Coffee brands go gourmet

The small cup of coffee with milk and sugar from a McDonald's in Manhattan cost 96 cents. On the cup, it announces, "Premium roast coffee. Fresh brewed. Custom blend. Rich, bold, and robust." All of that for less than a buck.

The small cup of coffee with milk and sugar from a McDonald's in Manhattan cost 96 cents. On the cup, it announces, "Premium roast coffee. Fresh brewed. Custom blend. Rich, bold, and robust." All of that for less than a buck.

The coffee was actually a little nondescript. Americans who grind their own beans or take other steps in pursuit of their morning caffeine shot may sense that their palettes have become a little pampered by the seeming ubiquity of gourmet coffee.

"We've found that in recent years, consumers' tastes for coffee have gotten more sophisticated," says Shannelle Armstrong, communications lead for McDonald's Premium Roast Coffee and breakfast, in an email. "Additional factors like convenience and value continue to be important to consumers as well."

For most casual occasions, instant coffee was once perfectly acceptable. Nowadays, demand has increased for coffee with a gourmet twist. And brands traditionally known for a no-frills cup of Joe are now offering upscale options.   

"The overall trend is that consumers are looking to explore different roasts, blends, and what we call the ‘creamy arena,' like cappuccino," says Lars Atorf, external relations manager for P&G global coffee. "It appeals to a consumer that maybe 10 years ago would not have dreamed of this kind of beverage."

For a decade, P&G's Millstone brand has offered a premium alternative for its mainstream coffees. Now it shares the "premium" moniker with Folgers Gourmet Selections, which promises "gourmet every day," Folgers lattes and Simply Smooth for coffee drinkers with a sensitive stomach. Atorf calls the new offerings "good coffee for good value," priced at $5.50 to $6 per bag versus $7 to $8 per pound for other premium brands. The premium Folgers brands are made with Arabica beans and come in various flavors and roasts.

Atorf says the response to the taste of the new coffee brands has been favorable. However, the look of the premium brands is setting them apart as well. The Gourmet Selections coffees are sold in bags like other premium coffees, a departure from the red canister of the Folgers coffee we grew up with.

"Some say it's more of a beauty packaging than the regular Folgers," says Atorf.

According to Joseph DeRupo, director of communications and PR for the National Coffee Association, an early release of statistics for 2007 shows that while 57% of the US population consumes coffee every day, only 14% consume gourmet coffee on a daily basis, a number that has slipped slightly from recent years. Coffee is a $19 billion industry and DeRupo maintains that there's definitely room for everyone at the café, but gourmet coffee is still considered a delicacy to most.

"[There's] a blurring of the line between traditional and gourmet in the minds of consumers," says DeRupo. "What they define as gourmet coffee beverages are the espresso-based, fancy beverages. Consumers are probably starting to regard what they buy, which would have been [considered] gourmet, as traditional coffee."

At a nearby Starbucks, the sound of the espresso machine competed with an Aretha Franklin CD (on sale at the register) for prevalence. A woman who ordered a cappuccino with no foam was advised to order a latte next time because it's always foam-less.

In the infamous February memo, Starbucks CEO Howard Schulz expressed concern about the dilution of the Starbucks brand. The "romance and theatre" of a trip to Starbucks has been sacrificed, he said, for "speed of service and efficiency."

"While the current state of affairs for the most part is self induced, that has lead to competitors of all kinds, small and large coffee companies, fast food operators, and mom and pops, to position themselves in a way that creates awareness, trial, and loyalty of people who previously have been Starbucks customers," wrote Schulz. "This must be eradicated."

There continues to be a specialization at Starbucks that you won't find at McDonald's. But the breakfast egg sandwiches now housed in a glass case at the Starbucks counter definitely have the same whiff as the Egg McMuffin menu at the Golden Arches.

"The ideas expressed in the memo are core parts of our business philosophy, and inform all of the decisions we make," writes Tara Darrow, a spokesperson for Starbucks from the global communications, corporate and issues management group, in an e-mail. "Starbucks is continuously looking for opportunities to offer innovative food and beverage products that meet the needs of our customers. We believe this will further enhance our ability to connect with our customers while adding to the Starbucks Experience."

One company that has stuck to its gourmet guns despite the onslaught is Peet's Coffee and Tea. Its Web site says that it is "known as the ‘grandfather of specialty coffee'." "Artisans" working for the 40-year-old Berkeley, CA-based company begin hand roasting their coffee at 4am to be shipped out same-day for freshness. The company founder, Alfred Peet, is still known to train roasters himself.

Peet's began selling in supermarkets in 2003, and now sends employees (its network of employees and customers are called "Peetniks") to the grocers to switch out the coffee to maintain quality. They still only have shops in California. Word-of-mouth and the Internet has broadened their reach.

"There's been an increasing demand over the past 20 or 25 years for specialty food and beverages in general," says Erica Hess, media relations manager at Peet's. "And as people have moved out of areas on the East and West coasts, there's a demand in other places."

For Peet's, fostering a sense of community through events and programs, as well as telling the brand's story is the key to success. They go to great lengths to sustain their decades-old conduct of business, but see an uncompromised future for Peet's.

"The category is huge and still growing," says Hess. "Right now, we look tiny compared to the opportunity. But knowing the opportunity, we want to capture those looking for distinctive alternatives. I think we're uniquely positioned to grow if we continue to execute with excellence and that's our commitment at the end of the day."

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