Nescafe PESTLE Analysis
Detailed PESTLE analysis of Nescafe examining political, economic, social, technological, legal & environmental factors.
Political Factors:
Nescafe is having the largest global coffee footprint with its presence in more than 180 countries. Change in policies of any these countries will have impact on the brand. Like the reduction in corporate tax from 30% to 22% done by the government of India will serve as a festive bonanza for Nescafe. The tax rate cut will result in more cash in hand which can be used to increase the demand by giving extra discounts to the customers.
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This concludes the political factors in the Nescafe PESTLE Analysis.
Economic Factors:
Below are the economic factors in the PESTLE Analysis of Nescafe:
The production of coffee in Brazil is expected to increase thus leading the increase in supply but the same is not forecasted. The prices of coffee are expected to rise as farmers will supply only a limited amount at the low price which is now prevailing in the market and hoard the rest and wait for the prices to rise.
This would impact the brand as its cost would increase. But despite of this the demand for coffee is also increasing. India being largely a tea drinking nation has experienced an increase in demand for coffee by 40% in the last decade with instant coffee being the most preferred among the millennials. Nescafe captures 51% market share in the Indian market followed by its competitor Bru. The condition in South Africa is completely different. The other competitors of Nescafe like Frisco and Ricoffy are constantly reducing their price to be in the market. The company has invested rupees 1.2 billion in the instant coffee manufacturing plant in South Africa because it believes there is potential in the coffee market of SA.
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Social Factors:
Following are the social factors impacting Nescafe PESTLE Analysis:
First time in 75 years, Nescafe launched same branding across all the countries where it sold. The brand uses a new slogan “It all starts with a Nescafe.” The slogan was designed with keeping the new younger generation consumers in mind. Company believed that living in a more globalized and social world they needed a more unified and powerful umbrella for the brand which could express the single personality of the brand in different countries. It rejuvenated the brand and made it more contemporary. With its commercials like “make every moment matter” and #badlolifekiraftar it offers experience beyond coffee. Its provides an inspiring perspective on life to the youngsters. It has a wide variety of products which caters to the taste of every individual. From pure soluble coffees to 3 in 1 mixes and ready to drink coffee it has enormous range of products. Every year Nescafe celebrate the International Coffee Day by organizing social events for the people.
Technological Factors:
The technological factors in the PESTLE Analysis of Nescafe are mentioned below:
Nescafe has a unique research and development center in China. It has tie ups with agricultural universities with the objective to promote coffee industry. The brand has come up with first of its kind E by Nescafe –a smart coffee machine which makes hot and cold coffee. It needs to be paired via Bluetooth with Nescafe E connected mug app. Various social media campaigns like ‘Good Morning World’ was done which asked people to post their video with their morning coffee mug on digital platforms. The campaign managed to reach 15 million people Facebook being the greatest engaging platform. The brand is also expanding in E-commerce.
Almost all the products are available on various E-commerce websites like Flipkart, Amazon, Big Basket making it more convenient for people.
Legal Factors:
Following are the legal factors in the Nescafe PESTLE Analysis:
The company has recently filed a suit in Delhi high court against various third parties for illegally manufacturing, distributing and selling counterfeit of Nescafe instant coffee. The interest of the brand and the health of the public was at stake due to these counterfeit products. The Ministry of Health and Family Welfare along with the Food Safety and Standards Authority of India (FSSAI) are taking charge of the matter.A scam of Nescafe giving free coffee machines for testers has been around the corner. The brand has reported for the same to the Malaysian Communications and multimedia commission.
Environmental Factors:
In the Nescafe PESTLE Analysis, the environmental elements affecting its business are as below:
The brand has the largest sustainability programme called the Nescafe Plan. They are the largest user of responsibly sourced green coffee. They are teaching farmers sustainable coffee growing techniques with limited usage of water. In UK energy efficiency techniques are being used to roast more coffee using less energy.
Avoiding the usage of pesticides yet preventing diseases are being taught to the farmers. The Nescafe brand is also working for the preservation of the ageing coffee trees and better usage of coffee lands. They have few objectives to reach by 2020 which includes 70% more responsibly sourced coffee, 35% reducing water withdrawal and zero waste disposal.
To conclude, the above Nescafe PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
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