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Tatas make a foray into branded instant coffee

By Ishita Ayan Dutt & Avishek Rakshit |Kolkata| Business Standards | December 01, 2015

Group will compete head-on with brands such as Nescafe from Nestle and Bru from Unilever

The beverage arm of the $110-billion (Rs 7 lakh crore) Tata Group on Monday announced foray into the Rs 1,300-crore instant coffee market, with a new brand, Tata Coffee Grand.

The move comes as the Rs 7,833-crore Tata Global Beverages (TGB) looks to increase revenues from the coffee division, one of two areas the company has identified as future growth drivers. TGB gets 75 per cent of its revenue from tea. Coffee and water contribute around 18 per cent and two per cent, respectively. The plan is to take coffee and water revenues to 35 per cent and seven per cent, respectively, in the next few years, as the company wishes to reduce its dependence on tea.

TGB had set the process in motion a few years earlier with a tie-up with global coffee house major Starbucks. At the time, there was big gap in the packaged coffee space in India.

Globally, TGB has brands such as Eight O' Clock Coffee and Grand in its portfolio. The initial plan was to extend subsidiary Tata Coffee's packaged coffee bean brand (Mr Bean) into the instant coffee space in India. However, this was shelved for a new product altogether.

Sushant Dash, regional president for TGB, said Tata Coffee Grand was developed in-house, after months of research and consumer studies.

A 50g bottle has been priced at Rs 130 in the north, west and eastern regions; in the south, it is seven to eight per cent lower, he said. The southern region accounts for 80 per cent of coffee consumption in India and is also driving the shift from roast and grind to instant coffee, Dash added.

The brand will also be available in 50g pouches and sachets priced at Rs 3, Rs 5 and Rs 10. Rivals such as Bru from Hindustan Unilever (HUL) and Nescafe from Nestle are also available in these formats, implying TGB is taking the fight for share to their respective doorsteps, analysts tracking the market said.

TGB will be the third player in this market. Bru and Nescafe make up the bulk of the instant coffee market in India. Bru's market share, according to industry sources, is around 49-50 per cent, while Nescafe's market share is around 51 per cent.

Last year, Nestle revamped its advertising for Nescafe, which was part of a global relaunch. The brand had a new slogan 'It all starts with a Nescafe', with unique digital ads calling the shots. This was in contrast to what the brand had done in the past when it had celebrities such as Deepika Padukone, Purab Kohli, musicians Shankar-Ehsaan-Loy and director-producer Karan Johar featuring in its ads.

Rival Bru wasn't far behind, getting actors Siddharth Malhotra and Anuskha Sharma on board. Prior to Malhotra and Khan, Bru had Priyanka Chopra and Shahid Kapur as brand ambassadors.

The two brands have also taken their fight to the retail market, with exclusive Bru World Cafes and Nescafe Bars in select cities, intended to give consumers, mostly youth, an on-ground experience of the two products.

While Dash of TGB did not indicate what was in store for Tata Coffee Grand, he did indicate that advertising and marketing communication for the new product would roll out in a fortnight from now.

MORE COMPETITION
  • Indian market for Instant coffee is Rs 1,300 crore
  • Key players are Bru & Nescafe
  • The two frequently trade positions, with share almost neck and neck, according to industry sources
  • Tatas' entry will bring a third player into this market
  • To part debt, the company is looking for debt infusion in its projects

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