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As the specialty/premium coffee craze continues to gain momentum, many convenience store operators have yet to connect with consumers when it comes to quality in the coffee department. This is a major mistake, as consumers are demanding higher-quality coffee everywhere they go.
You need not look far to discover the validity of that point. Specialty coffee consumption has achieved double-digit percentage growth, while commercial coffee (Folger's, S&D, etc.) is now growing in single percentage points annually. Simply stated, specialty coffee is growing faster than commercial coffee.
The reason for such growth is that coffee consumers have become more educated over the years, thanks largely to coffee retailers like Starbucks and Peet's, to name a couple. These retailers and others have invested heavily into changing the perception of coffee by providing their customers with high-quality, specialty grade Arabica coffee from around the world. This coffee, when harvested, crafted and brewed to the exacting standards of the SCAA (Specialty Coffee Association of America), creates a coffee experience like no other.
It is this experience that captivates the consumer and changes their sensory perception. These changes are subconscious, for the most part, as most coffee drinkers cannot define their experience any other way than by stating, "It just tastes better." At the core, this is what has driven the changes in coffee consumption and created a more demanding consumer.
As humans, we are inclined to pursue that which has created pleasure and a positive experience. We remember where we achieved the positive experience and in our pursuit, usually end up back at that place in hopes of achieving that experience again. This is powerful information for those who sell coffee, especially c-store operators.
When you combine the behavioral statistics as outlined above with statistical facts -- such as more than 80 percent of Americans drink coffee; coffee drinkers consume an average of 3.1 cups of coffee per day; and coffee consumers spend an average of $167 a year on coffee -- the reality of just how large the coffee opportunity is can be mind-boggling.
It is because of these facts that McDonald's, the world's second largest QSR (quick-service restaurant) chain in store count, has invested hundreds of millions of dollars in an effort to revitalize its coffee program and capture a larger portion of the market share. McDonald's has proven that with focus on the coffee category, a retailer can increase sales and profits substantially. Back in 2007, McDonald's reported a 30-plus percent increase in its Premium Roast coffee sales. The QSR changed its focus on coffee to meet consumer demand and they responded positively. That has been the case with its McCafé rollout as well.
So, how does this relate to c-store operators? Interestingly enough, the hot beverage category is usually one of the top five most profitable categories in the store, yet it is the most commonly overlooked. What would happen if c-store operators focused more intently on the coffee category and made changes to meet consumer demand? The answer is simple and not much different from what McDonald's experienced. The trick is deciding what changes to make and how.
7-Eleven and Wawa offer two of the nation's leading c-store coffee programs and they deserve much credit for their attempts to meet consumer demand. They continue to cultivate their programs, taking key learnings from both consumer trends and industry market research and incorporating those learnings into their programs. This has proven successful for them, although both programs are still lacking in some areas.
It is possible and surprisingly cost-effective to change a coffee program. There are many out-of-the-box programs offered by coffee wholesalers across the nation. That being said, before you make a decision to change, it is well worth the cost to spend some time with a consultant who understands the market and who can help connect you with a program that fits your needs or who can help you create a program exclusive to your company.
One thing is for sure: every day you opt to push the coffee category aside is another day of missed sales opportunity. Take a close look at your coffee sales history over the past couple of years. If you find that your sales are stagnant or in decline, perhaps it's time for a change.
Burke Hodge is a coffee industry expert with nearly two decades of experience. He is the president of The Coffee Consultants, an industry-specific consulting firm that specializes in helping clients revitalize their current coffee programs to meet consumer demand. You can contact Hodge at [email protected].
Editor's note: The opinions expressed in this article are the author's and do not necessarily reflect the views of Convenience Store News.