Nestle launches fruit-flavored instant coffee, hoping to sell it to young people in third-tier and lower cities

At the FBIF 2019 Food and Beverage Innovation Forum a while ago, Nestlé Greater China Chief Marketing Officer Jiang Nini mentioned that 170 new products will be launched in the Chinese market this year. At that time, she mentioned that new coffee products will be launched this summer. Considering the timing, she should be referring to the special fruit extract series of instant coffee that will be launched at the end of April.

The product highlights the cross-border combination of "fruit + coffee". The three new flavors are refreshing peach flavor, coconut pineapple flavor and ice sweet green apple flavor. This is the first time that Nestlé has added fruit flavors to the instant coffee category. The new series of products and Nestlé's classic "1+2 series" instant coffee belong to the same business group and are also aimed at the mass consumer market.

At the Fruit Extract Coffee Media Experience Conference held today, Nestlé said that the most popular flavor since its launch is the Peach Flavor. Not only instant coffee, but almost all tea drinks on the market have launched peach flavored drinks this summer.

Heytea's new product "Chizhi Taotao" is peach flavored, and Starbucks' cross-border iced drink also has a "Vinegar Peach" drink. According to Li Ting, marketing director of Nestlé's coffee business in Greater China, during the more than half a year of research and development, "many brands have hit the same point."

In addition to the crossover flavors, the brewing methods of fruit extracts are not limited to the traditional hot water brewing. Peach flavor and coconut pineapple flavor coffee can be brewed with hot water and then iced, and iced green apple flavor coffee can be brewed directly with ice water or sparkling water. In addition, consumers can also mix fruit extract coffee with other drinks to explore more flavors. As for the reason why the first two cannot be brewed directly with ice water, Li Ting explained that they have added Nestlé's coffee companion, which has different solubility.

The packaging of the special blended fruit coffee series looks very summery, not as heavy as the "1+2 series". In terms of product marketing, Huang Minghao, the fourth place winner of last year's "Idol Producer", a member of Nine Percent and a member of Lehua Seven NEXT, was invited to serve as the image spokesperson for the fruit coffee.

These adjustments and innovations are all aimed at the young market. Nestlé found in its early research that the penetration rate of coffee in the young consumer market in 2018 was lower than that of the middle-aged consumer group. The penetration rate for consumers aged 15-20 was 29%, while the penetration rates for consumers aged 36-45 and 46-50 reached 42% and 43% respectively.

Nestlé believes that young Chinese people, who have a relatively low penetration rate, like fresh flavors and purchase experiences, and that the original instant coffee is too popular. It emphasizes that the product should be completely localized from the beginning of the research and development process. This approach can be closer to Chinese coffee consumers, so there are multiple flavors and multiple brewing methods. The reason behind this is that the coffee culture in the Chinese market is different from that in the European and American markets. Most consumers still pursue the functionality of coffee, consider it to be refreshing, and regard coffee as a beverage like milk tea and juice.

It is an indisputable fact that the average Chinese person consumes less than 5 cups of coffee per year, 84% of which is instant coffee. Although Starbucks has been working hard to expand into third- and fourth-tier cities since 2011, Li Ting asked, "How many residents of third-tier and fourth-tier cities can afford a cup of coffee that costs 30 or 40 yuan? Can they really afford a cup of Starbucks every day?" The population of third-tier and lower-tier cities accounts for 74.8% of the total population. The labor and distribution costs are relatively lower than those of first- and second-tier cities, and they are the main source of profits in the food industry.

Nestlé wants to serve mass consumers, i.e. the larger population group, so that "small town youth" can afford to drink fashionable and high-value coffee. Nestlé's early consumer research results showed slightly exaggerated results, that this group of young people go to Starbucks to take photos, check in, and meet up with friends once a year.

Taking into account the coffee demand and economic ability of these "small town youth", the fruit extract series is priced at 20 yuan per box, and the average price of each instant coffee (15 grams) is only 2.5 yuan. If the e-commerce platform conducts promotional activities, the actual price will be even lower.

The special blended fruit extract series focuses on the market demand of segmented groups. Li Ting believes that many companies have entered the market after seeing the growth opportunities in the Chinese coffee category. This is because different consumers have different demands, and different price ranges have different demands. Companies have many options.

Nestle Coffee has also recently launched a new business, which is a takeaway service tested by the e-commerce team and the coffee business unit. It has entered the Ele.me platform at the beginning of this month, but it is currently limited to Beijing.

The online store "Nestle Sense Cafe" seems to be a continuation of the previous "Beijing Sense Cafe" offline pop-up store event. In the store, there are also specialty coffees "Jiaoer" and "Dana" under the "Beijing Sense" category. Compared with the light meals of Starbucks and Luckin Coffee, Nestle sells wafer biscuits and chocolate.

In its reply to Curiosity Daily (www.qdaily.com), Nestlé mentioned that the current test results are good and it will evaluate the results after the trial and then decide whether to make it a long-term project.

Title image from: Unsplash