Obesity, Breakfast Wars, and the Coffee Aisle
We’ll get to that intriguing title in a second. But first, let’s ask:
Is Coffee a Breakfast Item?
Sounds like a silly question, right? Especially for you, Mr. Café Owner. You’ve known for years that 80% of your traffic comes before 10 am. Good coffee sales equals great profitability for you. What about on the grocery shelf? Do coffee and breakfast go together there? Seems like it should. But back to the intrigue…
One of the casualties of the obesity epidemic has been on-premise soft drink sales. Fewer Americans are filling up 48 ounce cups with carbohydrate-packed soda. In parallel and perhaps ironically, there has been a push by the fast food segment to promote breakfast. It’s called the “The Battle for Breakfast.” McDonald’s has dominated for years, Burger King got after it, Wendy’s and Taco Bell are in the midst of tests, and even Subway is vying for the breakfast customer with a national rollout on April 5th. So why should grocery buyers care?
With the drop in soft drink sales, and increased competition for breakfast items, McDonald’s, naturally, went for the coffee drinker with McCafe and its “premium roast” coffee. (Sidebar: Remember the days when the word premium meant more than “It actually doesn’t taste bad!”) Now more fast food marketers and quick serve restaurants are following suit. But foodservice operators realize they can’t win over the breakfast customer without a decent cup of coffee. Makes sense right? The two go hand in hand. We don’t need a market research report to tell us that most Americans, without fail, drink coffee and eat breakfast, together, e-v-e-r-y-d-a-y. Bank on it. Dunkin’ Donuts is. Recently known as a coffee (and then donut) destination, they’re in the middle of launching “Oven Toasted Breakfast.” And I bet it does well.
So there you have it. Obesity to soft drinks to breakfast to coffee to breakfast. Now let’s tie it to the coffee aisle. In Dana Point, California two weeks ago, the National Coffee Association released its 2010 Trends finding. The report is available in a month or so, but once again, we learned that in-home brewing isn’t just up, it’s way up. With the number of total coffee drinkers remaining the same, 5% of all coffee drinkers no longer make a coffee run to their local coffee spot, but rather choose to brew at home! What’s more, the previous annual trend was a 6% shift to the home brew! Year over year, it’s a 9 percentage point move north for in-home brewing, from 75% of Americans to 84%!
The food service response to this, no doubt, involves breakfast. You see, and will continue to see, aggressive coffee-breakfast co-promotions. You’ll continue to see unprecedented media spends from quick serve restaurant chains targeting the coffee drinker (like hundreds of millions of dollars when just two years ago no one was advertising coffee with any regularity) – with most of the messaging promising a “premium” experience better than Starbucks, for you to savor every morning. With these targeted “coffee-breakfast” consumers now walking grocery aisles in droves, maybe it makes sense to think about coffee-breakfast cross promotions. After all, coffee is a breakfast item. And what’s really cool? It’s fat free.