Nestle Case Study Analysis:
1. What is the structure of the Italian coffee market?
About 750 national or regional coffee rosters, and coffee roster coffee-houses. They bought coffee directly from growers or through agents or importers.
National Coffee Roasters normally bought beans from growers and sold their products to wholesalers on cash and carry basis; food channels such as supermarket, small stores or street vendors, coffee houses, restaurants, hotels, and coin operated machines
Regional Coffee Roasters bought beans from importers or agents and sold their products to end-consumers through food channels
Local Coffee Roasters bought beans from importers and sold to wholesalers.
Coffee Roasters Coffee-Houses bought beans from importers and sell coffee to end consumers directly.
Family segments: They were end consumers, which had 80% of coffee dollar consumption and 31% of volume coffee consumption.
CHR segment: They were coffee houses restaurants, and other institutional outlets, which had 20% of dollar coffee consumption and 70% of volume consumption.
Normal: Family segment consumed doubled of coffee than CHR segment (69% vs. 31%)
Decafe: Family segment consumed slightly higher than CHR segment (58% vs. 42%)
Instant: Family consumed 7 times higher than CHR segment (88% vs. 12%).
The market had low entry barrier.
The top four national coffee roasters dominated about 42% of the coffee market. The next four dominated about 10% of the market.
2. Assess Nescafe’s current market position in Italy.
It had less than 1% of market share in Italian ground coffee market. (0.836 tons vs. 137 tons of total market)
Instant Coffee Market Share in Italy in 1988: Nestle had 77.7% of market share in terms of volume, and it had about...