It recently kicked off a new round of marketing for an instant coffee product in the country and as a strategic move taken to fight against Via, an instant coffee product launched by Starbucks, it is the first targeted marketing Nestlé conducted for such product after it entered the market with advertisement slogan of "good taste" in 1980s. Starbucks launched an instant coffee product named Via in 2009 and over the following 10 months, it saw the sales from over 40,000 outlets around the globe hit USD 100 million. The product, with retail price of CNY 8 to CNY 9 per bag, formally debuted in the Chinese market this month. Thus Nestle, which seizes up to 75 percent of the nation's instant coffee market, takes move at once.
Under such an environment, it is quite tough a job for Starbucks to tap the nation's instant coffee market. "It should be huge potential in the Chinese coffee market as well as Starbucks's outstanding brand premium that jointly caused it to make such a decision," said an industry observer. Statistics from CPR Research show that China's annual consumption of coffee maintained at 30,000 to 40,000 tons in recent years. With an average annual growth of 10 percent to 15 percent, it is expected to become the world's biggest consumer of coffee. And the consumption is guessed to reach 120,000 tons next year, with the retail sales of over CNY 10 billion. Instant coffee will contribute much to the sales as the sales of such product in China surged by 13 percent to CNY 5.1 billion in 2010, according to data by Euromonitor International.
China's instant coffee market is cultivated by Nestle, thus it will be very difficult for Starbucks to break its monopoly there. Currently, Nestle's sales in the market mainly depends on supermarkets and statistics show that there were a total of 176 Carrefour and 224 Wal-Mart in the country as at the end of 2010. However, there is no doubt that its pricing mode, distribution mode, as well as promotion mode will be changed by Via based on the platform of Starbucks' stores across the market. And to some extent, the concept that instant coffee is a kind of cheap drink will become a history. Starbucks has had about 500 stores in the country and aims to raise the figure to 1,500 by 2015.