If more coffee cannot be sold, sell better quality!

There is intense competition in the coffee market. The development of the instant coffee segment has slowed down and private labels have also appeared. On the other hand, quality is also becoming a priority. – It is no surprise that private labels have appeared in the instant coffee segment, as it is easier to become successful in a developing category, than to perform constantly well for decades in another one – comments Beatrix Pálvölgyi, PR manager of Sara Lee Hungary. In spite of the expansion of the instant coffee segment, the overall market shows some decline as a result of two developments. One is the spectacular success of energy drinks, which are direct competitors of coffee and the other is the increase of average prices in all segments. – The price of coffee is very sensitive to many influences. World market prices of both arabica and robusta have grown significantly this year – says Ágnes Szíjjártó Ágnes, PR manager of Tchibo Budapest Kft. As a result of growing world market prices, the share of private labels in the ground coffee market has begun to decline. Hungary was the first country in the Central and Eastern European region to see the introduction of the Senseo® low pressure vapour percolator system by Sara Lee and Philips. With PreDouwe Egberts Senseo coffee cartridges, the specially processed coffee is pre-portioned, which speeds up the process of making coffee substantially and ensures uniform quality for each serving. Over 12 million systems have been sold world-wide in the five years since its introduction, and approximately 70 million cups of coffee are made each week using the system. 2 million cartridges have been sold in Hungary so far. – We have introduced Tchibo Family Intense this year, which is the “sister” brand of Family Classic – says Ágnes Szíjjártó. Intense is a more intense, characteristic flavour of the well known brand in red packaging, which has been received favourably by consumers. Another innovation of the company for 2007 is Espresso Gusto, which is a creamy, excellent quality espresso coffee to be ground directly before percolation. Though average prices of instant 3in1 and 2in1 products have been falling till the end of last year, prices are rising now. A response to this challenge is expanding the target group to include even younger age groups, like Douwe Egberts is doing with its 3in1 products, namely the 3in1 KID child drink. – This is based on the same concept as the original 3 in 1 product for adults, but it is free of caffeine and can be prepared just as easily – says Beátrix Pálvölgyi. Tchibo has also renewed its product range this year. – Our new packaging is more colourful and youthful. Boxes with 25 servings are practical and economical – says Ágnes Szíjjártó. – We have also introduced a new product, Tchibo 3in1 Vanilla – she adds. The share of capuccinos in the instant segment continues to shrink but Eszter Beraki, brand manager of the major brand La Festa is optimistic: – 3 in 1 products offer an alternative primarily to classic coffees and much less to capuccino, which still has a strong consumer base. – New innovations are still successful in expanding market shares in the short run. The question is what kind of innovation will be needed to enhance market shares in the long run.– comments Andrea Princz Andrea, Senior Brand Manager of Nestlé Hungária. They have organised an independent promotional campaign for their instant coffee products for the first time this year.