REDvolution: Repositioning the Nescafé Brand

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Excerpts....

The Nescafé brand was born during World War II when Nestlé was struggling with falling revenues. During the 1930s, Brazil had a lot of surplus coffee as its supply exceeded demand in the market. Brazil requested Nestlé to help it preserve the coffee so that it did not go waste. One of the coffee experts of Nestlé, Max Morgenthaler, came up with an idea of making soluble coffee that would not lose its natural flavor even it was stored. The idea was to create a new way of coffee making without having to boil the coffee powder in hot water or milk. After seven years of painstaking development, Max Morgenthaler’s team developed the world’s first instant coffee, which was branded as Nescafé. The Nescafé brand of soluble coffee could be preserved for a long time and consumed by just adding some water to it. The brand was initially released in Switzerland in the year 1938. Despite the initial high expectations of the Nescafé brand, it took a few years for it to gain popularity in the market due to World War II. Soon, Nestlé started expanding the brand to other countries like France, USA, and Great Britain.

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Coffee was one of most widely consumed beverages in the world and the consumption of coffee was especially high in developed markets like USA, Japan, and major European countries. Coffee was also the second most traded commodity on the major commodity exchanges in the world after oil. The total market size of coffee was estimated to be US$ 100 billion per annum in the year 2011. The price of coffee was very volatile and was highly dependent upon the climatic conditions in major coffee producing countries.......

Maxwell House, one of the oldest and leading coffee brands in the world, was owned by Kraft Foods. It was established in the year 1892 and continued to be the largest-selling coffee brand in USA till the late 1980s. The coffee brand had both regular and instant coffee products under its umbrella. Maxwell had a rich history in making instant coffee. It first started supplying instant coffee to the American military during the early 1940s. The brand had a strong presence in the major coffee markets located in USA and Europe. Products sold under the Maxwell House brand were cheap and affordable even to customers living in the middle-income countries........

The sales of instant coffee began slowing down around the world at the beginning of the twentieth century due to a change in consumer preferences. Following the trends in the coffee industry, the sales of Nestlé’s soluble coffee brands too had fallen since the year 2008 (Refer to Exhibit – IV for the sales of Nestlé’s soluble coffee brands between the years 2008 to 2013). The main reason for the decline in the demand for instant coffee was the availability of easier ways to brew fresh coffee. Conventional consumers of instant coffee started using portable coffee machines that made fresh coffee in minutes. ........

In order to make the Nescafé brand appealing to younger customers, Nescafé started a repositioning exercise called ‘REDvolution’ in June 2014. The repositioning exercise was mainly developed with younger customers in mind. Under the repositioning campaign, all the products that were sold under the Nescafé brand would share the same visual identity, communication, and digital strategy. The brand would have the same characteristics in all the 180 countries where it was sold. The repositioning exercise of Nescafé was based on three visual markers, viz. the final accent on the logo of Nescafé, a structurally redesigned red mug, and a blockmark called ‘hub’ (a view from the top of the mug) (Refer to Exhibit- VI for the three visual markers of REDvolution).........

As part of the repositioning exercise, Nestlé introduced a number of new products under the Nescafé brand. A milk-rich and chilled coffee product called Shakissmo was launched in seven European markets in June 2014. Shakissmo was the first ever chilled ice coffee product sold by Nestlé in the European markets. In order to make the product appealing to younger customers, Nestlé sold the Shakissmo range of ice coffee products in specially designed plastic cups that created foam when they were shaken. Shakissmo was targeted at the younger customers who were drinking coffee for the first time in their lives.........

Nestlé aimed to implement the repositioning exercise in 90 percent of the countries where it had operations by the end of 2014 and to reach the rest of the market in the year 2015. Nestlé also launched customized campaigns based on the REDvolution repositioning exercise in some markets around the world. In the Middle-Eastern markets, Nestlé launched a new advertising campaign called ‘My Inspiration’ for its Nescafé My Cup range of instant coffee. The My Inspiration campaign featured younger customers who were aspiring to grow in their life. The advertising campaign persuaded the youth to try new things in life and discover the aspects of life that inspired them..........

Exhibit I: Select Financials of Nestlé
Exhibit II: Major Coffee Producing Countries in the World
Exhibit III: Top Five Coffee Consuming Countries in the World for the Year 2013
Exhibit IV:Sales of Nestlé’s Soluble Coffee Brands
Exhibit V: Interbrand’s Ranking of Nescafé Brand
Exhibit VI: Three Visual Markers of REDvolution