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Don’t mess with the bean

Small and big brands are battling for shelf space, but they all agree on one thing: consumers want coffee that tastes like coffee, not pumpkins

coffeereport-category

Anyone thirsty for a double shot, half-caffeinated, extra foam peppermint mocha? No? Complicated drink orders may still appeal to Starbucks snobs, but a back-to-basics approach is what’s percolating in the coffee category.

The trend is perhaps best symbolized in Kraft’s “Respect the Bean” campaign for its Nabob brand. TV ads that hit the airwaves last year mocked coffee culture. In each ad, a host offered fancy Starbucks-like coffees, with whipped cream, pumpkin spices and chocolate swirls, to Colombian coffee farmers who were clearly appalled by the concoctions.

“This is an insult to coffee,” said one farmer. “The way I take my coffee is pure,” added another, clearly relieved to be offered a cup of Nabob, which the farmers described as tasting “authentic” and “pure.” The ad has been viewed nearly 900,000 times on YouTube since it first aired last April.

Kraft’s stand that “coffee should be about coffee” is resonating with consumers, according to its marketing director of coffee, Dana Somerville. At store level, retailers are seeing consumers show more interest about different varieties.

“Coffee hasn’t really changed. It’s consumer knowledge and tastes that are pushing the changes in consumption and demand for different brands,” says George Bachoumis, general manager for upscale Toronto grocer the McEwan Group. Among the big sellers at his store: Balzac’s, Kicking Horse, Lavazza and McEwan’s own private label line. Instant, meanwhile, is gradually disappearing from the shelf with only the “older generations” selecting it, he says.

READ: A store where coffee pods rule

Nielsen data supports the renewed Canadian love affair with roast and ground coffee, with in-store sales now topping nearly $1.1 billion (52 weeks to Nov. 15), up 8% from a year earlier. Instant coffee sales are down 3% in the last year. “More than ever, Canadians demand convenience and want to bring home the barista experience,” says Carman Allison, vice-president of consumer insights at Nielsen.

Within the roast and ground segment, on demand (the coffee pods category) is still proving to be a big mover, with dollar growth of 19% in the last year. On demand now accounts for an astounding 45% of roast and ground coffee retail sales. One noteworthy point is how much more consumers are willing to splurge on coffee brewed in Keurig- and Tassimo-type machines.

“On demand and pods cost 2.7 times more per pound than traditional brew systems,” Allison says.

Pods or otherwise, consumers increasingly want to know more about their coffee’s origins.

READ: Coffee pods: the new eco-villain

“Years ago, they just wanted to know if it was fair trade or organic. Now, they want to know about the bean type and are eager to explore new regions and strengths,” says David Wilding-Davies of Ashanti Coffee in Thornbury, Ont. He points to interest in coffee from Zimbabwe. Over at McEwan, Bachoumis calls Panama the next big coffee hot spot.

Similar to categorizing wine by region, retailers may soon adopt the same aisle layout with coffee, aiming to create “a vast selection that accommodates all tastes, from mild to strong,” Wilding-Davies says.

Some brands are already doing something similar. Salt Spring Coffee, in Richmond, B.C., provides tasting notes and flavour ratings for its products on its website, says president, Mickey McLeod.

Small coffee houses may be tapping into the interest for niche brands, but it’s the big coffee makers that could take over the grocery shelves, according to Euromonitor’s Svetlana Uduslivaia.

READ: Why beverage pods need their own section

Case in point: last fall, McDonald’s introduced its McCafé premium roast into supermarkets, with help from Kraft.

McDonald’s, Tim Hortons and Second Cup have done a good job adding atmosphere to their restaurants, which “may well resonate with consumers, especially the younger demographic, and spill over to retail sales,” says Ken Wong, a marketing professor at Queen’s University. “With their marketing budgets, I believe they will stretch their powers more in the grocery field.”

But even the big brands are sticking with the coffee basics. As McDonald’s Canada president, John Betts, said recently: “It’s not about coffee snobbery. It’s about coffee accessibility.”

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