With more people consuming hot beverages than a year ago, the £5.8bn market is showing no signs of slowing down. According to Allegra Strategies’ Project Café, an estimated one in five people now visit a coffee outlet on a daily basis, with figures showing that the morning period remains the most popular time to grab a cup.
Caroline Harris, marketing director at Costa Enterprises, says: "There is a considerable amount of profit to be made by selling a product that has become an indispensable part of many peoples’ daily routine. Forecourt retailers can capitalise on this growing demand by offering their passing trade quality branded coffee ’on the go’. What’s more, Costa has been voted the nation’s favourite for the third year running making the beverage range and offer from Costa a ’must stock’."
She says research from Allegra shows the two key factors that determine consumers’ choice in coffee are convenience and quality. "Consumers increasingly expect to be able to grab a cup of coffee on the go wherever they are, which is good news for forecourts, as it almost guarantees a captive audience for coffee.
"The research shows that ’quality’ has grown in importance for consumers and should therefore be an absolute must in attracting and retaining customers. Customers are more likely to re-visit and recommend a consistently good product which will in turn drive sales for the forecourt operator."
Meanwhile, in specific forecourt research on buying behaviour, Costa found that ’buying a coffee’ is the main reason for 29% of visitors to a forecourt, and a third of these people, importantly, ended up buying unplanned items as a result. Furthermore, 85% of forecourt customers stated that they are now looking to purchase ’quality’ coffee that they can ’grab and go’ when out and about.
Says Harris: "It also identified that Costa Express brings drivers into the forecourt. Fifty seven per cent of the people asked said that Costa Express increases the likelihood of them visiting a forecourt, with over a third saying they would go out of their way to visit a site with Costa Express and 91% choosing Costa Express because ’the coffee always tastes great’."
Costa’s quality Mocha Italia beans are sourced from South America, Africa and the Far East and are 100% Rainforest approved with only 1% of the world’s production of coffee good enough for the taste and aroma of Costa’s signature Mocha Italia blend. Since 1971, Costa has been roasting its own coffee in Lambeth using 70% Arabica and 30% Robusta beans to lock in the flavour.
Costa operates over 2,800 self-serve Costa Express machines across the country. The machines use only fresh milk and the same freshly ground Mocha Italia coffee beans found in a Costa store maintaining quality standards and driving brand preference further. The company says the popularity of this model has led to an 87% growth in sales year-on-year.
Meanwhile, Tchibo’s Piccolo coffee system uses Tchibo Vista 100% Arabica coffee beans from South America, which deliver a sweet and nutty profile with a full-bodied flavour and low acidity. It is Fairtrade and certified organic and Tchibo has entered into long-term and sustainable relationships with small farmers’ organisations with a guaranteed fair price policy.
With its easy-to-use functionality and flexible terms, the Piccolo system has been developed with the forecourt and convenience sector in mind.
It is available through Tchibo’s pay-by-day concept.
Parkfoot Garage in West Malling, Kent, installed a Piccolo coffee system following a refurbishment earlier this year. It has been a hit with owner David Charman and his customers alike, with more than 8,000 cups of coffee dispensed since installation.
David says: "It is important to deliver something unique. There are seven coffee machines in the area and they are all the same brand, so it was vital for us to offer customers something different. Not only does the Piccolo offer us a point of difference to our competitors, but it uses sustainably sourced coffee beans, which fit well with our overall offering. We’ve had the machine for six months and sales are strong and growing steadily. We currently sell around 70 cups per day."
The Piccolo is sited next to Parkfoot Garage’s food-to-go, so that customers can grab a coffee when they pick up their breakfast or a snack. And, thanks to its eye-catching designs and location, the machine is clearly visible to customers making their way to the till area.
"Our previous coffee machine was hard to use and expensive to maintain," explains David. "To function properly it required a bag of constantly boiling milk, which was fine during peak times but not when demand fell away. Our store is open 24-hours and we can run Tchibo’s Piccolo machine constantly we simply choose a quiet time to clean the machine. The Piccolo doesn’t hold milk in the pipes and milk is only used when it is needed."
David says Tchibo allows him to set his prices. "I haven’t felt the need to run any promotions yet. Other express coffee machine manufacturers dictate what promotions we can run I prefer to have control over my business.
"The machine has been a huge success and people use the coffee station on a regular basis. The Piccolo machine enables us to serve our customers excellent coffee, tea and hot chocolate we have even added a chocolate shaker to cater for everyone’s tastes and preferences!"
And how those preferences are evolving. Stephen Clifford, marketing controller at Country Choice, says most coffee shops now add chocolate flavoured syrups to espresso and steamed milk, but there’s a new craze emerging with real chocolate chunks being melted into the steamed milk. He says speciality coffees are adding to the drama of having a perfect cup of coffee, with latte art becoming very popular.
For Country Choice, the best-selling coffees are latte, cappuccino and white. "As the trend moves to quality over the price of the coffee, more people are willing to pay a higher price to ensure they have satisfaction from their drink."
Clifford says that, on average, a hot beverage is complemented by two food/confectionery purchases.
"Meal deals and linked promotions have an increasingly important role to play in coffee sales," he explains. "With the big margins that are achievable on coffee, many retailers discount their coffee if the customer purchases a food item such as a breakfast bap or baguette. ’Half price coffee with any breakfast bap, filled baguette, croissant’ would be a typical offer in their store.
"Most of the coffee shop chains offer loyalty cards and this is certainly something we can facilitate for our forecourt operators. Obviously for an independent forecourt, take-up will depend on how many regular customers they have. Operationally it’s quite easy we print a quantity of cards with the loyalty mechanic on them and supply the forecourt with a stamp to record the purchase."
Every convenience retailer’s take-home coffee range should include Nescafé and Nescafé Gold Blend. That’s because the latter has seen sales growth of 9.6% in the past 12 months (SIG data), while by stocking the Nescafé original 100g price-marked jar, retailers can make clear the value that’s on offer in their store.
But even in instant coffee there’s room for coffee shop quality products. Nestlé UK trade communications manager Graham Walker says barista-style instant Nescafé Azera has performed particularly well in convenience stores and currently accounts for one in every £2 spent on super premium products. The growing consumer demand for coffee shop quality beverages that can be prepared at home is also demonstrated by the uplift in sales of Nescafé Café Menu, which comes in latte, cappuccino and mocha varieties. Over the past year, sales have increased by 15% (SIG).
Meanwhile Douwe Egberts marketing director for UK and Ireland, Corrine Hopwood, says the freeze dried segment was the main contributor to annual spend growth in convenience multiples last year (SIG). She therefore advises independents to stock the key freeze dried brands and provide more space for them in store "to unlock an increase in coffee basket spend and provide customers with what they want".
Another trend is the growth in sales of instant coffee refills. Mondelez International trade communications manager, Susan Nash, says: "Kenco Eco Refill packs have 97% less packaging weight than Kenco jars per gram of coffee, making them a great way to reduce packaging waste and lighter for shoppers to carry home.
"In addition, the rrps of the refills is less per gram of coffee than the rrps of either 100g or 200g jars, helping customers to save money at a time when budgets are tight."
Coffee in the news
This year’s Macmillan’s World’s Biggest Coffee Morning will take place on September 27. To find out how you can get involved, go to coffee.macmillan.org.uk
Tesco-backed coffee shop chain Harris + Hoole has stated that it wants to double in size within the next year. It currently has 18 standalone stores in the South East as well as five shops within Tesco sites.
According to a report in the Financial Times, Whitbread wants to expand its drive-thru Costa Coffee shops from its current 10 stores to 70 or 80. Five more will open by February and 20 or so more are already in the pipeline.
Thirty Costa Coffee outlets in the United Arab Emirates now offer consumers the choice of having camel milk in their drinks. Also available is a strawberry camel milk cooler.
starbucks plays a Starring Roll
Following the success of its Starbucks drive-thru offer, Euro Garages is now extending the partnership with the use of Starbucks On The Go machines. With 57 sites already boasting an On The Go machine, customers who are busy and on the move can now purchase their Starbucks beverages to take away. The company reports that sales are on the rise with an average 51 cups per day currently being vended per site.
"Plans are in place to roll-out the Starbucks On The Go machines throughout the 120 forecourt locations," explains Salim Hasan, head of operations at Euro Garages. "The Starbucks On the Go offer now completes the forecourt customer’s coffee experience and they can now choose whether they want to sit and enjoy their beverage in the comfort of a store, use the drive-thru facility or simply pick up a drink while in the forecourt."
This month, Euro Garages celebrates the opening of its 30th Starbucks drive-thru but plans to open a further 15 more stores by the end of the year.
"We are proud to have expanded our Starbucks drive-thru offer across our forecourt estate," says Ilyas Munshi, commercial director at Euro Garages." During the summer we have had a busy trading period as consumers were on the road searching for destinations with a premium offer our Starbucks drive-thrus deliver this for them."