Monica Watrous examined the growing trends in specialty coffees for Food Business News. She noted that the National Coffee Association’s National Coffee Drinking Trends market research showed daily consumption of espresso-based beverages and regular coffee made with gourmet coffee beans is up to 34% as compared to 31% in the 2013 data. And daily non-gourmet coffee drinking is down 35% from the previous year’s 39%. Leading the consumption of specialty coffee drinks are 25- to 39-year-olds, 42% of which reported daily usage.
What does this mean for the coffee industry?
Profit margin is driving the coffee SKU proliferation. Watrous noted that Krispy Kreme Doughnuts, Winston-Salem, N.C., thirsty for a share of sales, has endeavored to redefine itself as a drink stop. The company expanded its beverage platform so coffee and other specialty drinks can play a larger role in the total sales mix. Krispy Kreme also began testing frozen lattes and offering packaged ground coffee and ready-to-drink iced coffees in the grocery channel this year.
Competitor Dunkin’ Donuts is also seizing opportunities in the specialty coffee segment. With beverages generating 57% of sales, the company innovates with seasonally inspired limited-time offers and customizable flavor shots and swirls. “Iced coffee is a high-growth category; we're the market leaders,” said John Costello, president of global marketing and innovation for Dunkin’ Brands Group, Canton, MA, during an analyst presentation in September. “It's also a product that has real appeal to millennials,” Costello added.
Specialty coffee beverages not only build check and add menu news to the fast-growing breakfast day part, but also provide plentiful opportunity for flavor innovation. For the winter months, Dunkin’ has launched a sugar cookie latte, featuring the flavor of frosted sugar cookies topped with red and green sugar crystals; and the snickerdoodle cookie latte, which combines flavors of sugar and cinnamon with a whipped cream and cinnamon topping. Peppermint mocha coffees and lattes are also returning for the season.
Dunkin’ Donuts is not the only restaurant chain aiming to perk up sales with seasonal beverages. Starbucks Corp., Seattle, has unveiled its first new holiday beverage in five years with the introduction of a chestnut praline latte, featuring a blend of espresso and flavors of caramelized chestnuts with steamed milk, topped with whipped cream and spiced praline crumbs. Inspired by European holiday flavors, the chestnut praline latte “resonated strongly with customers in test markets and will add incrementally as the next iconic holiday beverage,” said Howard Schultz, chairman, president and chief executive officer of Starbucks.
More competition is brewing in the specialty coffee market, reported the Specialty Coffee Association of America (SCAA), a non-profit trade organization and the world recognized leader in coffee knowledge development. With over 9,000 members located in more than 40 countries, including member companies and their employees, SCAA members represent every segment of the specialty coffee industry, including producers, roasters, importers/exporters, retailers, manufacturers, baristas, and other industry professionals. For over 30 years, the SCAA has been dedicated to creating a vibrant specialty coffee community, recognizing, developing, and promoting specialty coffee by setting and maintaining quality standards for the industry, conducting research on coffee consumption, and providing training/education on brewing and perfection of craft.
SCAA announced that the U.S. Coffee Championships will be held February 19-22, 2015 in Long Beach, CA at the Long Beach Aren, and will consist of events that include: U.S. Barista Championship, U.S. Brewers Cup, U.S. Latte Art Championship, U.S. Cup Tasters Championship, and Roasters Choice Competition. Who do you think will win?
Thomas R. Cutler is the President & CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc., (www.trcutlerinc.com). Cutler is the founder of the Manufacturing Media Consortium including more than 5000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler authors more than 500 feature articles annually regarding the manufacturing sector. Cutler is the most published freelance industrial journalist worldwide and can be contacted at firstname.lastname@example.org and can be followed on Twitter @ThomasRCutler.