Coffee is an addiction. As with many addictive substances, dabblers get the munchies. Not even a blood-letting recession has weaned hard-pressed cocoa-heads off their Jobseekers Allowance-busting £2.35 macchiato hit, and as such, coffee chains continue to be the dominant peddler of baked goods for caffeine junkies on the high street.
Depending on who you listen to, store growth will, at best, show a moderate dip and, at worst, the market will consolidate, with capital expenditure put on hold before the cheque books get waved again, probably sometime around 2011. The sector’s robustness was enough of a carrot to attract giant wholesaler Brakes into the market, tar- geting coffee shops with the launch of a dedicated bakery division in April. Signs are that the big coffee shop players will continue to exert more and more sway on NPD in bakery and further challenge bakers for spend on the high street.
As head of food at the UK’s biggest coffee shop chain, and third- biggest retailer of baked goods and sandwiches on the high street (not counting supermarkets), behind Greggs and Subway, Costa’s Beverley Phillips wields more clout than most. If proof were needed, in the time since British Baker last spoke to Phillips for a feature in early 2008, Costa has added over 200 outlets. That’s a lot of blueberry muffins.
Dealing with change
Much has happened since then - not least the small matter of the near-collapse of world capitalism. A time to reflect - or panic - perhaps? "It was about sharpening the pencil and asking are we providing the best value at the right price for the customer?" she recalls. "That led us down a lot of avenues, talking to suppliers, looking again at products and the sales mix. It just means you have to doubly focus."
Bar Costa’s recently launched £4.95 coffee and panini meal deal promotion, the premium pricing structure has - surprisingly - survived intact, bolstered by the strength of the brand. "We’re not a £2 meal deal brand," notes Phillips.
Nevertheless, all the major chains offer a pretty similar product mix. Does Phillips believe there has been enough innovation from bakery suppliers for coffee shop customers? "Everybody has got sandwiches, pastries, muffins, because it’s all about having something that goes with coffee," admits Phillips. "The ranges are very similar, so it’s about how you introduce interest in choice and interest in quality. What we do know, through our consumer research, is that our customers buy more food than Starbucks or Caffè Nero - read into that what you will. [Our competitors] either have less food on offer or less churn, and less focus on their promotions. For us, food is very much the secondary driver, after coffee."
One barrier to range development that shouldn’t be discounted is the customer. "We’ll develop something that’s way off the scale and your customer brings you back and says, ’OK, that’s too different, I want it to be like this - relevant to the coffee shop experience’", she says.
Is it a disappointment then when boundary-pushing products fail? "Of course. But if you don’t go to your consumers with products that are challenging enough, then you’re never going to get the right level of innovation," she says. "We might take 10 concepts to research. If only two of those concepts come out as winners, that’s a success. If you trialled every concept and they all worked, you’re either very brilliant or you’re not pushing the boundaries enough."
That’s partly why Phillips prefers to nurture longer-term partnerships with single category suppliers, rather than tender each and every product. For example, the pastry contract was awarded to Delifrance in October 2008 after the whole category was tendered. "We feel they are the best in the market right now and that’s why we work with them," she says. "If you’re sending eight briefs to six suppliers, your opportunity to get the best out of people, in terms of creativity and development, is stifled; it becomes all about one product and the best price." To illustrate, gluten-free specialists were invited in to pitch, but served up "horrendous to average" fare, so Phillips challenged her long-term cakes supplier to make a gluten-free product - a well-loved brownie.
Costa shook up its impulse category this year, bringing in Patterson Aran for biscuits, and introduced health bars and savoury pastries (a savoury cheese twist) for the first time. It also developed a three-layer club range of sandwiches including an All-day Breakfast version after research indicated men were after a bigger eat. Conversely, a hot-eat flatbread range was introduced as a lighter eat for women. More low-fat options have crept onto the menu, as well as indulgent comfort classics, such as a recession-masking Victoria sponge, served in pleasingly doorstep-sized wedges.
But if long-term contracts are in place, is the door closed to new suppliers? "We don’t work with a sole supplier with all of our categories," says Phillips. "For example, we have several different suppliers in our cake category. We’re not always looking for the bigger supplier. We like the fact that our main cake supplier - Cakehead (Stamford, Lincolnshire) - works with a number of much smaller specialist factories, so we get the best product. We’re looking for someone who is truly immersed in our brand and understands the coffee shop market, who can provide a different point of view that opens your eyes - one that perhaps you haven’t considered."
So if you’re a potential supplier and want to get your foot in the door when the next tenders come round, best start racking up those loyalty card points.
=== The Costa churn ===
l Costa revisits its range every two months, with up to eight products affected, depending on seasonality
l Work occurs on three fronts: range churn - flavours within the same categories; seasonal flavour profiles; and ’blue sky’ work on products that break the mould
l The food range is split into sweet and savoury
l NPD is led by two food teams: a development team and a technologist team
l This is supported by a buying team, an international food team and marketing; Costa does not buy through a conduit, such as 3663 or Brakes, but instead fosters direct supply partnerships
l The Costa estate is split into eat-in and travel channels and the range flexes accordingly; take-away accounts for 15-20% in an eat-in outlet
l Consumer testing is at the heart of Costa’s food development and might take place in a handful of stores, across a region, or with 50 people invited into the test kitchens
l When a new product is launched, a top-down communication process kicks in, with briefings and tastings for shop staff to help communicate to customers
=== Suppliers’ notes ===
Wish-list: "If there is a market need for new people on the block, I’d go with pastry. There’s not as much choice as you’d expect out there," says Beverley Phillips
Know thy limits: Costa does not use microwaves because Phillips believes they degenerate products, but food can be heated on a panini grill; there are no facilities for fresh sandwich assembly on site. "We will continually review it, but even in brands that do it really well, there is inconsistency in their product. Our sandwiches are delivered daily, so we still have fresh product made by specialists"; Costa only bakes-off in its international stores, "so we’re not averse to doing it, but it depends what the customer is looking for in the UK"
Take-away: A review found the average waiting time between a hot sandwich purchase and sitting on a train to eat it was 10-20 minutes. Costa developed bespoke, disposable packaging to keep the product warm
Must-haves: "We will look at a supplier’s innovation team, their technology team, how robust their factory is and what capacity they’ve got. We don’t want to be knocked off the product cycle, because Marks & Spencer, for example, wants another 20% of product"
Biggest bugbear: "The number of suppliers that will approach us and say ’I think this product is appropriate for your brand’, and it’s an off-the-shelf product that has no resemblance to your brand... they lose all credibility"
=== Creating the perfect cuppa ===
Nearly every baked item bought in Costa complements a coffee, so it’s worth knowing what goes into making it. And who better to ask than Costa’s chief taster Gennaro Pelliccia, who hit the headlines earlier this year for insuring his taste buds for £10 million. A PR stunt, surely? "People say it’s a PR stunt but people insure parts of their bodies that are key to their success. I’m insured for permanent damage to my taste, my ability to pick out defects," he says.
Every drink that is ordered at Costa is made with at least a double espresso (apart from large sizes). Everything that the coffee comes into contact with has to be the right temperature, from grinders to water to cups. Pelliccia talks us through the ritual at Costa’s third new barista training academy in Newbury.
== The roast ==
If your beans have been roasted too lightly, you do not gain the body required, but you will have a light, aromatic coffee with no bitterness and more flavour. If your roast is dark, you increase the body and bitterness. The secret is finding the balance between the two. Lighter roasting shows up the defects of poor quality beans. Darker roasting can hide those defects. "We’re almost being arrogant by saying we roast it lighter," says Pelliccia. "Some competitors use great coffee beans, but they roast them too dark."
== Grinding the beans ==
This stage is crucial. There should be the right mix of larger and smaller granules. If the grind size is too coarse, it does not give enough resistance against the water, therefore resulting in a weak, underextracted coffee. If it’s too fine, it could result in a burnt undesirable extraction. The grinder will perform differently throughout the day depending on external conditions. A Costa barista is trained to adjust the grinder three times a day to compensate for changing humidity (Costa uses Mazzer grinders, which cool the grinding blades so they don’t overheat and burn the coffee). You judge whether you’ve got this right by how the espresso pours out of the machine (it should look like a ’rat’s tail’); you should get the perfect espresso in around 20 seconds - too much or too little coffee and the grinder needs adjusting.
== The portafilter ==
The perfect cup is made from 7g per shot of coffee in the portafilter - the handheld ice-cream scoop-like device that the grinder deposits granules into, which is then slotted into the coffee machine. Wet the portafilter before depositing the coffee into it - this ensures the granules stick to it. The portafilter is tapped on the worktop to level the granules, which are then pressed flat to ensure the water flows through consistently.
== The coffee machine ==
Using Marisa coffee machines, the water has to be 9 bars of pressure, at 92-94C (if it’s boiling you burn the coffee). The resulting espresso should be a hazelnut brown crema with tiger marks and a red tinge and is judged by:
1. visual: thickness, texture (should be velvet), no black coffee, no bubbles, at least 3ml of crema
2. olfactory: honey, toasted bread
3. gustative: should linger at the back of the tongue, with a slight acidity
4. after-taste: should leave you wanting more