Brits have developed a passion for chilled coffee, creating new opportunities to attract shoppers to flavoured milk…
This spring, Starbucks ran a half-price deal on Frappuccino iced coffees. It was a rip-roaring success - at its peak, the Starbucks store in Westfield shopping centre in Stratford was selling one every 15 seconds.
The success of the promotion is just one indicator of the passion Brits have developed for chilled coffee-flavoured drinks. The number of ready-to-drink chilled coffee products in supermarket chillers has soared and retail value sales of coffee-flavoured milk drinks have risen by 34.7% to £8.9m over the past year [Kantar Worldpanel 52 w/e 10 June 2012].
“UK consumers are becoming more sophisticated and adventurous with their coffee,” says Liz Forte, marketing manager for Starbucks, which produces RTD drinks for the retail trade in partnership with Arla. “They don’t just want to be able to enjoy a perfect morning latte they are also looking to enjoy coffee in different ways, and that includes chilled coffee.”
This is not just an opportunity for coffeehouse brands to expand into the supermarkets, but also for flavoured milk suppliers to broaden their customer base. In addition to children, flavoured milks have been aimed at men for some time, but Nathan King, marketing director at Frijj owner Dairy Crest, says research shows they are now enjoyed by just as many women as men.
“The development of coffee drinks has furthered this growth in women buying into the category,” he adds. “More indulgent and mature flavours, as well as the increase in coffee-flavoured milk drinks, have helped draw a more mature audience and increased the number of women in the category.”
“More indulgent and mature flavours have helped draw a more mature audience” Nathan King, Dairy Crest
Such is the opportunity for chilled coffee that Dairy Crest has just entered the fray itself, launching a caramel latte-flavoured milk under its Frijj The Incredible brand this week. Dairy Crest hasn’t been in the coffee game since 2002, when it did a Frijj latte limited edition, but it will hope the strength of the Frijj brand - which has increased value sales by 12.3% over the past year [SymphonyIRI] - will help make up for lost time.
The chilled coffee offerings of the mults have certainly expanded significantly in recent years. Since Emmi launched its Caffè Latte range five years ago and Starbucks entered the RTD fray in 2010, there has been an avalanche of caffeinated launches. Last May, Illycaffé and The Coca-Cola Company teamed up to bring Issimo chilled coffees, on sale in the US and Greece since 2009, to the UK in Caffè, Cappuccino and Latte Macchiato variants. Earlier this year, Mars launched Galaxy Café Double Shot Mocha Latte and Galaxy Café Skinny Mocha Latte into the mults.
A number of smaller players have also gained traction, including Jimmy’s Iced Coffee, which, since launching 18 months ago, has secured listings in Budgens and Waitrose.
Coffee drinks have brought welcome premiumisation to the flavoured milk market, but volume sales in flavoured milk overall are still largely being driven by promotions, says a Morrisons spokesman. That’s not necessarily a bad thing: promotional activity has encouraged adults to pick up milk drinks as part of their lunch, he says, adding that Morrisons anticipates more indulgent and coffee-flavoured drinks targeted at adults in coming months.
“I would expect milkshake brands to introduce more coffee flavours - and other high street coffee retailers to enter the fray,” he adds. As the category matures, coffee-drink brands will also expand further into multipacks, he says - a move already under way with Emmi launching three-packs in July.
One of the most active dairy drinks markets - in terms of new product development, at least - is Japan, where Mintel has recorded 270 new products entering the market in the past 12 months alone. Here, Mintel analyst Kiti Soininen selects some examples:
Starbucks Discoveries Chocolate Truffle Espresso Coffee
Description: A limited-edition mocha with a rich, mild taste much like chocolate truffles, with an infusion of espresso-roast beans.
Mintel says: A wider variety of flavoured coffees seems likely in the UK, with nearly two thirds of UK coffee drinkers seeing coffee as ‘a nice treat’. Recent launches in Japan have included flavours like white chocolate, macchiato, honey.
Mt. Rainier Caffè Latte Light Cafe Mocha
Description: A 30% calorie-reduced cafe mocha made with caffé latte and couverture chocolate.
Mintel says: Health considerations play a noticeable role in the soft drinks market. Given the importance of light drinks in carbonated soft drinks, low-calorie versions are a possible development area for operators in coffee drinks looking to position their products as permissible treats.
Blendy Café au Lait with Double Caffeine
Description: A café au lait with twice as much caffeine as usual, to support focus for students sitting examinations. There is a blank space on the front of the pack where a personal message can be attached.
Mintel says: 55% of coffee drinkers note it as providing an energy boost, so a high-caffeine positioning is possible, although this would put RTD in competition with energy drinks.
Ibushi Fire coffee drink
Description: A consumer survey by brand owner Kirin showed that consumers look for taste and ‘strong’ body for coffee in the winter, especially men in their 40s to 50s. Ibushi Coffee Drink limited edition is brewed from char-roasted beans for strong body, and a smoky aroma of oak chips.
Mintel says: Some 51% of coffee shoppers note rich taste as important. A positioning on ‘rich’ rather than ‘strong’ would perhaps appeal more in the UK.
Across the category, brands have also started to experiment with new formats. This summer, the Issimo range, which launched in cans, was expanded with 250ml releasable bottles, while - away from coffee drinks - Mars has looked to widen the appeal of milk drinks with sports cap bottles.
“Retailers are being increasingly adventurous with flavours and product sizes, which enables them to reach a larger audience,” says Dairy Crest’s King.
New formats play an important role in broadening the appeal of milk drinks and flavoured milk, says Pat Brunt, sales and marketing director at Delamere Dairy, which launched two RTD soya shakes in July. “Offering a milkshake in a different format, such as a ready-to-drink format, can alter the child-oriented appeal into a product targeted at adults,” she adds. “A carton with a straw wouldn’t grab the attention of an adult, an individually wrapped cup might.”
As interest in chilled coffee grows, consumers are also looking for greater variety - and they want the flavours they enjoy in coffee shops available in an RTD format. “Coffee trends are set in our coffee houses on the high street, and customers want that same level of innovation in the coffee products they can buy in their weekly shop,” says Forte at Starbucks.
In March, Emmi Caffè Latte launched the UK’s first chilled RTD Flat White, followed by a limited-edition Vanilla Tahiti variant in April, and the company says a new limited-edition flavour is planned for early 2013. And a look east, to Japan, reveals how much further potential for coffee drinks there is.
However, not everyone is convinced by fancy new coffee flavours. Illy Issimo, for example, plans to stick to its roots. “We do not personally envisage any crazy variations,” says Shane Angus, brand manager for Illy Issimo at importer and distributor Euro Food Brands. “It’s possible to create a number of variants by playing with the flavour of the milk - and many companies are doing this - but this takes you away from the coffee itself, which is not what Illy’s about.”
Suppliers and retailers are also keen to stress that, while coffee drinks are an important growth market, there’s plenty of innovation elsewhere in flavoured milk. Morrisons is working with its suppliers on developing limited-edition milkshake flavours, while energy drink brand For Goodness Shakes last year reformulated its sports recovery range. Meanwhile, Frijj has been targeting a more mature audience with indulgent flavours such as sticky toffee pudding and banoffee pie under the Frijj The Incredible sub-brand launched last summer.
Coffee may be making all the noise at the moment, but there’s little chance the more traditional milkshake will end up a has-bean.