Brew for profit

Against a backdrop of high costs in food and drink, caterers are having to contend with consumers looking for both quality and value for money. John Porter reports.

Operators need no reminding that the price of coffee continues to be a big factor in rising food costs faced by the catering sector – and there's little sign of the situation improving.

Commodities analyst Euromonitor reports that in May this year, Arabica coffee prices hit a 34 year high, due to factors such as increased global demand, higher oil prices, and adverse weather in various parts of the world which hit crops.

Although commodity prices have fallen a little since, they are still above 2010 prices and the problems in the market will "contribute to lingering high coffee prices as the market struggles to bounce back from soaring costs", forecasts Euromonitor.

Despite rising prices, however, UK consumers continue to switch to coffee from the traditional British cup of tea in large numbers.

Market analyst Mintel forecasts that the total UK coffee market will grow by around 25% to £976m by 2014, from £782m in 2009. While some of the increase is due to those increased costs, consumers trading up to more premium coffee products have also been a key feature of the market, it says.

Ethical buying is an increasingly important consumer factor. Total UK sales of Fairtrade coffee were worth £157m in 2009, the most recent year for which the Fairtrade Foundation has figures available, more than twice the sales of tea, which is the next biggest commodity.

Leading distributor Peros says that ethical consumer spending is still bucking the recession with significant growth, especially in Fairtrade goods.

Recent figures suggest sales of Fairtrade products grew by 40% in 2010 to an estimated retail value of £1.17bn compared with £836m in 2009.

"Clearly UK consumers, particularly students in our experience, are continuing to embrace Fairtrade and are not giving up their ethical values despite tough economic times," says joint managing director James Roberts, adding that around 20% of roast and ground coffee sold in the UK is now Fairtrade.

"We have recently introduced a promotional calendar for each of our brands – Cafédirect and Eros – to help organise promotions and generate upselling opportunities throughout the year. The calendar contains a number of promotional concepts which we will be supporting at appropriate times with special deals allowing you to make the most of the opportunities.

"The cross selling offers refer to other products from Peros, such as bakery items from the One World range or chocolate from the Nero & Bianco range – all of which combine great taste with Fairtrade credentials."

Kraft's Kenco coffee is renowned for its ethical sourcing of coffee beans from Rainforest Alliance certified farms and promoting its sustainability, quality and value. The company claims that twice as many consumers describe the brand as ethical compared to any other brand of soluble coffee, thanks to Kenco's ongoing commitment to sustainable farming and improving its environmental credentials.

This focus on sustainability has seen Kenco's retail value rise 4.3% to £124m, according to public data, adding £5m to its value over the last 12 months.

Trade communications manager Susan Nash says: "We recognise the impact that agriculture can have on the local environment, economy and people, and work closely with our supply base to make sure that effect is as positive as possible.

"We have projects based in several countries as well as contributing to the Common Code of the Coffee Community project, which seeks to define sustainability in the coffee sector across the world. "Since 2003, we've been working with the Rainforest Alliance, which has helped to bring sustainable coffee into the mainstream. This means consumers can be assured that the coffee they are buying comes from farms where the environment is protected, and where workers and their families are treated with respect, with access to clean water, medical care and education for their children."

This year Kraft has joined forces again with Macmillan Cancer Support to be the official coffee partner of the World's Biggest Coffee Morning 2011, which is Macmillan's flagship fundraising event. The event kicks off on Friday, September 30, but the company says hosts can take part whenever it suits to raise money for the cause. Once registered online at www.kenco.co.uk, lots of support and information will be made available to ensure success.

Out of home, consumer expectations are continually being raised. This year has seen the Whitbread owned Costa coffee brand open its first drive through store, as well as move into the travel and education sectors with the acquisition of the Coffee Nation self-service business, which has been rebranded as Costa Express.

Cost sector operators clearly have to raise their game in response to such innovation, as well as to meet consumer's ethical and quality expectations.

Contract caterer BaxterStorey has been working with United Coffee to refresh the café concepts on its sites.

As well as revamping its existing Down to Earth coffee concept, new brand Cheeki has been developed.

"Having reviewed our coffee service last year we decided we needed to refresh what we currently offered," says Matthew Thomas, regional managing director at BaxterStorey. "More people were looking to the high street and we wanted to capture this market on site by building a stronger café culture.

"Our vision was to create a quirkier and more artisan identity and the result is our new brand Cheeki. We also wanted to refresh the Down to Earth brand, which had become dated, to make its messages of provenance and integrity more obvious."

Down to Earth has a complete new look and feel to the ethical coffee concept. The colour scheme is inspired by independent coffee shops, and the brand features chalkboard style menus, simple point of sale, wrappers, craft product bags and the "ground-to-ground" concept, where customers can take home coffee grounds to boost their garden soil.

Cheeki has more of a high street feel, with urban and funky artwork, and with the brand identity extending to brand wallpaper, colour cups, product wrap and barista uniforms.

The two brands are currently rolling out to BaxterStorey sites across the UK, with each site deciding which concept to implement according to their customer profile. "Though it is still a work in progress, the concepts perfectly fit our vision and compete with the big players in the evolving and dynamic café market," adds Thomas.

Vending is an important format to the cost sector, something which Costa's move into self-service underscores. For operators, this raises the issue of meeting high consumer expectations.

Martin Thorpe, head of dispense beverage business unit at Nestlé Professional, says: "The appreciation of high quality coffee has now become such a standard part of life in any corporate building or workplace that there is no going back."

Thorpe argues that this is good for both the consumer and the caterer. "The most important thing for the caterer is that the average consumer has come to appreciate the quality of the modern coffee menu, and has come to accept the price to be paid for it."

The rise in the quality of coffee from fully automatic machines means the best now can come close to replicating the drinks served by skilled staff.

"For the catering manager, this narrows down the major decision very helpfully. It is no longer a question of 'will an automatic coffee be good enough?' but a matter of deciding which format and method of brewing to choose," he says.

The Nescafé Milano machine "produces the coffee menu that consumers have seen on the high street, but without the hassle and cost of expensive equipment", he says. "What this means is that it creates the modern 'specialty coffee' menu without any mess and wastage, and with minimal training."

While vending is a solution for some sites, a manned coffee operation with trained staff serving coffee is essential at others.

Travel food specialist SSP UK serves 22.5 million cups of coffee each year in the UK at brands including Upper Crust, Caffè Ritazza, Breadbox and Pumpkin, with coffee accounting for around 23% of total sales in air and rail locations across the UK.

SSP's coffee specialist, Graziano Moroni, says: "It's crucial that we get it right when it comes to coffee but that means more than just the product.

"It means making sure the whole culture of coffee throughout the company is strong – from suppliers and equipment through to training and development."

Steps to transform the coffee culture within the business includes new training programmes to improve employee knowledge and encourage a passion for coffee.

SSP now operates 13 training schools at which 42 head baristas and 1,100 senior baristas have completed externally accredited programmes.

An internal barista championship has also been developed to recognise and reward the best employees.

"One benefit of this training and the workforce becoming more knowledgeable about coffee is that the downtime of our equipment is reduced," says Moroni. "Maintenance call out costs on coffee equipment are down 35% – a measure that can't be ignored for any operator, especially one with more than 700 units across the UK.

"By raising levels of motivation and enthusiasm we have raised standards and reduced costs – which means better coffee served by better staff at better margins."

The product itself has also been improved with this year seeing the introduction of Belluno, a new blend created exclusively for SSP, at more than 200 units including Pumpkin and The Pasty Shop.

The new blend has a higher proportion of Arabica to Robusta beans compared to the previous coffee.

"We trialled two new blends with consumers, not just to see which was their favourite, but to better understand their coffee needs and behaviours too, and Belluno came out on top."