What's Their Cup Of Tea?

For many Americans, the day begins with a steaming-hot cup of coffee or tea. And today's consumers are more willing than ever to make their morning brew a private label product.

But retailers shouldn't assume that a low price is enough to get shoppers to embrace a store brand coffee or tea product, warns Erik Juch, vice president of sales with St. Louis-based Fine Foods International N.Y. LP.

"Today's private label customer is a well-educated and focused customer — not only driven by incentives or low prices," he explains.

Don't skimp on coffee quality

To grab share on the coffee side, many retailers are paying attention to quality more than ever. Bill Kirkpatrick, president of Cameron's Coffee, Minneapolis, says he sees this heightened quality focus with retailers that are developing national-brand-equivalent (NBE) products, in particular. To reduce costs, most major retailers had developed their NBE packaged coffees into inexpensive blends posing as NBE, he explains.

"Now, buyers are looking for better coffee and to call out actual growing regions and perhaps roast methods," he says.

And as time goes on, more and more buyers also will be seeking organic and ethically sourced coffees, says Jason Barrow, president of Denver-based Luna Coffee Roasters and Boca Java Coffee & Tea.

"For example, we expect to see more retailers looking for coffees produced through direct trade partnerships with farmers, and an increased focus overall on sustainable and organic coffees," he notes.

And retailers are expanding their selection of own-brand flavored coffees, says Erin Woodard, national account manager with Boston's Best Coffee, South Easton, Mass.

Alison Rosenblum, brand manager with Portland, Ore.-based Coffee Bean International, also sees strong growth in flavored offerings — especially in seasonal flavors.

"We've seen that the fastest-growing flavor — according to Nielsen's data — is pumpkin spice, which is interesting, as it's a seasonal," she explains. "So you're not going to see it all year [round], yet it's experiencing the fastest growth as people get onboard with interesting seasonals."

Do

make sure the quality of your NBE coffees is equal to or better than the quality their national brand counterparts.

Don't

ignore the booming market for single-cup products.

Convenience matters, too

But offering a high-quality or uniquely flavored product isn't always enough to drive private label coffee sales; many shoppers also want products that are easy to prepare. That desire for convenience likely explains why single-cup products continue to see strong growth in the coffee segment, Barrow says.

And it appears there has never been a better time to enter the single-cup coffee market with quality store brand products. In September, K-Cup manufacturer Green Mountain Coffee Roasters — which already took a hit earlier this summer when Safeway and Kroger said they were introducing Keurig-compatible store brand coffee cartridges — saw several of its key patents for K-Cup technology expire, according to an article on Forbes.com.

Also popular with convenience-minded consumers are stick packs containing premium coffee (similar to Starbucks' Via line). Tarick Gamay, business development manager with Alexandria, Va.-based DreamPak, says stick packs meet shoppers' desire for two attributes: quality and convenience.

"Instant stick packs are a growing category because consumers are increasingly preparing their coffee on the go," he says. "[And] there is a growing desire to replicate the specialty coffee experience without having to visit a quick-service restaurant."

Quality, convenience also key in tea

Quality and convenience rule in tea, as well. Specifically, Barrow says consumers seek "tea-house quality" products compatible with single-cup makers.

Gamay agrees, noting that in today's on-the-go culture, many Americans don't have the time or patience to steep a tea bag or use a tea infuser. In addition to Keurig system-compatible cups, he sees multi-serve bottles of liquid tea concentrate as an area of growth.

"Utilizing its patent-pending hot beverage technology, DreamPak has developed a 24-serving liquid tea concentrate packaged in its proprietary bottle" for private labeling, he explains. "Consumers really appreciate the convenience of being able to carry that many servings of tea in a single bottle, as well as the ability to create a consistent beverage profile every time."

Still, some shoppers are willing to take the time necessary to brew a quality product, Barrow points out.

"We see that the demand for loose leaf [tea] in a bulk format could [create an opportunity for] higher-end retailers who already deliver many other high-quality dry goods in bulk," he says.

As for bagged tea, Barrow says retailers should consider offering full-leaf tea in pyramid-style sachets instead of fannings in a paper tea bag.

"Quality is now the name of the game," he explains.

"Tea is graded by size, so if you open up a tea bag and see that it contains dust, it's probably time for a change."

Do

consider offering full-leaf teas in pyramid sachets instead of cheap fannings in plain paper tea bags.

Don't

discount the importance of educating shoppers about your coffee and tea products. Consider printing QR codes that link to informative videos on packaging.

Merchandise for success

Quality also is the name of the game in merchandising — retailers need to put a lot of thought into their strategy here. Clay Dockery, division vice president - corporate brands with Portsmouth, Va.-based Massimo Zanetti Beverage USA, recommends that retailers with their own in-store cafés cross-merchandise their store brand coffee with compatible private label products (cookies, baked goods, etc.) there.

Retailers also could find ways to educate the shopper. Juch says packaging and merchandising materials should communicate attributes such as nutritional information and packaging advantages (such as recyclability).

Kirkpatrick agrees, noting that his company prints quick-response (QR) codes on packaging and merchandising materials to communicate attributes.

"We manufacture [Supervalu's] Java Delight single-serve [product] and are applying QR codes," he states. "These codes are linked to videos that can deliver specific messages regarding coffee quality, social commitment or brewing methods."

Online, social media could help a retailer better connect shoppers with its own brand coffee and tea, Barrow explains. For example, retailers could engage consumers online with contests that "center on interaction" with a coffee product to cultivate brand loyalty and create "brand ambassadors" organically. Interacting with consumers via social media also helps a retailer develop new flavors and varieties of tea and coffee.

And don't forget about an old-fashioned sampling program. When it comes to tea, Barrow says it really is the best way to provide a "tea-house-style" experience to potential buyers.

"It gives you the chance to educate about proper serving instructions and quality differentiators," he explains.

Look what's new

Costa Rican Tarrazu Anniversary Roast Ground Coffee from Fresh & Easy Neighborhood Market, El Segundo, Calif., was introduced to celebrate the retailer's five-year anniversary. The kosher-certified coffee is described as a smooth, rich medium-roast coffee with notes of citrus. It retails in a 12-oz. bag.

New from Loblaw Companies of Brampton, Ontario, is Tassimo President's Choice West Coast Dark Roast Gourmet 100% Arabica Coffee. An exclusive blend of fine Arabica beans, the coffee is described as bold and intense with a full body, complex flavor and heady aroma. It retails in a 123g carton with 14 individual brewing discs that are compatible with the Tassimo Hot Beverage System.

Austin, Texas-based Whole Foods Market unveiled Brazil Sweet & Creamy Three Beans Coffee. Made from 100 percent Arabica beans, the coffee is said to have a natural bittersweet chocolate note with hints of roasted nuts. It retails in a 12-oz. canister.

A blend of green tea, dried fruits and flowers, Trader Joe's Crimson Blossom Herbal Green Tea is said to refresh, invigorate and uplift. Available from Monrovia, Calif.-based Trader Joe's, the kosher-certified product retails in a 1.41-oz. recyclable carton containing 20 tea bags.

Now available from Walgreen Co., Deerfield, ill., is Good & Delish Rooibos Chai Herbal Tea. A blend of rooibos and aromatic spice, the kosher-certified tea is said to be naturally caffeine-free and contain naturally occurring antioxidants. The product — which is free from preservatives and artificial flavors — retails in a 1.41-oz. carton containing 20 tea bags.

Source: Mintel's Global New Products Database