Where do you drink your first cup of coffee each day – at home or out of home? If it’s at home, what brand of coffee are you drinking? Maxwell House? Nabob? And if it’s out of home, which coffee shop is it from? Tim Horton’s? Starbucks? McDonald’s? While consumers associate an emotional link to coffee, research has shown that this link is primarily with café brands like Starbucks and Tim Horton’s. And often times, the coffee consumer is also the household’s main grocery shopper. Consumers used to keep their at home coffee brand separate from their out of home favorite. This is why retailers are integrating branded cafés to combine café brand equity with their grocery brand equity. Virtually all Target U.S. locations include a Starbucks café inside. Most Walmart Canada stores has a McDonald’s inside. Safeway has Starbucks and Metro Ontario has Tim Horton’s within their grocery stores. Even with the dollars these cafés generate, retailers still have untapped potential.
Branded cafés attracts shoppers into grocery stores, and is potential revenue for grocers beyond the caffeinated beverage. In essence, branded cafés are trip drivers and purchase prompters for at-home coffee. While stalwarts like Maxwell House and Nabob are also traffic drivers in their own right, they do not share the emotional bond with shoppers like café brands, especially with Millennials who prefer café coffee brands. It should also be noted that café brands command a higher price, and ultimately raise the grocer’s total basket value. Which explains why locations with branded cafés have contributed disproportionate sales growth to their at-home coffee category.
Whether your grocery chain has a Starbucks café or not, there is potential to leverage these brands to improve category sales. The key is product positioning, and ensuring café brands are afforded prime real estate to prompt the shopper. One option is to create “café blocks” within each product format, such as a café block in coffee pods, and another café block in ground coffee. These brands deserve to occupy the space based on their brand equity and sales potential. They also drive coffee category news with constant media support centered on their cafe. Despite these media’s central focus, the brand exists in your store and is one that shoppers look for. Shoppers are looking to recreate the café at home, meaning that reinforcing the café brand down the grocery aisle is equally important as a visible café block.
Retailers recognize the value café brands have to drive traffic and dollars. They recognize these brands form an emotional bond with their shoppers, and that shoppers are willing to pay more for these brands. The question is how retailers can take advantage of café equity to enhance at-home coffee sales. This begins by elevating café brand visibility and strengthening the communication down the aisle.