Brand extension analysis

BRU World Café

Hindustan Uniliver Ltd. – Manufacturer

• HUL is India's largest FMCG Company with a history of over 80 years

• The company owns over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers.

• The HUL vision states “We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life…”

BRU – Parent Brand• Number 1 Coffee brand in India• Unilever's only Coffee brand• Enjoys a rich heritage, came into

existence in 1962 under the brand name Deluxe Green Label

• Consistently offering better and newer products to the consumer through improved packaging solutions and innovative product formats

BRU World Café – Brand Extention• Launched in 2011, BRU World

Cafe outlets in Mumbai offer the true tastes of coffee from around the world

• BRU World Cafe is purely about premium coffee and the experience of having it in the most authentic way possible.

• From delicious cakes to exotic coffees, BRU World Café's detailed coffee menu exhibits that BRU World Café is not just any coffee shop.

Current Market Scenario• Coffee has retail value growth of

16% to reach Rs32.9 billion in 2014

• Foodservice volume sales grow by 9% which is faster than retail volume sales of 8% in 2014

• Nestlé India Ltd continues to lead with a retail value share of 37% in 2014

• Hindustan Unilever’s brand Bru continued to hold on to its second place with 18% increase in values sales in 2014.

• Cafés and specialist coffee shops continue to drive coffee consumption

• Growing penetration of international and domestic chained coffee outlets such as Café Coffee Day and Starbucks coupled with the increasing inclination of consumers for coffee contributed to further popularity of coffee across India.

• The company continued to promote the brand by using new brand ambassadors and opening coffee shop chain under the brand name Bru World Café.

• Retail coffee consumption will continue to benefit from the growing popularity of coffee specialist retailers/cafés. Therefore, there are no potential threats to growth of coffee. However, consumers in tier II cities especially might continue to consume tea which has strong traditional popularity.

• Over the forecast period, coffee is likely to gain further popularity in at home consumption in the North and West where tea was previously dominant due to dominance of coffee specialist retailers/cafés in these regions. Furthermore, consumers would also experiment making various type of coffee at home.

Retail Coffee Sales

INR million 2009 2010 2011 2012 2013 2014Fresh Coffee 6,688.30 8,074.10 8,873.10 9,859.20 10,939.00 12,071.00- Fresh Coffee Beans - - - - - -- Fresh Ground Coffee 6,688.3 8,074.10 8,873.10 9,859.20 10,939.00 12,071.00-- Fresh Ground Coffee Pods - - - - - --- Standard Fresh Ground Coffee 6,688.3 8,074.10 8,873.10 9,859.20 10,939.00 12,071.00Instant Coffee 7,978.70 10,008.00 11,928.90 14,352.00 17,348.80 20,803.40- Instant Standard Coffee 7,978.7 10,007.70 11,928.50 14,351.50 17,348.20 20,802.80- Instant Decaffeinated Coffee - 0.3 0.3 0.4 0.5 0.6Coffee 14,667.00 18,082.20 20,802.00 24,211.10 28,287.70 32,874.40

Table 2 Retail Sales of Coffee by Category: Value 2009-2014

Exhibit 1: Coffee sales currently stand at INR 32,874 million and have shown a steady increase over the years

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Market Share Data

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Exhibit 2: Hindustan Lever, with its BRU brand, has maintained a steady market share of c. 31% over the last 5 years.

% retail value rsp 2010 2011 2012 2013 2014Nestlé India Ltd 33.1 34.5 35.9 36.8 36.8Hindustan Unilever Ltd 30.7 31.3 31 30.7 31.2Narasu's Coffee Co 5 5.2 5.4 5.2 5.1Amalgamated Bean Coffee Trading Co Ltd 2.1 2.1 1.9 1.7 1.2Tata Coffee Ltd 1.3 1.3 1.3 1.1 1Cothas Coffee Co 0.7 0.7 0.8 0.8 0.8Hindustan Lever Ltd - - - - -Others 27.2 25 23.9 23.6 23.9Total 100 100 100 100 100

NBO Company Shares of Coffee: % Retail Value 2010-2014

Category Growth from 2009-14

% volume growth 2013/14 2009-14 CAGR 2009/14 Total

Fresh Coffee 3.7 3.9 20.9- Fresh Coffee Beans - - -- Fresh Ground Coffee 3.7 3.9 20.9-- Fresh Ground Coffee Pods - - --- Standard Fresh Ground Coffee 3.7 3.9 20.9Instant Coffee 12.8 12.6 80.8- Instant Standard Coffee 12.8 12.6 80.8- Instant Decaffeinated Coffee 15.2 - -Coffee 6.5 6.3 35.5

Table 3 Retail Sales of Coffee by Category: % Volume Growth 2009-2014

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Exhibit 3: Coffee sales have shown an impressive growth of 6.3% CAGR between 2009-14 in volume terms and 17.5% CAGR in value terms.

BRU World Café – 4 Ps

4 P’s

Product

Price

Place

Promotion

Product• BRU World Cafe outlets offer the true tastes of coffee from around the world,

in an atmosphere that is so refreshing that it gives a feel of their origins.• BRU World Cafe is purely about premium coffee and the experience of having

it in the most authentic way possible. • Ranging from cakes to exotic coffees, BRU World Café's detailed coffee menu

exhibits that BRU World Café is a means to an original and exotic selection of coffee brews from around the world.

• Bru World Café outlets are currently operating only in Mumbai as a pilot; however the company plans to soon expand nationwide to tap the growing trend of outside-home coffee consumption by the growing urban population.

• The menu at BWC offers a range of coffees sourced from around the world and brewed in styles ranging from Turkish to South Indian Filter coffee – complete with matching traditional crockery.

Price• HUL has adopted competitive pricing for its café offering. While the prices

are not the highest in the premium coffee segment, the pricing has also not aimed to undercut the competitors. The company wishes to communicate the BWC range as a premium offering and hence is not targeting penetrative pricing, instead relying on product differentiation to justify the premium price.

• HUL aims to penetrate the high end coffee market and out-of-home coffee consumption segment through its Bru World Café outlets.

• BWC was launched to compete with giants such as Starbucks and Café Coffee Day, thus the price of the beverages and savories at BWC are priced in the premium range with prices comparable Starbucks coffee.

• Prices start at Rs. 79 for a filter coffee and go up to Rs. 139 for its Hot beverage

Place

• Bru World Café outlets are currently operating in the city of

Mumbai as a pilot run.

• Being a premium offering, the outlets – 7 so far – are located in

the up market suburbs of Mumbai.

• Bru World Café currently operated its outlets in the prime

suburbs of Andheri, Bandra, Juhu and Versova.

Promotion

• HUL does not undertake promotion activity for Bru World

Café exclusively. Instead it relies on the brand recognition of

its premium Bru Exotica range which is in sync with the

offerings at BWC.

• This strategy is similar to Starbucks – the premium coffee is

sold at retail outlets as well as its own chain

BRU World Café – STP• Segmentation:

The market for BWC is segmented on the basis of Geography and demographics

• Target Segment:The target segment is young, affluent class in the Tier I cities – who are looking for a unique experience while enjoying their cup of coffee.

• Competition:The main competing brands for BRU World café are Starbucks, Costa Coffee and Café Coffee Day. All of these offer a premium out of home coffee experience to urban consumers with a pleasant ambience and décor. The focus is on the experience and not the beverage alone.

Frame of Reference

• Premium world coffee

• Pleasant and comforting ambience and décor

• Leisure and Spending time with friends

Points of Parity

• Premium worldwide coffee• Wide range of beverages and savories• Prepared using authentic traditional methods• Pleasant and relaxed ambience and decor

Points of Differentiation

• Mediterranean style ambience and décor• Range of exotic south Indian coffee• Associated with a trusted and long established

Indian coffee brand• BRU is long recognized as an authentic coffee

brand and enjoys strong brand recognition and brand equity.

• BRU is projecting itself in the premium category

BRU World Café Menu

Café Coffee Day Menu

Perceptual Map

varia

nts

price

High

Low

Low High

Starbucks

Costa Coffee

Café Coffee Day

Barista

Bru World Café

References• http://www.brucoffee.in/World_Cafe.aspx• http://www.moneycontrol.com/news/business/hul-brews-plan-to-open-c

offee-shop_527545.html• http://www.moneycontrol.com/news/special-videos/whats-brewing-hind

ustan-unilever-opens-three-cafes_529105.html• http://www.thehindubusinessline.com/catalyst/bruing-a-premium-market

/article2473379.ece• http://fcbulkacomstrat.in/pastcases/case_study_2011.docx• http://www.hul.co.in/brands-in-action/detail/Bru/303748/• Further, information has been researched from past HUL Annual Reports,

Investor Presentations and Earnings Call Transcripts

Prof. Sameer MathurIndian Institute of Management, LucknowMarketing Professor: August 2013 – Present

McGill UniversityMarketing Professor: July 2009 – July 2013 

Carnegie Mellon UniversityPh.D. in Marketing : August 2003 – June 2009

These slides were created by Rohit Sharma, IIM Lucknow, as part of a MBA course "Brand Management" (www.MBASkills.IN) taught by Prof. Sameer Mathur