P&G, which has seen sales of its No. 2 supermarket coffee brand Folgers slide in recent years, has launched Millstone Signature Blend mail-order coffee. The program custom-matches consumers to various blends of premium coffee, depending on taste preferences indicated through questionnaires.
DIRECT MAIL, PRINT ADS
P&G is backing the test with direct mail and print ads by Rapp Collins Worldwide, New York, including an insert in the March issue of Martha Stewart Living.
The mail-order coffee market is worth an estimated $100 million, said Dan Cox, president of consultancy Coffee Enterprises.
Kraft, marketer of top retail brand Maxwell House, has built its Gevalia and European Coffee House mail-order brands into an estimated $60 million business since 1984, Mr. Cox said.
The delivered price of P&G's Millstone is 15% to 20% lower than Gevalia.
Kraft put more than $5 million in print and direct mail ads behind its programs last year, according to Competitive Media Reporting.
Starbucks Coffee Co. does about $17.8 million a year through various direct marketing channels, including America Online, a spokesman said.
The mail-order market pales beside the $3.3 billion supermarket category, but margins for mail-order businesses can be much higher than with supermarket channels, Mr. Cox said.
"What really makes Millstone Signature Blend unique is that we help custom-match people's taste to the blend of coffee," a P&G spokeswoman said.
She said the program is an opportunity to build on the Millstone business, a $22 million supermarket specialty brand, according to Information Resources Inc.
SUPERMARKET REVAMP, TOO
P&G also is updating Millstone's supermarket product with a new logo. It launched new TV and print advertising last year via N.W. Ayer & Partners, New York.
Millstone got $2.8 million in ad support last year, CMR said.
The Millstone test comes as supermarket unit volume erodes for P&G's Folgers, down 6.5% in the 52 weeks ended Jan. 28, IRI said. The category as a whole is down 4.5%. Unit volume was up 0.9% for Kraft.
Specialty coffee is the fastest-growing segment, having captured about 10% of the supermarket category in recent years.
But despite interest from mass marketers, Mr. Cox doubts the long-term potential of mail-order coffee.
"Twelve years ago it was a novelty," he said. "And because there weren't so many specialty stores, there was some validity to it. That's not the case nowadays."