Strauss Consolidating Coffee Brands to Boost Instant Sales

The Strauss food conglomerate aims to increase its sales and capture 57% of the coffee market within a few years, said Dalia Mandelman, chief executive of the Strauss Group company Elite Coffee.

Speaking at a press conference announcing the launch of its new freeze-dried instant coffee, Mandelman said the company plans to invest NIS 8 million to strengthen its position in the freeze-dried coffee sector, where its hold is weak compared to its powdered instant coffee business.

It plans on eliminating two well-known coffee products in the process, Aroma and Platinum.

Strauss' Elite brand instant coffee has captured 45%-53% of the overall coffee market category, which includes powdered, granulated and freeze-dried instant coffee. But the local freeze-dried market, dominated by Osem-Nestle with its Tasters Choice brand, accounts for 58% of the revenues from this product type, according to Storenext figures for the period of January through May.

Strauss will eliminate its Platinum brand of freeze-dried coffee, in which it has invested some NIS 10 million, and which accounts for 10% of the all coffee sales. In its place it will launch a new freeze-dried Elite brand that will come in three flavors. Strauss will also erase its Aroma brand, which will now appear as a sub-brand of Elite, and redesign its packaging for its canned Elite instant coffee and Turkish coffee.

Mandelman says the move is part of the process of rebranding and strengthening the Strauss Group through consolidation of all of its coffee products under the Elite brand name, one of the group's strong arms.

"It's not that we are erasing Platinum or that we think it has failed. The move is part of our strategy of strengthening our [existing] strengths. We have a valuable asset in the Elite brand. We understood that the new concept is not suited to Platinum, but to Elite," Mandelman said.

The company is not worried about losing customers as a result of the move. "We didn't lose a single customer when we stopped marketing the 18 Karat brand of coffee. In this case as well, we believe we will be able to make the changeover without losing our clientele, and are even aiming to increase sales over last year," Mandelman said.

Speaking on consumption habits in the economic crisis, Mandelman said that after years of an annual growth rate of about 15% in the area of coffee consumption outside of the household, the trend has leveled out this year, and there has been no growth. In addition, she said, while the market for powdered coffee has maintained stability, freeze-dried coffee sales are on the rise, and granulated coffee sales are falling.