Retail coffee brewing with innovation

by Allison Sebolt
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With many consumers spending less at coffeehouses and donut shops in the food service market, various manufacturers and food service operators are finding ways to attract consumers by offering more retail coffee options.

According to Mintel International, Chicago, 49% of respondents to a survey said they are spending less on coffee and coffee drinks in food service this year compared with last year. Sales in the coffeehouse and donut shop market are expected to decrease by 2% in 2009 but rebound to 4% in 2010, Mintel said.

"The market was soft in 2008," said Gary Hemphill, senior vice-president of information services for the Beverage Marketing Corp., New York. "The away-from-home coffee market has been growing at the expense of the in-home market.

But in 2008 consumers were feeling an economic pinch and sales were soft due to weakness in the away-from-home coffee market."

Despite the away-from-home market decline, there are still opportunities for innovation. Mintel said going forward coffee drinkers probably will drink about as much coffee as they have in the past, but they will go for the value-priced products and home brewing.

While Starbucks Coffee Co., Seattle, is in the middle of closing 900 stores, it recently introduced VIA Ready Brew coffee, an instant coffee line. The new product is available in Illinois and Seattle-area Starbucks stores and is available for national distribution on-line. It also is available in some Costco and Target stores in Seattle and Illinois and has a suggested retail price of $2.95 for packets of 3 and $9.95 for packs of 12.

"Starbucks VIA Ready Brew has been more than 20 years in development and realizes our desire to produce a coffee that replicates the body and flavor of Starbucks coffee in an instant form," said Darcy Willson-Rymer, managing director of Starbucks UK and Ireland. "It was a significant move for Starbucks."

Starbucks said the instant coffee market is an important opportunity because it is a $17 billion global market.

For other growth opportunities, Dunkin’ Donuts, Canton, Mass., is making its products available in theme parks, airports and hotels, and Tim Hortons is experimenting with a self-serve kiosk unit growth model. Dunkin’ Donuts also has launched the DDSMART betterfor-you line with products meeting at least one of the following criteria: 25% fewer calories, 25% less sugar, fat, saturated fat or sodium; and/or ingredients that are nutritionally beneficial. Dunkin’ Donuts also distributes a line of coffees in the retail market through an agreement with Procter & Gamble.

Mr. Hemphill said specialty coffee has shown growth and R.-T.-D. coffee has promise but has yet to develop significantly.

The Coca-Cola Co., Atlanta, has started offering illy issimo, a line of premium R.-T.-D. coffees, in the United States in New York City, Los Angeles and San Francisco. The products are available in 15 countries throughout the world, primarily in Europe, through a joint venture between Coca-Cola and illycaffee S.p.A., an Italian company. The products offered in the United States are issimo Caffe, issimo Cappuccino and issimo Latte Macchiato.

"We’ve brought together the elegance, style and coffee heritage of the illy brand with the beverage expertise of The Coca-Cola Co. to launch illy issimo, the real Italian espresso-based premium coffee beverage," said Deryck van Rensburg, president and general manager of venturing and emerging brands for Coca-Cola North America. "This is a perfect example of how The Coca-Cola Co. is bringing new and exciting beverages to meet the growing demand for authentic naturally sophisticated brands."

Caribou Coffee, Brooklyn Center, Minn., also offers grocery and retail products in a full roast spectrum with whole bean and ground varieties in grocery and club pack sizes as well as trail-size fractional packs.

Wolfgang Puck Coffee, a product of Wolfgang Puck Worldwide, Inc., Beverly Hills, Calif., recently introduced a retail line of estate grown coffees in varieties such as Tuscan Breakfast, Provence French Roast, Sorrento Colombian Estate and Vienna Private Reserve with distribution in Wal-Mart Stores, Inc. as well as some grocers and natural foods stores. Newman’s Own, Westport, Conn., has a line of retail coffee with a dark French Roast variety. Seattle’s Best Coffee has introduced an anniversary roast whole bean coffee, according to Mintel’s database.

According to The Nielsen Co., total U.S. sales of coffee in food, drug and mass merchandise outlets totaled $4,948,374,778 for the year ended May 16, up 7% from the previous year.

According to Mintel’s Global New Products Database, there were 317 new coffee products introduced in 2008 compared with 362 in 2007. In 2009 through June 10 there were 88 new products introduced.

This article can also be found in the digital edition of Food Business News, June 23, 2009, starting on Page 50. Click here to search that archive.

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