Coffee is a beverage that is prepared from coffee beans obtained from the coffee plants. These coffee beans are found in coffee cherries, and it is the most traded agricultural products in the world. Coffee has caffeine, which has a stimulating effect on human. Instant coffee is prepared by freeze dying after which it can be hydrated.
Marketing situation of coffee
Instant coffee exists in three different forms spray dried, liquid coffee extracts and freeze-dried. Coffee has been a social beverage that has been consumed widely. Instant coffee accounts for the bulk of Abu Dhabi coffee sales. Statistics on the consumption between fresh and instant coffee displays a great range of variation. There is an increase in the demand for instant coffee compared to the traditional coffees such as Arabic and Turkish. There is a decline in the consumption of traditional coffee with the corresponding increase in the consumption of the branded coffee such as instant coffee as well as other exotic coffee such as cappuccino, and Mocha. This shows that Abu Dhabi like any other part of the world is undergoing change. These changes have lead to the increase in the consumption of instant coffee.
Instant coffee that is consumed in the region is imported from different areas such as Malaysia and Brazil. The raw materials that are imported are packed in bottles and sachets. The product is also imported from directly from Singapore. There are two main types of coffee that are available in the market that is coffee Arabica and Robusta coffee. These coffees are available in the international markets. These coffee varieties differ in their flavor with Robusta producing inferior taste and more caffeine content. The consumption of instant coffee products in Abu Dhabi has been affected by the challenges that are facing any other products that are facing international product brand management which are managed by multi international companies. There is a rapid growth in the growth of out of home fresh coffee market. This type of coffee drinking spree has built a strong loyalty to the product as currently it is viewed an in-home product.
In Abu Dhabi, the instant coffee producers acknowledge the fact that it is not because the consumers have recognized the need for consumption of coffee that will make them go for instant coffee as their choice. Producers should be able to devise strategies to make the consumers realize the advantages that are there when consuming the instant coffee. Every consumer has at least one experience on the search of the information before buying his or her coffee products. Information search can be internal which involves gathering relevant retrieved knowledge both from external and internal sources in order to come up with enough information on the product. Most consumers rely on their own experiences or the experiences of others when buying instant coffee product. Currently, consumers rely on the existing knowledge when making decisions of buying coffee.
The degree of customer satisfaction determines the consumers' reliance on the internal search. The consumer's use to a larger extent external search as a means of evaluating ones available knowledge on the different coffee product varieties. When a customer tries a different brand and finds it to be more satisfying than the one that he has been consuming it will motivate the consumer to go and buy it. The brand and company loyalty plays a major role in the purchase of instant coffee products. Consumers build continuous satisfaction and expectation about the choice of the products that they use. The producers should form intimate connections with consumers in order to maintain them. The criteria used by consumers in Abu Dhabi to evaluate coffee are based on the quality of the product, price, availability, good taste, beautiful aroma, brand name, as well as packaging of the product. Packaging of instant coffee is important since this product is sold in supermarkets. Some plastic bags may ruin the quality of coffee.
Companies such as Star buck have gone to a greater extent of giving a free bag of ground beans to costomers who are not satisfied with their instant coffee. This strategic measure has increase the consumption of their instant coffee. Star buck is confident that consumers are happy with the taste as well as the quality of their products. This move is also expected to attract the consumers who have not tried the instant coffee product.
Consumer's routine behavior in Abu Dhabi also constitutes the differences in the consumption of instant coffee. For instance, routine behavior of the consumers' such as an addition of sugar and milk to the coffee are the customs that guide consumers taste. The Arabic culture of the people of Abu Dhabi has influenced the behaviors and the approach towards the use of the modern coffee products. Coffee marketers have been trying to fight the competition that is because of the consumption of other forms of drinks. Consumption specialty coffee such as cappuccino and cafe mocha is associated to young adults of ages between 18- 24 years.
The social class and the lifestyle of the consumers also determine consumption of instant coffee. The unequal distribution of variables such as income, education, consumer goods that determines people social hierarchy. For the past years, there has been a notable change in the consumption of instant coffee to be associated with certain groups of people with different social classes.
Coffee drinkers in Abu Dhabi have varying degree of love for coffee. This varying degree of love is because of varying choices in terms of taste, coffee experience that have different preferences and standards. Consumption of instant coffee is affected since most people who have the time to prepare their own coffee at home prefer regular coffee to instant coffee. This is because regular coffee can be enjoyed any time. Since instant coffee is a modern, type of coffee there those Individuals who may not enjoy the taste of instant coffee. In terms of preparation, instant coffee is easy to prepare compared to the regular coffee. It takes a shorter time to prepare and it does not require stepwise procedure to prepare it. In terms of taste, regular coffee has a stronger and a more boulder flavor. Most people do not consume instant coffee with the reasons that the very necessary flavors of coffee are lost during the processing procedure of developing instant coffee. In terms of market range, instant coffee is preferred to regular coffee as it is cheaper. Since it undergoes additional processing and therefore it is less expensive than regular coffee. Regular coffee has higher premiums, which is primarily because of its promising taste.
Consumption instant coffee is also affected by the presence of other beverages such as tea, which is, has been existing for a long period. Many people would go for tea bags to coffee since before coffee was introduced people used to take tea as a beverage. Other people prefer tea because of health reasons, as they believe that tea has less caffeine as compared to coffee. The demand and the supply of coffee berries also affects the quality of the coffee produced which in turn affects the rate of consumption of coffee due to price inflation and changes in the taste as well as other factors that determine the quality of coffee.
Instant coffee faces completion from the Arabic coffee that is mostly cultivated in Abu Dhabi, and it is widely used to prepare the famous black Arabic coffee which has a nice aroma and taste. The recipe that is used to prepare the Arabic coffee is simple and takes a very short time. The brands of instant coffee with global management such as Nescafe are facing competition from the local produced coffee that existed for a long time. This type of instant coffee faces increased organizational complexity unlike other regional brands that are produced locally. They also face the lack of diminished local market
Instant coffee products distribution
Companies such as Emirates Snacks and Foods market instant coffee, which has developed into a well-known player I the marketing and distribution of instant coffee. This company has a diversified range of products that they distribute apart from coffee. The distribution by the Emirates snacks and foods is throughout Abu Dhabi is supported by smaller distribution warehouses in Al Ain, Ras Al Khaimah and Fujairah. Modern storage facilities are used. The distribution merchandise consists of persons in charge of sales and distribution, merchandises as well is the marketing and delivery personnel. There are also operating nationwide trucks, which distribute the instant coffee to various places, and locations, which are approximately 4000 outlets. Aldar market, which is found centrally located in Abu Dhabi, plays a major source of market for the instant coffee. International architects design the market and its central location is aimed at satisfying the needs of the long-term residents who are residing in the area. It has outdoor boutiques, retail stores, flexible roofs, which allows a lot of light to pass through it.
Aldar market is as if a city within a city and the residents of Abu Dhabi finds it convenient as it has all the local needs that a family would need. Starbuck is the leading coffee company that markets and distributes coffee in the world. Most distribution of instant coffee in Abu Dhabi is through this company. Recently Starbuck has developed a brand of instant coffee but the challenges that it is facing is that the quality of the produce that they produce is lower compared to the other types of brands. It has the best supply chain operations, and it is developed in its merchandise. They do retail distribution of the instant coffee in the grocery shops, local shops and in kiosks. Their diverse distribution channel has allowed the instant coffee to be distributed to different places without problems. The instant coffee that is produced is marketed to different regions of the world. The demand for instant coffee in Abu Dhabi is increasing due to increasing awareness on the health benefit of the coffee.
Nescafe instant coffee brand
Nestle Company produces Nescafe, which is the world's largest beverage. It has announced that the consumption of Nescafe has increase and it has recorded a remarkable annual growth of about 15%. This growth has become steady over the past few years. The consumption of instant soluble coffee in Abu Dhabi has grown five times as from the way it was in the year 2000.
For over fifty years that Nescafe has been in Abu Dhabi, it is seen to blend very well with the culture of the region. When Nescafe was introduced into the region, consumption of tea was more prevalent in the region. Currently many people Consume Nescafe more than tea. They believe that Nescafe is much better than tea. Nescafe is becoming the beverage of choice for many young generations. Nescafe was originally found in Ethiopia, and the consumption of coffee as a habit was originally popularized in the Arabic countries. Currently the beans that are selected for the production of Nescafe come from all over the world including major coffee producing areas such as Brazil, Kenya, Columbia and Costa Rica. Although coffee originated in the Middle East, it has spread to the other regions within and without including Abu Dhabi. Consumers in Abu Dhabi use coffee to start their day and culture have been born of enjoying coffee with a group of friends any time of the day.
Nestle has been promoting the consumption of instant coffee in this region. During the introduction of Nescafe to the region, tea was the most consumed together with cardamom. Currently, the consumption of instant coffee is more considering all senses, moods and in every choice of the occasion and daily lives.
Nescafe has been produced with the understanding of the consumers' preferences in taste, habits and the changing trends. This has increased demand for Nescafe as compared with others. Nestle company fundamental objective is to prepare quality product that will be enjoyed by the consumers. The process of procuring quality beans as well as blending process is done in such a way that there is exhaustive extraction of the best flavors in the coffee, which gives Nescafe a distinctive quality taste. The understanding of the local consumer preference is one of the main objectives. Through this understanding, it ensures that a wider market is created which matches the consumers liking (Oxford business group, 2007).
Currently, at least 4000 cups of Nescafe are consumed worldwide, each second. This makes Nescafe to be one of the most widely consumed brand of instant coffee. Nescafe faces competition from the Baristas coffee company in this region. This company operates through a chain of Espresso Bars under the brand name, Barista. Barista instant coffee brands are growing in number. It is currently listed among the top 100 brands. It has several coffee bars in the urban centers it several other outlets. It has different specialties of brands to suit different consumers. In their coffee bars, they have other products such as ice cream to offer to its customers. Majority of consumers that come in for coffee come in the evening, therefore the capacity of the coffee shops are not utilized all throughout the evening. The cafes that are selling instant coffee should strategic ways of ensuring that they have managed to attract more customers during the odd hours of the day. Coffee is the most products that are consumed in the coffee bars followed by cold products.
Nescafe is directly related to consumers compared to other brands of instant coffee consumed in Abu Dhabi. Nescafe is worth around 1.3 billion dollars. According to the inter brand study on consumption, Nescafe has had more benefit in the increase on consumers in that they have educated the consumers on the health benefits that are associated with the consumption of the beverage. The first version of the product of Nescafe did not have a very good taste, and the form of packaging that was used was simple. It was made of 100% coffee with the use of carbohydrates as the stabilizers. The goal of the producers is to ensure that highest consumption levels are achieved. During the 50's and the 60's, the brand values were family oriented. The advertisements that were used previously to market this brand were not very prominent. Initial campaigns helped to create awareness. The brand was more focused on the young people. Packaging of the product should be in a way that will attract the local consumers. It should also be packaged in a way that is suitable for the local market.
According to a recent study that was carried out by Nestle, consumers in Abu Dhabi are enjoying more the instant coffee Nescafe more than other brands of instant coffee. In 2002, Nestle introduced the brand Red Mug Line that was designed to suit the taste of consumers from Abu Dhabi. Nescafe my cup was launched in the year 2005 and was designed to fit the consumer tastes of those people from the region who preferred it to the Red Mug Line.
Whole sellers and street hawkers form the largest Nescafe resellers in Abu Dhabi. Traditional retail shops sell widely consumed Nescafe, which is packaged in small packs while street venders sell the iced coffee, which is ready made. Other phenomenon witnessed includes the invention of the vending machines, which are placed in offices and in front of public buildings in the region (BNET, 1999).
Market strategy for Nescafe
Nescafe has developed very good marketing strategies in Abu Dhabi. Considering the socio cultural environment they have taken advantage of the fact that coffee is consumed as culture in this region.They have also considered other factors such as the legal environment, the economic environment and the changing technology. The strategies that Nescafe has used to enter the market include operational efficiency, innovation and renovation, product availability and consumer communication. Aldar market forms a central market for the sale of the Nescafe instant coffee as it is centrally located and it is more convenient for all the people who want to go for shopping in this region. In Abu Dhabi, the market share, for example, of the instant coffee products has risen when compared to the other drinks.
It has grown by about 5% since 2000. Nescafe also is the leading in the category, in the market share by 88% thereby making it the world's leading coffee brand. The greatest achievement of Nescafe in the region is its competitive advantage over other brands in that they have been able to Co ordinate their innovations across all the product brands and also the market range of their products. They have managed to maintain their consumers. Product innovations and consumer insight has been found to be very stable in creating new market developments. This is very important in developing market for low-income consumers in the region.
Based on the product, Nescafe has many other product variations, which vary in the tastes that are selected based on the kind of consumers who consume the product. Different consumers in different regions have different preferences, and Nescafe has capitalized on this to produce high quality brands depending on the market. The product is packages in different box sizes, which ensures that all people of different social classes are able to purchase the commodity. Nescafe sold in a variety of coffee shops have different prices. In Abu Dhabi, many coffee shops sell the coffee at more convenient places in the city. Nescafe has continued to invent other good products such as Nespresso which gaining market, and it has become highly successful. Te producer has aimed at upholding sustainable business practices through ensuring that there is a continuous streamline of quality raw materials, which will in turn, lead to the sustainable development of quality products. Both Robusta and Arabic beans produce Nescafe. This ensures that there is a constant supply of the raw materials that are used to produce this product (BNET, 1999).
Nescafe is the leading instant coffee brand in the market. It is highly consumed out of the total soluble market Nescafe has a 90% share and the type Nescafe frappe represent about 60% out of the total market share. The market size is struggling to grow bigger each time.
Nescafe uses that the price of the commodity is regulated such that it is expensive to the market built it ensure that consumers are not exploited, and the production costs are met without incurring any losses.Many coffee selling shops and restaurant that have hiked their prices have compensated this through the provision of efficient and quality services. The services that are offered at these places are relaxed and very friendly. The staff working in these places is people who are highly trained and they are friendlier. This attracts more customers who are in need of these services. Most cafes at Abu Dhabi have discounts for visitors who wish to take coffee and leave.
Price regulation of coffee, Nescafe from the producers will give a chance for global coordination of the brand, which will give way for cost -effective expansion into new markets in the region with the existing products. Global coffee prices have been increasing due to the increase in the demand for coffee. This is in relation to the increasing supply concerns in the region. Decrease in the supply of raw material will increase the cost of production of the Nescafe thereby increasing the overall cost of the final product. Decrease in the supply of the coffee increases the costs of importing the coffee from other countries such as India and Brazil. The international market has witnessed shortage in the supply due to the adverse weather in Brazil.
Nescafe has ensured that it has well established markets in the region. It has opened coffee shops in the institution such as universities, which attracts the student population. The student population falls under the age between 18 -25 years, which from statistics it has been seen that this is the range of age that consumes more Nescafe.
Nescafe has coffee shops around big business centers in the city. This is to attract customers from all over the city. It also attracts the consumers who have come to do shopping at the business centre. Nescafe has captured the market at the sports centers to attract the players and the other crowds of people who have come to watch the games. Different bus stations and other stations such as the railway station form a good market to attract the passengers who have alighted form the buses and the ones that are waiting for the buses.
Nestle is working on ensuring that there is an entire cover of the value chain from the suppliers down to consumers to ensure that the product is available all the time. The company considered the growing concern for the quality and price by the consumers. The awareness has increased with the increased knowledge on the fair- trade movements.
Drinking coffee in this area has become sophisticated due to changes in the lifestyles and this drinking of coffee is affected by the social lifestyle. There is a growing variety of the coffee shops that are becoming popular over others. Aldar market forms the best place with its pools where friends and families can sit by the pool and relax over a cup of coffee. The central market has many food courts with different types of food ranging from Mediterranean to Morocco, Italian or French foods. It offers a good dining place. Nestle has used the cafe concept to attract large outdoor consumption by urban families that usually spend time outside large shopping malls and in entertainment joints. Similarity in the consumer demands will benefit the producer from the extra cost that is incurred in order to satisfy individual group of consumers.
This similarity in consumer demand in Abu Dhabi has presented an opportunity for consumer coordination in the area. It has facilitated the coordination between the consumers, suppliers and most importantly the innovation engine. For global brands such as Nescafe, which posses a global name of the brand gives a better chance for market communication amongst people of different cultures. Being a cosmopolitan city Abu Dhabi has many foreign people who visit the area as a tourist or for business trips, this has allowed for the Co ordination of the consumer market. Where the characteristics of the consumers justifies it gives a chance for the producers to produce more varieties and more quantities in order to satisfy all the consumers (Nestlé, 2008).
The promotion of this product is based on what the consumer likes. Nescafe has created a good link with the consumers to ensure that consumers' satisfaction comes first. Nescafe that is sold is supposed to be packaged in smaller quantities to ensure that all consumers are considered. Marketing promotions are done in different ways such as through promoting video games, drinks and through organizing consumer education programs on the commodity. Promotions can also be done from the internet to give a chance to the internet surfers to comment on the brand that they see on the screen. After which all these comments are sampled to be able to come up with consumers' preference. Nestle marketed its coffee in Nescafe Gold range.
Particular case of Nescafe, which has a global unique brand name and a central position as well as similar executions on the prices, and services that are involved in packaging and pricing are kept constant in the global market. Nescafe has been proven to have a global acceptance, which makes it more appealing more than national or regional brands.
In Abu Dhabi Nescafe has launched the coffee bar concept in order to market the coffee across the region. Many coffee bars are existing in this region. This attracts many customers who are lovers of coffee. Coffee days have also been used as a means of promoting coffee consumption. These coffee days are accompanied by celebrations and sports which attracts since it was launched it has attracted more consumers and it has built a strong consumer loyalty of the brand. Several other promotional strategies have been put in place in order to market the coffee. Marketing of the recent Nescafe brand by attaching it to other products such as cakes and bread will give a wider range of distribution as since it is a free sample may people will try to find out how it tastes (Nescafe leads the soluble coffee market, 2006).
In an online survey that was conducted by Nescafe, they found out that Nescafe is the most consumed Instant coffee in the region. Coffee lovers from Abu Dhabi are suffering unnecessary guilt about their addicted habits of coffee consumption. 86% of consumers in the region believe that they should consume a maximum of 2 cups a day almost half of the consumers end up consuming 3-4 cups per day. This is considered by nutritionist to be a moderate serving. It is also considered to provide positive health benefits. This help in easing guilt from the coffee lovers who are guilty that they are over consuming. This shows that there are many people in Abu Dhabi ho think that they are consuming more coffee and in the real sense, they are just consuming enough.
There are myths that are surrounding coffee consumption. This has lead to misconceived judgment that coffee consumption is harmful to one's health. In the study that was conducted by Nescafe in the Arabia website, they interviewed about 740 interviewees form Abu Dhabi about their knowledge on the antioxidants in order to highlight the facts that are surrounding the consumption of this drink, which was part of the awareness campaign the study showed interesting results. From the total people that were interviewed in the region three quarters believed that the coffee that they consumed had positive health benefits. Approximately 40% of the respondents had a clear understanding of the antioxidants while the greater range appeared t be only consuming the instant coffee because of the habit formed. Although there is a clear understanding of the antioxidants, only a few people are aware of how they work. About 47 % of the men that were interviewed had a clear understanding of what the antioxidant were and their effects on their health as compared to women.
The speed of geographical expansion of the cit y of Abu Dhabi has allowed Nescafe company to study and share insights across the brands. Abu Dhabi is a cosmopolitan town, which gives Nescafe teams to learn more from the consumer needs and giving way for release into the market of new products and innovations.
Most consumers of Nescafe have a positive perception about the quality of coffee that they are offered to at the café. Nescafe benefits from the fact that most of the respondents do not need additional product to go with the coffee that they are taking. Most cafes in the region offer a good level of satisfaction to the customers. The level of satisfaction varies depending on the attitude of the attendants and sales persons. This enhances loyalty of consumers to the brands that sure consumed.