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    Supermarket GROCERY Business: Full steam ahead

    New products are jolting coffee and tea sales, not to mention consumers' palates.

    By Richard Turcsik

    There's a tempest brewing in the coffee and tea aisle. Introductions of scores of new coffee and tea items--most of them high-ring specialty products--are creating a stir, helping to revitalize the formerly staid categories with a caffeine-induced rush of increasing sales. That's a pretty wondrous feat, given the Wal-Mart- and Staburck-ization of the retail world.

    According to ACNielsen in Schaumburg, Ill., sales of coffee in the food, mass, and drug channels (excluding Wal-Mart) for the 52 weeks ended Oct. 4 were $2.95 billion, a 2.2 percent increase from a year ago, when sales fell 6.7 percent compared with 2001. Sales of all forms of tea for the 52 weeks ended Oct. 4 were an impressive $1.72 billion, up 2.2 percent from the $1.68 billion posted in 2002.

    Several new developments are perking up the coffee section, promising an espresso-strong sales curve through 2004. For starters, the folks at Folgers have kicked the can—replacing the venerable tin coffee can with a new plastic AromaSeal Canister. The AromaSeal Canister features a foil peel-away seal, eliminating the need for a can opener and a possible visit to the emergency room from a rough edge, while offering a unique snap-tight lid that seals in Folgers' famous "Mountain Grown" aroma. This way the canister offers that just-ground smell every time it's opened. "The AromaSeal Canister is doing very, very well and is exceeding expectations," says Tonia Hyatt, a spokeswoman for the Procter & Gamble Co. in Cincinnati.

    The new Chock full o' Nuts New York Roast from Sara Lee is so heavenly that better coffee a billionaire's money can't buy, to update its famous slogan. According to Sara Lee, dark roast coffees have been the strongest segment in the flat ground-coffee market, exhibiting a 3 percent increase since 2000. Its New York Roast features quality 100 percent arabica beans, expertly roasted to deliver a rich, full-flavored taste that's intense but not bitter.

    "We really want to offer the urban flavor seekers a dark, bold, and intense blend of coffee," says Ed Dubin, director, Chock full o' Nuts, at Sara Lee Coffee & Tea Consumer Brands in Harrison, N.Y. "Consumers have trusted our Classic Blend since 1932, and here's an opportunity to try something a little more robust." Sara Lee will back the rollout with product sampling, advertising, price promotion, customized co-marketing programs, and Sara Lee corporatewide programs.

    Fair trade trend

    Arabica beans are also one of the secrets behind Kona Coffee—the only American-grown coffee. Kona is a 175-year-old variety of arabica coffee grown exclusively in the Kona region of Hawaii. It's so popular that the state has built a Kona Coffee Cultural Festival around it. The 33rd annual festival, held last month, featured coffee art, coffee cuisine, and even a coffee keiki (children's) cooking contest among its many events. "Kona coffee is described as having a mellow, smooth, buttery flavor that doesn't leave that bitter aftertaste," notes Robin Morisawa, public relations manager for the Kona Coffee Cultural Festival in Kailua-Kona, Hawaii.

    Some 650 farms, ranging from two to several hundred acres, raise Kona coffee. The variety is regarded as a gourmet and specialty product, and its beans fetch a hefty price. Unfortunately coffee farmers from developing and Third World countries aren't so prosperous, but the big manufacturers are working to change that, and fair trade and environmentally friendly coffees look like the next big trend.

    P&G's Millstone brand is introducing a line of sustainable coffees called the Signature Collection. For now the line is sold only online through www.millstone.com and by phone through the (800) SAY-JAVA number, but it may eventually make its way to store shelves. "It's certified by outside organizations, including Fair Trade Certified Coffee, Cup of Excellence, and Rainforest Alliance, and only contains sustainable coffees that provide farmers with higher prices," says P&G spokeswoman Hyatt.

    Additionally, Kraft has teamed with the Rainforest Alliance to support the development of sustainable coffee production in Mexico, Columbia, Brazil, and Central America. "We've committed globally to buying 5 million pounds of certified coffee in the first year alone," says Pat Riso, a spokeswoman for Kraft Foods in Tarrytown, N.Y. "That's significant because it represents a significant expansion in the entire global market for sustainable coffee. Right now 18 million pounds have been certified by Rainforest Alliance, and we'll be buying 5 million pounds of that."

    Beginning next year, that coffee will be sold in the United States and Europe through Kraft's foodservice division under its Maxwell House, Yuban, and Maxwell House Premium Cup brands. Why foodservice as opposed to the supermarket channel? "Actually foodservice is where there's been a need, especially in colleges and universities—that particular population is very interested in sustainable coffee," Riso explains.

    Interactive shelves

    In the supermarket channel Kraft distributes and markets Starbucks coffee, and it has recently introduced a touchscreen marketing tool designed to give grocery customers insight into the best way to enjoy Starbucks at home. Plans call for the Starbucks Interactive Unit (SIU) to be featured in approximately 4,000 grocery stores per year, providing consumers with a wealth of information on topics including "The Fundamentals of Brewing," "Our Coffees," and the ever-popular "Taste Matcher," which shows consumers which Starbucks coffees best fit their individual tastes, enhanced with full-motion video and jazz music. "In supermarket tests the SIU increased shopper visits to our shelf by 200 percent," says Dave Sachs, category business director, Kraft Foods.

    Chandler, Ariz.-based Bashas' Supermarkets is jazzing up its coffee aisle by carrying the Peet's line in 23 of its stores. Peet's deep-roasted coffees, in whole bean and ground varieties, became available at Bashas' in late October and are merchandised from a customized wooden rack. "We roast all orders by hand, and our dedicated direct store delivery network allows us to deliver Peet's fresh to the store," says Patrick O'Dea, president and c.e.o. of Peet's Coffee & Tea, Inc., in Emeryville, Calif. "We also manage a strict product rotation schedule to ensure that only our freshest coffees are presented on the shelves."

    European-style coffees are also widely represented on store shelves. This summer the presentation got a little flashier when Taylors of Harrogate introduced an eight-SKU-count line of imported English coffees with catchy names like Lazy Sunday, Take it Easy, Dark Side of the Moon, and Hot Lava Java. "Coffee is growing in popularity in England," says Barbara Noureldin, marketing manager at Globe Trend, the East Hanover, N.J.-based importer of Taylors of Harrogate. "In the U.S., you're seeing more and more people looking for decaf for health benefits. The better you can make a decaf, the more loyalty you'll get out of a drinker who likes coffee."

    But what about teetotalers who don't want to hear any jive about java? Celestial Seasonings has heard them and added a line of lattes and chais to its product mix. "Lattes are traditionally associated with coffee," explains Joe Beauprez, senior product manager at Hain Celestial Group in Boulder, Colo. "Through consumer research we found that there's this whole group of tea drinkers that doesn't drink coffee and feels left out of the Starbucks latte craze. You'd be surprised at how bummed that left these people feeling. So we've created an all-natural tea latte and all-natural tea chai that are instant and very convenient." There are three lattes and three chais in the line, and the six will be heavily promoted to both the trade and consumers this winter.

    Six seems to be a magic number when it comes to tea. Taylors of Harrogate recently introduced six new varieties of English tea to the States, including Green Tea with Mint, Decaffeinated Spiced Chai, Raspberry and Rosehip, Green Tea with Ginger, Lemon and Herb, and Green Tea with Lemongrass. Each is packed in a 50-tea bag-count box. "Flavored teas are more common here than in England," Noureldin says, "so for these to be flavored teas from an English company is very unusual."

    That's because Americans tend to drink their tea straight up, sometimes with a twist of lemon and sugar, while the English typically drink it with milk. Tetley believes it has the quintessential British tea with its Tetley British Blend, which was relaunched last year and is in the midst of a "win Tea Time in the U.K." promotion. Packed in an 80-count box, the British Blend tea is different from its American counterpart in several ways. "We have more tea in the tea bag, so it's heavier, and the tea bag is round with more perforations, which helps to disperse the tea flavors out of the tea," says Ron Zussman, marketing manager at Tetley USA in Shelton, Conn. "People who are looking for a bolder, British-tasting tea have found it in British Blend."

    Those looking not to burn their fingers wringing out a tea bag may find their answer in Wal-Mart. That's where Tetley is testing its patented drawstring bag, which Tetley U.K. has made popular in England. "Instead of one string, this bag has two coming out of each side," Zussman says. "After you make your tea, you pull the two strings opposite each other, and it wrings out the bag."

    White-hot white tea

    "There's a tremendous interest in tea by both young and old people," says Ira Barbakoff, president of Eastern Tea Co., the Monroe, N.J.-based manufacturer of the Bromley Tea line. "Tea is a product that's thousands of years old, but it's developed a caché about being young, trendy, and hip."

    The growth of tea is definitely in the bag, according to Joe Simrany, president of the Tea Association of the U.S.A. in New York. "The health benefits of tea are serving to stimulate the entire industry from a standpoint of greater consumer awareness," he says.

    "The entire green tea category would not exist in this country were it not for the health benefits," Simrany says. "And certainly white tea is the next thing. It's in the spotlight right now, and its health benefits are driving it."

    Indeed, white tea is white hot. Black tea, green tea, and white tea are all derived from the same tea plant—camellia sinensis. The difference is how they're processed. Black tea can be from any leaves of the plant, which are picked, pressed, rolled, and fermented. Green tea is also from any leaves, but they're steam- or pan-fired so that they're only mildly processed, leaving them with a much higher level of antioxidants. White tea is made from only the top two leaves of the tea plant.

    "It can only be harvested in the spring when the new leaves burst out, literally like three days in the whole year," says Beauprez of Celestial Seasonings. "It's picked, dried out in the sun, and that's it. It's very minimally processed and very high in antioxidants."

    But green tea is still the fastest-growing tea subsegment. "The biggest trend in tea is toward the good-for-you-type teas, and green tea in particular," says David Rigg, v.p., sales and marketing, at Redco Foods, Inc., the Windsor, Conn.-based manufacturer of the Red Rose and Salada brands. "We're seeing growth of green tea in excess of 20 percent, and our brand is up 30 percent. In food, where 3 percent growth seems to be the norm, that's certainly out of the ordinary. The consumer is trading up from a commodity to a specialty tea."

    Seeing red tea

    As a result Redco has been focusing its growth on the good-for-you tea arena. "One of our new Salada products is a white tea and green tea blend," Rigg says. "We also have two new green teas with antioxidants: Green Tea with Red Antioxidants, including lycopene, and Green Tea with Purple Antioxidants, including grape skins." Both products contain rooibos, or red tea.

    Since white tea is white hot, it's only natural that red tea is red hot. Rooibos (Afrikaans for "red bush") is an herb grown only in the Cedarburg Mountains of South Africa. "Red tea has a superb taste, and because it's fermented it has a body very similar to black tea, so you can add milk and sugar," says David Abrahams, chief operating officer at Kalahari, Ltd., the Atlanta-based importer of red tea. "It offers two medicinal benefits—it lacks caffeine, and it has very high antioxidant properties that rival those of green tea.

    "Just about every mass market grocer, including Safeway, Kroger, and Albertsons, are adding several SKUs of red tea to their main tea sets. It's an emerging category, and you're going to continue to see growth of red tea over the next several years in a similar fashion like you've seen with green tea," Abrahams says.

    "Tea is moving away from the commodity blends and into more of the single-origin teas from specific countries, like Darjeeling from India," Simrany says. "The good news for supermarkets is that it brings in more dollars and profits because consumers aren't comparing it on price, but buying it based on the perception of quality."

    Indeed, Bromley, which was the first manufacturer of decaffeinated traditional tea, has been expanding its portfolio to include Bromley Exotic Teas, a line of 24-count boxes of English Breakfast, Earl Grey, Tropical China Black, Temple of Heaven Green Tea, Passionfruit Green Tea, and several other varieties. New products like these are sure to keep consumer interest--and sales--brewing well into the future.

    By Richard Turcsik
    • About Richard Turcsik

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