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Foodservice & gourmet coffee: a theory and a success story.

The next big growth area in specialty coffee is foodservice and careful analysis of newly released demographic information on specialty coffee consumers supports this theory.

The Specialty Coffee Association of America is compiling new marketing information on the specialty coffee industry. The report is expected to be completed and presented at the annual meeting scheduled in Seattle, Washington, April 25 - 28. The following excerpts have been shared with the magazine.

* Overall, 22.1% of Americans purchased specialty coffee, but some groups consume gournet coffee in above-average amounts.

* Residents in the New England, Mid-Atlantic and Pacific Coast regions buy gourmet coffee more often than residents in other regions of the country.

* Most buyers of gourmet coffee live or work in large urban population centers with a market size of over one million and especially over 2.5 million.

* The primary age group is 35 -44 years old.

* Persons with some college education are 11% abover average in their consumption of gourmet coffee.

* Most specialty coffee consumers earn salaries of $35,000 and above, and those who earn in excess of $50,000 are 64% above average in gourmet coffee purchases.

* These consumers usually consume gourmet coffee at home with breakfast.

If you look at a map of the U.S., and darken the areas with the highest concentration of gourmet coffee drinkers, (New England--Maine, New Hampshire, Vermont, Rhode Island, Connecticut, and Massachusetts; Mid-Atlantic--New York, Pennsylvania, and New Jersey; Pacific Coast--Washington state, Oregon and California) the entire west coast will be covered and the Northeast will be covered, but what about all the states in between? These areas of the country will generate significant gourmet coffee income in the near future as familiarity with gourmet coffees continue to grow.

While it is hard to belive that someone in mid America will go to the trouble to buy and prepare gourmet coffee at home with the same fierce divotion as someone in New York, Seattle, or San Francisco, it's not so hard to believe that someone in mid-America would walk into a coffee cafe and be familiar enough with gourmet cofee to order a cappuccino or mocha.

Trends in gourmet coffee come in cycles. On the bean side, first there was gourmet coffee, then decaffeinated gourmet coffee, then flavored gourmet coffee, then West Coast dark roasted coffee. On the product side, first there was brewed gourmet coffee, primarily consumed at home, and coffeehouse espresso. With the growth of coffee shops, we are now in the middle of an espresso and espresso beverage explosion and a trend toward cold coffee beverages is just now gaining momentum. Related coffee items such as chocolate covered espresso beans and coffee flavored ice creams are beginning to appear. What next? Who knows, the only limitation is imagination.

With the bulk of Americans now familiar with gourmet coffee and espresso drinks such as cappuccinos and lattes, the opportunity for foodservice is now; but only smart operators realize this. Most foodservice operations do not look beyond the price per pound for high quality gourmet coffees. Smart operators look past the price per pound paid for the raw materials and look at the total dollars per pound generated by serving gourmet coffee drinks; it can be very, very profitable.

Three things effect a gourmet coffee sale; quality, service and price. You can control the quality of the product and the manner in which it is presented just as you can control customer service, but whether you roast coffee in-house, buy from a large national roast house or a small, local roaster, you can't control price.

The large demand for gourmet coffee and the small amount that is available annually combine to drive up the price. At a SCAA retailers seminar, Ted Lingle pointed out that of roughly 85 million bags of coffee produced annually, only 75 million of it is exportable. Of this 75 million bags, 18 - 19 million bags goes to the U.S.

Of the total amount of coffee available, only 1.5 to 2 million bags of coffee are good enough to be considered specialty coffee and this undersupply drives up the cost. Right now there is a strong world demand for high quality coffees; Scandinavia, Western Europe, Japan, the U.S. all these major powers are competing for a portion of the small amount of specialty coffee produced annually.

Because of buying power, large national companies are often in the best position to have high quality gourmet coffees competitively priced. Whether or not they do depends on the commitment of the company and the coffee buyers understanding of the market. A national foodservice company that has made a commitment to gourment coffee is Caffee' Classico(TM) and the commitment seems to be paying off.

Pamela Haley, the company's director of operations told me that it was a wholly owned, subsidiary of Baskin Robbins. Two sister companies to Baskin Robbins are Dunkin' Donuts and Tetley Tea. Right now there are 33 stores, with three more about opening in March, and five more about to start construction. During the course of 1992, they expect to have opened another 20 to 25 stores and hope to reach 250 locations within 5 years. For now, they are concentrating on the Los Angeles, San Diego, and Orange Country areas as well as northern California, Chicago, Washington D.C. and Florida.

Accordingly to Haley, Caffe' Classico(TM) has three basic menu type items. "We serve espresso, coffee and espresso drinks and we roast all our own coffee at our roasting plant in San Francisco. We also serve gelato that is made at our San Francisco plant as well as upscale pasta, sandwiches and soups that is made on the spot at each location."

They also serve iced coffee, coffee flavored gelato, chocolate covered espresso beans, special signature concoctions such as an "Affogato" which combines espresso and gelato, and roast and pack their own line of whole bean coffee for take-home.

Accordingly to Haley, each store has five grinders. One is for regular espresso and one is for decaffeinated espresso; in the brewin area is a dual-hopper grinder that grinds a 3- ounce portion of regular ro decaffeinated coffe into the brew basket. If you want to buy an eight or 16 ounce of roasted coffee packed in an airtight, valve bag, someone will be happy to open it up and grind it in one of their two grinders (one for regular, one for flavored), and then put it into a fresh bag.

Caffe Classico roasts and sells nothing but 100% Arabica beans in regular and decaffeinated Espresso, Private Blend, Premium Blend, Kona, French Roast and Colombian. The flavored line includes regular and decaffeinated Irish Cream, Amaretto, Cinnamon, Vanilla, Hawaiian Hazelnut, and Chocolate Raspberry.

They are as knowledgeable of their patrons as they are of developing a good product line, according to Haley. "Our customers is typically a well-educated, upscale individual; 50% of our customers have traveled in Europe and are familiar with things such as latte and gelato. We find that the we are attractive to women; about 64% of our customers are female."

The Whole focus of this company is to provide a quality product at a fair price with good service. They want each customer to leave each location having had a positive experience. By focusing on what they can control, quality and service, and not letting the price of gourmet coffee deter them, they have found what seems to be a formula for success.

Common characteristics that foodservice operations share that have had success with gourmet coffee are:

1. Demand for quality product brewed at the proper strenght with quality control standards established;

2. Focus on potential profit dollars per pound rather than cost of raw material;

3. Employee training about the product;

4. Presentation of product in a visually appealing manner.

5. Imaginative and attractive menu.

6. Give customers a true price/value product.

The biggest challenge is to find a good supplier of coffee. If you don't roast your own, try samples from many different suppliers and find the one that tastes the best; price should be secondary. As you look for a supplier, try the large national rast house as well as your small, local supplier. Don't be prejudiced against any company because of size. Whether a company is large or small, many do a good job, but many don't. Let the quality of the product, not the size of the roast house guide you.

Once you have found a supplier, concentrate on making quality coffee beverages. I read a "letter from the editor's desk" in a newsletter recently that illustrates the importance of concentrating on the end product. The editor was describing a concept developed by a "creativity guru" involving the idea "that in order to sell a product, you have to truly understand the 'product of your product.'" 'The stroy he used to illustrate his point is that of a drill by company who had trouble selling their drill bits until they realized that it was the precision of the hole cut by the drill bit thta was important to their customers, not the drill bit itself.

The editor went on the point out that "The same can be said of retailing coffee. It's not the beans that really matter to our customers, its the beverages they create with them. If you really want to learn how to sell the bean, begin by learning the magical beverages created from them."

The newsletter was the January/February 1992 issue of In Good Taste published by the Specialty Coffee Association of America and the editor was Ted Lingle. T ruer words were never written.

The secret to selling specialty coffee is to focus on the brewed products of the specialty beans; varietals and flavored served hot and cold, good tasting decaffeinated coffees, espresso, cappuccino and all the huge variety drinks that can be prepared with espresso. Continued specialty coffee growth will not be driven by retail pounds as much as foodservice cups.

Specialty coffee has not even begun to tap the potential revenue that will be generated by foodservice sales of specialty coffee drinks when the foodservice operators realize how very profitable good coffee can be.

Shea is a specialty coffee consultant and writer. She can be contacted at: Grounds for Discussion, 717 Pratt Avenue, P. O. Box 10061, Huntsville, AL 35801, Tel/Fax.: (205)539- 5237.
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
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Title Annotation:marketing and management in the coffee service industry; Gelato Classico Italian Ice Cream Inc.
Author:Sturdivant, Shea
Publication:Tea & Coffee Trade Journal
Article Type:Column
Date:Apr 1, 1992
Previous Article:Coffee and cold feet.
Next Article:Estate coffees: hype or value?

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