The right pricing is important when it comes to selling coffee, judging from consumers' behavior in Asutralia.

by Chee Leng
(Singapore)

Australia has a strong coffee culture, but what many people are not aware of is instant coffee is big in this country as well (it is actually my belief that instant coffee is big everywhere!).

According to a research agency Roy Morgan in Australia, 7 millions Australians drink instant coffee. That is more that 40% of its population.

This is a big market, and if you think instant coffee is cheap, that is the reason they got huge market share, you are half right.

The market is split is 24% purchased Nescafe (affordable pricing) and the nearest competitor is actually Moccona a premium instant coffee from Sara Lee that holds 10% market share.

The really budget brand came in at 4%, and it is followed by the rest of the supermarket brands sucha s Riva, Robert Timms, Bushell's and Jarrah at 1% each.

There is nothing interesting about Nescafe being the market leader. They have a huge distribution network and is always working to grow it bigger.

In addition, they have just launched a major coffee advertising campagin "Coffee at its brightest", so they should enjoyed the market share.

What is interesting is the budget brands such as Riva or Bushells' is not enjoying a better market share than Moccona, which is actually a very premium brand of coffee.

According to the stats, the Moccona seems to attract a more affluent group of customers that are particular about their coffee.

Some of you might snigger at the thought of "premium instant coffee", it is almost like an oxymoron, how can instant coffee taste good.

After years of millions spend on research, instant coffee does taste good, at least some of them.

Call it good positioning or marketing, but Moccona, does enjoys a premium status amongst consumers and this is the reason for it being the market leader after Nescafe.

So, cut throat pricing might not always work. Moreover, with the cash and might of Nescafe, they have the ability to sustain price cut (even at the expense of negative EBIT) longer than any companies.

Clearly, good marketing is important and for this case, the money that went in to any forms of marketing for Moccona works...

My two cents...