Positioning stevia on the Danish market
Branding through a holistic approach using NP Sweet as a case
Bianca Legorreta Cand.Merc.Kom | Katarina Krohg Cand.Merc.MCM | Supervisor: Jesper Clement, Department of marketing
Copenhagen Business School
POSITIONING STRATEGY FOR STEVIA IN THE DANISH MARKET
In November 2011 the sweetener stevia was approved by the EU, and the sweetener is gradually starting to show up on shelves in the Danish supermarkets and specialty stores. This report attempts to create the best possible positioning strategy for the company NP Sweet and finding a place on the market for its prospective stevia product. By taking point of departure in the debate about health and sweeteners, a depiction of a segment surfaces: women within the age 20‐34. In the combination of classical branding theories and social constructionist thought, the positioning and the critical discourse theory encounter with the purpose of creating branding in context. The social constructionism says that the subjective and the objective do not make sense by themselves and that the social reality is an indispensible factor; the place where the two interact and generate meaning. In this same direction, Popper takes point of departure in the social sphere that includes the physical, the psychological and the social aspects. These two together create the standpoint for this report, which will take all relevant aspects into consideration and account for the context to a higher degree. It can be argued that within the report, a situation analysis is performed aiming to assemble all the elements that can help construct the brand. The primary branding theories used are Keller’s positioning theory as well as Aaker’s brand identity, which can be combined to attain a strategy that is simple, applicable and comprehensive. Methods used to obtain relevant data are chosen based on the principle of triangulation. The instruments used are a questionnaire, a focus group and a critical discourse analysis, where the latter serves to depict the consumer’s context and which perspective on health and sweeteners that penetrates the Danish society. Through the use of the questionnaire, various sweetener brand attributes were tested against each other as to detect which ones were preferred and by whom. Results show that the consumers who prefer natural sweeteners prefer a product which is natural, helps with the diet and offers easily attainable information on the product, whereas the ones who consume artificial sweeteners were more focused on sweet taste, zero calories, availability in supermarkets, convenience and that you are guilt free when consuming the product. The focus group provided information that enabled the stipulation of two main hegemonic target audiences within the segment.
From this point and on, the positioning elements POP and POD can be defined. POPs were largely based on the attributes found in PureCircle and the PODs could not live up to the criteria of being desirable and deliverable. NP sweet is first and foremost advised to perform a value chain and brand audit of the sugar partner of NP Sweet, Nordzucker, with the objective of finding branding elements that can differentiate them from the competitive field, many of them who also use PureCircle as supplier. Competition is only seen to excel and so being more preemptive and proactive in their go‐to‐market strategy and focusing on developing a stevia product that exudes naturalness, genuineness and has qualities that makes it able to differentiate itself from the current and prospective competitors.
POSITIONERINGS STRATEGY FOR STEVIA PÅ DET DANSKE MARKED
I november 2011 blev sødemidlet stevia godkendt a EU, og det er så småt til at finde på hylderne i de danske supermarkeder. Rapporten forsøger at skabe en positioneringsstrategi for virksomheden NP Sweet med henblik på at finde en plads på markedet til deres eventuelt fremtidige stevia produkt. Ved at tage udgangspunkt i hele snakken om sundhed og sødemidler tegnes der et billede af målgruppen, som er den sundhedsbevidste kvinde mellem 20‐34. I kombinationen mellem klassiske brandingteorier og en socialkonstruktivistisk tankegang møder positionering og kritisk diskursanalyse hinanden med det formål at skabe branding i kontekst. Socialkonstruktivismen siger at et subjekt og et objekt ikke giver mening i sig selv, men at den sociale virkelighed er nødvendig – altså stedet hvor de to interagerer og skaber mening. I samme retning tager Popper udgangspunkt i det sociale rum, som inkluderer det fysiske, det psykologiske og det sociale. Disse danner grundlaget for en rapport der inkluderer alle relevante aspekter for casen og i høj grad tager konteksten med i processen. Det kan siges, at der i rapporten foretages en slags situationsanalyse med det formål at filtrere alle elementer som kan hjælpe med at bygge stevia brandet op.
Kellers brand positionering og Aakers brand identity kombineres til at nå en relevant positioneringsteori, og metoderne som bruges til at opnå relevant data er baseret på triangulering og indeholder en spørgeskemaundersøgelse, et fokusgruppeinterview og den kritiske diskursanalyse, som skaber et billede af forbrugerens kontekst og hvilket syn på sundhed og sødemidler som hersker i det danske samfund.
Resultaterne fra den kvantitative analyse viste at de forbrugere der helst spiser naturlige sødemidler foretrækker et produkt der er naturligt, hjælper med en diæt, og indeholder let tilgængelig information om produktet, hvorimod dem der spiser kunstige sødemidler er mere fokuserede på en sød smag, nul kalorier, at det er tilgængeligt i supermarkederne, at det er praktisk og at det gør at man ikke får dårlig samvittighed når man spiser det. Fokusgruppen som den kvalitative metode gav værdifuld information omkring målgruppens syn på sundhed, sukker og sødemidler og gjorde det i sidste ende muligt at beskrive to konkrete hegemoniske grupper af kvinder inden for målgruppen: Den spirituelle superwoman og den vægt‐
Til sidst bliver positioneringsstrategien udviklet, hvor alle pointerne fra de øvrige afsnit i rapporten samles for at definere POD and POP. POP var primært baseret på de fundne attributter hos PureCircle og POD kunne ikke leve op til kriterierne om at være eftertragtet og leveringsdygtig. NP Sweet rådes i høj grad til at foretage en value chain analyse og en brand revision af NP Sweets sukkerpartner, Nordzucker, for at finde brand elementer der kan give dem konkurrencemæssige fordele. Konkurrencen bliver kun højere, og NP Sweets go‐to‐market straregi må derfor indebære et steviaprodukt som udstråler naturlighed, ægthed og kvalitet og som kan differentieres så meget som muligt fra den nuværende sødemiddelkategori, som opfattes som kunstig og af skeptisk kvalitet.
TABLE OF CONTENTS
POSITIONING STRATEGY FOR STEVIA IN THE DANISH MARKET ... 2
INTRODUCTION ... 6
PROBLEMSTATEMENT ... 7
DELIMITATIONS ... 8
PERSPECTIVE ... 9
THE STRUCTURE ... 11
JACOBSEN’SBRANDINGMIND‐MAP ... 11
STRUCTUREOFREPORT ... 13
PART 1: THE SITUATION ANALYSIS ... 14
1.1THECOMPANY|NPSWEET ... 14
1.3THEMARKET|SWEETENERS ... 22
1.4THECONSUMER|SEGMENTATION ... 32
PART 2 | THEORETICAL FOUNDATION ... 33
2.1INTRODUCTION ... 33
2.2BACKTOBASICS ... 36
2.3BRANDLITERATUREREVIEW ... 38
2.4CONCLUSIONOFREVIEW ... 57
PART 3 | METHOD ... 59
3.1TRIANGULATION ... 59
PART 4 | RESEARCH ... 65
4.1QUANTITATIVERESEARCH|ONLINESURVEY ... 65
4.2WILKOXON ... 67
4.3MANN‐WHITNEYU ... 72
PART 5 | CONSUMER IN CONTEXT ... 79
5.1CRITICALDISCOURSEANALYSIS ... 80
5.2TEXTSCHOSENFORANALYSIS ... 80
5.3CRITICALANALYSISOFTHEDANISHHEALTHDISCOURSE ... 82
PART 6 | BRAND POSITIONING ... 93
6.1INTRODUCTION ... 93
6.2BRANDIMAGE ... 95
6.3BRANDIDENTITY ... 95
6.4POP AND POD EVALUATION ... 100
RECOMMENDATIONS & FUTURE OUTLOOK ... 101
CONCLUSION ... 102
EVALUATION OF REPORT ... 105
REFERENCE LIST ... 106
APPENDIX 0‐13 ... 115
Health and wellness are of increasing interest for Danes, which i.e. is reflected in the rising number of fitness club members and acquisition of related goods. Concurrently, men and women have progressively become more preoccupied with “health and physical appearance”. (Euromonitor International, 2009, p.
81). Through campaigns, the government promoted healthy eating recommending increased intake of fruits, vegetables, and fish and also promoted exercising. Since the 1990s the demand for organic products has increased, and today demand is high. But at the same time, the level of obesity is rising as well.
Consumption of high calorie foods and too large portion size are some of the reasons why the problem of obesity is rising (Euromonitor International, 2009 and Bebe, 2012).
By and large the the concept of health has evolved, where it no longer only encompasses physiological health but has morphed into an integrate part of ones lifestyle (Jensen, 2011). Given all these health related tendencies in combination with the fact that EU sugar prices are upsurging due to scarce supply, it seems like the market would be accepting towards a product like stevia.
NP Sweet is a newly established company who’s primary interest is to sell stevia products. In this report, NP Sweet is used as a case example on how to create a brand position for stevia in the Danish market. Stevia brands are already established outside of Europe and since the approval in November 2011, brands have started to surface wihtin EU borders as well and lately also in Denmark. How can NP Sweet gain a strong brand position in the stevia market? Stevia has been presented as having superior innate qualities and forecasted to have a promising future (PureCircle, 2011 and Moulin, 2010). Despite its favorable product components, stevia may end up being yet another High Intensity Sweetener on the shelves of supermarkets if it is not properly differentiated from others.
Since NP sweet is a new company and its parent companies, Nordzucker (a sugar company) and PureCircle (a stevia company) are not seen as established brands in Denmark either; NP Sweet needs to make an effort to get the consumer to notice the product and brand. A way to do this is through branding initiatives, which provides more long‐term strategies in comparison to classic marketing strategy. What is interesting to unearth regarding branding of stevia is how it can be favorably positioned in the minds of the Danish consumer given the health trends in society. The intent is to formulate a brand position for a tabletop brand of NP Sweet, which is not produced yet. Granted, one could assess NP Sweets established B2B strategy, but the interest is in tapping into the end‐consumer market, especially because branding does not seem to be so pronounced in the Danish sweetener category. With stevia, is seen as the opportunity to build a brand that is up to par with the Danish society’s health and ethical expectations of a product and it is seen as favorable candidate for delivering a stevia tabletop brand to the Danish consumers. All in all this leads to the following problem statement.
The introduction leads to the overarching problem statement of the report:
Which brand position could be advantageous for stevia in the Danish Society?
As a means of understanding some of the classic fundaments of positioning, the first sub‐questions are:
Who is NP Sweet?
What are the characteristics of stevia?
What are the characteristics of the sweetener market and which competitors must be taken into account?
The next step is to see which brand building blocks that could be used for holistic brand positioning and which literature that could help tap more deeply into the contextual sphere. Hence the next inquiries are:
Which branding methods are best fit for the case at hand?
How can one ensure to include the contextual sphere into branding theory and thus create a holistic positioning instrument?
At the receiving end of the positioning effect is the consumer, who inherently is one of the most important stakeholders. In order to understand the consumer in his/her environment, the following must be elucidated:
Who is estimated to be the most viable target audience?
What is their segmentation profile and which local health discourses are they affected by?
Which brand attributes are preferred?
Now that all the information needed has been unearthed from the company, market, product, consumer, societal discourse and brand/related literature, the ultimate step is to assemble all the attributes and use them for the brand position. This leads to the last questions:
What is the brand identity of stevia?
Which attributes are fit for POP and PODs?
What is the essence of the brand position, in other terms, what is the mantra?
All these sub‐questions are meant to answer the main question, which is framed and found at the beginning.
The report is entering unexplored territory on two levels. Firstly, the fact that stevia was newly approved makes branding of stevia in Denmark a new initiative. In general the world of sweeteners is not much explored and therefore it will be possible to create new knowledge in a field that is much debated but scientifically little explored.
Secondly, the holistic approach to branding theory has been considered in the field for a long time;
however, tools to detect contextual elements such as societal discourses seem to be deficient. Discourses are important to identify if one wishes to understand consumers and the world they live in to a greater depth and consequently attain better insight for segmentation.
The key focus of the report is to construct a positioning strategy for stevia in Denmark, where the theoretical building blocks will be a fusion between the two fields branding and linguistics.
When assessing these inquiries, there will be certain delimitations that must be taken into account and those are specified in the following chapter.
The focus is limited to the geographical region Denmark, since the resources of the report best allow for research in the residing country. Nevertheless, on cannot avoid including global perspectives since one of the partner companies, PureCircle, is a global company, which leads questions of global competition into the case.
Information about the sweetener market is scarce, and therefore it is difficult to obtain enough information for making a valid market analysis. Interviewing Lars Bo Jørgensen, stevia manager from NP Sweet, will be one of the primary (if not the primary) sources of information. However, there is only so much a company can reveal and so the information remains limited. Given that stevia as a product in general is completely new to the European market, and the fact that it can be perceived as both a sugar and a sweetener product, it is difficult to determine who the competitors in fact are. Consequently, guesstimations are made regarding potential competitors in order to build the brand position.
In general, the sweetener market is growing rapidly, so because of constant development there are pieces of information that will not been possible to include in the report (Moulin, 2010 and PureCircle, 2011).
Theoretically speaking, due to the unifying of the two fields of theory, namely branding and critical discourse analysis, and because of space limitations, it is not completely possible to use the full potential of the Critical Discourse Analysis. However, it will be used in the best way possible to filter the relevant information about the target audience. In regards to branding literature, not all fields are reviewed since the extent of that task goes beyond the scope of this report. As a result, what will be reviewed in branding is the theory that is seen as relevant to this report. Because of space limits, brand positioning will be in
focus as opposed to a full branding strategy (or integrated marketing communications strategy) including brand personality, relations building, measurement, media choice, creative strategy etc.
This chapter will introduce the perspective penetrating the report, namely social constructionism. Further, it will introduce Popper’s three worlds that are used as the practical tool to ensure the social constructionist worldview. Presenting the perspective is meant to give you an understanding of why all the parts of the report have been included and why the theories have been combined as they have.
Social constructionism assesses the field between the society and the individual and sees the world as a social construction, which is meant to be studied as meaning‐creating processes and phenomena that have been developed through historical, cultural and social processes. In line with the author’s perspective, you cannot understand a given element fully if you take it out if its environment. Examining an element in context is an inherent part of social constructionism, and thus, it is suitable to move within this paradigm.
The thought is that a branding theory supposedly is not more effective alone than in combination with other theories and methods. Following the social constructivist perspective, they way of creating knowledge and meaning is essential to the report, which is why Critical Discourse Analysis is included.
Therefore, some of the most important aspects of a social constructivist view will be shortly explained.
Social constructionism takes on the following world views (Esmark, Laustsen & Andersen, 2005 and Vivien Burr, 2003): These four worldviews are contingency, social reality, relations, and language and they are basically saying that everything a person understands is understood subjectively, so all social descriptions are in principle equally valid. These understandings are affected by the relations people have to other people or objects. The traditional discussion about ontology and epistemology sees the reality through objects and subjects, but social constructionism criticizes this, so it suggests a third independent domain:
The social reality. This is where interaction is created. According to this paradigm, human beings or objects would not make sense alone (without this social realm) because they naturally interact with each other and create meaning in this way. Especially, there is a focus on the language as the meaning creating process.
Social constructionism sees it as more integrated in the social context that does the post structuralism (that focuses more on language bits and sentences), but in this report language will be assessed from both perspectives taking small language details into account, but primarily focusing on the social context of the language.
The social reality and relations above basically consist of three worlds: The objective, the subjective and the social. These three worlds can be equated with the three worlds of Popper: “It”, “I”, and “We”. These three
worlds are intertwined and the point where all them overlap represents that “Integral View” (fig.1). Hence, within the literature review and the research process, the brand worlds help to ensure that we chose theories, which embrace the Integral View. How it will be applied will be introduced in the Literature Review chapter.
Below, as presented in Berthon et al. (2011), the figure of Popper’s three worlds is present.
Fig.1 POPPER’S THREE WORLDS
Source: Popper in Berthon et al. (2011, p.186)
The dotted yellow line represents the Integral view and is the point where all the worlds overlap. This figure provides a visual representation of integral focus that will be applied to the literature review and research process following the social constructionist worldview and allowing for (and ensuring) inclusion of elements from all three worlds throughout the report. So where social constructionism is seen as the overall worldview, Poppers three worlds gathered in the integral view is a good way of having a practical framework to follow when wishing to ensure the inclusion of all three worlds, especially the social, which branding to a certain extent occasionally does not succeed to include. As a means to ensure the integration of contextual and societal aspects into branding, a holistic investigation will be conducted through the use of the following structure.
Empirical View Design View Features view
Cultural View Community View
Relational view etc.
Personality View Psychological View Phenomenological
This chapter seeks to delineate the structure permeating the report from this point and on so that the reader will get an overview of how the report will proceed. In addition, the subsection of this chapter will present a structure encompassing a holistic perspective. This structure deviates from traditional brand positioning steps, but is more relevant given the perspective of the report.
JACOBSEN’S BRANDING MIND‐MAP
Usually, the main positioning steps would be to investigate the competitive framework and the target audience. Arguably, society, company and product needs to be deeper integrated into brand positioning and so new steps are proposed. In his book, Branding in a new perspective (1999), Glenn Jacobsen introduces a brand mind‐map. This mind‐map embraces all the desired elements the authors wish to utilize for building the brand position. Only the main topics of the mind‐map are included as can be seen in the figure below (see the full mind‐map in Appendix 0). The main theme branding is the center of the mind‐
map. There are 6 topics branching out from branding are: product, brand, organization, market, society, and management. In the original mind‐map multiple offsprings branch out from these 6 topics describing.
Since these offsprings are all directly related to product, brand, organization, market, society, and management, it is deemed appropriate to leave them out for the sake of simplicity. Jacobsen (1999, p. 12)
Jacobsen has produced this methodological stepping stone for existing branding methods. He argues that other authors have contributed adequality to branding methods and his contribution is to provide a helicoptor perspective on describing branding as a multidimensional concept and challenge the people who have a myopic view on branding (Jacobsen, 1999, p. 19). Accordingly, Jacobsen’s mind‐map will be playing both a structural and methodological role in this report.
There are certain alterations that seem necessary to make in order to make the mind‐map more applicable to creating a positioning strategy. You need to acquire knowledge about certain areas before you can start building a positioning strategy such as the target market, the nature of competition, the company, the brand and the product (Keller, 2008, pp. 97‐137). Jacobsen has added society in the branding concept.
Given that positioning is a fundamental part of brand building (Ries and Trout, 2001), the constituents you need to build a brand, are seen the same you need when building a brand position. This is why Jacobsen’s model is viewed as an appropriate knowledge foundation for building a brand position. Adapting the mind‐
map to building a brand position has resulted in moderate changes. The transformation from Jacobsen’s version (fig.2) to that of the authors’ (fig.3) is depicted below. The authors’ version is called ‘Holistic Brand Position Framework’ and here the topics Organization and Management are merged into one element
called Company. Brand in Jacobsen’s model represents factors such as The Holistic Brand, Product, and Trademark. There is no existing brand to assess, so instead, the brand literature review will represent Brand in the new version (fig.3), since choosing the right brand model is an important player in the holistic positioning strategy. Market taps into competition, industry, category, nation etc. in Jacobsen’s, which will serve the same purpose in ‘The Holistic Brand Position Framework’, and the same goes for the Society point, which for both versions of the model pertains to Culture, Consumer, the Individual etc. Society is renamed as to Consumer in Context as to capture the essence of its use in this report and to cameo the significance of the consumer in branding.
Fig.2 BRANDING MIND‐MAP Fig. 3: HOLISTIC BRAND POSITION FRAMEWORK
Source: Jacobsen (1999:12) Source: Derived from Jacobsen by authors (2012)
Concluding on this transformation, Branding is renamed Brand Position in the revised model (fig 2). The center Brand Position will draw upon all five elements around it and use them as constituents to building the brand position for stevia. The brand positioning and the interdependence of its constituents will represent the holistic nature of the approach and ultimately provide a brand position proposal for stevia in Denmark.
The weakness of this framework is that it is limited by its helicopter view which means that it cannot ensure that all three brand worlds (Berthon et al., 2011) are included when reviewing the brand literature nor assess all three brand worlds in the research process. This is where the three brand worlds mentioned in the previous part about the perspective can make a difference.
After having argued for the structure used to establish the foundation for the brand position, the content of the parts of the report can now be presented:
BRAND POSITION Consumer in Context
STRUCTURE OF REPORT
PART 1 | THE CASE ASSESSMENT
Commencing the overall structure of the report, the company (NP Sweet), the product (stevia and related sweeteners), and the market (sweetener market) will be assessed. This trio will determine the frames within which the brand can be positioned and can be seen as case that will be assessed. It can be considered as the foundation and building blocks for the brand position. A segmentation process will conclude the chapter as to tap into the consumer segment in focus.
PART 2 | THEORETICAL FOUNDATION
Following the situation analysis will be the literature review as to detect within which literary frame the report will be operating in. The review will present brand as well as brand‐related literature, as a means to find the models and theories that will help understand the consumers and build the brand position.
PART 3 | METHOD
It is now possible to determine which methods that will be used. The use of triangulation facilitates the validation of the data from the survey, the focus group and the CDA. These methods will all be explained in detail and will present the tools used to acquire the knowledge needed to build the brand position.
PART 4 | RESEARCH
Now it is time to utilize the tools and analyze the data output. The research is meant to help understand the consumers’ demographics, psychographics and socio‐graphics. Brand and sweetener preferences are some of main foci. Consequently, both descriptive and exploratory research is conducted. The quantitative results are mined through SPSS, presented and then analyzed, where the qualitative are used directly for analysis in the next chapter. Just like in PART 1, the results of PART 3 will provide building blocks for the brand position.
PART 5 | CONSUMER IN CONTEXT
Here CDA, a tool of linguistics, will be applied as to understand the consumers examined in the research above. Although this analysis is an innate part of the results assessment, the consumer is a vital cornerstone in the brand building process and has thus been given a chapter of its own.
PART 6 | BRAND POSITIONING
Having gone through all topic of the Holistic Brand Position Framework, it is time to construct the brand position. This part will initiate by establishing the brand identity and image, which will form the basis for the brand position. Next the POP and POD will be established as to define the which parities and
BRAND POSITI ON Consume
r in Context
differences that are necessary for the stevia to have in order to be have sustainable competitive advantage.
Subsequently, brand mantra will be stipulated as to assess what the essence of the brand position can be.
Having proposed the brand position, the future prospects and recommendations for the company are presented.
As the title signifies, this chapter will be a summing up all the essential points of the report – from start to end.
EVALUATION OF REPORT
In this chapter there will be the following and final activities: Reflecting upon the report, critically assessing the work and proposing alternative ways one could have approached the same problem.
PART 1: THE SITUATION ANALYSIS
By the end of this chapter you should have learned about the following points:
THE COMPANY | NP SWEET: Who is NP Sweet?
THE PRODUCT | STEVIA: Which sweeteners exist and how do they differ from each other? Where is stevia placed?
THE MARKET | SWEETENERS: Who are the competitors of NP Sweet and what are their strengths? Which trends characterize the market?
THE CONSUMER | SEGMENTATION: Which consumer segment can represent the target group?
1.1 THE COMPANY | NP SWEET
NP Sweet is a company whose primary activity is selling zero calorie stevia
sweetener or reduced calorie stevia‐sucrose sweeteners in different varieties. As of March 17th 2011, NP Sweet was established through a joint venture (JV) between Nordzucker and Pure Circle. Since the heritage of this newly ventured company highly depends on the profile and performance of the two constituting parties. Hence, Nordzucker and PureCircle will be profiled before digging more into NP Sweet on its own.
Nordzucker AG is a 150‐year‐old German company who produces and sells sugar. Its employee count amounts to 3500 across 18 European countries. Their core business is sale of sugar while their core activities are focused on extracting sugar and bioethanol from sugar beet with a sustainable profile (Nordzucker HP, 2011). The Nordzucker is one of the leading companies in Europe – the only market they
operate in. Sugar has experienced supply shortages, high demands and thus high prices, which is one of the many reasons why a sugar company would tap into stevia. Performance‐wise, EBITDA1 turned from EUR 166 million in 2009/2010 to a EUR 283 million in 2010/2011. So far, this is positive for the company since it also turned the performance from a loss to a profit, however, given that the sugar market is more volatile than ever, the future is uncertain (Nordzucker AR, 2010/11). As a part of the Nordzucker profile, Nordic Sugar has been in the Nordzucker family since 2009 and governs the umbrella brand Dansukker in the Nordic Countries. Since Nordic Sugar as an organization is seen as a financially integrated (as opposed to separate) part of Nordzucker, the annual report is made for Nordzucker only. Northern Europe and the two other regions, Central Europe and Eastern Europe collectively comprise Nordzucker. Northern Europe is run by Nordic Sugar who markets the known brand Dansukker. Since Nordzucker it the partner of NP Sweet, Nordic Sugar will not be assessed further.
PureCircle, the other partner of NP Sweet, sells high purity stevia‐based sweeteners to the world’s Food and Beverage companies. Meanwhile, the factor that determines the size of the market is consumer demand for the high purity sweeteners (within the products manufactured by these Food and Beverage suppliers) (PureCircle AR, 2011). PureCircle was founded in 2001 and younger than Nordic Sugar (PureCircle HP, 2012). Nevertheless, PureCircle is the global leader in the production of high purity stevia with an estimated 80%+ production share to date (Stevia Introduction slides, 2010, slide 7). The company has its global headquarters in Kuala Lumpur, Malaysia, while more recently a new European head quarters was established in London due to the increased activities in Europe. They develop their supply chain in “16 countries across South America, Africa, Asia, and the United States” (Stevia Introduction slides,2010 slide7).
Magomet Malsagov has been the CEO of PureCircle from the very beginning and is the one who is primarily responsible for the construction of the Group’s entire supply chain. Expected sales were approximately EUR 5.3 million (USD 7mill.) lower in 2011 than in 2010, which can be explained by EU’s delay of stevia approval (PureCircle AR, 2011). The market slowdown is passed on to the EBITDA, which was halved from approximately EUR 7,891 million (USD 10,486 mill.) to EUR 3,937 million (USD 5,232 mill.). 2012 and on is expected to grow much stronger since the European approval was official at the end of 2011.
Besides the high purity stevia, PureCircle also sells natural flavors and sweetener enhancer solutions, just like NP Sweet, which can be seen as supportive products that can boost the sale of stevia.
1 EBITDA is chosen over other performance indicators since it is the ‘untainted’ earnings that can be compared between companies.
Note that information about NP Sweet is still highly based on each partner company, but the information stipulated in this subchapter is directly linked communication used for NP Sweet.
As stated earlier, NP Sweet’s primary business is selling zero calorie stevia sweeteners and since there is a sugar company involved, naturally there will be some sugar‐interests infused into the business strategy, which leads to the other primary business activity, being the reduced‐calorie stevia‐sucrose sweeteners.
These core business activities also seem to be the goal of NP Sweet (no stated corporate goals found). The geographic territory is European‐based, and the market is divided into the same three parts as that of Nordzucker’s: Central, Northern and Eastern Europe. There are no performance numbers for NP Sweet, since the company has existed for less than a year and has not yet introduced its products to the consumer market.
Nordzucker and PureCircle each have 3 members represented in NP Sweet’s board with Lars Bo Jørgensen, a previous Nordzucker employee, instated as the CEO. His job is to balance the interest of both companies and everything he undertakes must be supported by the board. There are pros and cons to this establishment. The two companies have some common goals, but what about the strategic and operational decisions the CEO must make? PureCircle and Nordzucker are two companies with their respective primary agenda and so there will inevitably be some challenges in making speedy decisions that will satisfy both parties.
So far there will exclusively be a B2B push strategy by using the established sales channels since NP Sweet sees this as the best opportunity to enter the market. Awareness is spread through their website and other low budget media, e.g. the press, but no significant budget for branding is in pipeline. NP Sweet believes that branding will largely help the competitors, which is it does not perceive investment in the discipline as favorable. The authors of this report argue that NP’s sweet’s view on branding contradicts the very essence of the concept which is to distinguish the offer to market from that of the competitors by creating a sustainable and profitable advantage (Aaker 2002; Keller, 2008; De Chernatony, 2006, Davis, 2002;
Jacobsen 1999; Kapferer 2004; Kotler 2006; Miller & Muir, 2004; and Marconi, 2000). It is viewed as necessary for NP Sweets long‐term strategy to brand, since increasing competition is surfacing. In line with this, it is vital re‐emphasize that PureCircle sees the future of the stevia market be dependent on the demand from consumers purchasing the food and beverage products containing high purity stevia, which
encourages pull strategy – B2C communication. Since the authors assess this situation through the worlds of branding and communication, PureCircle’s perspective is seen as the best one for NP Sweet’s future. For this reason, the authors choose to examine NP Sweet's positioning possibilities in terms of the consumer market.
There are several strengths that PureCircle beholds, which literally starts from the root of the whole NP Sweet value chain (Porter, 1998 in Dess, Lumpkin & Taylor, 2005), and the supply chain process is where there appears to be an abundance of positive characteristics that NP Sweet can reap the benefits of. This will be explained in the following.
THE SUPPLY CHAIN
A little grown stalk is replanted in soil by hand, and there is not yet technology that can mechanize that process, which makes it expensive. When the plants are ready, they are harvested and afterwards the leaves are brewed like tea as to extract the sweet compounds called steviol glycosides2, which then go through purification and application process where the sweetener is made into a powder or crystallized form, where a high quality product is guaranteed. As stated, this process is all natural. The production process of PureCircle’s Stevia resembles that of sugar, which should help legitimatizing the naturalness of the process. (NP Sweets WEBSITE 12.03.2012) PureCircle’s supply chain operations are controlled in every step as to ensure quality. Concurrently, the independent farmers involved in these series of actions are stated to be carefully trained through PureCircle’s own education programs at their own Global Stevia Institute. The expert breeding is said to give rise to ‘high yielding Stevia plants’, which is a crucial for profitability. Fundamentally, the idea behind this structure and maintenance is to serve the market demand for natural, sustainable and reduced calorie sweeteners (PureCircle AR 2011).
See Appendix 2 for an overview of the process. PureCircle is socially responsible towards employed farmers and towards the community in which the it operates. This is done by helping locals through an organization called Amigos (PureCircle Pamphlet, 2011, p.6). The handwork, the efficient land exploitation, supporting local farmers, recycling of water, using biogas energy, and improving local communities are all values that can be financially favorable for both parties if they are strongly, continuously and distinctively communicated to relevant stakeholders (Keller, 2008). These values must be considered when developing the brand position for NP Sweet since they correspond to what the consumer requires in the product – both on a global and local scale (PureCircle Pamphlet, 2011, p. 10).
2 Steviol Glycolsides are the sweet tasting components of the stevia plant. Each particular glycoside has a particular
sweet taste and intensity. (NP Sweet Homepage, FAQ, 12.022011)
BRAND POSITI ON Consumer in Context
PureCircle has created a trust mark that says: ‘Stevia PureCircle’ , signifying a quality standard of their products. Whether or not NP Sweet will use these trust marks on products or marketing communications material is still under consideration, but if it is used it is important to have a nearby and very accessible explanation for what it means. There is a swarm of trust marks in the jungle of products, which each vouches for some claim – a few examples:
Organic | The Healthier Choice | Astma & Allergy Friendly
The final process of creating a quality product is NP Sweets’ opportunity to heighten the margin to an extent acceptable to customers.
All in all, PureCircle seems to be carrying the predominant part of the value creation process through their whole value chain and Nordzucker’s contribution is mainly the distribution opportunities and the sugar‐
stevia blend optimization. Even though both companies seem to have a fairly strong resource‐base, the general impression from the interview of Lars Bo Jørgensen, CEO of NP Sweet is that NP Sweet’s marketing budget is small. Due to PureCircle’s heritage, the general profile of NP Sweet is global despite its European market focus, and to that it is natural and lives up to the environmental, social and health‐related mega trends. How strong NP Sweet’s profile is in comparison to that of competitors will be unearthed in the chapter ‘The Market | Sweeteners’. Where stevia stands in comparison to
other sweeteners is also important to detect and so an assessment of this will be presented next.
1.2 THE PRODUCT | STEVIA
Understanding the characteristics of the product is fundamental to developing a brand position. This is why this chapter first sets out to
define sweeteners, profile stevia, as well as profiling sugar – this will establish the
primary product players for NP Sweet. Subsequently, benchmarking the Danish HI sweeteners against sugar will be organized in a table so that one attains and overview and an ability to compare HI sweeteners on their most important characteristics.
For the sake of clear communication, the different terms for sweeteners will be clearly stipulated.
Sweetener is the overall term for ingredients that add sweetness to food, which could be e.g. honey, cane sugar, syrup, aspartame, stevia and xylitol (Schmitz, Spreen, Messina, & Moss, 2002). Since stevia belongs to the category of high intensity sweeteners (HIS) (PureCircle AR 2011), this is the category in focus in this
paper. An overview of how the different sweetener types are related to each is shown in the hierarchy below.
HIS have that particular name because they can be between 100 to 25,000 times sweeter than sugar, meanwhile, they lack in mouth feel and body that sugar has. One can categorize HIS into two categories:
artificial and natural.
Stevia is a natural HIS. The other type which is very different from HIS is that of bulk sweeteners (also called polyols), which have characteristics that contribute to a satisfying mouth feel and body when consuming them; hence they can compensate for the lack of the same characteristics in HIS (Euromonitor International, 2008).The intensity of bulk sweeteners is usually weak and thus needed in high quantities in order to live up to the sweetening standard of sugar. Erythritol is an example of a natural bulk sweetener (artificial bulks exist too), and is used in many commercial stevia products (e.g. Truvia HP, 2012; Pure Via HP, 2012; Steviva HP, 2012). Further insight into characteristics of specific HIS can be seen in the Appendix 1. In regards to tabletops, the most commonly used sweeteners are Aspartame, Acesulfame‐K, Saccharin and Cyclamate (Hermesetas HP, 2012). Natural tabletops exist, but they are not as common (cf. Market) and “…more recently, the introduction of stevia has opened up new opportunities in sugar replacement”
(Euromonitor International, 2010, p. 1), which makes it interesting to see how one could market stevia as a tabletop.
Sugar, honey, fructose, syrup, etc.
Low or zero‐
Stevia, Luo Han Guo, Erythritol, etc.
Aspartame, Saccharin, etc.
Own Contribution 2012
Stevia rebaudiana (Bertoni) is a South American plant that is a genus of about 240 species of herbs and shrubs in the Sunflower family (NP Sweet HP, 2011). Native to Paraguay the plant was traditionally used to sweeten beverages and make tea for centuries (Knudsen, 2011). Regarding production, ‘Farming, extraction and purification of the plant requires low inputs of water, land, fertilizer and energy to produce, which means that it is a sustainable product and further it is not genetically modified’ (PureCircle Pamphlet, 2011 and NP Sweet HP, 2012). It is 2‐400 times sweetener than sugar, heat stable (good for cooking and baking), highly soluble (good for various food applications), tooth friendly, pH stable, etc. ‘High purity reb A (Rebaudioside A), is one of the best‐tasting, sweetest steviol glycosides found in the stevia leaf’ and thus one of the most commercially apt (NP Sweet HP, 2011). It is approximately 400 times sweeter than sugar.
Innately, sugar has superior qualities when it comes to sweet taste, heat stability, long‐term storage, volume when baking, and crystallization when cooking. People are used to how and when sugar taste onsets, the duration of it, the aftertaste, the fullness, the level of sweet, the texture, and its multipurpose functions for both food and non‐food products (Nordic Sugar HP, 2011 and Polopolus & Alvarez, 1991).
Sugar has a long strong natural heritage and a beloved taste profile, which in terms of attributes supposedly makes it the main competitor in the sweetener category (Lindley, 2010).
Since the 70s the Japanese have had high stevia consumption (Carakostas et al., 2008, p.3) but was not commercialized due to its strong licorice off‐taste and a lingering sweet aftertaste (Carakostas et al., 2008, p.3). In the US and EU there were many denials before stevia was approved and this was due to the uncertainties about whether stevia was dangerous for human reproduction and glycemic control (FDA, 2007 in Carakostas et al., 2008, p. 3). Through GRAS3 approval, reb A was accepted in 2005 by the FDA.
France applied and was granted approval to sell reb A in 2009 by the Agence Francaise de Securite Sanitaire des Aliment (AFSSA) (Cooper, 2011). Pre approval, NP Sweet has been experimenting with stevia blends (LBJ, 2011). Also pre approval, stevia has been sold in small specialty stores in Denmark, but only for cosmetic use. November 2011, stevia is approved, but unfortunately categorized as an additive and thus assigned an E‐number, which might give associations to artificial sweeteners.
3 GRAS: Generally Recognized As Safe. It is process where the company goes through the safety tests for a product
with the aim of getting it approved by the authorities (FDA HP, 2012).
NP SWEET PRODUCT PORTFOLIO
The poor taste profile is improved, but stevia continuously has the trail of licorice off‐taste and lingering sweet taste – particularly in higher dosages (Fereday et al., 2011 & Carakostas et al., 2008, p. 3). NP Sweet has three pure stevia types, Reb A, SG95, and PureCircle Alpha. On the Sucrose‐Sugar product list is the dry and free‐flowing version fit for ice cream, jams, yoghurts and dry mixes, and then a Liquid version fit for the beverage industry. It is usually Reb A and SG95 that is used for those blends (NP Sweet HP, 2012).
UNDERSTANDING AND COMPARING SWEETENERS
The aim is to detect which sweeteners may threaten stevia. Parameters that are contemplated are basic characteristics of sweeteners: Sweetener potency, heat stability, shelf duration; taste; and calories. See Appendix 1 for an overview of the sweeteners assessed in the following paragraphs. Sources used are Walters (2008), Lindley (2010), Ecogreen (2004), and Amino et al., (2004).
The chosen sweeteners are the ones who are legally approved in Denmark. In order according to highest potency are Neotame, Sucralose, Saccharin, Aspartame and Acesulfame‐K (Ministry of Food HP, 2012). Two approved bulk sweeteners Xylitol and Sorbitol have also been included in order to contrast them against HIS. These bulks are originally natural sweeteners. It is not economically favorable to extract them from their natural sources, so instead they are chemically produced, making them artificial sweeteners (Niger et al., 2011). Artificial sweeteners with the highest potency seem to be Neotame and Neohesirin dihydrochalcon. The latter cannot stand alone due to taste, but is often used as bitter compound or sweetener/flavor enhancer for other sweeteners. Taste‐wise, aspartame, sucralose and bulk sweeteners seem to take the lead. They are all used in a wide range of products, some more used in tabletops than others (cf. HI Sweeteners). Aspartame and cyclamate have a particularly bad reputation in terms of safety, so the restrictions for those are more known. Saccharin is as noted one of the most used for tabletops and its potency can be 300‐500 times sweetener than that of sugar. Stevia does not seem to be threatened by artificial sweeteners in terms of characteristics.
The natural HI sweeteners are the following: Thaumatin, Monatin (not approved in DK), Luo Han Guo (not approved in DK), Stevia and a bulk sweetener Erythritol. They are listed starting with the highest potency sweetener. Thaumatin is used to a very limited extent due the long lingering sweet taste, but is good for enhancing other sweeteners and flavors. Luo Han Guo contains calories, which in higher quantities the level of calorie have significance and its aftertaste is licorice/burnt caramel and its potency is similar to that of stevia. Luo Han guo is costly and thus less commercial than stevia. Monatin seems to be the biggest
BRAND POSITIO N Consumer in Context
potential threat to stevia, since so far no tests prove any malignant effects and, taste is very close to that of sugar, and it is 2000 times sweeter than sugar. Why it is not approved or known to the EU or Danish market was not detectable, but NP Sweet should keep an eye on this sweetener. Erythritol is a natural bulk sweetener functioning as a good complement to stevia. There are brands that market pure erythritol or erythritol with little added stevia, and since this sweetener has a better taste it could be a threat. A big difference is the price.
Of both artificial and natural, Erythritol (bulk) seem to be the biggest current threat and Monatin the biggest potential threat.
1.3 THE MARKET | SWEETENERS
In this chapter both the market trends and competition will be depicted and examined.
Delineating the trends aims to highlight the most important drivers within the sweetener market. Some of trends are derivatives of global trends. Based on Lindley (2010) and Euromonitor International (2010), the trends will be listed and briefly explained.
The sugar market is undergoing a crisis period due to instability in the market. For instance, general climate of the world is shifting and affecting agriculture. The effects have led supply shortages accompanied with speculation. As an effect, market is pushed off balance and price has soared. This creates opportunity for alternative sweeteners, like NP sweets stevia since they are less cost‐intensive.
HEALTH & NUTRITION
Obesity, diabetes and dental health are all frontrunners in this trend. Despite the general health awareness and the initiatives taken to decrease the number of obese people, the global obesity number is continuously increasing and thus also the weight‐related illnesses. In spite of the health trend, there are some tendencies that make the consumer prioritize health lower, e.g. convenience and taste. Stevia could serve as a helper here. Paraguayans claim that stevia is “helpful for hypoglycemia and diabetes because it nourishes the pancreas and thereby helps to restore the normal pancreatic function” (Singh & Rao, 2005, p.20). Other medicinal research show that show that people who consume stevia report lower incidences of colds coughs due to fact that certain bacteria cannot thrive at the presence of stevia. These bacteria are:
Streptococcus mutants, Pseudomonas Aeruginos, and Proteus Vulgaris and other microbes. This makes it
suitable for mouthwashes and toothpastes. (Lindley, 2010, Moulin, 2010, Euromonitor International, 2011, p. 3, Singh & Rao, 2005, p. 20).
People are on the go – they are busy juggling work and private lives, which leaves them with scarce time to cook. Convenient foods are surfacing on supermarket shelves, cafes, special food stores, and fast food chains ‐ including health food. There is a trend at the other extreme reminding people of the quality of slow cooking. (Euromonitor International, 2009, p.2).
Consumers are seeking natural tastes and natural sugar and are said to prefer all natural sugar rather than not consuming it at all. This opens opportunities for NP Sweet’s stevia‐sucrose blends. Earlier attempts by Coca Cola C2 in 2004 and Pepsi Edge in 2005 to make a 50/50 sugar and artificial sweetener mix failed.
Perhaps the timing and/or the ingredients were not what the consumers desired at that time. In ‘THE PRODUCT | STEVIA’, further significant aspects of taste can be found. (Euromonitor International, 2011, p.3).
There are about 100 existing natural sweeteners where only a select number of them have commercial value. Innovation in technology and general product innovation is imperative since there continues to be a race in formulating the best tasting natural sweetener (Lindley, 2010).
‘BETTER FOR YOU’ PRODUCTS
Better‐for‐you‐products (BFY) have reduced salt, fats, sugars, and/or so forth. Between 2009 and 2014 the BFY products are expected to increase by a further 7% (Moulin, 2010). These products have been taken up more and more space in the supermarkets, giving people a better conscience in consuming a healthier version of the food or beverage they are used to consuming (Euromonitor International, 2011, p.2).
Important to note is that it is very hard to reduce calories. When you take something out of a product you have to replace it with something with equivalent volume, which is why e.g. cakes and cereals that are sugar free may have an increased fat or starch content in order to be able to keep the size and density that they have (LBJ, 2011). Functional and fortified foods are also gaining in popularity. This is a wave that stevia can ride to its advantage. (Euromonitor International, 2009, p. 4)
NP sweet purchases stevia at low market price from PureCircle, however, rising manufacturing costs and crop shortages affect the final price. Sweetener suppliers are facing rising raw material and production
costs – normal for industrial manufacturing. These rising costs are mostly due to the higher energy prices as sustainability issues continuously affect global fuel prices. Prices also play a big role for the soft drink manufacturers, especially in times of recession, where they seek more effective products at lower prices.
Therefore, sweetener suppliers face a growing competition from the Asian countries (particularly China) and other developing countries that have the possibilities of producing sweeteners cheaper that the western countries. These suppliers must be watched. (Euromonitor International, 2010)
Low calorie sweeteners only comprise 0.1% of the entire sweetener market, but are argued to “no way be an indication of the relative importance of HI sweetener ingredients” (Euromonitor International, 2010, p.
23). Saccharin possesses the largest market share while aspartame and sucralose comes in second and third respectively (Fereday et al., 2011, p3). In terms of growth rate, sucralose is leading owing to the fact that it has evolved into the favorite choice in private label products (Fereday et al., 2011). Trends the last 10 years show how HI sweeteners have had modestly higher growth percentage than that of caloric sweeteners, since the consumer market is reaching outside the diet segment. (Fereday, et al., 2011). Of the products that have grown the most, it is lifewaters (e.g. Sobe Lifewater) and tabletop substitutes such e.g. Truvía (Lindley, 2010). Sweetener use in soft drink is forecasted to continue growth (Euromonitor International, 2010). Market opportunities for stevia seem to be increasingly present.
The US will continuously lead innovation of sweeteners and the western world will most likely follow depending on which turn it is going to take (Lindley, 2010). According to Nielsen (2008‐2010), the prospects of an artificial sweetener to survive in Denmark seem dim. The emerging market has the greatest growth potential, because in comparison to the very mature markets in the western world, the emerging markets are still in the growth phase (Euromonitor International, 2012).
Market segments are expected to increase and as soon as the natural sweeteners are accepted as safe by the vast majority of the public, companies can start penetrating new segments including products for children (Lindley, 2010). Soft drinks are forecasted to continuously be the frontrunner of innovation since the natural sweeteners are best applied in that product type. (Fereday et al., 2011, p. 3)
Stevia market growth seems promising but note that even though a resource‐strong Cargill made heavy investments advertising, consumers’ favorable, reactions where short‐lasting and the geographical market expansions were limited due to pending approvals (Fereday, et al., 2011, pp. 4‐5; PureCircle AR, 2010, p. 8).
Limited presence on shelves and low resale rates resulted in the companies not reaching the levels of sale as they expected (Fereday et al., 2011, pp. 4‐5). In Denmark, stevia just entered market. The growth in food
product categories such as BFY and functional foods can contribute positively to the stevia market as well as the licorice market due to stevia’s licorice aftertaste (Moulin, 2010, p. 3).
The chapter seeks to delineate how the competitive field is in general and which players that are the biggest threats to NP Sweet. Note that the prices mentioned in this chapter might not be directly comparable since the prices can vary from country to country but they still provide an indication of price level.
DEFINING THE COMPETITIVE MARKET
Sweetener tabletops will be the category within which competition will be assessed. There are factors that delimit the framing of competition, some of which have been mentioned previously. The perceptions of the various sweeteners are unknown and information useful for this chapter is scarce because the sweetener market is researched to a very limited extent. Stevia can be positioned as both a sugar substitute/complement and a sweetener substitute, all depending on how the consumers choose their sweetener. The data that will be used is a brief telephone interview with LBJ together with the relevant secondary data that is possible to detect. Due to lack of information, some assumptions must be made.
There do not seem to be any prominently branded sweeteners in the Danish market. Meanwhile, with convenience as a trend (Euromonitor International, 2009), it is assumed that availability in supermarkets may play as a factor for choosing a sweetener. Whether or not this is valid will be further researched in the online survey. This assumption gives rise to the first possible competitor profile, which will be called
“Supermarket Sweeteners” and will be elaborated on soon.
Another trend detected are the eating habits in Denmark, where the preferences lean strongly towards natural products, which for consumers who prefer natural products is argued to be the primary motivation when choosing a sweetener (Euromonitor International, 2010). The second competitor profile will thus be called “Natural Sweeteners”. Yet another observation is that companies offering stevia products in Denmark operate on a much smaller scale and is assumed to target a very different crowd (they are in specialty stores) than that of NP Sweet (Nordzucker usually have their products in supermarkets), so they do not seem to be a direct NP sweet stevia substitute. However, supermarket brands are starting to introduce stevia tabletops on the market. For example, Hermesetas recently introduced their stevia brand
“Stevia Sweet” into the Danish market. The companies that sell stevia on the Danish market will be the third and final group of competitors and will be called “Stevia Sweeteners”. Potential competitors who are not on the Danish market yet will also be assessed. The three competitor groups will likely overlap. It will