DELUXE FOODS ROLLS OUT PEET'S COFFEE KIOSK 2004-11-01 (1)

DENISE CROSS

APTOS, Calif. -- Deluxe Foods here is offering freshly brewed beverages at a new Peet's Coffee & Tea kiosk in the retailer's prepared-foods section in the front of the store.

"The kiosk is approximately 150 square feet and resembles a smaller version of Peet's stores," said Kelly Krueger, senior account executive at Weber Shandwick Worldwide for Peet's Coffee & Tea, a Berkeley, Calif.-based specialty coffee company.

Deluxe's aim is to enhance their customers' overall shopping experience. The coffee kiosk is the final phase of a seven-year remodel project to position Deluxe as a local leader in gourmet food retailing, officials at the family-owned, single-store independent said.

Shoppers can get a select line of Peet's fresh proprietary coffees and hand-selected teas at the kiosk. There's no seating; shoppers drink the beverages as they shop. Drinks are brewed and presented according to the coffee company's standards.

A pastry display case featuring an assortment of Deluxe's bakery products is available on the counter; officials said they have seen a noticeable increase in sales of the baked goods since the pastry case was installed.

The kiosk is a service run by Deluxe employees who received specialized training both at Peet's Emeryville roasting plant and in the field, focusing on Peet's history, coffees and teas, brewing techniques, and store operations. Peet's, which calls itself the "grandfather of specialty coffee," has a loyal following in Berkeley, where the company got its start as a small coffeehouse with a roasting machine on the premises, a few blocks from the University of California campus.

Since Alfred Peet opened that first store in 1966, the company has grown, with upscale Peet's coffee shops operating in several metropolitan areas, as well as a number of kiosk partnerships with selected specialty stores. Fans of the company's coffees and teas also buy them packaged at selected supermarkets and specialty stores, from Peet's Web site and through a mail-order service.

Peet's foray into supermarkets is not unlike other gourmet coffee brewers, most notably Starbucks who have been establishing off-site licensed locations offering fresh-brewed beverages for years. Retailers largely view the kiosks as an additional service they can offer customers that requires little labor on their part.

Krueger emphasized Peet's partnerships with supermarkets are different from Starbucks.

"Peet's approach is designed to focus on marketing the finest quality fresh whole beans whereas Starbucks are beverage intercept locations," said Krueger.

Peet's will continue to be very selective in siting locations and choosing operators with a like-minded approach to quality, Krueger said. Store officials agreed on the project because Peet's and Deluxe Foods share many of the same core values. In business for 25 years, Deluxe is located in an upscale community 10 miles south of Santa Cruz and 18 miles north of Pebble Beach.

Sales at the kiosk, which opened in August, are slightly below what was expected, but officials noted Deluxe has not yet done a grand opening nor used all the marketing materials available to them.

"Peet's is supporting Deluxe Foods with quarterly marketing initiatives and is happy to support their efforts to have a grand opening celebration," said Krueger.

Deluxe customers seem to love the roaster's beans. After adding prepackaged bags to Deluxe's stock in the grocery aisles, officials said the product skyrocketed overnight to become the top-selling prepackaged coffee. Deluxe sells on average 40 to 45 cases of prepackaged coffee a week.