Nescafe's answer to Mio: Nestle USA beverage boss hails 'major market innovation'

Nescafe answer to Mio: Nestle US boss hails 'major market innovation'

Nestle USA is poised to launch a 26-serve Nescafe ‘to go’ liquid coffee concentrate that consumers can add to water to create RTD coffee on demand, along the same lines as its Nestea liquid water enhancer.

Rob Case, president, Beverage Division, Nestle USA revealed the news when discussing innovation plans for the Nescafe brand at a Boston innovation day in June, in comments not widely reported until now.

Nestle’s US beverage division reported sales of $2.04bn in 2013 and Case said it is focused on growth for its three ‘global strategic brands’ Coffee-Mate, Nescafe and Nesquik, which all have around 6% CAGR.

Discussing plans for the latter, Case told analysts and investors “We’re launching a ‘to go’ Nescafe – that you put into water, shake and have RTD coffee.  It’s fantastic and will be a major innovation in marketplace.” He said users could create an RTD coffee drink in 15 seconds.

Asked why Nestle had opted for a liquid concentrate RTD coffee (in a format similar to the Nestea squeezable offering, see photo) rather than a powder, Case insisted that powder was not the optimal format for consumers, who will be able to create drinks using the super concentrated liquid in 15 seconds.

'We get far more users at a very attractive margin'

Whereas delivering 26 servings would have meant selling a big stick pack, he told his audience, “this dissolves instantly and it’s very portable”.

The appeal of it in our testing is that we got far more users in at a very attractive margin, rather than a much smaller business with maybe a slightly higher margin with powder. So we went for the bigger play,” he added.

When might this Nescafe 'to go' product launch? A Nestle USA spokeswoman told BeverageDaily.com today that there is no specific launch date or final packaging news to share just yet.

Case said other plans to grow the Nescafe brand in 2014 include transitioning flagship premium instant coffee brand Taster’s Choice from plastic to glass.

“It’s a beautiful container that will help brand equity, but it’s also the best physical protection you can give to coffee, put it into glass,” Case said.

Nestle is also launching a new line of reserve blends using 100% single-sourced Arabica sourced from the top two per cent of beans in the world.

In addition, Case spoke of Nestle’s partnership with CoffeeMate to launch Ready Cup – which provides a pre-creamed coffee in one cup.

“What we’ll end with is a line of coffee under one brand architecture, covering everything from everyday mainstream to everyday premium that extends us just beyond soluble to bring the customer new experiences and benefits to enjoy Nescafe,” Case said of the brands investment and research (I&R) platform.

'Very robust I&R platform'

“We have a very robust pipeline over next three years as well, that at some point I’ll be able to share with you,” he added.

Given the growth in single-serve systems in the States – Nestle is taking on Keurig owner and market leader Green Mountain Coffee Roasters with Nespresso and, (for a longer, US-style joe) Vertuoline – Case admitted that this category had cannibalized soluble, which still account for 18% of US coffee sales.

“Yes, there has been cannibalization out of soluble, but much more out of roasted and ground, almost all of it. You see that when you walk into a grocery store. That section’s a lot smaller,” he said.

Case also talked down the threat posed to Nestle by Starbucks at retail level, following the launch of Starbucks Via from 2009 – a range of single-serve soluble coffee in 12 packs.

Starbucks Via, a serious retail threat?

“Starbucks is trying to become a consumer packaged goods company, going into a lot of different categories. Their effort in Via was initially very successful, bought in several million dollars in new sales to the category,” he said.

“They bought new users into the category, but they’ve actually been declining over the last year, fairly significantly, almost double digit, as many consumers were not willing to pay the price point once they got into the category and discovered brands like Nescafe Taster’s Choice and Clasico,” Case added.

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