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Rediff.com  » Business » Nestlé shifts spotlight to non-Maggi brands

Nestlé shifts spotlight to non-Maggi brands

By Viveat Susan Pinto
September 13, 2016 11:43 IST
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Nescafé is leading the company’s efforts to widen the public lens on its portfolio of brands

The recently released short film by Nestlé on YouTube is clearly aimed at the heartstrings. A radio jockey tries his best to get call-ins, but he is disheartened. Stuck with the graveyard shift at 5.30 am when the radio is a sleeping app on most phones, he struggles to find an audience.

But a sip of the brew and he is struck by an idea: He asks people to phone in, assuring callers that their secrets are safe from prying ears since nobody tunes in at that hour. His message hits home and the radio station finds itself flooded with calls despite the hour.

The third part of Nestlé’s ongoing campaign for its instant coffee brand Nescafé is a hit, getting 4.6 million views on YouTube within two weeks of its launch. But, the ad is more than an emotional reach-out.

For the Swiss food and beverages multinational, it is part of a planned effort to swing the torch on all non-Maggi brands in its portfolio. Nescafé leads the pack in this game with dairy, chocolates and confectionary close behind.

Digital push

The campaign also marks the digital maturing of a company that once relied primarily on television commercials to spread the word. It is now going digital first on many campaigns and is not looking at the medium as an ad hoc accompaniment to traditional forms of communication.

Pitching online
Campaigns typically break on Youtube, with a staggered rollout on TV
Nescafé is seen as a younger brand than Maggi and its campaigns are thus designed for a digital audience
The latest short film, third in the series, has managed 4.6 million views on Youtube within two weeks of its launch, more than any of the previous campaigns in such a short period of time
The latest ad has been created in conjunction with radio station RedFM, this is the first time the company has allowed another brand on to its platform

In the case of the ongoing Nescafé campaign, the RJ film was first launched on the Internet, extended only recently to TV (September 6). There is an attempt to maintain narrative continuity too - the new commercial was released with the hashtag #StayStarted, indicating a progression from #ItAllStarts that accompanied the previous two ads.

Nestlé also has a tie-up going with a radio station RedFM for this commercial, with the station’s popular RJ Rishi Rawat, featuring as the protagonist in the ad. This incidentally is the first time that two companies have come together for a commercial, sector experts say.

The RJ ad’s popularity can be gauged from this: In one year, an earlier commercial in the series titled ‘Cartoonist’ has had 6.9 million views so far, while the ‘Stammering Stand-up Comedian’ ad garnered 5.5 million views in two years. Crossing 4.5 million views in two weeks, say market experts, is even more significant in this context.

Nestlé has not stopped there. A radio show called Nescafé Mornings between 5.30 and 7 am plays every day on RedFM. The digital push is not without reason. Nescafé has been positioned as a younger brand in comparison to Maggi, which is targeted at families.

It also highlights the importance Nestlé is giving its non-noodles portfolio. Prepared dishes and cooking aids, which includes Maggi noodles, contributes around 20 per cent to Nestlé’s topline, post the ban.

It was 31 per cent prior to the ban. But growth-wise Nestlé’s sales figures continue to be skewed in Maggi’s favour. Out of Nestlé’s overall domestic volume growth of 7.3 per cent for the first half of 2016, contribution of categories excluding noodles was 0.5 per cent only. Value growth of the non-noodles portfolio was also low, declining 0.7 per cent for the period under review.

Suresh Narayanan, chairman and managing director, Nestlé India, is determined to change that as he indicated in a recent analyst meet. “We have made significant progress in the coffee portfolio. There has been a relaunch of Nescafé Sunrise with an even better and superior blend. Ready-to-drink (RTD) under Nescafé is another area,” he said.

Taking on the competition

Nestlé’s focus beyond Maggi is in part due to heightened competition in foods. Cigarettes-to-hotels major ITC recently announced its entry into gourmet coffee with a brand called Sunbean. While the segment is different from instant coffee, a mass-market category, analysts say ITC could well get into the latter at the opportune time.

“Since food and FMCG are areas identified by ITC as future growth drivers, they will study all segments closely,” Abneesh Roy, senior vice-president, institutional equities (research), Edelweiss, says. The Rs 1,300-1,500-crore (Rs 13-15 billion) instant cofffee market in India has been largely divided between two players - Bru from Hindustan Unilever and Nescafé.

Tata Global Beverages became the third player last year to step into the ring with Grand. So, Nescafé, which fights closely with Bru and is the leader with a 50.4 per cent market share in Jan-June 2016 - will have to keep its eye firmly on the business to ensure it does not slip up at all, experts say.

Narayanan in the recent analyst meet reiterated just that, saying that the company was working on “aggressive projects”. And he does not have just coffee on his mind. In recent weeks, Nestlé has launched a slew of products across categories.

At the analaysts’ meet, Narayanan said that one of the goals the company had set for itself was to seek “secular growth” across the portfolio. “For the winning edge, any organisation has to be fast, focused and flexible. We are working on it, looking at the reality of where we are and what we can offer,” he said.

Photographs: Victor Fraile/reuters and Konstantin Chernichkin/Reuters

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Viveat Susan Pinto in Mumbai
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