffee's luxury image. In order to do this they had to rethink their marketing strategies. They launched their best product – the espresso. In today's world of of globalization, cut-throat competition exists between companies coming up with varied flavors of coffee and the market is not the same anymore.
The consumption of traditional coffee has witnessed a lull for many years. At home, the French generally drink espressos made from coffee Arabica. Coffee lovers also look for other varieties such as the Moka made of coffee beans from Ethiopia or Supremo made of Columbian coffee beans. This year France recorded sales of 700,000 espresso machines, which is an increase of 9 or 10% (3.8 million in Europe). The sales figures of coffee rises about 40% every year. Espressos are only 10% of the coffee sold in supermarkets but have a turnover of 20%. These figures do not include sales in the parallel circuits.
Some important features of the coffee market are:
- In the early 90s, coffee was not only a common beverage but also a luxury product. “Carte Noire, un café nommé désir” which means ‘Carte Noire, a coffee called desire' and “L'or, de Maison du café”, which means ‘Gold, from the house of coffee' were two popular brands that sold coffee as a luxury product.
- The number of French coffee bars decreased significantly, from 200,000 in the 60s to 50,000 in the 90s.
- The sales of small electric coffee appliances rose during Christmas.
- After 7 years of testing in Switzerland, the first coffee machine was marketed in 1991 in France by Nespresso.
- Carte Noire, Maison du cafe and Nescafe noted an increase in the sales of coffee dispenser machines.
[...] To a global marketing strategy Market segmentation In France, there is no real distinction between coffee consumers. All the companies are targeting the maximum number of people that they can. The youth and the elderly are not the best target audience for reasons that have been explained above. The behavior for the rest of the population is quite uniform and there is not a great amount of difference among them when it comes to consumption and expectations of coffee. Of course, the best option for a company to grow would be to target the people who have the money to spend. [...]
[...] Innovation is not the only factor that guarantees success. The French market penetration strategy Why the French market? Generally, the French market is economically stable; however, the market experienced a recession until the early 90s. However, the number of potential customers was very high and this represented a good opportunity for growth. The coffee market was decreasing because of the lack of quality but its image could be easily relaunched by a good innovative product and a good communication strategy. [...]
[...] The fact that the patent of Nespresso is going to fall in the public domain soon will be the trigger for companies to produce a less expensive version of the same coffee, chocolate, or maybe even tea. Because of this, it is possible that we will see Nespresso coffee or coffee like Nespresso in supermarkets in the near future. This will be because the demand is increasing and that companies are not going to take charge of the distribution themselves. [...]
[...] Another reason for choosing the French market is the fact that at this time, they didn't use the Euro as currency. The Euro was regarded as a cause of inflation and was potentially dangerous for international transactions, especially for the American brands like Sara Lee and Kraft Foods. The main factor is that France has the the best coffee market in the world. When was the best time for the coffee market? The first companies who entered the market were labeled the pioneers of the market and benefited from this image. [...]
[...] Senseo can be found in French supermarkets. The success rate is so impressive that those distribution networks do not hesitate to stock Senseo's new products. This gives Senseo the power of negotiation and the ability to make the first move in this distribution channel when the market is completely globalized. No standard yet The success of Nespresso attracted the Americans. Their system is just like the iPod system. Each company arrives with its own standard, made to attract its own customers. [...]
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