If there has been a common factor in the coffee trade during the first few weeks of 2012, it has been that everybody is running at full speed. And there is no expectation that things will let up – in a delightfully quaint phrase, one significant coffee supplier to the high-class hotel sector has said: ‘we don’t expect to slow down until Mothering Sunday’ (which is 18th March!).
With regard to high-street trade, there is generally a guarded optimism.
The usual wild ‘everything is wonderful’ attitude about the place of coffee shops on our streets does continue – even Reuters produced a news clip, much copied around the world, raving about the three dozen independent cafés which had apparently opened in London in 2011. Elsewhere, that figure had been reported as the number of openings in November alone!
More soberly, however, others in the trade have enquired whether anyone has counted the number of closures, which tell a different story. “New start-ups are still happening because people still see beverages as an opportunity – and there is still opportunity in tough times, so long as you’re sensible about how you approach it,” said Marco Olmi of Drury Tea and Coffee. “I’m cautiously optimistic that we’re on the periphery of something great. We had a good 2011, and January is already up on that.
“I do not expect it to be too hard, except for those who are doing it badly and charging too much. Do it well, do it with a smile, and you’ll be OK. The lesson is – don’t throw caution to the wind, be sensible, work hard and concentrate on good product and great service, and you’ll be OK. We have seen exactly the same in restaurants, and this is why some are picking up.”
James Hoffmann of Square Mile Roasters is not, however, as optimistic about the general coffee-house sector as some other observers – not in London, anyway. “London has seen some explosive growth in the last few years, but this hasn’t spread at the same rate outside of the capital. London businesses have enjoyed some protection from the UK’s economy because it is pretty much a separate economy unto itself. The recession certainly hit, and many feel like there must surely be an end to the storm. I don’t think that end will be in sight in the next year, I think 2012 is going to be extremely tough in London for coffee retail. I hope I am wrong on this one.”
Perhaps we should expect a different attitude to consumer spending, suggested Barry Kither of Lavazza. “The UK consumer, in the back of their mind, is entrenching themselves for a prolonged recession. It’s in the back of everybody’s mind, and it means being careful about going out, going to the pub, smoking… and about coffee.
“They’re not giving coffee up, but they may now have one before you leave home, and say ‘that saves me £10 a week’. It’s a kind of subconscious financial healthcheck, and it affected Starbucks a few years ago.”
If consumers do make more coffee at home, then it may well be good filter coffee, Peter Dore-Smith of the Kaffeine coffee house wrote before the turn of the year. “We believe that more people will start to make their own coffee at home, not using espresso machines, but grinding their own beans to use in an aeropress, cafetiere or pourover.”
(He also predicted that even more new independent roasters will open, ‘bringing more interest and opportunities to the industry’.)
There might be an interesting development in filter, suggested James Hoffmann. The much-touted brew-bars, of which he was a pioneer, have created an interest in quality filter brewing that may now spread: those brew-bars make a big thing of brewing coffee by the single cup. He now suggests that requirement for quality will be carried forward to filter coffee brewed in quantity.
“I think we’re going to see an increase in the quality of coffee coming out of batch brewers. This doesn’t imply an upcoming innovation in the technology – more a shift in the places using them. They make really nice coffee when used well, and this year I think it is very important that we focus on just getting coffee right regularly rather than trying to blow people’s minds with clever by-the-cup techniques.”
A peripheral view of the high street came from Claire Martinsen of Breckland Orchard, the artisan soft drinks maker, who is increasing her business with quality coffee shops. “British consumers keeping a careful eye on their budgets, and wanting their spend to go further, will be energising for the UK drink market in 2012 – there will be innovation in low-alcohol beers, retro soft drinks and new independent coffee shops emerging as a direct result of the UK economy. Independent coffee shops will become more prevalent as consumers eschew the giants such as Starbucks and Costa to seek out coffee shops with personality.
“The recession is actually helping this trend, as modern entrepreneurs leave their corporate jobs to follow their passions and start up coffee shops that can reflect their love of great food, great coffee and great atmosphere. After sipping coffee in a great independent, we just can’t see anyone wanting to go back to the sterile environment of a Costa or Starbucks again!”
That alternative may equally well come from competing big players, suggested Darril Ling of the flavour company Monin. “I don’t think we’ll see many casualties this year, instead we can anticipate growth in the independent sector, as the coffee trade continues to offer an attractive business model with high profit margins. I think we’ll see some major operators who are not currently associated with coffee, becoming serious high-street players. To some extent we can expect to see a war on prices, with some operators becoming more competitive as other outlets strengthen their offer.”
The news in early January may have endorsed his view, with the chief executive of Greggs the Bakers, Ken McMeikan, talking of the success of his pilot coffee shop, which will be followed by a couple more test sites. He did indeed make a point of saying that his hot drinks and food are offered at ‘much lower prices’ than the national coffee chains.
In the wider field, at the foodservice consultancy Horizons, managing director Peter Backman has predicted that all high street food businesses will continue offering customer discounts, meal-deals and money-off vouchers to improve traffic, which will depress their profit margins… the foodservice sector was down 3-5 per cent in volume for 2011, with the average price paid by consumers falling as a direct result of this discounting.
At Barclays Corporate, a researcher has said that more precise targetting of consumers is necessary. Two-thirds of hospitality businesses, said Barclays, are missing the potential of the older market. Apparently, two thirds of senior managers in foodservice have not specifically considered the over-65 customer group, many of them hopefully assuming their products were suitable for all ages.
“This lack of tangible engagement should be something of a wake-up call for the food sector,” said Barclays. “As the hospitality industry struggles against multiple headwinds, it would be a mistake to overlook the opportunities this healthier ageing population presents. Given the level of income the over-65s currently provide, the industry would be remiss to ignore investing in a demographic that is expected to grow so significantly in the next few years. Simple considerations that take this group into account will go a long way towards securing their spend.”
In a news statement entitled ‘new research reveals tea as a big opportunity’, the vending operator Selecta began January with the ‘finding’ that of seven thousand consumers surveyed, just under a quarter chose tea as their preferred drink. One might have thought it higher, but several people believe it is time for better promotion of good tea.
Typcially, Darril Ling at Monin said that: ‘speciality tea could really take off if someone is adventurous enough to go down that road’.
Too right, said Nick Kilby of Teapigs. “We firmly believe that the Real Tea Revolution which we are leading will continue apace. When things get tough, it’s those who raise their game and offer their customers real value who prosper. That doesn’t mean lowering prices – it means offering better overall value, and a better quality experience. We’re seeing more and more coffee bars, restaurants, gastro pubs, bars and hotels upgrading to quality whole leaf teas in pyramid bags.
“Any foreign visitor coming to Britain for the Olympics will expect a great tea experience, because it’s one of the things the country is famous for. So surely we should be wanting to offer up something better than the insipid slop that comes from a paper bag that costs a penny or two? It will be embarrassing not to.
“The Olympics is the opportunity of a lifetime to show the world that Britain has a foodservice industry, second to none. Don’t skimp on the tea!”
In general, we can expect differences in payment, suggests the Trendwatching consultancy, agreeing happily that this prediction has been going on for years.“Will coins and notes completely disappear in 2012? No. But a cashless future is (finally) upon us, as major players work to build a whole new eco-system of payments, rewards and offers around new mobile technologies. It is going to be the year that players like Google and MasterCard will actively roll out their cashless initiatives around the world.
“Shoppers who have their credit card information stored in their NFC (near-field communication) smartphones can pay for purchases by waving their smartphones near or tapping them on the reader, rather than using an actual credit card. Square is an electronic payments service which allows for a completely hands-free payment experience by simply saying your name!
“For consumers, the initial lure will be convenience… for suppliers, mobile payments will create an entirely new data-driven eco-system of rewards, purchase history, deals and so on.”
Expect more use of smart codes, said Trendwatching. “2012 will see instant visual information gratification brought into the real and visual world with objects and even people.”
Will 2012 finally see the tipping point for QR codes? ”They’re everywhere now, and thanks to smartphones, consumers may finally be warming up to them too. In September 2011, Ralph Lauren introduced customised QR codes in its stores, featuring the retailer’s signature polo player logo – by scanning them, customers could win tickets to tennis tournaments. Starbucks also unveiled a QR code promotion designed to educate consumers about its mobile payments app and its coffee.”
Vegware, the makers of compostable takeaway cups suggests there will be a greater activity in econoliogical and recycling activity at high-street level.“2012 will see genuine improvements in coffee shop recycling. Clientele are increasingly unimpressed by bins full of a mix of waste which could all be recycled if they were kept separate. April 2012 will see landfill tax rise another £8 to £56 per tonne, increasing the business incentive to maximise recycling. March 2012 will see the launch of our new initiative, the Food Waste Network, which will help any UK business find their local food waste recycling services for free.”
In the wider world, the price of raw coffee will continue to be a problem, say the importers. Stephen Hurst of Mercanta says he expects to see prices falling in the commodity market before recovering later in the year, but that as a trader, he sees demand from the catering trades remaining buoyant. Partial agreement comes from Simon Wakefield of DR Wakefield, who recommends a generally cautious approach to buying: “In the UK, I expect consumption is likely to be down a bit. Prices in 2012 will remain unpredictable – the futures market will react to the global situation and indeed, their appetite for risk has been reduced somewhat. The weather will also affect availability which will affect price.
“The safest route is to work with more flexibility – be willing to change as demand and supply changes, and don’t commit too far ahead, which could lead you down a dead end street on a conveyer belt… with no emergency stop and a furnace at the end!”
In the domestic world, what will happen to the public image of the speciality coffee trade? A former World Barista Champion has suggested that the experience of the recent world championships, which went to a country of coffee origin for the first time, has rather signalled the end of one kind of barista competition, and that we can expect to see change in the way competitions are approached.
“This year there will need to be a new angle, a new focus. I think the field of competitors will struggle with this – though I think there is a great opportunity for someone to do well by having a very clear vision and idea.”
It could come from the coffee trade learning a better understanding of ‘food’ in the media, says Claire Martinsen, the soft-drinks maker. “We could get our first celebrity baristas in 2012, if barista champions transition over into the mainstream. If someone with some media-savvy wins Barista of the Year then this will undoubtedly come true! Watch out for blends of coffee specially concocted by these celebrity baristas, and pop-up cafes in urban centres with the baristas in residence for a limited time. The trend has been around in restaurants the past year or so, so it’s an easy notion for people to understand.”
So, watch this space and here is hoping that 2012 brings continued success to all in our community.