Coffee Global Corporate Strategy

Strategy Briefing

About This Report

Oct 2014

Nestlé continues to hold a strong position in global coffee by value. While it is desperate to address its weakness in the US pod market, soon-to-be merged entity Jacobs Douwe Egberts (JDE) is likely to post a real threat to Nestlé’s global leadership. Technological innovation is a constant challenge and opportunity to sustain consumer loyalty and fend off compatible products. Nestlé’s VertuoLine and Keurig 2.0 marked the highlights of coffee pod systems in 2014.

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Coffee Global Corporate Strategy

Nestlé still a strong leader in instant coffee

Nestlé’s instant coffee dominance and the Nespresso and Nescafé Dolce Gusto’s expansion, firmly underpinned the company’s clear leadership in global coffee; in off-trade value terms. However, while the company has the most balanced geographic coverage, it is weak in coffee beans and shows no clear intention to develop the beans category further.

Competition in the formation of Jacobs Douwe Egberts (JDE)

The pending JDE deal shows that private investors can be instrumental in shaping the market landscape. The potential opportunity for leveraging Mondelez and DEMB’s facilities, can make JDE a number one coffee player in off-trade volume terms and therefore JDE can become a real threat to Nestlé.

US coffee pod hot spot

The US pod market continues its boom and attracts considerable investment and market development. Keurig is continuing to establish alliances with mainstream brands to sustain consumer loyalty to the Keurig system. The launch of Keurig 2.0 is the latest attempt to fend off growing competition from compatible products and also shows the importance of product differentiation.

Instant coffee will see no change of market leader

Nescafé’s solid position in instant coffee is unlikely to be challenged by JDE in the immediate future; the combined geographies of Mondelez and DEMB are still not wide and powerful enough to take on Nestlé and instant coffee is not a strength of either partner.

What this report includes

  • Top-level strategic analysis of how major consumer trends will influence global markets
  • Consumer insight
  • Impact across all relevant consumer markets
  • Unique graphics and case studies
  • Key market snapshots
  • Accompanying presentation to synthesise main findings

Why buy this report

  • Identify factors driving change now and in the future
  • Understand motivation
  • Forward-looking outlook
  • Briefings and presentation should provoke lively discussion at senior level
  • Take a step back from micro trends
  • Get up to date estimates and comment

Introduction

Scope
Key findings

Strategic Evaluation

Major companies’ revenues: Nestlé leads, Keurig outpaces
Weight of coffee in the corporate fmcg retail basket
Top line coffee growth strategies: Nestlé, Mondelez and DEMB
Top line coffee growth strategies: Strauss, Lavazza and Tchibo
Major players’ geographic white spaces and weak spots in 2013
White space discussion: Nestlé, Mondelez , DEMB and Keurig
White space discussion: Tchibo , JM Smucker and Lavazza

Competitive Landscape

Nestlé’s position still strong in overall coffee in 2013
Major players’ value growth vs global coffee market
Overview of category strengths and opportunities
Key findings of category strength and weakness

Potential Impact of JDE

Formation of JDE creates global shake-up
Highlights of ownership structure of JDE
The potential impact of JDE
New order in competition pyramid by off-trade volume with JDE
JDE: Near-term challenges and DEMB’s new parent
Understanding of DEMB’s parent JAB
JDE to consolidate its category presence in Western Europe

Growth Strategy for Instant Coffee

World top players in 2013: JDE no chance to challenge Nestlé yet
Nescafé remains Nestlé’s key brand and continue to dominate
Nestlé holds strong position in major growth markets
Mondelez UK share gains reflect opportunity in premium instant

In Hot Pursuit of Pod Opportunity

Global opportunities will remain biased in favour of fresh coffee
Gaining share in developed markets should be the key strategy
Commonalities in major pod markets
Keurig: Birth of Keurig 2.0 marks another eventful year in 2014
Nestlé : VertuoLine lands in US while Cube launches in Europe
Case study: Nestlé - leadership is challenged on all fronts
Global pods: Nespresso overtaken by Keurig amid US growth
Nespresso Cube: New automated retail vending concept
Exploration in US foodservice
Case study: US - pod battle
Competition landscape in the US pod market
The K-Cup barrier: Open system carrying multiple coffee brands

Possible Future Movements

The future of pods
Possible corporate movements: Nestlé, Keurig and JDE