BUMP AND GRIND

KAREN DeMASTERS

Coffee and tea are beverages that defy the demand for convenience. While everything else is geared to on-the-go consumption, shoppers remain more than willing to grind their own beans or steep their own leaves.

Retailers tapping into this ongoing trend are installing greater numbers of bulk bins or adding new varieties that reflect the potential to brew strong sales.

Year-to-year comparisons and monthly totals are not kept on the very specialized category of bulk coffees, and little sales information of any kind is available for teas sold in bulk. Supermarket sales of random-weight coffees reached $196.6 million for the 52-week period ending Dec. 28, 2002, according to ACNielsen Homescan Consumer Facts Fresh Foods 2002 Report. It showed the average buyer of random-weight beans spent $25.49 last year.

It's natural to turn to Seattle in examining the coffee category, where awareness is high in the hometown of Starbucks and Seattle's Best, among other popular brands.

"The bulk coffee business just continues to astound us," said Brad Lindsey, director of sales and merchandising for the six stores under the Town and Country Markets umbrella in Seattle. "Both whole bean and ground coffees are doing amazingly well."

The retailer is in the process of doing a category analysis of bulk coffee sales to see how growth can be maintained and what else customers might want. In the past 18 months, sales in bulk coffees have grown 15% to 25%. In particular, Equal Exchange Fair Trade shade-grown coffee has gone from No. 3 of the bulks to No. 1 to account for 43% of the retailer's total bulk business, Lindsey said.

"We have a better price point on that at $8.99 a pound, compared to a dollar more for other premium brands, but we also decided to partner with Equal Exchange because of what it stands for," Lindsey said.

Fair Trade shade-grown coffee appeals to the environmentally conscious buyer, a key component of Town and Country's customer base. It's purchased from small coffee growers at a price that offers the growers a respectable living, and is grown in the shade, which prevents destruction of the rain forest. Town and Country Markets has sent employees to work with the coffee growers to see how the plants are cultivated, and confirm the procedures used to sustain the environment.

"Michelle Elsom is a Town and Country manager who went to Peru, and we have pictures of her working with the growers displayed with the coffee. She is in charge of the natural and bulk categories, and it is her job, when she returns from Peru, to communicate with other store managers about the importance of this product and about the importance of Fair Trade coffee to the world economy," Lindsey said.

Ten years ago, Town and Country had 12 feet to 16 feet of shelf space devoted to canned coffee. That space has been cut in half, and there are now anywhere from 16 feet to 20 feet of space devoted to bulk coffees and teas with both high-end offerings and lower-priced varieties. Whole beans are sold as-is, or can be ground on-site. Information about the different coffee beans and growing methods is displayed with the beans.

Mustard Seed Market and Cafe, which has stores in Akron and Cleveland, does extensive marketing in bulk coffees and teas, in part because the stores have a coffee bar, a full-service restaurant, banquet facilities, and a catering business associated with each store.

"We have coffee going on all over the place here," said Barbara Schenk, vice president of operations for the natural foods retailer. "Our bulk manager also spends a lot of time on the floor talking with customers, answering their questions, and educating them. We feel that is the key to growing a category."

Mustard Seed has 28 bulk bins of coffee, all organic and Fair Trade. Equal Exchange and a local roaster, Crooked River Coffee Co., supply the coffees.

"Crooked River roasts every day, so another key for us is getting fresh roasted coffee every day," Schenk added.

Specials are featured each week in the restaurant and coffee bar so people can sample the blends, and a display is maintained next to the bulk bins with fresh brewed coffee for tasting.

Pairing supermarkets and suppliers, like that reported by Town and Country, is the wave of the future, according to Michael Diegel, director of communications for the Washington-based Grocery Manufacturers of America.

"We have begun to see, and will see more of, co-branding with specialty coffee makers as a way for a supermarket to differentiate itself from its competitors," Diegel said. "This will show up in special coffee displays in the Center Store. It is a way for the supermarket to capitalize on the trends in coffee and offer premium-priced products. You will see more of a store setting aside areas for special displays and differentiated space to a particular brand."

Part of the focus will add new excitement as rows of cans and jars are replaced with bins and dispensers, and retailers show off the product and tell customers why it is special, he added.

"There are specialty teas out there, too, but they have not generated quite the level of interest among the masses that coffee has," Diegel said.

However, tea does have its own appeal for the health-conscious consumer.

At Town and Country, "Growth in tea sales of all types has been phenomenal for the past three to five years, increasing in our stores by 20% to 30%," Lindsey said.

Mustard Seed stores get their product from the Republic of Tea, Novato, Calif. Some 24 varieties of bulk tea are currently displayed on a high-quality, wooden endcap. Tea strainers and other accessories are offered there, too.

Recently, the U.S. Department of Agriculture announced that drinking black tea may lower bad cholesterol levels, and might help reduce the chance of heart disease. Reports of these findings are showing up on popular television programs, and boosting sales for all types of teas.

More studies are also coming in that indicate tea, as a regular part of a diet, may help a person manage his or her weight, according to the Tea Association of the USA, New York. All teas come from the Camellia sinensis plant, a warm-weather evergreen, but they can vary widely, depending on what part of the plant is used or how it is processed.

Schnuck Markets, based in St. Louis, has introduced new colors and flavors of teas, including white and red, sales of which are increasing because of health claims touting that higher levels of antioxidants may do anything from clearing up acne to extending life, said Lori Willis, a spokeswoman for the 100-store retailer.

White tea is one of the rarer teas, made from the buds of the Camellia plant. It also has the added selling point of being high in healthful polyphenol. Schnuck carries Celestial Seasonings White Pear and Madagascar Vanilla, as well as Numi Red Mellow Bush and Numi Orange White Spice. The stores have a total of 12 varieties of whole bean and ground coffees sold in bulk from Mother Parker, Millstone, Ronnoco and Papa Nicholas, among others.

"Consumer response has been good for both teas and coffees," Willis said. "A customer can stand in the coffee aisle and spend some time picking out a particular blend. The aroma is wonderful."

Coffees and teas are displayed together along with filters, grinders and other accessories, she said.

Huffman's Market in Columbus, Ohio, devotes its entire bulk section to Queen City Coffee, a company based in Cincinnati. The 16-foot coffee section of the center aisle has standard, canned brands on a lower shelf, and premium, whole bean brands that can be ground on-site in an area above the canned varieties.

"We brought in Queen City about two years ago. It is all premium brands, ranging from $7.99 a pound to $22 a pound for Kona coffee, and they all do very well for us," said Tim Huffman, owner.

A different marketing strategy is used by Dorothy Lane Markets, which has three stores based in Dayton, Ohio. A large section of each store has been leased to Boston Stoker, which operates a coffee on the premises, and sells whole bean and ground coffee to take home.