Profits brewing as coffee keeps growing

My Coffee Station machine

A good quality coffee offering has gone from being a ‘nice to have’ to an absolute must for all convenience stores in Scotland over the last few years – and that trend looks set to continue.

Who would have thought 10 years ago that coffee would be a major category in the majority of c-stores in Scotland? Who would have predicted Coca-Cola buying Costa Coffee for £3.9bn, even a year ago? The category has gone from niche to bigger than mainstream in the last few years and very few stores these days don’t offer at least some sort of coffee offering. The latest shift is seeing retailers migrate up the coffee food chain away from quick and cheap brews to higher quality, artisan coffees that allow them to compete head-on with the array of specialist coffee shops that adorn most of our high streets.

“Gone are the days of offering black or white instant coffees,” says Laura Sayer, Head of Directs at Costcutter Supermarkets Group. “Many of our retailers are upgrading their coffee offering to bean-to-cup machines as customers now expect a variety of specialty coffees. Our retailers’ drinks range covers everything from Americanos and Vanilla Lattes to Macchiatos and Espressos.”

Costcutter has met the challenge of providing higher quality solutions by forming alliances with a number of the leading coffee houses to ensure their retailers have access to a great quality product at a good price – and Sayer suggests that no local retailing outlet is complete these days without a strong coffee offering.

She says: “A hot drinks-to-go machine is a must-stock addition for many independent c-stores. We have developed strong working relationships with several coffee houses including Seattle’s Best, ExpresscoPlus (Lavazza), Selecta and Tchibo. Some of the greatest success stories have been where recognisable brand signage is placed outside of a forecourt attracting shoppers, including local residents and passing trade.”

Another strong offering is the one from My Coffee Station which offers a range of striking hot drink stations, perfect for the centrepiece of a strong food-to-go area in a store. The unit comes with no capital outlay and free installation, with free exterior and interior marketing and promotional materials thrown in too. Retailing at £1.75, the products offer a strong POR of 31%, or 55p, a cup.

There’s little doubt that the power of a big brand is something that many retailers are coming around to these days. The big name offers customers a quality guarantee, and for many of them that’s more important than the price. But, as always, it’s never that simple, as Sayer explains: “However, with the average number of coffees sold per day by the convenience industry estimated at 18, the average rural store selling 7-8 and a forecourt 50-60, retailers need to not only consider the space available – whether that’s a small counter top machine or big self-standing unit – but also the footfall in their store, to ensure the machine suits their needs.”

To help Costcutter retailers meet this challenge, the company provides local insights through its Shopper First Programme, so retailers can understand what approach will work best in their store. Sayer says one Costcutter retailer saw his weekly sales exceed £3,000, selling more than 250 cups per day, which equated to around 15% of overall turnover.

Coffee also offers a great opportunity to drive basket sales across food-to-go throughout the day. Regardless of the time of day, there is always a demand for hot drinks and food-to-go. To increase the attraction of food-to-go offers, retailers should consider running a range of in-store promotions and meal deal solutions, such as lunch and breakfast bundles including a hot drink, sandwich and packet of crisps for a set price.

Self-serve Seattle from Aryzta

Aryzta Food Solutions’ partnership with Seattle’s Best Coffee offers a range of quality coffees made from only Fairtrade 100% Arabica beans in integrated touch screen devices using fully-automated technology to produce consistently high-quality beverages.

Paul Whitely, Head of Marketing UK, says: “Coffee is a big footfall driver – almost three-fifths of hot drink-to-go shoppers say it is the main reason they go into store which makes hot drinks an important focus for convenience store retailers.

“Convenience retailers across the UK are now recognising the opportunity installing a premium coffee-to-go facility can provide. Our partnership with Seattle’s Best Coffee provides retailers with a range of self-serve solutions that delivers both great-tasting hot drinks and a great customer experience.”

Shoppers can enjoy Seattle’s Best Coffee favourites including the choice of a Latte, Americano, Mocha, Cappuccino and brewed filter coffees, as well as hot chocolate.

“The Seattle’s Best Coffee units provide highly visible branding creating a destination in-store,” says Whitely. “Retailers have the option to build Aryzta’s bakery brand Cuisine de France and American sweet treat brand Otis into the units to offer day part deals and encourage link sales. Shoppers can pick up a pastry in the morning or a doughnut or cookie in the afternoon whilst they wait for their coffee to pour.”