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I mentioned the topic of “three coffee waves” with you earlier. Today, I finally came to fill in this old pit.
So, what is “three coffee waves”?
Coffee wave refers to the three important evolution of coffee form. It is a marketing and commercial concept.
The first wave was the commercialization and fast-food of coffee, that is, with the promotion of Nestle and the vigorous promotion of the U.S. military during World War II, instant coffee became popular rapidly. Coffee has developed from agricultural products with unstable quality to standardized commercial products.
The second wave is the chain expansion of coffee brands led by Starbucks, which sells handmade coffee through industrial assembly lines and provides added value in space, emotion and class.
The third coffee wave is the emergence of high-quality hand brewed coffee, which gives coffee a series of labels such as origin, flavor, grade and production methods. Since then, fine coffee, like wine, has become a high-end consumer product with aesthetic attributes.
These three waves also swept China, but the difference is that in China, the first coffee wave was 30 or 40 years later than that in Europe and America, but the third occurred simultaneously with the world.
In just over 30 years, three waves have emerged intensively, and a large number of excellent brands have emerged, and the story of confrontation between them has become more and more ups and downs.
We’ll talk about the first two protagonists of the coffee wave.
The competition between Nestle and Maxwell has not only opened up a new market in the world coffee territory – China, but also shaped the Chinese people’s understanding of coffee for a long time.
In the first decade of instant coffee entering China, Maxwell has been pressing Nestle.
In 1984, kraft, the world’s largest food company, entered China through a joint venture. Kraft’s brand Maxwell also entered the Chinese market under the transliteration of “Maxwell”.
Maxwell came to China under the aura of “American instant solution sales champion”.
Although Nestle came to China in the same year, it was first involved in the dairy industry. Therefore, from the beginning, Nestle was in the position of a challenger.
But both the challenger and the Challenger have a huge problem in front of them.
Chinese people have been drinking tea for thousands of years. How can they turn around and drink coffee?
Historically, tea and coffee are substitutes for each other. If a market is dominated by tea, there will not be much space for coffee, and vice versa. If the coffee market cannot be opened in China, the competition between Nestle and Maxwell will be meaningless.
To this end, the two brands have made a lot of attempts.
Maxwell first opened a simple coffee shop in Peking University to provide young potential consumers with coffee drinks made from coffee powder. Then he stared at the gift market and began to shop in department stores, gift boxes for coffee, buy a large bottle, send a cup, and match it with a beautiful handbag. We carry bags, visit relatives and friends, and drink coffee with my cup. Isn’t this a live advertisement?
As a result, Maxwell found that he not only didn’t make money, but also lost millions.
Little brother Nestle is similar. In Peking University, Nestle subsidizes college students by naming them, and even makes special reports in various universities and presents promotional materials of instant coffee to students. It turned out to have little effect. Nestle also has gift boxes, but the effect is also average.
The two failed to land for the first time, mainly because the Chinese people in the 1980s had almost zero understanding of coffee, and even many people did not know that coffee had a refreshing effect.
In marketing, there is a theory of customer cognition. This theory holds that customers must form an understanding of the goods before they buy them before they can take the next action. Customer cognition can be divided into category cognition and brand cognition.
In a market where the category cognition of “what is coffee” has not been established, it is doomed to fail to promote the brand.
As a result, Nestle changed its strategy, turning floor flow marketing into high-profile marketing, putting in TV advertisements and throwing money at customers’ cognition.
In 1988, Nestle’s classic advertisement “delicious” first appeared on the TV screen of mainland audiences.
From today’s perspective, this advertisement seems to be unconvincing. However, it should be noted that this is 1988, when even “TV advertising” itself is very novel. This advertisement conveys at least three messages:
1. What is coffee: a kind of beverage with very fragrant taste
2. How to drink: brew with coffee powder + coffee partner + sugar, which is convenient and innovative
3. Usage scenario: it is used to entertain guests and is very foreign
At that time, it gave people the feeling that drinking coffee was a particularly fashionable thing. This just hit the growing consumer demand of Chinese consumers at that time, and bound the identity of coffee and white-collar workers.
Although white-collar workers are forced to work hard now, they were the dream of young people in those days.
I still remember when I was in primary school, the teacher arranged the composition of “me in 20 years”. The girl at my desk wrote that she became an urban female white-collar worker in 20 years, and she was very proud to show off to me.
emmm… Now she has achieved her wish
Incidentally, my childhood dream was to eat instant noodles every day.
At that time, Wu Wenfang, Executive Creative Director of Zhiwei Thomson Asia Pacific, was responsible for Nestle’s advertising in the mainland. In his memory, Nestle is a very difficult project to promote. On the one hand, the taste of coffee is strange and bitter to mainland consumers. Therefore, to make the public accept such a new taste, there must be a moving point.
And “delicious” is not only a slogan, but also a compliment. At that time, consumers were not as difficult to fool as they are now. They basically believed what the advertisement said. It’s said on TV that coffee tastes great, so I have to buy it and try it?
So if I go back to the 1990s, I must show “the curator is so handsome” on TV.
Therefore, in Nestle advertisements in the 1990s, there were a large number of advertisements with the story template of “the host invited the guest to drink coffee and the guest praised the taste”.
But no matter how the story is replaced, the classic “taste great” hasn’t changed for a long time.
How successful is this advertisement? In the Shanghai market alone, Nestle’s coffee sales soared to 500 tons.
I was also curious about the taste of coffee because of the TV advertisement, so I quietly opened a can at home to taste it. The result is bitter and sour. It feels worse than traditional Chinese medicine. I don’t want to touch this thing again until middle school.
Maxwell, who took the lead in advertising by Nestle, responded quickly. In the second year of Nestle’s advertising strategy, Maxwell also launched a TV advertisement focusing on “America’s best-selling Macintosh coffee”. For the first time, he shouted the famous slogan of “every drop is fragrant, but the meaning is not enough” on Chinese TV.
This slogan has a long history.
In 1908, Theodore Roosevelt, then president of the United States, came to Nashville, the capital of Tennessee, where Maxwell was founded. He drank a cup of Maxwell’s coffee and enthusiastically praised, “good to the last drop!”.
In 1920, the founder of Maxwell decided to take the president as the slogan of Maxwell’s advertisement. In the following decades, this slogan and the brand story of old Roosevelt drinking coffee swept the world with Maxwell’s instant coffee.
Its Chinese version is “fragrant and meaningful”, which can also be regarded as a textbook translation in the field of copywriting.
Interestingly, you can hardly find the record of this story anywhere else. Only Maxwell himself is repeatedly publicizing it.
Many people who write about coffee history suspect that this story may not have happened at all. Even the phrase “didi Xiangnong” is not original by Maxwell, but the slogan of Coca Cola in 1908.
No matter whether this is a marketing scam or not, the only thing we can be sure of is that “every drop is fragrant, and the meaning is still incomplete” has become a classic in the history of advertising and one of the first impressions of Chinese coffee consumers on coffee.
Through TV advertising, Nestle and Maxwell finally pried open the Chinese market.
However, it is not enough to let people know what coffee is, but also to let consumers have a perceptual understanding of coffee.
So Nestle found composer Lin Ziyuan and hoped to cooperate with a song related to coffee to play in shopping malls to stimulate consumption.
Lin Ziyuan rejected Nestle, but Nestle’s proposal gave him a flash of inspiration. He wrote a song “walking through the coffee shop” and gave it to singer QianBaiHui to sing.
Unexpectedly, this song became popular in three places on both sides of the Strait. Even my mother bought a tape of this song.
The song tells of a girl passing by the coffee shop where she and her ex boyfriend once came. She suddenly had thousands of thoughts and sighed that the past was over. With the popularity of this song, coffee has become a concept associated with “love” and “dating”.
Here is a concept of emotional marketing.
What is emotional marketing? It refers to taking consumers’ personal emotional differences and needs as the focus of brand marketing. Pay attention to consumers’ emotional satisfaction and psychological identity.
For example, the Dr diamond ring that overturned some time ago claims that it can only give one person in a lifetime, which is to meet the emotional needs of the givee and empty the giver’s pocket.
As long as something is related to love, it can become a wallet butcher and a rational killer.
Coffee is no exception. Lin Ziyuan’s rejection has become an emotional marketing of the whole coffee category. Nestle’s sales volume has rapidly exceeded tens of millions of bottles, and Michaelis has also turned from loss to profit, and even sold out of stock for a time.
By the mid-1990s, the mainland had initially established a coffee market dominated by instant coffee.
The battlefield is ready. It depends on how the two protagonists play.
In fact, instant coffee in the 1990s is not a drink in essence, but a gift.
Many post-80s and post-90s may have memories. At that time, whether Nestle or Michaelis, the best-selling ones were gift boxes, a can of coffee, a can of friends, and cups and spoons. It’s very decent to visit relatives and friends and give them away.
And the quality of that coffee pot is really good. The older generation has the habit of using waste. After drinking coffee cans, they can also be used to hold milk powder, dried fruits and even sauces.
It can be said that the niche occupied by coffee is actually similar to that of melatonin later.
This is obviously more conducive to Macintosh coffee.
Because gift giving is price insensitive consumption. The price is higher and the quality of coffee beans used is better than that of Nestle. Therefore, Maxwell’s sales were almost twice that of Nestle and its profit exceeded 20%.
However, in terms of brand strategy, Nestle, which is behind us, thinks further than Michaelis.
The history of coffee planting in China can actually be traced back to the late Qing Dynasty, when missionaries brought coffee to Yunnan. Since then, there have been sporadic coffee planting here. But because there is no market, planting is not proper, and the output is very low.
Until 1989, Nestle discovered this Fengshui treasure land in Yunnan, so it began to help farmers grow coffee in Yunnan.
Yunnan coffee planting base
Nestle has brought seedlings, planting technology and various interest free loans. Most importantly, Nestle has signed a 10-year purchase and sales contract of 5000 tons per year, in which the protection price for farmers is set. If the international price of coffee rises, it will be paid to farmers at the international price. If the international price is lower than the protection price, it will be purchased at the protection price.
Now the coffee planting industry in Yunnan is brought up by Nestle.
Of course, Nestle is not a philanthropist. The planting technology it brings is very extensive, and the seedlings are not the best varieties. It is only suitable for large-scale futures procurement, not suitable for taking the high-quality route. Nowadays, many coffee farmers in Yunnan are transforming into high-quality products, but this is a later word.
Nestle’s layout in Yunnan has become an important chip for it to turn over Maxwell in the future.
In 1995, chain supermarkets began to appear in China, and Carrefour and Wal Mart entered China one after another.
From a commercial point of view, the renewal of sales channels often leads to the replacement of dynasties, strong brands will decline if they do not seize the opportunity, and weak brands will rise under the new situation. Pulling down the emperor is the eternal theme of business stories.
Facing the supermarket channel, Maxwell and Nestle made different choices. The purpose of the supermarket is to sell the goods directly to Maxwell, that is, to master the information of the supermarket.
But the supermarket itself is also a channel. Only when the goods are sold can we have the money to return to the supplier. It is impossible to sell a box of coffee. We will immediately pay the coffee money to Maxwell’s account, and we will not advance the payment first. Therefore, when you enter the supermarket, you will certainly deposit, that is, the payment will not be collected until the sales volume of the product reaches a certain amount, or until the accounting period reaches a certain time limit.
At that time, Wal Mart’s accounting period was about 45 days, while Carrefour had to delay for two or three months. It means you sell the goods and may not receive the money in a few months.
Although Maxwell is a large enterprise, its products are highly profitable. However, a large amount of funds are pressed in the hands of supermarkets, and the working capital is not enough. It can’t be carried for a long time.
Cash flow is always the lifeblood of enterprises.
On the contrary, Nestle adopts the dealer system. The dealer directly pays the money and delivers the goods with Nestle. Of course, the disadvantages are obvious. If the dealer wants to make a price difference, the profit will be thin. But Nestle has a big business and is not afraid to earn less.
Compared with Maxwell, Nestle has better cash flow and more money to put into production.
In addition, dealers are a group of creatures who are responsive and pursue interests. In order to earn back the money they spent, they can carry out various promotional activities according to local conditions. Therefore, Nestle’s promotion is always full of tricks, while Maxwell is like a cold old-fashioned.
Moreover, in order to fight Maxwell, Nestle also launched the “adhesion strategy”. Where Maxwell is sold, Nestle will sell next to it and put more products around you.
This is the benefit of the dealer’s flexibility.
In fact, there is no distinction between direct supply and dealer system. They are not even completely mutually exclusive. It all depends on the competitive environment, market scale and market positioning.
In today’s e-commerce era, brands are more willing to do direct supply, attribute consumers, pricing power and profits to one place, and there is no middleman to make a price difference. However, in the consumer goods market dominated by offline channels, the rapid expansion ability, sufficient cash flow and strong operation and service ability brought by dealers are difficult to replace.
Nestle chose the most appropriate strategy at the most appropriate time. At this time, Nestle’s growth can no longer be suppressed.
Maxwell found himself in a close fight with Nestle.
Aiming at the fact that Chinese consumers don’t like black coffee, Maxwell launched instant coffee with creamer and sugar, and launched a series of products such as original coffee, espresso and flavor coffee, hoping to attract consumers with diversified styles.
This operation also achieved good results, and Maxwell’s sales increased by tens of millions of yuan. However, Nestle soon followed up with its products and launched the classic “Nestle 1 + 2”. In addition, it also launched more diversified products than Maxwell.
Maxwell found that the category war could not be won, and the two sides fought a marketing war again.
In 1997, Macquarie coffee changed its name and became the current Maxwell. Later, he made an advertisement on CCTV to further strengthen the concept of “every drop is fragrant, and the meaning is still incomplete”.
In 2001, Maxwell simply tried to recreate the miracle of “walking through the coffee shop” and cooperated with Su Yongkang in an advertising song “meaning is still unfinished”. To be honest, it sounds good, but the reason why a miracle is a miracle is that it can only happen once.
In contrast, Nestle’s marketing kept pace with the times. In the late 1990s, it abandoned the classic “delicious” and started a new slogan “good start”.
The change of slogan shows that nestle recognizes that the market education on “what is coffee” has ended, and it should focus on the functionality of coffee, that is, “refreshing”.
With the new slogan, Nestle found shunzi, a popular female singer at that time, and teacher Zhang Wei, who is still popular now, and created two advertising songs “open up” and “good start”.
You Maxwell want to do what I did ten years ago. If you want to fight, fight.
And the two songs share a set of chorus melody, that is, the classic “open your eyes, open your mind, open your thought”. To tell the truth, Nestle beat Maxwell in terms of both communication and the high-level sense of the brand.
Marketing can not hold down Nestle, Maxwell began to fight a price war.
With the further popularization of coffee drinking habits, coffee has changed from giving gifts to drinking by yourself. Of course, the cost of what you drink will be considered. In addition, instant coffee can’t make any difference between good and bad. Maxwell’s high-quality coffee strategy is completely ineffective, and the advantage has shifted from Maxwell to cheap Nestle.
Maxwell chose to reduce the price by 10% under market pressure.
At this time, Nestle has a lot of confidence. Who is not a big company with a mine at home? Who is afraid of the price war?
I’m 4 yuan cheaper than you for boxed coffee; I buy one coffee and get one free; Bagged coffee costs you $1.2 and I $1. In short, as long as it is the corresponding product, I must be 20% cheaper than you.
The two sides fell into a stalemate again in the price war. But at this time, Maxwell, who had the advantage, had to take the initiative again and again, but he was always passive, while Nestle, the inferior, stood in the position of seeing and defying moves.
At this stage, when we look back, Maxwell’s frequent moves can only be described in one sentence:
Tactical diligence is not enough to make up for strategic laziness.
Although Maxwell took the lead in entering the Chinese market, we will find that the key strategic choice and marketing innovation are almost initiated by Nestle. Maxwell will follow up immediately after seeing the effect.
Advertising strategy, song marketing and dealer strategy are the same.
Maxwell has been in the position of boss for more than ten years, which can be said to have eaten all the dividends. Because the Chinese coffee market is too immature, all brand marketing of Nestle has finally become category marketing, giving Maxwell a free ride.
But Nestle takes the lead. Maxwell’s days of reaping profits will not last forever. Strategic followers will find that they can’t keep up sooner or later.
Nestle, which has accumulated victory, only needs to wait for a chance to win.
And this opportunity will come soon.
From 2002 to 2003, drought reduced the production of coffee beans in Brazil and Colombia, and the international price of coffee beans doubled.
The rise in raw materials will inevitably lead to the reduction of Maxwell’s profit from overseas procurement of high-quality coffee beans. Whether it is a direct deposit from supermarkets or a price war with Nestle, it all depends on Maxwell’s sufficient profit margin. With thin profits and less working capital, the brand can only suspend its expansion.
But with the rapid development of China’s coffee industry, how can you stop and wait for you.
At this time, Nestle’s layout in Yunnan shows its power.
As early as 1997, Dongguan Nestle factory realized that all coffee beans were purchased from Yunnan. Although the quality of Yunnan coffee beans could not be compared with that of foreign beans at that time, the victory was that the supply was large and stable, the price was not expensive, and the relationship between the brand and farmers was relatively good, which was enough to support Nestle’s large-scale expansion at low cost.
It was not until the price of coffee beans soared that Maxwell thought of buying beans in Yunnan. As a result, he could only buy some in a scattered way, and the quality and quantity were not enough to change the war situation.
So in 2004, Nestle’s sales soared fivefold, and Maxwell had a poor growth rate of 3.2%. Nestle has finally achieved anti surpassing in market share.
In 2005, the revenue of Nestle coffee in China reached 5 billion, and the gap between the two sides gradually widened.
In the final analysis, coffee is a kind of crop. It takes about five years from planting to the first harvest, and it still takes two or three years to stabilize the yield. Nestle from Yunnan layout to the real confrontation with Maxwell, it happened to be seven or eight years.
What kind of marketing war and price war are all outside the board moves, and agriculture is the fundamental. Nestle’s vision is not without venom.
Coffee in Yunnan has become Nestle’s masterpiece against Maxwell.
Since then, with the admission of more new brands in the instant coffee industry, Maxwell continued to erode its market share, and Maxwell was gradually marginalized.
At the level of company operation, Maxwell vividly interprets what is called “transporting heroes is not free”.
The parent company Kraft has a large number of famous brands, including Oreo, fun, hyunmai, yikoulan, Guozhen, etc. Maxwell is not the only son. In the 1990s, kraft gradually shifted its strategic focus to the biscuit business, and Maxwell was no longer the most important brand.
Kraft is also a very interesting company. Many of the snacks we ate when we were children were from his family. We have a chance to talk alone.
In 2012, kraft food split its international business and established mondelez international. Maxwell’s business in China was naturally lost to Yizi.
In 2015, Yizi and D.E. master blenders 1753 funded the establishment of a new company JDE (Jacobs Douwe egberts) specializing in coffee brands, while poor Maxwell abandoned it again and lost it to the new company.
In September 2016, Maxwell closed the factory in Guangzhou and delivered the products from the Chinese market to the factory in Thailand.
And this is the life of the despised Maxwell.
It’s not that it hasn’t made efforts to save itself. In 2010, Maxwell sponsored the TV series “Du Lala’s promotion”, which made a lot of implants in the film, which did attract some attention. But this has long been irrelevant to Nestle and the whole coffee market.
By 2014, Nestle’s share in the instant coffee market had reached 73.5%, while Maxwell had only 11%. By 2017, Nestle’s market share remained basically unchanged, but Maxwell had only a poor 3.1%.
Recalling the confrontation between Nestle and Maxwell, Maxwell didn’t have a chance.
At least when it is out of stock for the first time, it should notice that there is something wrong with its supply chain.
When it first found Nestle’s promotion useful, it should note that instant coffee is a price sensitive product.
When it has a headache for the first time because of the payment collection of supermarkets, it should note that high profits are not enough to support fragile cash flow.
But perhaps out of laziness and conservatism in strategy, or because he was too high and didn’t want to be grounded like Nestle, Maxwell missed the opportunity of transformation again and again and finally became the outcast of the version.
Ironically, Maxwell’s silence was accompanied by the rapid development of instant coffee in the Chinese market. It brought the first coffee wave, but also missed the best and most magnificent moment of this wave.
The excitement is Nestle’s, it has nothing.
Maybe this is business. It is always full of challenges and always needs to think about how to survive. No brand will be immortal, no category will be young forever.
Just like Nestle, after defeating Maxwell, it turned around and found that a number of “island coffee shops” selling space were in full swing. In 1999, a brand called Starbucks officially entered China.
Before the winner of the first coffee wave could taste the sweet victory, he bumped into the impact of the second and third coffee waves. Everything happened in just a few decades.
This is also the highlight of China’s business story.
How did Starbucks become synonymous with coffee in the Chinese market, how did it impact the instant market, and finally become a family with Nestle from rivals? How will the new boutique coffee challenge Nestle and Starbucks. We’ll save these stories for next time.
“Coffee War: Nestle is pressing Maxwell to close the Guangzhou production line” — Business Review
“Smoke of gunpowder everywhere, life and death of Chinese coffee” – Business
What did Maxwell do wrong when he first entered China and lost 80% of the market to Nestle
Nestle coffee in the second half of China – Interface news
“Can’t the” didi fragrant “Maxwell coffee go on in China?”—— Interface news
Nestle Empire China’s three decades of stormy journey: a breakthrough from 0 to 43.3 billion
Source: IC Laboratory (ID: insightplusclub), reprint authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246); Foodaily Expo 2022] in line with the original intention of providing the whole value chain and one-stop industrial innovation services for the industry, foodaily Expo 2022 (2022.05.31-06.02, Shanghai) is further upgraded. In addition to the upstream and downstream of the food industry, it also covers and gathers multiple resources such as e-commerce, social media, traffic, channels and capital, aiming to bring you an annual innovation feast. Here, products, content, technology, marketing and other aspects related to food & brand innovation will be presented in the form of “professional exhibition + innovative content + interactive experience”, breaking through and differentiating in the consistent form of industry exhibition. related reading