Coffee sales continue to percolate, thanks to new products that deliver coffee shop quality at a fraction of the price.
By Richard Turcsik
Long lines. Snippy baristas. Tip jars. America’s love affair with coffee is so strong that people will put up with most anything to enjoy their favorite cup of Joe. But the weak economy is leading an increasing number of consumers to skip the coffeehouse and pore over the proliferation of products in the supermarket coffee aisle.
New flavors, exotic blends and exciting varieties are perking their interest, as well as different ways to brew coffee. “One of the big trends that we are seeing is the pour over process,” says Chris Hillman, vice president of marketing for Melitta USA, Inc., based in Clearwater, Fla. That is when coffee grinds are placed in a funnel-like apparatus lined with a paper filter, which is placed over a cup and filled with boiling water.
Other individual cup brewing methods are also taking off, including the Senseo pod system and the Keurig Single Cup Brewing System, which uses K-Cups.
“The Keurig Single Cup Brewing System and the K-Cup Portion Packs are really transforming the grocery aisle,” says Sandy Yusen, director of public relations, Specialty Coffee Business Unit, at Green Mountain Coffee Roasters, Inc. (GMCR), based in Waterbury, Vt. “K-Cups are one of the fastest growing categories within the center store, according to IRI and Nielsen. It’s because the system appeals to a growing trend of consumers who are looking for variety, convenience and quality out of their coffee experience.”
Coffee consumption has held steady during the recession, even in the face of higher prices. “Coffee is an affordable luxury and people are not willing to give up their daily cup,” Yusen says. “But the trend is that more consumers are choosing to brew their coffee at home.” The National Coffee Association Drinking Trends Study showed a 4% increase of people brewing their coffee at home in 2010, Yusen says.
Single-cup brewers drive sales
K-Cups sell best when merchandised on display fixtures that also include the high-margin brewers, Yusen says. This fall, Starbucks branded K-Cups will be appearing on supermarket shelves, building further interest in the system.
“We’re also very passionate about the continued expansion of our Fair Trade coffees,” Yusen says. “We’re finding that more consumers are looking for a better understanding of where their food comes from, including coffee. Supporting Fair Trade is one way that we provide a guarantee to our customers that the coffee they purchase is grown in a socially and environmentally responsible way.”
As summer settles in, GMCR is focusing on Brew-Over-Ice K-Cups. “These K-Cups are specially blended to brew over ice using the Keurig Single Cup Brewers,” Yusen says.
In supermarkets, Green Mountain Coffee Nantucket Blend and French Vanilla Iced Coffee will be featured in the offerings of Brew-Over-Ice K-Cups, along with a selection of Celestial Seasonings Perfect Iced Teas. “We’re finding that for grocers this is an incremental sales opportunity because it expands consumers’ use of the Keurig Brewing System to a whole new category of beverages,” Yusen says.
Starbucks has been introducing a new generation of coffee drinkers to the formerly staid instant coffee shelf set with its Starbuck VIA Ready Brew. “Starbucks VIA Ready Brew represented our first entry into the single-serve space and, in year one, we saw $194 million in system sales,” says Michele Waits, vice president of Seattle-based Starbucks Consumer Products Group.
Starbucks VIA Ready Brew’s initial varieties are Colombia, Italian Roast and Decaf Italian Roast. Now iced varieties are being added to the mix. “This June, Starbucks VIA Iced coffee arrives in grocery channels across the U.S.,” Waits says. “Like all VIA Ready Brew, it takes just a few seconds to brew. It’s lightly sweetened with cane sugar and specially designed for mixing with cold water.”
The line will have a suggested retail of $7.99 and be merchandised with special shippers, shelf-talk banners and sampling at Starbucks kiosks inside grocery stores.
San Ramon, Calif.-based Brands of Britain wants consumers to know that the country synonymous with tea has also created a pretty darn good cup of Joe. Marketed under the Taylors of Harrogate brand name, the coffees are roasted, ground and packaged in England, marketed in stylish 8-ounce bags in seven varieties: Hot Lava Java, Espresso, Take It Easy, Lazy Sunday, Rich Italian, After Dark and Decaffé.
“We have a pretty solid following on our teas, and are in a number of key retailers, including some Whole Foods divisions, The Food Emporium, Wegmans and Fresh Market,” says Mark Rajeski, Brands of Britain’s president. “We’ve had some dialogue with these folks about picking up our coffee. There would be a halo effect, and we think the consumer base is there because a lot of folks are drinking both coffee and tea.”
Family-run Taylors of Harrogate has roasted coffee since its founding in 1886. “When it comes to premium coffee, in the U.K. they are the No. 1 player in the major grocery channels,” Rajeski says.
Each Taylors of Harrogate blend has its own custom ground. “This ensures that the consumer is going to get the type of coffee that they believe is going to be the best,” Rajeski says.
By comparison, the new Café Collection, which is being rolled out to New York, New England and other select markets by Melitta after a successful test run in Philadelphia, is available only in a European style extra fine grind. “With an extra fine grind, you can use it in any coffee maker, other than a French press,” says Hillman.
Melitta Café Collection is available in medium roast Classique; Blanc Etnoir, a blend of light and dark roast; Vienna Roast dark; Riviera Sunset decaf; Hazelnut Crème Brulee; and Parisian Vanilla varieties.
Chock full of value
Dennis Crawford, senior marketing manager at Massimo Zanetti Beverage USA (MZB), the Portsmouth, Va.-based subsidiary of Italy’s Massimo Zanetti Group, says his company’s coffee costs just pennies per cup. He can rattle off a whole list of reasons why MZB’s coffees offer value—everything from its 100% Arabica beans, to the environmental friendliness of its old-fashioned steel cans.
According to Crawford, MZB is the only fully integrated coffee company in the world. It runs its own plantations and does its own milling, roasting and packaging. In the U.S. its brands include the household staples Chock full o’Nuts, Hills Bros., Hills Bros. Capuccino, Chase & Sanborn and MJB.
MZB’s newest product is the Dark Satin blend, which is being introduced by Chock full o’Nuts and Hills Bros. “Dark Satin is playing into the bold, dark, rich-flavored coffee that seems to be catching on at this point,” Crawford says. “We are certainly taking a look at what is selling in the marketplace and there are a number of dark roasted coffees that are doing quite sell. Clearly there is a consumer segment out there that is looking for a bold, dark variety of coffee.”