Nestle is betting on a low-cost ready mix brand of its flagship Nescafe coffee brand to enter the mass market.
Priced at Sh10, the 15g Nescafe sachet mixed with sugar and cream, allows users to make a single cup of coffee by adding hot water, a move the firm says will help lure low income consumers by removing the need to buy sugar or milk.
Nestle has previously heavily relied on sales to middle and upper income households that dominate coffee consumption.
The firm already has a sachet of Nestle coffee priced at Sh5 that is more popular in high-end hotels than among low income consumers, a fact attributed to Kenya’s deep-rooted tea drinking culture.
Mr Guenter Spiess, an executive at Nestle Kenya, said the new product solves the complex art of brewing coffee. He said one million sachets have been sold since October.
Players in the local market have been trying to increase the uptake of coffee.
Last year, Coca- Cola launched Chaywa, a take-away brand targeting upmarket coffee drinkers. And Dormans runs a chain of 11 shops in Nairobi and Mombasa.
Nestle, which dominates the global coffee market with a share of 19 per cent, relies on direct sales of its finished Nescafe coffee brand.
Nestle’s low-priced sachet is as a result of a Sh2.4 billion investment in the Kenyan operation, designed to boost production and, subsequently, regional market share.
The firm also plans to expand its eight distribution channels in Angola, Kenya, Zimbabwe, Mauritius, Mozambique and the DRC to 21.
Large companies are increasingly targeting the mass market to grow their earnings, riding on high volumes to increase profit margins from sales of low-priced products.
The head of Nestle Equitorial African region, Pierre Trouilhat, hopes the Nescafe strategy can be replicated to market the Milo brand.
In the nine months to October, Nestle sales of food and beverages in Africa, Asia, and Oceania grew by 10.7 per cent, followed by 5.5 per cent and 3.3 per cent growth in the Americas and Europe.