Innovation and convenience are keeping sales steaming in the coffee aisle
Judging by the lengthy lineups at Tim Hortons on any given morning, coffee drinking has become one of our favourite national pastimes. In fact, a recent survey by the Coffee Association of Canada (CAC) reveals coffee is the most popular beverage among Canadians over the age of 16, outranking even tap water. Two-thirds of adults enjoy at least one cup of coffee a day, with the average consumption in Canada hitting more than three cups daily.
As a $6.2-billion industry, of which $1.4 billion is in grocery/retail sales, it’s no wonder more manufacturers, distributors and retailers are jumping on the coffee cart. Plus, with the growing popularity of single-serve in-home brewing devices, more and more consumers are choosing to make their cup of joe at home.
Patricia Snell, president and co-founder of Muskoka Roastery Coffee Co.—a Huntsville, Ont.-based local roaster now in its 18th year of business—says the biggest changes she’s seen in the coffee industry are the increase in demand for premium, coffee-shop quality coffee at home, as well as “one cup at a time” convenience. “Even when the economy is down and people can’t afford to go out as much, they’re absolutely willing to spend on a good cup of coffee,” she says. “Retailers are recognizing these trends and allocating more shelf space to truly differentiated, on-trend brands.”
Known for its handcrafted roasts, the company will launch its first 100% organic blend in 2018 and recently introduced its 100% compostable coffee pods.
“The fact is, people care about innovation in coffee, how it is processed and where it comes from,” says Jason Chong, insights and category development lead for Starbucks Canada’s grocery side. “People who shop for grocery coffee are trying to replicate the café experience at home.” That could mean buying their own beans for grinding or looking for more variety in the on-demand segment via pods and capsules. “Canada is one of the highest consumers of coffee in the world so there are lots of opportunities,” he says. “Grocers can take advantage by being more open to having displays and in-store touch points for coffee versus other categories.”
Chong suggests increasing promotion around occasions for coffee and the foods you can pair with it. “It’s a similar approach to what you’d see with wine,” he says. “We need more communication in-store around how consumers can enjoy these beverages differently, and sampling is important to drive the experience and connect the taste before they buy.”
Coffee drinkers get more daring
In addition to being heavy coffee consumers, Canadians are also getting more adventurous with the kinds of java-based drinks they’re reaching for. According to The NPD Group, hot brewed coffee servings have declined at a rate of 1% over the last five years, while hot specialty drinks have grown by 4% and iced specialty coffee a whopping 10%.
Cold brew coffee is an example of one such innovation that is percolating. Meticulously slow-brewed without additives, the cold brew technique is gaining popularity for being an “any time of day” coffee drink that’s smoother than traditional iced coffee. “Buyers in the beverage category are craving new and exciting things,” says Mitchell Stern, creative and strategic marketing and branding specialist for Station Cold Brew Coffee Co., which was among the first to commercialize the cold brew in Ontario.
The target consumers for cold brew are millennials, but popularity is catching on with the younger set as well, says Stern. “We made assumptions that students couldn’t afford it because it is a premium-priced product, but we’ve been proven wrong and it’s amazing,” he says, noting that their products are now being carried in all Metro grocery stores in Ontario. The company is also talking to major grocers about providing a cold brew tap in-store where consumers can come in and fill up their own bottles to go. “We are working with Metro now on a pilot project to launch in one or two locations to see how it does.”
At CAC’s annual conference in Toronto this past November, a panel made up of millennials noted there is no limit to how much they would spend on a good cup of coffee. According to the Craft Coffee at Home report by NPD, this is also the demographic at the centre of a growing interest in craft coffee methods at home, using French presses, vacuum brewers and pour-over cones.
As the inventor of the world’s first coffee filter, Melitta is banking on the popularity of the pour-over method to keep on growing. The company recently introduced its Signature Series of one-cup, pour-over coffeemakers, which are a modern take on the original invented by founder Melitta Bentz more than 100 years ago. “The pour-over method makes any coffee better and there’s no environmental impact as the filters are all natural,” says Davide Viola, VP of marketing at Melitta North America. “You really don’t need fancy contraptions for a really good cup of coffee you can make at home in seconds.”
Viola suggests grocers put an assortment of coffee filters wherever they display brands of coffee. “People forget that 80% of the coffee category still goes through drip machines,” says Viola. “That’s a huge opportunity to capitalize on consumers’ impulse purchases.”
That’s not to say grocery shoppers won’t enjoy their coffee in-store as well. Starbucks cafés have become a staple in Longo’s stores in Ontario, and all six of Toronto’s Pusateri’s locations feature a café to complement the grocery experience. “Our shopping carriages have coffee holders built in so people can nurse a latte or cappuccino while they shop,” says Sebastian Demedeiros, Pusateri’s learning and development specialist of compliance, and the resident coffee guru.
He, too, notes that grocery shoppers today are much more savvy when it comes to their coffee preferences. “I’ve noticed that the coffee consumer has become more and more educated about different roasts and is asking for more milk varieties such as coconut, soy and even organic milk,” says Demedeiros, noting that all Pusateri’s cafés have recently switched to carrying only a 100% organic, fair trade private blend. He says shoppers will also find a lot more locally roasted coffee on store shelves because they’ve been asking for it. “They think it’s fresher when it’s local.”
This article appeared in the January 2018 issue of Canadian Grocer.