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Gourmet coffees and their retail dispensers like the Starbucks chain have made the drinking of specialty coffees an event.

That cachet is missing in the market for the 2-pound can of supermarket coffee, though the major brands can't be faulted for trying to ride this trend with special blends and image remakes.

But time seems ripe for the big marketers to step from the past: 49% of the U.S. population now drink coffee on any given day, up 2 percentage points from last year. Coffee consumption, trending down over the past decade, is now 3.7 cups a day vs. 3.6 in '95; 74% of coffee still is consumed at home, according to National Coffee Association. And sales of ground specialty/gourmet coffees, about 23% of the total coffee market, are expected to grow to 30% by 1998.


"It's only a matter of time before the majors begin to recognize coffee can be sold as an upscale beverage," says Ted Lingle, executive director of the Specialty Coffee Association of America.

The majors for sure are trying to gussy up their image, abetted by increased ad spending.

Procter & Gamble Co. boosted Folgers ad spending 59.7% to $70 million in 1995 to support the "Folgers in your cup" campaign. Kraft Foods, a division of Philip Morris Cos., turned up the heat on Maxwell House, with media spending up 67.5% to $76.4 million in media.

But these expenditures appear more maintenance-level viewed against the prolific growth of the specialty coffees.

Folgers, despite its loftier ad budget, can't staunch its sales decline. It slipped 3.7% to $868.8 million for the year-to-date period ended mid-May, 1996, according to Information Resources Inc.

It still remains the top coffee brand in the U.S. with a 27.2% share of market for ground, instant, caffeinated and decaffeinated coffee for that same period ending in May.

P&G may be acknowledging growth will come outside Folgers with its recent purchase of Millstone Coffee, a top U.S. retail specialty brand. The challenge for P&G is to learn to market in a significantly different segment than Folgers, says Tom Pirko, president of Bevmark, a beverage industry consultancy.


"What they need to do is help turn the specialty coffee drinker into a drinker of three cups a day of regular joe," says Mr. Pirko. If P&G keeps Millstone separate from Folgers it is a step in that direction, he says.

Industry analysts continue to criticize the Big 3 coffee producers for emphasizing price over quality and image, noting that price points are swaying fewer coffee drinkers.

"No one is spending on campaigns to give consumers a reason to buy," says Gary Stibel, principal of New England Consulting Group.

Kraft Foods seems to have taken a step in that direction. Its campaign for Maxwell House, using the familiar perking-pot sound and "Good to the last drop" tagline, helped boost the brand's '95 share by 2 points to 19.2%, according to IRI's three-outlet data. Kraft's spending included $40 million diverted from its coffee trade budget.

Nestle nudged its Hill Bros. media outlays a modest 5% to $4.2 million in '95, and dropped media spending on Taster's Choice instant coffee 51% to $9.5 million. Sales of Taster's Choice declined 5.2% to $124.2 million for the year-to-date period ended mid-May, reports IRI.

Industry watchers attribute this performance partly to consumer boredom with the long-running Taster's Choice soap-opera campaign.


"The story really ended with the `Kiss' episode," asserts Dave Vadehra, president of Video Storyboard Tests, noting the campaign climbed as high as eighth on the consumer popularity charts. "But Episode 12 [the most recent] "wasn't even on the charts," he says.

The category needs new images, believes Mr. Stibel.

"It's just like cars. As Generation Xers wouldn't be caught in their fathers' Oldsmobiles, they're not going to drink their parents' coffee brands."

Big marketers have to come up with new appeals, he says, "the same old grind isn't going to make it."

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