Nestlé Coffee Partners Monthly Notes August 2020

COFFEE NOTES AUGUST 2020

Welcome to August’s edition of Monthly Coffee Notes. In this issue, we’re continuing our deep dive into everything that’s happening in the wake of the pandemic and pulling out the insights we think are helpful for those in the business of hot and cold beverage solutions. We’re also exploring the ‘better-for-you’ category by looking into the fascination behind sugar-free trends and the environmental impact of alternative milks.

Finally, we’re investigating how self-serve solutions can help us get back to safer times.

Enjoy, and as always get in touch if you need any advice or help at all.

5-MIN READ

FUNCTIONAL BEVERAGES LOOK TO TAKE THE LEAD In April of this year, FMCG Gurus surveyed 23,000 people across 18 countries to pinpoint any upcoming food and drink trends in light of the global pandemic. In May, they found that a massive 80% were planning to eat and drink more healthily after COVID-19, a seemingly innocuous statement at first, but looking deeper, it’s one that could forecast a huge shift in consumer behaviour.

WHAT DOES THIS MEAN FOR FUNCTIONAL BEVERAGES? Traditionally, ‘functional beverages’ refers to drinks that are both convenient and healthy, for example ready-to-drink (RTD) products or those with added vitamins or minerals. But the simple cup of coffee falls under this umbrella too as a more ‘natural’ functional drink that in itself has been said to benefit our health and lifestyle.1 The FMCG research clearly shows that the pandemic is leaving consumers with a much greater need to look after their health and wellbeing. Beverages that could boost immunity, uplift metabolism and increase alertness — like coffee 1 — are readily available to fill the functional needs of an increasing number of healthconscious consumers.

WHAT DOES THIS MEAN FOR OPERATORS? While the UK returns to work and study, consumers need to feel they can restart their usual routines safely — and that includes feeling comfortable and safe when visiting cafés for their daily routines involving coffee.

Along with the communication and safety measures that consumers want to see in place, operators can make quick wins to speak to this shift in behaviour. Placing a range of better-for-you products front and centre in-outlet and on menus (including sugar-free syrups or lower-calorie snacks), showcasing plant-based milks, and even shouting about the ways that coffee could benefit wellbeing in a factual and engaging way can help to position outlets as the go-to for this functional choice, and increase their appeal with health-conscious customers.

Source: 1 - ‘The Latest Scoop on the Health Benefits of Coffee.’ Harvard Health Publishing, 2017.

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5-MIN READ

THE ENVIRONMENTAL IMPACT OF ALTERNATIVE MILKS We’ve recently seen the UK plant milk market grow to a value of over £244m, and it now accounts for over 15% of the European market.1 But after all this progress, it’s important to reflect on the environmental effects of these alternatives — just as we do with dairy — and review what the industry can do to remain environmentally responsible.

DID YOU KNOW...

PRODUCING A GLASS OF DAIRY MILK EVERY DAY USES:

3X GAS

ALMOST 3X THE GREENHOUSE GAS EMISSIONS OF ANY NON-DAIRY MILK

2X WATER

AND OVER TWICE AS MUCH WATER

2X LAND

THE EQUIVALENT OF TWO TENNIS COURTS WORTH OF LAND (650M 2 OR 7,000 FT 2), MORE THAN 10 TIMES AS MUCH LAND THAN ITS ALTERNATIVES

Source: Chart Source: Poore & Nemecek (2018), Science. Additional calculations, J. Poore.

1 - ‘UK plant milk market.’ The Vegan Society, 2019.

WHICH ALTERNATIVE MILK HAS THE SMALLEST IMPACT ON THE PLANET? The below shows the environmental impact of one glass (200ml) of four of the most popular alternative milks against dairy: EMISSIONS (KG)

LAND USE M 2

WATER USE (L)

DAIRY MILK RICE MILK SOY MILK OAT MILK ALMOND MILK 0.0 0.2 0.4 0.6

0.0 0.5 1.0

1.5

0

40

80

120

It seems that oat milk has the least impact during production, especially as it uses significantly less water per litre than almond. With the introduction of innovative new alternatives like the increasing popularity of pea milk, and the UK experiencing the highest consumer search interest in oat milk than any other country in the world,1 operators should consider how their range of dairy-free products can help increase ROS, drive average transaction value, and continue attracting the health-conscious consumer while understanding their environmental concerns.

WHAT CAN OPERATORS DO? • Take steps to research and understand your consumer demographic and in turn offer the milks that would be most suitable based on what’s important to them environmentally.

• S upport your team by educating them on alternative milks. This will give them confidence to talk to customers and help them in making a more environmentally friendly choice at the point of purchase.

• Keep an eye on your sales patterns and forecast your stock levels accordingly to avoid unnecessary wastage. For example, you may see a peak in alternative milk sales over periods like Veganuary.

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3-MIN READ

THE FASCINATION WITH SUGAR-FREE Sugar-free and low-sugar products are having a long moment.

After Public Health England’s (PHE) 2017 pledge to put more of a focus on tackling obesity, the ‘war’ against sugar became a national talking point, especially after the added momentum of the government’s Soft Drinks Industry Levy in 2018. In the years following, leading foodservice organisations started working hard to support these initiatives, with some even switching their entire coffee syrup ranges to sugar-free versions. In 2019 alone, 49% of coffee syrup drinkers preferred the sugar-free syrups.1 But now that there’s a growing emphasis on wellbeing as the world deals with coronavirus, we’ve discovered that consumers are becoming much more discerning when it comes to making healthier food and drink choices — especially when it comes to their own sugar reduction.

WHAT DO CONSUMERS THINK?

60%

PLACE IMPORTANCE ON A SUGAR-FREE OPTION. 3

7 OUT OF 10

CONSUMERS ACROSS THE UK, US, FRANCE, GERMANY, CHINA AND BRAZIL HAVE REDUCED THEIR SUGAR INTAKE. 5

50%

ARE ACTIVELY TRYING TO CUT DOWN ON THEIR CONSUMPTION OF SUGAR.4

Sugar-free alternatives have also been put forward by the NHS 2 as a way to reduce our sugar intake without taking on excess calories, so naturally food and drink providers are taking heed and rolling out products to suit, with more and more café operators stocking the sugar-free versions of their chosen syrups and including low-sugar snacks on their menus.

WHICH SYRUPS ARE MOST POPULAR IN THE UK?

• VANILLA

• CARAMEL

• HAZELNUT

(And they’re also the most popular within We Proudly Serve Starbucks outlets too!)

Operators can capitalise on this opportunity by looking at ways of incorporating low-sugar or sugar-free versions of their most popular syrups, making sure these options stand out on menus and POS so that customers know they’re available.

Cafés can also stock low-sugar versions of snacks to align with growing health trends that we’ve covered previously. All consumers will have a different opinion about what healthy looks like, but for operators it’s all about providing a balanced range which includes healthier and more indulgent beverage choices, and helping customers to continue making informed choices.

Sources: 1 - Beyond the Bean sampling procedure conducted in February 2019.

2 - How to Cut Down on Sugar in Your Diet. NHS, UK. December 2018.

3 - William Reed Business Media, Matthew Algie.

4 - GlobalData Q3 2019 Consumer Survey 5 - Consumer Lifestyle and Attitudes Survey 2018.

2-MIN READ

SELF-SERVING UP THE NEW NORMAL Combating the spread of coronavirus will be the highest priority for UK businesses in the food and beverage industry over the next few months. But how do foodservice operators do this safely and successfully when the very nature of serving coffee involves close contact?

Nothing can beat the human experience of a served coffee solution. Self-serve machines however are a great solution as an additional purchase point, alleviating congestion and managing social distancing, providing coffee where served outlets are closed, or sitting as a standalone option.

Whatever your reason for introducing a self-serve solution, high-use self-serve touchpoints must adhere to a high level of hygiene — and that’s never been more important in today’s climate. To ensure customers feel safe using a self-serve option, it’s imperative that operators demonstrate how the machines are being cleaned and the process involved in using them, e.g. spray-downs after each use, hand sanitiser available, cleaning checklists and social distancing instructions.

We Proudly Serve Starbucks and Seattle’s Best Coffee self-serve solutions are available to suit a variety of outlet and location types. With options for free-vend or cashless payment, self-serve solutions not only support a cashless model to remove the concern behind handling cash, but also cater to consumers’ higher expectations of safety in the new normal.

Using the latest user-friendly espresso technology, customers can get their coffeehouse favourites created with real milk and fresh beans, and can personalise their drinks with extra shots and syrups.

Barista-served solutions will continue to be popular as a coffee solution, especially when looking to compete with the high street. But with the introduction of rules and regulations in combating the spread of coronavirus, operators and businesses will be looking for new ways to ensure the safety of their customers without removing the benefit of a workplace or university café — and self-serve is a solid option to help them do this. If you’d like to learn more, drop the team an email or give us a call to discuss your options.

STARBUCKS and the Starbucks logo are used under license by Nestlé. Serveware varies from images shown.

Nestlé Coffee Partners offers a range of brands and solutions to fit your customers’ requirements.

If you’d like to talk through any of what you’ve read and explore how we can help you leverage the insight we’ve shared this month, or if you’d simply like to catch up over a coffee, we’d love to hear from you.

We’re available on +44 (0)203 124 1029 (Option 2) or at StarbucksSupportEMENA@nestle.com