A 50% plunge in the commodity price for coffee from September 1991 to the same time this year, has precipitated an aggressive price war on the supermarket shelf.

Much of the financial gain coffee marketers might have realized had retail prices remained constant since commodity prices began falling in April has been passed on to the supermarkets and their customers.

But Nabob Foods is determined to keep at least some of these potential profits for itself.

Late last month, the Burnaby, b.c.-based company launched Gold Rush, an aggressive instant-win coupon promotion in support of its Summit and Tradition roast and ground brands.

As part of the promotion, 15-cent coupons are being inserted in four and a half million specially marked packages of the brands, in regular and decaffinated formats.

In addition, $5 coupons will be inserted in 15,000 packages; gold coins valued at $100 will be inserted in 250 packages; and vouchers for gold bars valued at $10,000 will be inserted in three packages.

The promotion, which is scheduled to run until the first quarter of 1993, will be supported by a 30-second tv spot and point-of-purchase advertising.

Ad agency is Palmer Jarvis Advertising of Vancouver.

Nabob Marketing Manager Jonathan Cronin says the promotion is designed to provide ‘incentive and value to the consumer beyond just looking for the best price of the day.’

Cronin says Gold Rush is the first value-added promotion Nabob has done, explaining coffee marketers tend to focus on price promotions.

Cronin says ‘we hope doing things like Gold Rush will signal to the trade and our competition that nobody is going to win in a price war.’

Nabob is locked in combat with Kraft General Foods and its Maxwell House brand for the title of market share leader in the roast and ground category.

According to A. C. Nielsen figures for the four-week period ending Aug. 22, Nabob had the lion’s share of the market with a 24.7 % share.

Maxwell House had a 23.8 % share.

Well back from the front-runners, Nestle had 7.3 % of the market with Nescafe MJB and Taster’s Choice, while Melitta had a 5.8% share.

Retailer house brands accounted for 31.6 % of the market and regional brands accounted for 6.8 % of the market

Although coffee marketers regularly find themselves embroiled in price wars, the current low commodity prices have led to some of the most aggressive pricing in recent memory.

Occasionally in recent weeks, national brands such as Nabob and Maxwell House, and regional brands such as Mother Parker’s in Ontario, have hit lows of 99 cents with a discount coupon for a standard 300-gram package.

More commonly, retailers have been featuring national brands at $1.49.

Non-feature prices are averaging between $1.99 and $2.49.

Fueling the price nosedive has been a drop in commodity prices for green coffee beans.

The price hit a 17-year low in September, when a pound was selling for just US 49 cents.

A year previously, the price was US95 cents a pound.

Since the September low, commodity prices have risen to US69 cents, but the market is still well below average.

Greg Petrie, Nestle’s brand manager on Taster’s Choice, Nescafe MJB and Hill Bros., he believes supermarket prices will begin climbing back to traditional levels in the new year.

Petrie will not say whether he is planning to run value-added promotions for his brands.

But he is quick to praise Nabob for going on the offensive with a promotion designed to spur brand loyalty and give people a reason to do more than shop for the lowest price.

‘I think anything that adds value to a product and brings excitement to the category is a good idea,’ Petrie says.

‘It will be interesting to see what happens,’ he says.

Dave Hulbert is marketing manager for Mother Parker’s Foods, which markets Mother Parker’s coffee in Ontario and is the country’s largest maker of private label brands.

Hulbert says it makes good sense for Nabob to invest some of the cost-saving from the drop in commodity prices into brand building instead of simply directing it toward lower retail prices.

Hulbert says that since commodity prices began to fall, ‘the focus has been on putting marketing support onto price to drive the business, versus on increased consumer support activity.’

He says the price war will continue until the major coffee marketers decide they have had enough.

‘They have to stop bashing prices around or we all have to continue the game,’ Hulbert says.