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Jacob's, the pulse of Germany's coffee.

Jacob's, the pulse of Germany's coffee

The best selling name in roasted coffee in Europe, number one on the Canadian, French, Swiss and Austrian roasted coffee markets, the Zurich-based Jacobs Suchard Group necessarily plays a leadership role in the international coffee industry and via subsidiaries, in national markets worldwide. However, although headquartered in Switzerland since 1982, following the merger of Jacobs and Suchard, when it comes to coffee the Group's flagship remains very much the original German Jacobs company.

Ringing up 2.6 billion Swiss Francs in 1988, Jacobs Suchard international coffee sales contributed better than 40 percent of total Group turnover. Of this, Jacobs retail coffee sales in the German Federal Republic accounted for some 50 percent, at nearly 1.5 billion German Marks--roasted retail came to 1,371 million DM in 1988, instant retail to 112 million DM. The significance of the Group's German coffee operations is further augmented by figures for Horace and export sales, respectively of 217 million DM and 164 million DM during the year.

Deutsch marks and volume aside, the Group's German operations provide technological and marketing research support for the worldwide Jacobs Suchard coffee activities. The German company is managed from Bremen, where the Group's international coffee research center is also located. There are Jacobs coffee roasting plants in Bremen and Berlin. As a sophisticated and complex market, Germany also serves as fertile ground for the development and market testing of the majority of new products being targeted by the Group for its global brand strategy.

And, of course, Bremen bears a special even sentimental status within the Jacobs Suchard Group because it was here, in the cozy heart of this ancient Hanseatic city, where Johann Jacobs, a farmer's son, opened his small shop for "Coffee, Tea, Cocoa, Chocolate and Biscuits" in the year 1895.

Jacobs Suchard Germany is actually its own "group" of companies, with divisions for household roasted coffee, household confectionary, institutional service, and for instant coffee and exports. Total Jacobs Suchard Germany sales came to 2.8 billion DM in 1988, about two-thirds of which hailed from coffee-related activities.

For many, the name "Jacobs" is synonymous with coffee in Germany. Yet in fact this renown is now earned year by year in hard fought market battle. Last year the company appears to have consolidated its place as the nation's number one coffee marketer, with a 20 percent share in roasted coffee. The struggle continues to be fierce, however, with Tchibo at 19 percent of the market and Aldi at 18 percent.

The Jacob's reputation stands firm in large on the abiding strength of its Kronung brand family. Kronung is the best selling coffee brand in Germany and had 10-12 percent of the entire market. The company is proud of this status and of such figures as these: Germans quaff 28.5 million cups of Kronung each day, or 330 cups per second; and, if all the Kronung packs produced since the brand was launched in 1966 were paraded in line around the globe they would encircle us five-times over.

But status quo is impossible on a coffee market such as Germany's, of closely engaged market leaders, constant price war and shifting consumer preferences. Jacobs has been holding to first place through innovation and intense market study. The company now has seven brand families, extending to a plethora of brands to contend in every segment of the national market. The current growth coffee sectors in Germany are for premium coffees (at 27.6% of sales), the "natural mild" genre (at 19.5), and decaffeinated (now at 17.4% of sales). Recent Jacobs launches reflect this, with Swing, a youth oriented premium brand, Mild & Fein for the naturally mild sector, and Night & Day for decaffeinated.

Night & Day has been positioned as a Jacobs Suchard global brand. In Germany, the brand went into national distribution in January of this year and by August had acquired a three percent market share.

In the specialty coffee sphere, Jacobs has placed its new espresso brand, Mastro Lorenzo, on the national market, and supported it with an extensive direct marketing campaign for home espresso machines. Again, although relatively small, espresso is a growth coffee segment.

There are some 60,000 retail outlets for coffee in Germany, with Jacobs covering about 95 percent of them. The company is now actively extending its presence by selling coffee in such non-traditional outlets as gas service stations, in 250gm, 100gm and single-portion packets.

Innovation is indeed very much in the air at Jacobs, and down to such details as the newly released "aroma zzzip" resealable opening system for the Kronung brand packs. In what may be the most interesting news, however, in September the company begins the test marketing in selected German regions of a completely new, and reputedly innovative, series of Jacob Suchard global brands.

That Jacobs Suchard Germany serves far more than a national production/marketing function within the international structure of the Group is made clear in the activities of the German company's out-of-home, instant and export divisions. Created in 1972, the out-of-home division is now market leader in the German Horeca sector. Its success has been such that the Group at large has used German management to establish and coordinate the international Jacobs Suchard out-of-home business.

The Bremen plant not only produces instant coffees for domestic consumption, where Jacobs sales are expanding despite the regressive market trend, but also for all international subsidiaries. Instant sales internationally increased by 3.2 percent for Jacobs Suchard in 1988. As well, the Bremen plant roasts coffee for export to several national markets not served by a local Jacobs subsidiary. This means that premium Jacobs coffees, "Made in Bremen", are enjoyed today in such diverse markets as Japan, Norway and Australia.

PHOTO : Swing was released nationally by Jacobs in 1987. A premium brand, Swing is positioned for

PHOTO : young consumers, a market segment too often ignored
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Title Annotation:Jacobs Suchard Group
Author:Bell, Jonathan
Publication:Tea & Coffee Trade Journal
Article Type:editorial
Date:Sep 1, 1989
Previous Article:Austria: the economic importance of tea & coffee.
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