Hindustan Unilever Ltd (HUL) has entered the premium-coffee market with the launch of its latest offering Bru Exotica. The premium-coffee category currently comprises imported brands with just a single Indian brand — Nescafe Gold from Nestle, HUL's nearest competitor.
Speaking to Business Line , Mr Arun Srinivas, Vice-President, Beverages, HUL, said, “It is a two-player market today in the premium-coffee category. There has been no market development and we will be building this category for the next five to ten years.”
Mr Srinivas said, “The challenges in establishing the category would be similar to developing any new category like hand santisers or fabric conditioners, categories which we ourselves and our competitors are already developing.” However low penetration of coffee (compared to tea) will help HUL and its competitors to tap into the segment that is growing at nearly 20 per cent, according to estimates.
Tea dominates with almost 96 per cent penetration, while coffee penetration remains as low as between 12 and 15 per cent in the country. However, penetration of coffee is high in the South at nearly 40 per cent.
Consumers ready
With Bru Exotica HUL intends to tapp into the in-home consumers segment with international flavours from countries like Brazil. “These are the first set of variants from Bru Exotica for consumers looking for enjoying global experiences in coffee from the comforts of their home,” says Mr Srinivas. Ther company has plans of adding more international flavours to the category. HUL has also launched an ad with actors Priyanka Chopra and Shahid Kapoor.
Though it has priced the new offering two to three times higher than the Bru franchise, HUL believes that consumers are ready to pay a premium. “We have adapted these international coffees to suit the Indian palate, and today consumers have the ability and willingness to pay for them,” said Mr Srinivas. While Bru Instant continues to be the largest selling coffee within the Bru franchise, new variants like Bru Lite, Bru Cappuccinos and now Bru Exotica have been attempts to segment the coffee market. “Today we have straddled every point in the Bru franchise and have also segmented the market based on taste, origin and flavour. HUL will continue to invest and build the Bru brand,” added Mr Srinivas. HUL is the second-largest player (after Nestle's Nescafe) with a 44 per cent value-share in the Rs 900-crore coffee market.