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Osem Investments Ltd. has launched Nescafe Mild Roast, a milder alternative to its Red Mug mass market label in an attempt to head off competition from Strauss-Elite.
Appearing on supermarket shelves across the country today (Monday), testing of the new product and its adjustment to the taste of Israeli consumers took the company over a year.
Each year Israelis consume about 2,200 tons of instant coffee, spending nearly NIS 243 million in a market with yearly growth of 3 percent, according to Nielson consumer research.
Osem, which is approximately 20%-owned by Nestle SA, markets Nescafe in Israel.
With 52% control of the Israeli market for "quality coffee" (that produced by freeze dry technology) through the Gold Blend, Espresso, and Taster's Choice brands, Nestle has thus far only offered its Red Mug brand - an instant coffee with a rather strong taste produced by cheaper spray-dry technology - to the mass market. Nevertheless, Red Mug claimed some 61% of the granulated soluble coffee market, according to Nielsen.
Now with Mild Roast, which was expected to compete most strongly with Strauss-Elite's soluble powder coffee, Osem also will try to address market demand for more subtle coffee tastes.
Strauss-Elite was quick to play down Nescafe's new product, however, claiming it did "not see any innovation" in the product.
Elite has been on the Israeli market and will continue to be the leader," the company said Sunday.
Strauss-Elite's coffee unit is represented mainly by "Aroma" - a granulated coffee brand, which Strauss-Elite said holds 11.2% of the overall Israeli soluble coffee market - and by the powder coffee brand "Cafe Names Elite," of which Strauss claims it has 31.6% share.
The new product launch coincides with the release of Osem's fourth-quarter 2005 earnings report on Sunday. The company said net income rose to NIS 36.5m. from NIS 36m. a year earlier, although revenue fell 1.6% to NIS 628.2 million. The company attributed the small profit increase and revenue slide to the late holiday season in 2005.
The writer recently was a guest of Nescafe at its headquarters in Vevey, Switzerland.