Almost instinctively resistant, just shortly after Starbucks announced that Via was due to land in China in April this year, a "Daily Evolutionist" ad appeared on the street sign beside some bus stops in Beijing. It was Nestlé's own milk fragrance. A new round of marketing by instant coffee. Since the 1980s when Nestlé started advertising the coffee market in mainland China with the slogan “Very delicious”, the product has been refurbished in recent years, but no targeted marketing has been conducted for instant coffee.

Nestle's stress behavior is very simple and Starbucks is not good. In 2009, instant coffee Via was launched, achieving 100 million U.S. dollars in global sales in just 10 months and establishing more than 40,000 sales outlets.

Compared with Nestle, which has a minimum price range of 1 yuan per package, the price of Via8 to 9 yuan per pack is closer to 10 times. Nestlé, which occupies 75% of China's instant coffee market, is naturally in need of protection.

In fact, Via stirred not only Nestle’s solid position but also the optimistic Chinese coffee market. According to statistics from Spid Food Research, China’s coffee consumption has been maintained at between 30,000 and 40,000 tons in recent years, and the market growth rate has averaged an annual growth of 10% to 15%, which is expected to become the world’s most potential coffee consumer. It is estimated that by 2012, China’s coffee consumption will reach 120,000 tons and the market retail sales will reach tens of billions of RMB. Instant coffee is a celebrity category. According to Euromonitor International's research, China's instant coffee sales grew by 13% in 2010 to a total of RMB 5.1 billion.

However, there is no single company in the big market that can change Nestle's monopoly. Today, this heavy responsibility falls on Starbucks. Via may not be able to break the monopoly, but the rules of puerile and multi-selling represented by Nestle, long-distance distribution, and even the rules of the game to continue to spread the price of coffee will certainly change. Instant coffee is equal to the embarrassing situation of cheap drinks may also become history. .

Oligopolitics If Starbucks does not have an outstanding brand premium, Via's listing in China may not attract much attention. Previously, Starbucks' influence was mainly in the coffee culture that was shaped by "experience," and Via entered the strange instant coffee market. In mainland China, instant coffee is synonymous with "Nestle."

Coffee has not been popular in China since its introduction in the late 19th century. The country's taste for coffee is precisely the multinational company represented by Nestle, which has been cultivated over 20 years.

“At the beginning, Nestlé was fundamentally unattainable in China. China has no habit of drinking coffee at all.” Gao Bihua, chairman of Beijing Gaolia Coffee Co., Ltd. recalls, the first challenge Nestlé faces in China is how Allow Chinese consumers to accept coffee flavors that resemble Chinese medicine.

Fortunately, Nestlé had a similar experience in Japan where the tea culture was once more than China. The solution at that time was to develop the "gift" market by high-end packaging in black and white, and to attract the Japanese middle class who aspired to Western consumer culture. Therefore, entering China, Nestlé replaced the packaging with reds that are close to consumers and hit the high-end gift market.

Although only coffee powder was a product at that time and the high price made many consumers consider it a luxury product, Nestlé and then Maersville (later called "Mc's" before 1997) still used it. The ad words that tease the taste buds have successfully attracted a group of hobby-loving consumers.

Since then, these two brands have created a unique evolutionary history of coffee for Chinese society: the gift of quality - a refreshing, decompressive functional beverage - a representation of life form - the appearance of personal characteristics. In this process, prices play a major role.

Take Nestle Asia's famous Japanese market as an example. In 1963, Nestle sold for 350 yen per pack, which was equivalent to two hours of Japanese salaries at the time. As a result, Nestle gradually eliminated “expensive” impressions through a series of advertising campaigns. In 1965, Nestlé announced in a timely manner that the coffee beans would be harvested with sufficient information, and announced in a timely manner that the price of coffee would be reduced from 350 yen to 290 yen, resulting in a substantial increase in coffee consumption in the Japanese market. While popularizing the market, it also promoted the sales of Nestle Coffee.

Japan’s popularity has enabled Nestlé to quickly open up its Asian market and successfully replicate its model in China. During the price reduction promotion period, the price of Nestlé Coffee in the Chinese market was once as low as RMB 1 per package. The low-profit management and small profits and quick turnover became one of Nestle’s operating principles in China. However, it is worth mentioning that behind the high turnover is a very low profit margin. According to 2009 statistics, Nestle's average annual profit accounted for only 1% to 1.5% of turnover.

This is the market that Starbucks Via enters: a high degree of monopoly, high brand loyalty, small profits but quick turnover, insufficient competition, and immature markets. The corresponding problem is that it is difficult to expand channels. After all, the market operation of instant coffee is quite different from that of chain stores. For the former, Via does not have much experience.

Choosing high-end market entry may be the only choice.

“New entrants fear the Nestlé brand's influence and its channels are perfect. They choose different ways to enter the market segments. The high-end instant coffee market currently has a small number of competitor brands and the competition is not fierce,” said Chen Xuanyu, head of the diet data project at Spee. The magazine, high-end instant coffee is the most potential market segment in the industry, and has huge development value. “After the transition from a general instant coffee market to a high-end segment, the profits of coffee makers will naturally increase.” Gao Bihua said that compared to traditional products, the profit margin of high-end instant coffee is even greater.

Nestle is also aware of this and launched high-end products before Starbucks in 2010. “From 60% to 70% of the freshly brewed coffee available on the market, it is still less than this. I believe that Via is probably the same.” According to Gao Bihua, high-end instant coffee has already challenged some freshly brewed coffee. In this regard, Wei Hanye, the former Starbucks Cofco Store manager who had been drinking Via, said, “Despite the instant coffee, Via tasted the same as the selected coffee this week.”

These high-end instant products that aimed at freshly brewed coffee were not able to distinguish their taste from their taste, and they focused on channels. At present, the mainstream channels of instant coffee are supermarkets and hotels, among which supermarkets are the most important. Nestlé’s ability to dominate the market is due to its selection of a “corporate-wholesaler-retail store” long-distance distribution model, rather than a short-circuit direct sales channel to sell products, thereby creating a huge sales network to enable products. Throughout hotels, supermarkets, convenience stores, and street shops, etc., not only created consumer awareness of Nestle's brand, but also laid a solid foundation for the company's small profits, so that other companies can not match.

In contrast, Via's channel advantage lies in Starbucks' store platform. Currently, Starbucks has nearly 500 stores on the mainland. According to the goal of global CEO Howard Schulz, it will reach 1,500 in 2015.

Frankly speaking, Via is hard to challenge Nestle in the number of channels. As of December 31, 2010, Carrefour had 176 stores in China and Wal-Mart had reached 224 – this is Nestlé's main channel, not counting other supermarkets and various convenience stores. Via's most likely tactic is still to rely on Starbucks' brand influence to deepen channel power, rather than blindly increase market share. For example, relying on the future expansion of the Starbucks second and third line market, infiltrate the brand energy.

In any case, although the monopoly of the instant coffee market cannot be changed, the addition of Via can still accelerate the segmentation of the market.

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