Although the retail coffee business is stagnant, growth has come from premium coffees-like Kraft Foods' license of Starbucks and upstarts such as Green Mountain Coffee Roasters.
Leading players Folgers and Maxwell House have tried to fight back recently with the introduction of new flavored varieties. But as Dunkin' Donuts eyes grocery stores and premium whole-bean marketer Eight O'Clock moves into ground coffee and launches its first-ever advertising, freshness has become the new frontier.
"The reason that the coffee industry has clawed back from its low point in the mid '90s is because of innovation, including new products and a wider range of qualities and options to meet a range of consumer preferences," said Jay Molishever, director of communications for the National Coffee Association. The association's annual coffee-drinking study showed that consumption hit an all-time low in 1995 when only 47.5% of those surveyed reported having had a cup of coffee in the last 24 hours. Earlier this year, the same study showed 51% had consumed coffee over the previous 24-hour period.
Procter & Gamble Co.'s ads for Folgers this fall will tout freshness and the convenience of its AromaSeal canisters, plastic, peel-top, resealable and easy-grip packages set to roll out on its 39-oz. Classic Roast item in September and to all varieties thereafter. The change marks the first foray beyond the brand's steel can since the 1850s. P&G recently stated plans to focus on Folgers as well as its Pringles businesses as it put its juice businesses up for sale. According to a P&G spokeswoman, ads, from Publicis Groupe's Saatchi & Saatchi, New York, will mark an increase in media spending over the $27 million TNS Media Intelligence/CMR reported it spent last year on Folgers.
P&G's move follows on the heels of recent initiatives by rival Kraft Foods, which earlier this year featured Maxwell House's new Fresh Seal packaging in advertising and late last year completed the rollout of its E-Z Open packaging, a peel-off top to its own steel cans. Anecdotal data suggest those efforts have helped Kraft capture brand-switchers, though analysis of sales trends have yet to take place, according to Tracy Roe Haffner, senior category business director for Maxwell House.
Ms. Haffner said research has shown in that "metal cans offer the ultimate protection for coffee freshness" and the company will base packaging decisions on consumer demand.
Meanwhile, Compass Foods' Eight O'Clock Coffee, the leader in the whole-bean coffee segment, recently began to ship a variety of ground coffee in the hopes of growing its business in the far-larger segment of the category. Keith Kelley, brand manager for Eight O'Clock ground coffee, said the higher taste profile of the brand, built over years as whole-bean coffee, will help position it against existing ground players. Although its parent A&P recently put the brand up for sale, Eight O'Clock still plans to unveil later this year its first-ever advertising, a roughly $3 million TV effort from Havas Advertising's Arnold Worldwide that Mr. Kelley said is meant to raise the relatively low awareness of the brand, which is distributed in roughly 60% of the country.
Dunkin' Donuts has placed "stores" in bakery sections of Stop & Shop stores that feature doughnuts and coffee. A Dunkin' Donuts spokeswoman denied the chain plans to sell its coffee broadly in retail stores.
contributing: kate macarthur