Crunch or grind?

10 April, 2009
Even in a recession, there's money to be made in coffee and a lot of support to get started, finds Andrew Williams
Page 34 

With a glut of food-to-go and sandwich outlets offering special coffee deals, such as recessionary £1 coffees linked to meal deal promotions, as seen in the likes of Pret, Upper Crust and Coffee Republic, focus is shifting from pushing premium coffees to just making sure consumers stay hooked on their daily coffee fix. This poses the question: if you are about to buy coffee equipment, should you go for cheaper filter or instant options or stay true to the premium ground espresso machines?

Following the success of the coffee chains, it's easy to overlook that the most commonly drunk format in the UK is filter. "Filter coffee still accounts for 70% of all coffee sold in the UK, but thanks in part to the SCAE's Gold Cup programme, we are seeing renewed interest in filter coffee service," notes Chris York, sales director for Marco in the UK.

Paul Meikle-Janney, managing director of coffee expert Coffee Community, believes filter could be set for a retro revival. The reason it fell out of favour, he says, was because it was served so poorly and merchandised badly. "Too little coffee was used to achieve a rich flavour and then, once made, it was left to stew on a hot plate," he says. "It's what people tend to want when they stare at a large menu in an espresso bar and then shout in desperation, 'But I just want a coffee'. Filter coffee has been cast into the shade by espresso in recent years but this should not be the case. Indeed, it is one of the best ways of enjoying single-origin coffee grown on one particular estate."

Made properly from freshly ground beans, and served quickly, filter coffee can be a "wonderful drink", he says. It offers a cost-effective route into coffee and would only cost a couple of hundred pounds to set up. Many coffee suppliers will even provide the equipment free on loan.

Even instant coffees are making a comeback in some quarters. "Affordable coffee solutions are becoming an increasingly attractive proposition as operators look at offering more cost-effective options to their customers in line with market shift," says Martin Lines, marketing director for Nestlé Professional. He says Starbucks' recent 'Via' launch of take-home instant coffees has added credibility to instant coffee. Plus, the point-of-sale support and loyalty promotions from big brands like Nescafé can help to boost impulse purchases, he adds.

However, compromising on quality won't do you any favours on the high street, says Meikle-Janney. After all, high-quality coffee can cost little more than the poor. "In these hard economic times the appeal of a product with a 1,000% mark-up that is commonly, even addictively, drunk by a large population should be attractive to most retailers," he says. "Coffee offers huge opportunities. It can be the perfect complementary product to offer a bakery or café retailer's existing customers and may attract new customers as well."

In fact, latest figures from market research firm him! show that both chain and independent coffee shop visits are still in growth this year, while sandwich shop visits are declining, suggesting that coffee quality is not being sacrificed by consumers (see graph below).

So are cheap coffees worth doing? Max Jenvey of food-to-go consultant Oxxygen thinks you would do well to focus on cross-category promotions to improve customers' average spend. "Research shows we can achieve as much as a 40% increase on a combination purchase such as coffee and pastry," he notes. "By offering both categories together, we can also increase frequency of customer visits from 1.5 to 3+ times per week."

Rather than offer price promotions on coffee, he suggests increasing the range of cup sizes to encourage trading-up. "Coffee and bakery are both still in growth of up to 14% and, in today's credit-crunched society, customers are still prepared to part with their hard-earned cash on a regular basis," he stresses.

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=== Costing it out ===

A quality espresso blend may only cost you £2-£3 more per kilo of beans than cheap coffee, writes Coffee Community's Paul Meikle-Janney. If each kilo makes about 125 espressos, it only means about 2p extra per cup. Or, to put it another way, a cheap espresso could cost you 6p to make and a quality one 8p.

If you then take the time to learn how to make it well, your customers will notice and return for more, but you still need to get them to buy it in the first place. To do this you need to demonstrate your "coffee credentials".

This can be done through good point-of-sale, such as a blackboard menu that's more than just a list of drinks; write some details about your blend - where it comes from, what it tastes like. You could also sell retail size bags of your coffee.





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