but when it comes to packaging in the tea and coffee business, the medium is the message, and sometimes the “product” too. Packaging communicates, preserves, protects and sells. When it comes to coffee, it’s packaging that distinguishes great beans from bad ones. Not only that, it ensures that the beans or grounds are fresh. It’s no wonder then that the use of packaging is viewed to be almost as critical as the selection of product and is treated with utmost confidentiality.
For the last few years, new product trends have been driven specifically by consumer demand for more complex, upscale coffee, both in and outside of their homes. The increased sophistication of the coffee drinker’s palate means that coffee as a whole is moving away from the “Cuppa-Joe” image and towards a richer, more complex drinking experience. So, as the trend toward single cup preparation at home is building more and more momentum, packaging innovators are looking at how-to best present pods to these consumers on retail shelves. The opportunities for increasing margins and to a lesser extent, quality and freshness, bode well not only for coffee roasters but for packaging equipment manufacturers and packaging supply companies. The consumer stands to benefit as well.
The latest news in coffee and coffeemakers in the U.S. is the concept of the pressure-brewing system that requires coffee “pods” rather than loose, ground coffee. While this concept has been in Europe for quite a while, both Procter & Gamble (Cincinnati) and Sara Lee (Harrison, N.Y.) have partnered with appliance manufacturers to offer systems that produce what they say is a superior cup of coffee. Procter & Gamble’s product, Folgers Home Café, uses Folgers or Millstone coffees. Each pod produces a single cup of coffee; a box of 18 pods costs about $4, making it most definitely priced as a gourmet cup of coffee. It will be interesting to see if the concept takes off in the U.S., as it has in other parts of the world.
Through a thorough analysis of Datamonitor’s Productscan Online (www.datamonitor.com), a proprietary database that tracks new product launches in the consumer packaged goods industry, Datamonitor is able to quantify new product introduction market trends. Their review, “U.S. Coffee New Product Developments 2005”, is based on over 750 coffee products released in the U.S. retail market between 1995-2005. In addition, this report examines the new products associated with the development of the U.S. single serve coffee machine market. Included in their report are the following highlights: the packaging claim “upscale” accounted for 56% of new coffee products introduced in 2004, while “single serving” is mentioned on 25% of new coffee products. “Vanilla,” as an added flavor, was the most popular distinctive flavor in new coffee products in 2004. Growth in vanilla-flavored coffee beverages has outstripped that of vanilla in other beverage categories, in terms of absolute number of new introductions as tracked by Datamonitor. Proctor & Gamble, Nestle, Sara Lee and Salton have all entered the U.S. market with a single-serve pod system for the home market. Kraft is due to enter the U.S. machine market, later.
The workplace is the second most prominent location where consumers drink coffee, according to Aramark’s (www.aramark.com) recently completed “Top Office Beverage Consumption Industry Trends.” Upscale coffee shops popping up everywhere have educated consumers to value a good cup of coffee, and move away from sticker-price shock, the study notes. The consumer’s enhanced appreciation for better quality coffee has created a viable market for providers committed to delivering high-quality coffee for their employees and clients within the workplace.
Aramark’s premium coffee business has grown 15% this year and is projected to continue to climb. Nearly 50% of the coffee Aramark sells is premium; over the last five years, Aramark’s sales of premium coffee have gone from 5% of revenue to more than 35%. “Brands like Seattle’s Best Coffee and Starbucks, as well as cappuccino and flavored coffees are increasingly in demand within the workplace environment,” stated Richard Wyckoff, president, Refreshment Services, Aramark. Americans’ interest in leading healthier lifestyles appears to be influencing their choice of beverage, as well as many are reaching for a morning or afternoon cup of tea. Teas have long been perceived as beneficial to human health and also provide a soothing alternative to coffee. The increasingly positive publicity and aura around teas has been driving consumer interest, and will thus drive consumption. “Tea has really burst onto the landscape and has become an important part of our overall offerings. Our tea business has been growing at a double digit rate for the past few years,” added Wyckoff.
In the U.S., only 10% of the equipment used in the office coffee or hospitality room service market is a single-cup brewer system. These single-cup machines use single-serving capsules that guarantee a fresh brewed beverage every time, with no mess and no waste. Single-cup brewers produce a variety of drinks including caffeinated, decaffeinated and flavored coffees, black and green tea and herbal teas. Chuck Rockwood of American Joe Coffee and Tea Company noted, “It’s great to read that the OCS industry is experiencing a revival. The advent of quality products in the consumer market now dictates that similar quality, that beverage-refreshment products be provided in the office environment. Knowing that 10% of the brewing equipment in this segment is currently of the single-cup variety, with anticipated and forecasted growth, it should stand to reason that coffee service providers and roasters continue to focus on providing exceptional brew-by-pot coffee products as well, until the day comes when this method of brewing is eclipsed by those pod systems.”
Besides the critical importance of pod packaging today, are issues surrounding the environmental impact after they have served their purpose and been discarded or recycled. It is well known that issues of sustainability and environmental “friendliness” have particular impact when it comes to the marketability of coffee and tea products.
The Green People, a group dedicated to environmentally friendly food products, have endorsed “Douwe Egberts” and “Ecopads” flavored coffee pods. Their take on pods in general is that controlled-portion food products and equipment, such as pods and pod brewers, decreases food, water and paper waste. The Ecopad is basically a reusable filter that lets you use any ground coffee in a Senseo-style machine. Tim Stack, director of The Green People, said, “I love this idea. The Douwe Egberts coffee pods produce really great coffee, but some people might not want to spend the extra money on the pods or they just miss their old brand of coffee, but they don’t want to lose the Senseo simplicity. What’s cool is that you can now make Maxwell House with rich creamy foam or even Starbucks coffee at home. Ecopad also works with finely ground teas, as well.”
All news is not pod news, however. Fres-co System USA Inc. has been supplying coffee packaging to the North American Coffee market for over 25 years. Fres-co is the inventor of the coffee degassing valve that first allowed coffee to be packaged fresh out of the roaster and degas in the package. Currently, Fres-co supplies 80% of the coffee market with coffee materials, valves, machines and service. When asked about the most dynamic areas of this business over the next 12 months, Chris Burger, coffee product manager for Fres-co, said “I believe the retail shelf will continue to move towards ‘boutique’ brands, with more high quality ‘gourmet’ coffees, in soft bags with valves, added. This will allow smaller roasters to place their product in their regions of the country.” Besides the growth of that segment, he also believes that in the office and foodservice environment, “We will see growth in the single-cup coffee segment - pods, cups and capsules. Each offering has its own distinct advantages to the consumer, including choice and simplicity. The single cup revolution could change the way many coffee drinkers purchase their coffee. This technology has seen tremendous growth in Northern Europe, and many believe the same type of acceptance is just a matter of time in North America.”
“There are a number of other trends I see from around North America,” he adds. “They include the continued growth of a bag style called “Corner Seal, which allows the roaster to package freshly roasted whole bean or ground coffee in a modified atmosphere package. The coffee will then degas in the oxygen-free package during transportation. This option stiffens the corners of the coffee bag allowing the bag to take a lot more abuse in the distribution channel, while still maintaining its nice crisp shape and displaying nicely on the retail shelf. Another strong growth area for Fres-co is with our high-speed fractional package machinery. We have placed multiple fully automatic systems that produce a ‘frac pack’ at speeds of up to 350-bags per minute.” Burger concludes, “The North American palate for coffee is becoming more discriminating. Now, many consumers are seeking out a better cup of coffee and are going to more of an effort to appease this desire. They are purchasing coffee as fresh as possible, knowing this will give them the most flavor and thus the best coffee experience.”
Packaging can’t make coffee taste better, but it can put it in the hands of the consumer fresher, faster, more attractively and with a better idea of how to use it. The right packaging is critical to the success of any coffee or tea product sold. This is even truer today, as the number of coffee and tea products increases and the attention span of the consumer becomes more limited. The coffee or tea package itself may be not only the product, but also the only communication (much less advertisement) for that product that the consumer may ever see. The role of that package is, therefore, as critical as the product inside.
About the Author: Joan Nielsen, a food journalist, has co-authored “The Great Coffee Book’ for 10 Speed Press. She is based in California.