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Douwe Egberts, on rejuvenating the Dutch coffee and tea markets.

Douwe Egberts, on rejuvenating the Dutch coffee and tea markets

It takes significant financial resources and a cadre of bright, trained people to give concept, reality and success to consumer products. Apparently, this is the law of the market place that by itself justifies the existence of increasingly larger consumer product companies. It takes tremendous energy and creativity and organization to fulfill the desires of a vast and sophisticated audience of shoppers. The contemporary supermarket is far more than a display warehouse for goods - it is a product fashion show and something of a cultural theater as well. To work well it must be a direct reply to the expectations of shoppers. The products offered must be attractive, i.e. popular - consumerism is radical populism.

Coffee and tea markets, particularly in Europe, are relatively new to this arena. Whether the company be large or small, an enterprise or a shop, coffee and tea marketing is still emerging from a 'commodity' and 'factory' mentally: By commodity, meaning that people still see tea and coffee as something almost raw and in bulk that's easily scooped into simple packaging and pressed fresh into the housewive's hand; by factory, meaning that the process of production - machines, recipes - is foremost, self supported by set concepts of 'quality' that may or may not have anything to do with the reality of consumerism. Students of consumerism would say that the commodity and factory mentalities remain quite viable in coffee and tea marketing because consumers still expect it to be so, but that they are not necessarily paramount concepts and are subordinate to the laws of the marketplace.

The people of Douwe Egberts Nederland would not appreciate my likening their company to a Summerian dig, the company is too lifely for that kind of imagery. Nevertheless, a company as successful, extensive and old as theirs does offer an informative study in coffee and tea marketing evolution. Douwe Egberts is not only one of the oldest consumer products companies around - dating back to the mid 1700's and the golden age of Dutch trade in tobacco, coffee and tea - as a Group of companies within SaraLee/DE, it is also now numbered among the new select group of multi-national coffee and tea companies. By itself, Douwe Egberts ranks as one of Europe's largest coffee roasting and tea packaging concerns.

With Douwe Egberts one can trace almost every phase of coffee and tea commerce and marketing, from the company's origins as a small town specialty store to mass market presence in an international framework, from commodity and factory concepting in coffee and tea products to the recent rise of a consumerist approach. Yet actually, over its lifetime of 239 years, the past decade stands out as perhaps the most intense period of radical change as to coffee and tea products in hand.

The story of the past 10 years of change at Douwe Egberts relates primarily to an emphasis on coffee and tea branding and market segmenting. In this, DE is moving along with other major companies towards Euro branding concepts and the development of brand loyalty in coffee and tea - something that has been relatively rare until now.

Segmenting Coffee

The parade of coffee packages behind glass in Douwe Egberts headquarters in Utrecht has much to tell. In the early 1980's, almost all DE coffee sales were of the so-called red label product; basically this package appeared as a large Douwe Egberts company logo surrounded by red packaging. At the time, this was the standard style of coffee presentation in the Netherlands - every company on the market relied on this type of red label 'commodity' concept, and the style occupied more than 90% of the total market.

Faced with a regressive market situation, DE began to take big steps toward brand concepting and market segmentation in the mid-80's. Foremost from this came the successful launches of the company's 'Excellent' and 'Select' brands. That DE segmentation has also aptly followed changing consumer interests is clear from the overall pattern of development in the Dutch coffee market: In 1984, decaffeinated coffees held only 2% of all Dutch sales, while they now account for approx. 10%. By emphasizing branding and segmentation, DE itself has almost tripled its percent share of the decaffeinated sector.

Other growth segments that DE is leading in include the new 'Moca' style and the espresso area. Douwe Egberts' Piazza espresso brand has been expanding vigorously each year since launched in the domestic area. More than 1% of the total Dutch retail market is now in espresso coffees.

In 1986 DE entered the single-cup filler service sector, selling filter packs separate from the plastic holders. This has steadily developed until now a small but increasing percentage of Dutch households are buying single-cup filter units on at least an occassional basis. Other developing segments include the natural mild sector and flavored coffees. Douwe Egberts Nederlands launched its 'Bon Cafe' brand in 1988, positioned for the natural mild market. The company also took position in the still nascent flavored coffee area in 1989 with three entries - Creme Caramel, Cappucino and Rhum Avocat.

As a direct result of these bold moves to branding and segmentation, DE Netherlands increased market share and is still increasing. Before the changes took effect, in 1985, the company held 44% and was losing share.

The moral here is clear; it is important to renew coffee products and images to keep the retail sector alive. Successful, large coffee marketers like Douwe Egberts have been learning and implementing new means of communicating with customers. They are bringing contemporary marketing concepts to coffee in an effort to assure what we all must hope for - that coffee continue to hold a respected and attractive place on store shelves.

Tea's Dynamism

Today's tea landscape at Douwe Egberts and in the Netherlands would bewilder an observer from 1980. Even as recently as 1985, more than 90% of the total Dutch tea market was in the traditional English blend, while this style now represents no more than 60% of sales. The legendary orthodoxy of the Dutch tea market is rapidly vanishing, replaced by an exoticism that is not only turning tea imagery on its head, but is obviously pumping fresh vivacity into the marketplace.

Douwe Egbert's tea market position is based on Pickwick, a brand established in the 1950's but now being strongly supported and developed not only in the Netherlands but various European markets.

The Pickwick line now includes Ceylon, Earl Grey, English Blend, China Blossom, and a range of flavored and herbal teas (the four herbal products are currently available only in Belgium and Denmark, not in the Netherlands). The main brands are presented in three pack styles, including a loose tea package. The majority of sales are in the 4g-sized teabag.

Undoubtedly, the new landmarks of tea in the Netherlands are Earl Grey and flavored teas. Douwe Egberts launched its own Earl Grey in 1989, and has seen the product zoom in sales. The Earl Grey teas now account for 3% of total Dutch supermarket sales, as compared to almost no presence whatsoever in the late 1980's.

The other boom segment is in flavors. In 1984, flavored teas represented no more than 1.5% of tea sales in the Netherlands - they have now passed 12% of the market and are climbing. According to Douwe Egberts tea people, every time a new flavor is launched the market reacts with a flurry of sales. Flavored tea consumption has doubled in the past two years. To follow this, the Pickwick line has expanded to 10 flavored entries, and with an 'International line' in 2g-size teabags.

When it comes to tea, however, the excitement of the moment at DE is 'Impressions.' This is the company's latest extension to the Pickwick line, new this year in fact. Impressions currently extends to four teas - Florida Festival, Tropical Flower, Hawaiian Sunset and Green Valley. These are black teas, with a combination of flavors and spices, in single-service teabags. They are clearly marketed as fantasy teas.

Impressions is probably supported by more imagery, styling, literature and accessory support than DE has ever given to a coffee or tea product. The combined effort here is to create a unique world for Impressions - this is cult marketing with a soft touch. For tea in the Netherlands it is a quite ambitious marketing effort, but early results point to success. Impressions tea is priced at the top end of the market, and is promoted for both Horeca and retail sales. For restaurants, the concept includes a very handsome tabletop wooden presentation box that would be the envy of even the finest Dutch cigar.
COPYRIGHT 1991 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Bell, Jonathan
Publication:Tea & Coffee Trade Journal
Date:Dec 1, 1991
Previous Article:Men of the Year.
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