Cold is the future, says Nescafé strategic head of coffee
Nescafé, the thirdlargest beverage maker behind Coca-Cola and Pepsi, and which boasts an illustrious history, including being the first coffee brand on the moon and on top of Mount Everest, is upbeat about establishing a coffee culture in tea-drinking Southern Africa.
Its parent company last year injected R79m into establishing a manufacturing plant in Tshwane to produce its range of coffee mixers and to serve as a platform to export into the region.
Business Day spoke to global head of Nescafé’s coffee strategic business unit, Philipp Navratil, who says cold coffee and coffee sophistication are the future in Africa.
What strategic growth plans does the international corporation have in Southern Africa?
We have a presence with Nescafé in 180 markets in the world and Africa is obviously a part of that. Our products are available in all of Africa’s countries directly or indirectly through distributors. When it comes to the Southern African region, the country where we see the most coffee consumption is SA, where there is an established coffee culture, even though it’s still a predominantly tea-drinking market.
What we see generally for Nescafé is that there is a huge opportunity for us to drive more growth in markets like SA, but also in other areas that drink even less coffee than SA, to convert tea drinkers to coffee drinkers.
Young people are interested in coffee through coffee shops [and] the coffee culture, and they want to replicate those beverages at home as well, so we see a huge opportunity in Sub-Saharan Africa, but also India and China. These are markets with 4-billion consumers who drink very little coffee, and that is where Nescafé is uniquely positioned to cater to them at a very affordable cost.
What coffee trends are dominating this region?
Globally, the biggest trend is sophistication you can call it, and that is two-pronged. The first is coffee shop-inspired beverages that people really like, which are sweet, milky and cold beverages that people want to replicate at home.
Then there is the sophistication trend related to sustainability, which is also the case in Africa as more and more people want to know where the coffee comes from, how it’s harvested, what it tastes like, what the post-harvesting process is and so on.
Cold coffee on-the-go is popular both around the world and in Africa. So I believe converting tea-drinking consumers to coffee might not necessarily mean a hot cup of coffee as we know it.
Those we are targeting may only get to know coffee as a cold beverage and never drink it hot. It will be interesting to see how we win over these consumers in Africa.
What’s important then is local insights. For instance, in SA the most popular Nescafé brand is Ricoffy, which is a mixture of coffee and chicory.
Speak to us about why sustainability has become such an important element for Nescafé.
When it comes to sustainability we are constantly looking for better sources, which became a formalised plan in 2010. Basically, we’ve been working with farmers, sharing knowledge and training them on how to use technical systems to get better quality products and sustainable yields.
We also go beyond the farms, with commitments on sustainable packaging and recycling.
How have farmers received the shift towards sustainable farming?
The concept has been well received in the African countries where we source coffee, such as Uganda. Farmers love the support on the ground, but you really need to have it localised as each country requires unique methods. So, while a place like Vietnam will have intercropping with pepper on its coffee farms, a country like Uganda will have its own local crop that it uses for intercropping.
Our Robusta coffee comes from Uganda, but we source our other types of coffee like Arabica from countries like Kenya and Ethiopia. We have feet on the ground that support farmers in those communities.
How difficult or easy has it been to navigate supply chain constraints in SA?
It has been quite easy to import coffee and chicory into SA to produce there and export into other Southern African countries. We’ve faced the same difficulties as other businesses with regards to the trucks and roads; it is not an easy place to distribute, but we are doing quite well for ourselves.
What is your outlook?
For Nescafé, most of Africa is a growth region, so we have also invested in distribution, innovation and bringing the latest trends to the consumer so they can have an affordable cup of coffee. It’s a long-term strategy, and we have seen it realised in markets like the UK and Japan, which were predominantly tea drinking. People have got into the habit of drinking coffee, with it now having surpassed tea as the most consumed beverage in the UK.
WE ALSO GO BEYOND THE FARMS, WITH COMMITMENTS ON SUSTAINABLE PACKAGING AND RECYCLING
MOST OF AFRICA IS A GROWTH REGION, SO WE HAVE INVESTED IN DISTRIBUTION, INNOVATION AND BRINGING THE LATEST TRENDS