Roast and ground coffee suppliers are laughing as consumers become more discerning and prepared to pay more. "Consumers are becoming more passionate and educated about coffee, actively seeking out premium quality," says David Rogers, sales and marketing director, Lavazza UK.
"We're all too lazy and can't be bothered to make roast and ground, hence on-demand machines - that's where the growth is," says Tesco's Mark Suddaby.
Lavazza UK is the market leader in the sector with an 80% share of volume sales, according to Nielsen [MAT w/e 16 June 2007]. The company has been busy with a variety of campaigns including direct mail, sponsorship linked to fashion and the arts and a regional sales drive in key cities such as Manchester and Birmingham.
Illy has jumped on the bandwagon with the launch of foil-wrapped coffee pods, made from 100% pure Arabica beans, for use with its ESE (Easy Serving Espresso) system, available in two roasts and a decaf variety.
The sector is being further invigorated by significant investment from manufacturers. For example, Kenco is investing £8m into the Tassimo brand throughout this year to make the most of the trend. "The café culture is continuing to influence consumers - this is driving the on-demand sector, which is showing value growth at 60% [Nielsen MAT w/e 14 July 2007]," says Kraft Foods' Dave McNulty.
Tesco has started selling the Dolce Gusto machine at the coffee fixture, not the electricals fixture. "This is something we're planning to roll out to other stores in time for the Christmas season - it's a real opportunity for the coffee industry," says Tesco's Mark Suddaby.
Educating consumers about roast and ground coffee is vitally important. Tesco has worked with wine expert Oz Clarke to give a description of its own label roast and ground coffee so consumers can gain understanding of each variety. "We do this where room permits," says Suddaby.
Percol has been explaining to consumers how different micro climates, soils and altitudes influence the flavour of the coffee. It compares coffee to the wine industry. In July this year for example, it launched a New Harvest Guatemala ground coffee, which it described as "the equivalent of a Beaujolais nouveau". It rushed to get the first harvest coffee out on sale as fast as possible to capture the intensity of the fresh flavour. "Coffee is just like wine that has seasons and variations according to its microclimate and country of origin," says Percol founder Brian Chapman. It has started coffee academies for consumers, hosted by wine expert and ex-Somerfield wine buyer Angela Mount.
Percol thinks retailers could use point of sale to help consumers understand the category more. "They could do something similar to what they do in the wine aisle to help consumers choose such as tasting notes or suggesting food pairings."
Meanwhile, Twinings entered coffee for the first time in February this year with a four-strong range of ground and roast blends. Made from 100% pure Arabica beans, the four varieties - Intense, Rich, Mellow and Decaff - have on-pack information, names and strength indicators. According to the company, more than 30% of sales are attributed to people who have not bought roast and ground coffee in the previous 12 months.
"We looked at the retail area and saw a gap in the market for blended coffee," says Paul Murphy, general manager UK, North America and Australia. "It's still early days, but we had a very good trial period - it's only just going into stores."
Another relative newcomer is Starbucks, which has moved into retail, but as Marcel Hayden, category buyer hot beverages, Somerfield, says: "It is early days yet. We need to see at least six months' performance in the market." n