With premium and artisanal single-serve coffee pods, the average cup of joe is getting an upgrade.
Retailers report growing demand for upscale blends, sweet and seasonal flavors and textural components like froth or foam. Eco-friendly packaging is also of interest to shoppers who opt for the single-serve brew method.
Chicago-based IGA reports that craft brew brands like Peet’s are particularly popular.
“What is selling best now within retail independents are premiums or craft brands,” said Dave Bennett, SVP of procurement and exclusive brands for the voluntary network of 4,000 supermarkets worldwide. “Peet’s and Gevalia do very well here, along with Starbuck’s. Each of these brands offers dark roasts and various blends, like breakfast blend and Kona blend, and cappuccinos are seeing additional play with people who appreciate the added foam or froth texture.”
Cappuccino has captured enough attention for IGA to market its own private label version. It launched single-serve IGA Signature brand cappuccino cups in French Vanilla and Hazelnut flavors earlier this year.
Other coffee varieties in the IGA Signature line include Breakfast Blend, Coastal Blend, Donut Shop, Hazelnut, House Blend and Decaf Breakfast Blend. In 2016, IGA will unveil seasonal flavored pods merchandised in shipper displays.
Premium brands like Peet’s and Gevalia are also sold at Cincinnati-based Kroger stores. Peet’s flavors range from a spiced Holiday Blend and medium- and dark-roasted varieties to regional renditions like Sumatra, Colombia and Guatemala San Marcos.
The influx of upscale offerings into the market in recent years is no surprise to Elizabeth Sisel, beverage analyst for Chicago-based market research company, Mintel. According to Mintel’s September 2015 Coffee report, 83% of surveyed consumers believe there should be better quality coffee available in single-pod form.
“Craft roasters and coffee shops are really the ones able to fit the description of premium and artisan trends best,” said Sisel. “Because big brands are associated with large scale production, fitting into artisan trends will be more challenging.”
Sisel sees potential in private label premium pods. But only if retailers can find a way to make affordable artisan offerings, since many shoppers seek lower-priced premium products.
‘Explosion’ of unique brews
Jackie Gray, director at Willard Bishop, a Barrington, Ill. consulting firm, reported a strong desire for unique flavors that has resulted in an “explosion” of new varieties within this single-serve segment of the coffee category over the past year.
According to the firm’s annual SuperStudy, a wall-to-wall look at product performance in traditional grocery, the number of flavored coffee pods (as opposed to unflavored coffee pods) jumped from 13% in 2014 to 21% in 2015.
“New flavors tend to mimic specialty drinks in coffee houses,” said Gray. “Nespresso’s egg nog, Coconut Mocha by Donut Shop and Kahlua’s Kahlua flavor are just some of the flavors I’ve seen.”Dunkin’ Donuts puts out a Bakery Series line of pods with flavors like Blueberry Muffin, Caramel Coffee Cake, Chocolate Glazed Donut, Old Fashioned Donut, Cinnamon Coffee Roll and Vanilla Cupcake. Gloria Jean’s offers Mudslide and Macadamia Cookie while Van Houtte makes Raspberry Chocolate Truffle and Crème Brûlée.
“There are also entrants in the pure, unflavored coffee pods which mimic a more high-end coffee experience, like Green Mountain’s Breakfast Blend and Nantucket Blend, Folgers Lively Colombian, and Tully’s Italian Roast,” said Gray. “Then there are coffee house brands like Starbucks and Dunkin’ Donuts that appeal to consumers not just because of their offerings, but because of the experience they provide.”
They’re likely training consumers’ palates to expect the same in-store offerings, only replicated at home, she added.
Americans are also looking to switch things up, with seven in 10 of those surveyed for Mintel’s Coffee study reporting that they prefer variety packs.
“This sentiment is significantly truer with Millennials and less likely with older generations,” said Sisel. “Supermarkets should look to cater to their main consumer base, depending on who that is. Half of Baby Boomers, for example, say they prefer single-cup variety packs, but the other half do not.”