Coffee

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As it entered the 20th century, the U.S. was the world's largest consumer of coffee. At the time Americans were just becoming accustomed to the idea of buying prepackaged, branded coffee rather than blends purchased in bulk from the local grocer.

Coffee marketers learned their first lessons in effective advertising not through competition with each other but rather in the struggle to stave off popular coffee substitutes that emerged at the end of the 19th century in response to health claims disparaging to coffee.

One, Postum, a grain-based "healthful" coffee substitute created in 1895 by C.W. Post, Battle Creek, Mich., effectively propagandized against "coffee nerves" with a $1.5 million national ad budget. When Postum Cereal Co. hired its first ad agency, Young & Rubicam, in 1924, it continued its unrelenting attack on coffee.

In an ironic twist, Postum began buying a number of companies in the mid-to-late-1920s, and one of them was coffee giant Maxwell House, in 1928. In 1929, Postum became General Foods Corp.

Early efforts

The coffee industry fared well in the early 1900s, using premiums, direct mail and in-store promotions to get consumers to commit to individual brands. When U.S. servicemen went to war in 1917, coffee went, too, so soldiers returned from World War I with a taste for the drink. Coffee marketers also got a boost when Prohibition went into effect in 1919. During the 14 years that alcohol was banned in the U.S., coffee sales rose steadily, and coffeehouses began to replace bars as social gathering places in the 1920s.

Meanwhile, regional coffee marketers began looking to broader markets for their products. In 1928, Hills Brothers coffee, which was strong in the West, rolled out in Minneapolis and Chicago, with ads from N.W. Ayer & Son proclaiming, "The robust West loves its vigorous drink."

In the mid-1920s, Maxwell House, a Southern leader, worked its way north and east with the help of J. Walter Thompson Co. Maxwell House was positioned as the aristocratic drink of the Old South that was "Good to the last drop"—praise the coffee company claimed was first awarded its product by U.S. President Theodore Roosevelt in 1904 after finishing a cup during a visit to Nashville's Maxwell House Hotel, from which the brand took its name. By 1927, it was the leading national brand and had moved into Chicago as well as New York.

With the brand war heating up, coffee companies turned to the new medium of radio into their battlefield. Chase & Sanborn, now owned by Standard Brands, sponsored the "Chase & Sanborn Hour," from JWT, a popular variety show begun in 1929. In 1932, the weekly variety show "The Maxwell House Show Boat" premiered, created by Benton & Bowles, New York. Sales for the brand rose 85% by December 1933, one year after a price cut for the coffee was announced on the show.

During World War II, coffee was again part of soldiers' rations, with the U.S. military requisitioning America's entire supply of instant coffee. Coffee became so tied to the U.S. G.I. that it earned a new nickname, a cup of "Joe."

By the 1950s, coffee marketers were facing new challenges. Although surveys showed that nearly every U.S. home served some form of coffee, Americans were not drinking much coffee outside the home. Americans also were continuing the wartime practice of "stretching" coffee, producing a diluted beverage that cut down on overall coffee consumption and satisfaction. At the same time, soft drinks, which had been in short supply during the war, were back full strength and significantly outpacing coffee in growth.

In 1952, the Pan-American Coffee Bureau, a Latin American-funded organization established in 1936 to promote coffee consumption in the U.S. and Canada, invented America's "coffee break." This well-funded, multimedia campaign created the theme, "Give yourself a coffee-break—and get what coffee gives to you." The campaign was so well publicized that within months, 80% of U.S. companies surveyed had introduced a "coffee break" into their employees' work schedules.

Classic TV commercials

Maxwell House began the 1960s with what would become a classic TV spot created by Ogilvy, Benson & Mather. The commercial featured a musical beat that accompanied the spurtings of a percolator and grew into a catchy instrumental jingle that continued to be used in one form or another in the marketer's ads until 1975. (The popular TV spot was brought back in near-original form in 1990.)

In 1960, America was also introduced to a new character, Juan Valdez, created by Doyle Dane Bernbach for the Colombian National Federation of Coffee Growers. Juan Valdez was introduced first in newspaper ads to personify some 300,000 hardworking cafeteros of Colombia who, the ads said, produced a superior, handpicked product. In a later TV campaign, Juan Valdez and his trusty mule appeared unexpectedly in household cupboards or supermarket aisles.

The federation also produced a "100 percent Colombian coffee" logo that was used worldwide by different brands. The federation claimed eventually to have reached 83% brand recognition among U.S. consumers, up from 4% at the campaign's beginning.

In 1963, U.S. families were introduced to the character Mrs. Olson in commercials by Cunningham & Walsh for Folgers, which was not yet a national brand. Mrs. Olson continued as the Folgers spokeswoman for 21 years, patching up marriages destroyed by bad coffee by telling couples to "just use Folgers."

At the end of 1963, Procter & Gamble Co. bought J.A. Folger & Co. and retained its ad agencies. The Federal Trade Commission, questioning the acquisition, issued a moratorium requiring P&G to refrain from expanding Folgers's marketing area for five years. During that time, General Foods went on the offensive, with Ogilvy & Mather creating a Mrs. Olson imitation, Aunt Cora. In commercials, Aunt Cora was a shopkeeper who advised young couples about the best coffee, Maxwell House. Although Mrs. Olson was the original, Aunt Cora beat her to the eastern states; when Folgers finally moved into eastern markets with Mrs. Olson, she appeared to be the imitation.

Brand differentiation

Meanwhile, the coffee war was expanding worldwide. With their instant coffees already a success in Europe, General Foods and Nestlé were starting to fight for market share in the Asia-Pacific region, primarily Japan and Australia. General Foods began moving into these markets in the early 1960s and by 1969 had garnered 30% of the Japanese instant coffee market. But its brand strategy faltered and, by the mid-1970s, Nestlé dominated the Japanese market, thanks to consistent brand imagery in advertising from McCann-Erickson.

The 1970s saw a period of great innovation and brand differentiation as coffee marketers attempted to counter social changes that were hurting coffee consumption, including accusations that caffeine was unsafe. Coffee marketers turned their focus to decaffeinated brands, which had been around since the late 1920s, as the new growth area.

Then, in 1972, an invention was introduced that took the focus away from instant coffee and returned it to regular blends: the automatic drip filter coffeemaker. By the end of 1974, 35% of Americans had purchased an automatic coffeemaker, replacing the electric percolator and other traditional coffee-making devices.

But coffee marketers soon faced a new problem: Failed Latin American coffee crops forced prices to spiral out of control from 1975 to 1977, and soft drinks finally moved ahead of coffee in per capita consumption.

Advertising in the 1980s and 1990s turned largely to emotional "lifestyle" appeals. Maxwell House advertising, from Ogilvy & Mather, linked the product's good qualities with consumers' special feelings; for example, one ad showed a mother playing with her daughter with the tagline, "Make every day good to the last drop."

In 1987, P&G dropped Mrs. Olson and turned to the jingle, "The Best Part of Waking Up Is Folgers in Your Cup," developed by N.W. Ayer. For 13 years, one of its main commercials showed "Peter," a young serviceman who came home for the holidays early in the morning—and announced his arrival by brewing a fresh pot of Folgers.

Perhaps the most publicized and popular commercials of this new romantic genre were Nestlé's soap opera-styled Taster's Choice commercials by McCann-Erickson Worldwide. The concept, first used in Great Britain from 1987 to 1993 for Nestlé Gold Blend instant coffee, followed the romance of two apartment-building neighbors who meet when one borrows some coffee from the other and is pleased—but not surprised—that the coffee is Taster's Choice.

Each subsequent ad picked up the story line and advanced the budding relationship a few steps. The same story line, with minor modifications, was picked up in the U.S. in 1990 and ran until 1997. Although Taster's Choice remained No. 4 behind other leading instants, it enjoyed a level of brand recognition beyond expectations.

Upscale marketing

Still, as the coffee industry struggled to recapture the market it enjoyed before its steady drop during the 1970s, brands sold to the home brewer did not see their biggest challenge coming until it was almost too late to act. Starbucks, offering richer, darker and more expensive coffee roasts, opened in Seattle in 1971, and the number of its outlets grew until the chain exploded in the 1990s, with 3,300 stores globally by 2001.

Its growth came largely through word of mouth; the chain barely advertised until 1997, when it launched a campaign tagged "Starbucks, purveyor of coffee, tea and sanity" from Goodby, Silverstein & Partners. Starbucks and its rivals found a market that had not been tapped before in the U.S., with young and old flocking to coffeehouses at all hours to spend their money on expensive coffee drinks and darker roasts. The Starbucks brand succeeded by transforming coffee from a commodity into a lifestyle accessory.

Another development in coffee marketing that materialized in the prosperous 1980s was the emergence of gourmet coffee lines. The strategy was that the mass market would indulge itself in an affordable luxury from time to time as long as the extravagance was within financial reach.

This shift away from traditional brews left the coffee industry reeling. In the late 1980s and early 1990s, the industry had seen mass consolidation and mergers, which resulted in more ad spending for the major brands. But by the end of the 1990s, the trend had shifted as companies such as Nestlé—which had purchased Hills Brothers coffee in 1984, in addition to Chase & Sanborn and others—sold its coffee brands to Sara Lee Corp. in 2000.

The market leaders scrambled to acquire and market their own specialty roasts, returning to their roots by selling whole beans at the grocery store, or to extend their existing brands with more upscale, flavored coffees. P&G, for example, bought Millstone, a specialty coffee retailer, in 1995 and offered its products first via mail order and then in supermarkets. Through N.W. Ayer & Partners, the company attempted to take shots at Starbucks.

General Foods bought Sweden's largest coffee company, Victor Th. Engwall & Co. KB, marketer of Gevalia, Sweden's best-selling coffee brand and, in 1980, decided to introduce it the U.S. Because the product was unknown in the U.S. and cost three times as much as popular supermarket brands, General Foods and agency Young & Rubicam decided to sell Gevalia only on a direct-mail subscription basis, giving customers a constant supply of superior coffee. It was marketed with the slogan, "The magnificent obsession that produced the coffee favored by kings."

By the end of the 20th century, coffee was the No. 3 beverage in average per-capita consumption in the U.S., according to the consulting company Beverage Marketing. Soft drinks ranked first, followed by beer. The overall U.S. coffee market was $18.5 billion in 1999, including $4.5 billion in at-home coffee sales, up from $13.5 billion in 1993, according to figures from the National Coffee Association, a trade organization for the U.S. coffee industry. In 2002, the organization said, 77% of all U.S. adults 18 and older drank coffee on a daily or occasional basis, an increase of 1.8 million new daily drinkers from 2001. Of that, 52% drank coffee daily.

New developments

In early 2003, Kraft rolled out E-Z Open packaging featuring peel tops on its steel cans, a move followed later in the year by P&G’s Folgers, which switched to AromaSeal plastic resealable packaging, the first foray beyond the brand's steel can since the 1850s.

A new battle to bolster home coffee consumption hit U.S. soil in early 2004, with Sara Lee, P&G, Kraft and others all announcing plans to market new gourmet single-serve coffee makers and branded pre-packaged coffee pods to use with them. In April 2004, Sara Lee launched its Senseo system made by appliance manufacturer Philips in the U.S. after success with the system in Europe. P&G said it would soon launch its own Home Café single-serve system with Black & Decker and Kraft began testing a system under the Tassimo name in France.

According to NCA, gourmet coffee beverage consumption rose from 7 million daily drinkers in 1997 to 27 million in 2002.

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