RETAILERS WARM UP TO FRESH COFFEE PROGRAM

AMITY K. MOORE Additional reporting: ROSEANNE HARPER

Retailers are finding that a coffee service program from a premium bean supplier is perking up sales of both the brew and other products in deli/food-service areas.

The program, Millstone Coffee's Fresh Brew program, provides supermarkets with all the coffee and brewing equipment they need to sell cups of gourmet coffee, at locations that tie the category to either the bakery or the deli/food-service operation.

The program has been up and running in a number of chains and independents in different markets.

Farm Fresh, Norfolk, Va., saw an almost immediate leap in brewed coffee sales when it put the Millstone Fresh Brew program in the delis of all its stores.

"Six months into the program, sales were up 40%," said Steve Harmon, senior vice president of marketing and merchandising for the 56-unit chain.

"We got new customers, people who wanted the flavored coffees and those who recognized the [Millstone] brand name. The thermo pots keep the quality up. It's probably a combination of the different coffee flavors and the consistent quality of the brewed coffee that has made it such a success," Harmon added.

At Erickson New Market, an independent in New Brighton, Minn., the cups of gourmet coffee have become an anchor for sales in the store's food court area, which is near the deli section, said Rick Repasky, store manager.

The retailer had previously offered brewed coffee free near the seating area. Now, at that same location in the store, the retailer is charging 59 cents a cup for Millstone and selling as much as it previously was giving away -- about 27 gallons a day, Repasky said.

Erickson has used deli/food-service products to promote the cup campaign. Through cross-merchandising, the independent has been able to boost its deli/food-service business by offering a free cup of coffee with the purchase of a slice of pie, or a free doughnut with the purchase of a cup of coffee, Repasky said.

Another independent, Mackenthun's Supermarket, Waconia, Minn., also keeps the Fresh Brew program in its deli section.

Jubilee Foods, Shoreview, Minn., offers cups to customers from its courtesy counter. The store's deli and bakery employees brew and help maintain the coffee.

All of the programs are self-service, except at Jubilee, where employees behind the courtesy counter will serve customers if they are not busy.

Millstone helps promote the Fresh Brew program through such marketing programs as its Coffee Cruiser, a vehicle that travels from retailer to retailer broadcasting live on a popular Minneapolis radio station, to inform listeners of the Cruiser's location and the free samples it offers.

Jubilee and Mackenthun's have used the Millstone Coffee Cruiser in their promotions, often running sales on bulk beans. The fresh brew program overall is encouraging better sales of whole bean coffee, the retailers added.

Because the coffee company offers a variety of flavors, retailers have the opportunity to experiment. Erickson and Jubilee provide their customers with two regular varieties: usually one decaffeinated, in addition to one flavored variety.

By featuring a new flavor each week, the retailers said they are seeing their bulk bean sales jump.

"We have seen the sales pick up considerably in the [bulk coffee] section with those flavors as we put each one out," said Pat Larson, store manager at Jubilee.

Erickson's Repasky also noticed a change in the bulk coffee sales. Before the store introduced the Fresh Brew program, customers were wary of buying the flavored coffee in bulk, Repasky told SN. Now, however, customers can test a flavor before making the larger purchasing decision.

Larson at Jubilee and Ed Gardeski, store manager at Mackenthun's, both said the margins on cup sales alone are less than remarkable.

"[Sales by the cup] are not the most profitable, but it's a convenience for the customer, something different we can offer them and still make some money on," said Larson.

Each of the independents interviewed also provides shoppers with free cups of generic coffee, either in the deli section or near the entrance to the store. The free coffee does not appear to provide any competition to the gourmet cup sales.

"The advantage [to the Fresh Brew program is it is] giving customers something that they want," said Gardeski. "Obviously, flavored coffees are pretty popular right now; we're finding people are willing to pay for that product even though we have free coffee in the store."

Prices per cup at the independents vary, from 25 cents at Jubilee to 50 cents at Mackenthun's, and 59 cents with free refills at Erickson.

Farm Fresh retails the Millstone brews for 59 cents a cup, the same price it had previously charged for plain, traditionally brewed nonbranded coffee in its delis.