Fascinating story in Business Week about a kind of coffee gap that typifies how people drink coffee these days – a gap that actually has some questioning the long-term viability of some well-known and even iconic brand names.
In essence, there are two problems. One is that younger people are drinking less coffee than their elders. Business Week writes, “Youngsters drink far less coffee than their baby boomer parents, and, when they do, it's more likely to be on the go. Only 37% of young adults between 18 to 24 drink coffee, compared with 60% for those between 40 and 59 and 74% for Americans over 60, according to National Coffee Assn. data.”
However, national coffee consumption continues to grow – which illustrates the other problem. Companies like Kraft, which makes Maxwell House, and Procter & Gamble, which makes Folgers, are finding that consumers are hooked on darker, richer coffees made by the likes of Starbucks, Dunkin’ Donuts and even McDonald’s. They perceive basic canned coffee from the supermarket as being dull and even generic in nature, and not reflective of their more sophisticated tastes.
Business Week notes that the manufacturers are trying to compensate: “Procter has recently started distributing Dunkin' Donuts coffee at supermarkets, while Kraft handles the Starbucks brand. Still, the labels have been slow to ratchet up the quality of their canned coffee, perhaps for fear that their core customer wouldn't tolerate a twofold or threefold price increase for, well, supermarket coffee.”
It isn’t like Maxwell House and Folgers are vanishing brands, however; the story makes clear that each brand generates more than a billion dollars in annual sales. But the market for these coffees is slipping and P&G, at least, reportedly is considering the sale of its Folgers brand t a company that might be better positioned to reinvigorate it.
In essence, there are two problems. One is that younger people are drinking less coffee than their elders. Business Week writes, “Youngsters drink far less coffee than their baby boomer parents, and, when they do, it's more likely to be on the go. Only 37% of young adults between 18 to 24 drink coffee, compared with 60% for those between 40 and 59 and 74% for Americans over 60, according to National Coffee Assn. data.”
However, national coffee consumption continues to grow – which illustrates the other problem. Companies like Kraft, which makes Maxwell House, and Procter & Gamble, which makes Folgers, are finding that consumers are hooked on darker, richer coffees made by the likes of Starbucks, Dunkin’ Donuts and even McDonald’s. They perceive basic canned coffee from the supermarket as being dull and even generic in nature, and not reflective of their more sophisticated tastes.
Business Week notes that the manufacturers are trying to compensate: “Procter has recently started distributing Dunkin' Donuts coffee at supermarkets, while Kraft handles the Starbucks brand. Still, the labels have been slow to ratchet up the quality of their canned coffee, perhaps for fear that their core customer wouldn't tolerate a twofold or threefold price increase for, well, supermarket coffee.”
It isn’t like Maxwell House and Folgers are vanishing brands, however; the story makes clear that each brand generates more than a billion dollars in annual sales. But the market for these coffees is slipping and P&G, at least, reportedly is considering the sale of its Folgers brand t a company that might be better positioned to reinvigorate it.
- KC's View:
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Funny how habits sort of take over. I only make Starbucks coffee at home, and I don't think I’ve bought canned coffee at the supermarket in more than a decade. But it never occurred to me that I was making a choice … it is just what I do, part of the routine.
This is a great example of how cultural and consumer habits can create an enormous shift…and how it can almost happen without consumers realizing that they’ve fomented this kind of change. The problem is when retailers and manufacturers don't notice until it is to late…and they’ve achieved a kind of category irrelevance.
