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With single serve, convenience trumps all: the explosive growth of single serve that was seen in 2012 may have slowed down but the sector remains an integral component of the hot beverage industry, with continued growth potential.

When it comes to hot beverages, today's quality driven consumers continue to seek out options that are both convenient and customizable. It was this magic combination that led to the rapid adoption of single serve in North America, and continues to keep this segment of the industry active today. "Pod coffee machines in the US have enjoyed double-digit growth for almost a decade, even cannibalising sales of their standard counterparts and closing the gap between the two surprisingly rapidly," said Christina Baus, contributing analyst, Euromonitor International, London. "In 2010, the relationship was four standard coffee machines to one pod coffee machine, by 2015. this relationship was less than two to one."

Keurig continues to be the leader in the single serve industry in North America, accounting for 70 percent of the volume in US sales and remaining the number one coffeemaker brand in Canada. "The core consumer expectations include simplicity, quality and choice," said Cynthia Shanks, director, communications and sustainability, Keurig Canada, Montreal, Quebec. "The Keurig offer is based on those expectations and that's how we can meet the growing needs of our consumers." These offerings include flavoured beverages, organic varieties and tea.

In addition to having a K-Cup option, Starbucks has continued with providing consumers with its own unique system, the Verismo system. Recently, Starbucks launched the next generation of the Verismo providing consumers with a brewer that can make both 10oz cups of coffee and full shots of espresso. "We're always looking to continue innovating and bringing new premium coffee offerings and experiences to our customers and that's what we've done with the new Verismo system," said Paul Camera, director of global equipment development, Starbucks Coffee, Seattle, Washington. "We know that our customers value being able to customize their beverages. This brewer enables them to make brewed coffee or pull the perfect shot of espresso using one machine, one cup at a time." The system also allows consumers to customize their beverages, including the option of milk-based beverages, with the Verismo milk frother. The concept is to provide consumers with the opportunity to create similar beverages that they would find at a Starbucks cafe.

Tea remains a small, but constant player, in the single serve market with most major tea companies responding with a single serve offering. Despite this, Cindi Bigelow, CEO, Bigelow Tea, Fairfield, Connecticut, has identified a decline in tea sales in the majority of outlets. There are several variables that are impacting this decline, but perhaps one of the main ones, is that tea already comes in a single serve offering, primarily the tea bag. "The traditional tea bag is less expensive, convenient, and can provide a better brew than what is available in a single serve format," said Bigelow. "Tea needs to unfurl to fully appreciate the nuances and flavours in a blend, and many single serve formats don't allow for this to happen."

"The US coffee pod machines market is still the most profitable global market, worth USD $1.4 billion in 2015, and competition is increasing," said Baus. "Nestle, for example, is stepping up the game with its Nespresso brand, with a strong and new advertising campaign in the US, trying to gain what Keurig has lost." Baus emphasized that the next few months will provide insight as to whether both more brand and price point variety will help to reignite the industry.

With a home market that is close to saturation, manufacturers are seeking opportunities in the hospitality segment and foodservice.

SS Elevates Hotel Guests Experience

"Coffee has become the number two request for providing a positive guest experience," said Dan Ragan, national sales manager, Pod Pack. Baton Rouge, Louisiana. "They want a quality cup in their room." To respond to this need, Pod Pack has recently launched the Super Pod, providing hoteliers with a roaster quality cup in a single serve offering. "The response has been overwhelmingly positive, with guests commenting on the coffee and purchasing the products from the roasters to replicate the experience at home."

Recognizing the unique needs of the hospitality industry, Michael Szyliowicx, founder of Commerce City, Colorado-based SolaBev, developed a platform to respond to them. The initial goal was to bring together local roasters with hotels to provide distinctive, locally roasted, beverages for the guests' in-room experience. He identified the need for hospitality to offer a quality, crafted cup to enhance the overall guest experience. "A lot of roasters already have hotel customers and are selling to the restaurants downstairs in the lobby, but never had the opportunity to go into the rooms," said Szyliowicx. The SolaBev system is a single serve offering specifically tailored to the needs of the industry, which reduces shrinkage by providing a hospitality exclusive system. "The capsules respond to the hospitality industry's sustainability goals by providing a fully recyclable capsule," said Szyliowicx. He worked with an outside company, TerraCycle, that both separates the grinds to be composted and then recycles the capsules into plastic pellets.

The Ecological Footprint of SS

In a society that has become increasingly focused on decreasing its ecological footprint, the waste produced from single serve continues to be of concern. However, the conversation has slightly shifted, recognizing that there was also extensive waste produced with traditional drip systems (mainly water and grinds). Compared to the traditional drip pot format, the single serve solution has resulted in water saving, energy saving, and a decreased amount of waste with the coffee grounds. With this system, consumers are consuming what they make thereby minimizing the waste created with the packaging.

Creating recyclable and compostable solutions is far from a simple solution. At the forefront, it is guaranteeing that the materials used will not compromise the quality and function of the cup. However, the challenge remains to educate consumers on how to treat the package and ensuring that there is an infrastructure in place to properly recycle and/or compost the products.

Acknowledging the infrastructure challenges, Keurig continues to research the best way to deliver a recyclable K-Cup pod. "Our journey to making all K-Cup pods recyclable will be completed in 2020," said Shanks, adding that the challenge has been creating a recyclable K-Cup pod format that doesn't compromise on beverage taste or pod performance, while ensuring that the pods can be effectively recycled.

To reach this objective, Keurig has been working with both recyclers and industry experts to improve the capture rate of the smaller items. "We have chosen to work with polypropylene #5 plastic for our first [pod] because it is a widely recyclable and desirable plastic throughout North America and performs well in the Keurig brewers," said Shanks. While this process is still being finalized, Keurig Canada's K-Cup has developed a re-purposing program that is processed through their Van Houtte Coffee Services Division. "In the past three years, tens of millions of pods were re-purposed through our program," she said.

Starbucks Verismo pod is also made of polypropylene #5. They are working closely with the Verismo pod manufacturer to find a solution while encouraging consumers to check with their local recycling/waste authority to verify if they will accept both the material and size of the container for recycling.

One of the initial recyclable single serve options was Mother Parkers Ecocup. Both roaster and packager, the single serve format allows Mothers Parkers to provide both the freshness and quality brew that consumers are seeking. "We wanted to provide a package that enabled us to bring all of the components, filter, freshness, particle size, that would lead to a better beverage solution," said Paul Yang, manager, packaging and development, Mother Parkers Tea and Coffee, Mississauga, Ontario. Mother Parkers sought a solution that would use minimal material without comprising on the cup performance that consumers associated with their initial offering, the Real Cup. "It was really about building a smart design, using material science to enable this solution. In the end, we didn't have to make the design more complex to enable the recycling function," said Yang.

Since the launch of Ecocup, several tea and coffee companies are now offering their single serve products in a compostable platform including Massimo Zanetd Beverage USA (MZB), Marley Coffee, Higgins and Burkes, Yogi Tea, and Balzac's Coffee. However, the challenge remains educating the consumer with best disposal practices and ensuring that the municipalities have the infrastructure in place to recycle the cups.

Club Coffee opted to develop a system that would fully biodegrade. "One of the challenges with creating a recyclable option is that it requires the consumer to separate the components of the cup," said Solange Ackrill, vp, strategic planning and process innovation, Club Coffee, Etobicoke, Ontario. "We wanted a solution that would ensure that would decrease this risk." The result was the PurPodlOO, a fully compostable cup. The goal for Club Coffee was to get coffee back into the organic food waste by providing consumers with a single serve platform that would fully biodegrade.

MZB introduced its PurPod100 version with its Hills Bros. Coffee brand in March. MZB has been rolling out the compostable pod to its other brands including Chock full o'Nuts and Kauai Coffee throughout 2016.

Tayst Coffee is also using the PurPod100. Tayst is attempting to rewrite the single serve platform by providing a sustainable/customizable alternative. "We built a subscription-based platform that allows consumers to customize exactly what they want," said Greg Byrnes, co-founder, Tayst. "It cuts out tremendous waste in the middle ground. We like to say that our entire packaging will self destruct." Tayst uses compostable or post-recycled material and the minimal amount of packaging required for safe delivery.

The rapid growth that was seen in 2012 with single serve, said Euromonitor's Baus, has slowed down. There are several factors that have contributed to this including market saturation, cost of single serve and the recent back-to-basics movement, which has seen consumers turn towards systems such as pour over devices. There remains a large sector of the population that will continue to seek out single-serve offerings. The key for the industry is to provide solutions that delivers on both quality and sustainability.

Anne-Marie Hardie is a freelance writer, professor and speaker based in Barrie, Ontario. She may be reached at:
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Title Annotation:SINGLE SERVE
Comment:With single serve, convenience trumps all: the explosive growth of single serve that was seen in 2012 may have slowed down but the sector remains an integral component of the hot beverage industry, with continued growth potential.(SINGLE SERVE)
Author:Hardie, Anne-Marie
Publication:Tea & Coffee Trade Journal
Geographic Code:1CANA
Date:Dec 1, 2016
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