Looking for Low-cost good quality coffee, it is possible?

by Southpointman

Nescafe Algeria Singapore

That is a question asked by a good friend, and I thought I just answer it here.

Low cost but good quality Coffee.

This is a scenario that coffee sellers and brand owners loathe, but one that is constantly being requested by F&B, restaurants and hotels.

My thought about this is one of value positioning:

The idea is one of positioning the right value to the buyers. If the buyers like the value of the product, price is not an issue. And that is the reason, why I mentioned that it is all a matter of perspective.

To command a good price, you need a story that buyer likes and “buy-in”. So, it is not just a good story, but one that will be readily consumed by the desired audience.

The lack of such value positioning is the reason why most coffee sellers end up fighting on price.

I cite the example on Nescafe as I noticed that they are planning to peddle their new Roast and Ground range to OOH channels.

I believe it is part of their business development plan to sell into the various F&B, hospitality chains, and of course hotels. This is what all coffee sellers hope to achieve - critical mass, growth of their distribution channels. And I believe like all coffee brands, onf of the key target is the hotels.

And the hotel channel is where they will meet the resistance of buyers, asking for low but good quality coffee. In this channel, there are companies selling as low as $18/kg of coffee, will Nescafe be matching that or go lower than that? Even if they do it, will the buyers look at them as quality coffee?

In my opinion, if the target channel is hotels then, the low cost comes before good quality and if your price is low and service acceptable, you should have a deal from the hotels.

This is not a desirable position for Nescafe.

To enter the hotel channel, they likely need to match the price. In addition, they need to convince the buyer that their coffee is of good quality (which I believe it is).

So, my answer to this good friend is, it is worth the effort to do all these? Or, it is better to find a blue ocean (an untouched channel) to groom and grow the sales?