Coffee and Tea Are Spilling Into Brand New Markets in Canada

Access to a wider variety of tea flavours and styles available both at home and at cafés has increased the appreciation and understanding of the complexity of coffee and tea.

 As a result, cafés, restaurants, suppliers and wholesalers are responding by upping their offerings just as coffee prices continue to increase. Demand for a good cup of coffee, particularly specialty coffees, has even forced the hand of conventional coffee retailers like Tim Hortons into selling its own specialty line of lattes and cappuccinos.

“I believe the trend is toward more full-bodied coffees rather than lighter ones,” said Neil Madden, president of ECS Coffee, a Burlington, Ontario company focusing on single-serve coffee machines for the homebrew and office market.

“Improvements by companies such as McDonald’s and Starbucks in their offerings have resulted in more medium to medium-dark roasts as the preference. Overall, though, people are simply looking for more variety.”

McDonald’s recently added to its coffee lineup with the lattes, cappuccinos and mocha beverages, part of its McCafé line of espresso-based coffee products.

“We really brought authentic specialty-based coffees into the mainstream,” said Louis Payette, the company’s national media relations director, who said the company would continue to expand its specialty coffees.

“It’s brought in a lot of people who have never tried our coffees. We’ve doubled our coffee business in the last two years.”

Another major coffee retailer, Starbucks, wants to prove whether blondes have more fun with the release of the company’s new blonde roast, which debuted in mid-January in Canada.

Starbucks statistics show that 54 million coffee drinkers in the United States said they prefer a lighter roast coffee for their daily fix.

“They told us they wanted a flavourful, lighter-bodied coffee that offers a milder taste and a gentle finish,” said Starbucks master roaster Brad Anderson.

Blonde moves the company’s offerings slightly towards the lighter end of the spectrum, a change in direction for Starbucks, which has relied on darker, more robust blends as its mainstay.

Jeff Hansberry, president of channel development for Starbucks, in announcing the blonde blend, said “it is our answer to providing a premium lighter roast coffee to appeal to those who describe Starbucks signature roast as too intense.”

The move to offer a easier drinking coffee at Starbucks comes at a time when some coffee retailers are hear ing customers saying “the bolder, the better.”

That could stem from coffee drinkers’ tastebuds being used to darker blends, forcing consumers to ramp up the boldness.

“In the past 20 years, dark roasted coffee has been a rising star primarily because it has that bolder taste, and pairs, like wine, with spicier flavourful foods, which are also becoming popular,” said Gary Jenner, owner of Nova Coffee, a Lower Sackville, Nova Scotia-based supplier to foodservice that hit its 40th year of business in 2012.

He sees specialty coffees as the leading edge of demand for coffee consumers, led by those in their late teens and early twenties.

“These individuals want espresso-based beverages because of the flavour and also because of the coffee shop experience. Lattes and all related espresso-based beverages are where it’s at right now. Chai lattes are right up there,” said Jenner.

At The Fairmont Winnipeg, hotel food and beverage director Ryan Dunne said the most popular coffees being ordered there are a freshly ground whole bean coffee as well as traditional French Press coffee and made-to-order cappuccino and espresso.

“Today’s generation (are) a little more adventurous in their tastes and also having so many different products available now. As people are exposed to new products and flavours, their palate becomes more educated and they have a better appreciation for quality and freshness,” Dunne said.

Corey Dalton, CEO of Williams Fresh Cafe, which has recently moved away from its founding identity as Williams Coffee Pub, agrees that coffee drinkers are more educated about what it is available.

“People’s palates are becoming increasingly more refined with restaurant expansions and the food education they receive via pop culture. Also, consumers have far more access to global foods through the supermarkets offerings as globalization continues,” Dalton said.

At Williams, the most popular teas ordered are the chai latte and the company’s London Fog variety, while cappuccinos and lattes rank as some of the best sellers among coffee fans.

“We find coffee and tea drinkers are more open-minded than before with regards to trying more bold flavours,” Dalton said.

“We tend to see bolder coffees being more popular in the morning, and demand for less bold as we move into the afternoon when tea consumption tends to pick up.”

Customers can’t get enough

Size matters at Tim Hortons, as the company says its customers want more of Canada’s best selling coffee, and they are now getting it for the same price.

In mid-January, Tims renamed its cup sizes from extra small, now the former small. The medium is now the small, and so on up the line. This makes room for a new size, the extra large.

“We tested the names of the new hot cup sizes with our guests and the response has been overwhelmingly positive,” said Dave MacKay, Tims director of brand marketing for beverages.

The new extra large is a 24 oz cup, while the extra small is a modest 8 oz. The small is 10 oz, the medium is 14 oz and the large is 20 oz. “By shifting the sizes, we’re able to provide coffee lovers with a full range of five size options, from extra small all the way up to the new extra large,” says MacKay.

In 2011, Starbucks introduced the trenta in the United States, but that size cup, larger than the grande, has yet to come to Canada. Even with increased prices for coffee, which are passed onto customers, Dalton at Williams Fresh Café said he has not noticed a difference in overall coffee sale. “Our guests are ordering larger cups of coffee,” said Dalton.

Coffee on vacation

Single-cup coffee makers are becoming more common in Canadian hotel rooms, so much so that it is now one of the top expectations of hotel guests.

A recent Hotels.com survey discovered that 24 per cent of Canadians chose high-end coffee makers as their top “modern in-room amenity,” second only to free Wi-Fi, the choice of 28 per cent of hotel visitors.

Taylor L. Cole, director of public relations and social media for Hotels.com, said the results did not come as a surprise, given the rising cost of coffee at the retail level.

“Canadians want the feeling of having a barista-brewed cup of coffee that they can enjoy anytime while in their hotel room. And you would suspect that Canadians would expect premium selections for their cup of tea as well,” she said.

To meet demand, hotels today are adding to their line of in-room caffeinated and decaffeinated coffees, creamers, flavour additives and teas, Cole said.

There is also a close connection between technology, coffee and tea.

“Hoteliers are taking the extra step and many provide take-away cups and lids so you get the feeling of just having stopped at the local coffee shop or drive-through. (Customers) also appreciate a hotel that provides loaner tablets or PDAs so they can stay connected while carrying their beloved morning brew,” Cole said.

Climate alert

Rising temperatures and climate changes among the already warming coffee growing regions are of definite concern for importers and suppliers, as conditions are driving up prices.

“Weather patterns are changing and having negative affects on coffee production. The price we pay for coffee will continue to increase over the years and the days of cheap coffee are over,” said Derryl Reid, owner of Green Bean Coffee Roasters.

He said that in certain areas, those higher prices are resulting in a hit on the environment, as land is being clear cut to bring about higher yields to get coffee beans to market quicker.

“Sadly, this is being done in very fragile ecosystems. This causes soil erosion and loss of habitat for native species of plants and animals. It has the farmers more reliant on fertilizers and pesticides.”

Amid these price increases, Gerry Docherty, chief operating officer at Good Earth Coffeehouse, a 35-unit chain operating in Western Canada, said growers are taking this as an opportunity to “produce higher quality crops,” resulting in a longer-term supply able to meet world demand.

“At the same time, you will see farmers attempt to differentiate themselves by being more environmentally-friendly in their production processes and giving back to the communities in which they operate,” said Docherty.

Evolving growing methods

More coffee drinking has forced a change in growing techniques, with old (and slower) picking methods just not cutting it anymore.

“Years ago, most coffee was handpicked on mountainous terrain because only donkeys could navigate the steep slopes,” said Jenner. “That has changed as consumption increased and the planting of hybrid varieties that will produce quicker.”

Known as ‘sun coffee’, Jenner said they are planted close to sea level where they are mass harvested in direct sunshine. “Because there is no shade, heavier use of pesticides is required,” he said.

Sustainable and fair trade coffees are the future of the industry, according to Madden. “More and more roasters are working direct with the farms in producing regions securing entire crops,” he said.

“In many regions, coffee production has become more mechanical using machines rather than by hand. (However), the tried and true method of coffee producing (by) hand picking is still the norm.”

Dalton said Williams Fresh Cafe customers are “very concerned” about the sourcing of coffee and tea, something that was not the case just three years ago. “We will need to ensure that we move our coffee and tea offerings to satisfy their desire for fair trade, organic and healthy,” he said.

“The shift lies mainly with farmers and their distribution methods. They’re more vertically integrated than ever before. Good quality coffees go to market directly.”

Docherty said changes coming about in the industry are due to the customers demanding it from growers. These include more transparency in their growing techniques and a move to sustainability, he said.

“Farmers are taking greater care for their environment by building wastewater treatment facilities. We are also seeing greater contributions back to the communities in which these farmers operate. Some of the farmers we purchase from are building schools on their plantations,” Docherty said.

Reid confirms that farmers are “changing the way they grow, harvest, sort and dry coffee” to achieve current standards for specialty coffees.

“The demand is mostly for organic, shade grown, higher altitude coffees, grown on small farms that have a mixed production of crops,” he said.

Taking home brew coffee to a new level

Last year saw a huge growth in the home brew coffee market, led by companies like Tassimo and Keurig, which give coffee drinkers access to specialty coffees without leaving home.

“The single cup coffee maker has made it easy for consumers to try different types of coffee, and the more that people are exposed to different tastes, the more we see guests looking for something other than the typical dining room cup of coffee,” said Dunne. “They have significantly changed the market (and) this is why everyone wants to get involved,” said Madden.

“As home consumers jump on board, and they are in droves, companies such as Tim Hortons, The Second Cup and McDonald’s need to be aware of the potential this market brings.”

With such incredible growth, Reid at Green Bean believes the single cup market is not sustainable in the long term.

“They will eventually go the way of the bread machine and the George Foreman Grill, and will be collecting dust in the garage. They are no doubt very popular now, both with consumers and many coffee companies,” he said.

However, Reid said they come with a huge cost that consumers need to keep in mind.

“Firstly, on the environment, they are over-packaged and create a ton of waste. Secondly, the consumer is paying four to eight more per cup compared to the traditional home brewing methods, and that’s why coffee companies love them.”

Serving tips from the pros

“Have ongoing training for your staff and focus on developing good, consistent industry standards. Good coffee is something we can all enjoy and there is no reason to be pretentious about it. Be friendly; meet your customer’s level of expectations with product, service and education.” — Derryl Reid, Green Bean Coffee Imports.

“Very simple good coffee purchased from reliable sources has to be prepared fresh. Use the correct amount of coffee for the amount of water you are using and never let the coffee sit. Twenty to 30 minutes when brewed into a glass bowl on a warmer (Tim Hortons has this right), or one or two hours in a thermal server.” — Gary Jenner, Nova Coffee.

“Only serve a coffee that you would be thrilled to have yourself. If not, do not serve it.”— Vince Piccolo, 49th Parallel Roasters.

“Customers know more than you think; don’t take your coffee or tea service for granted.” — Ryan Dunne, Fairmont Winnipeg.

Tetley Tea recommends that tea be served at 98.5 degrees and that tea be allowed to brew in the cup for three to five minutes before drinking.

Tea Tidbits

In 2011, specialty tea sales in Canada increased five per cent to just over $116 million.

• Overall tea sales in 2010 were worth $393 million in Canada, with $163 million of that sold in Ontario.
• Hot tea is #5 on the list of the most popular foodservice beverages, ahead of juice and just after tap water. 
• Worldwide, tea is second only to water as the most consumed beverage, even more than coffee. 
• Hot tea service in the foodservice sector increased four percent in 2011, compared to 2010 numbers, and a consistent 3.5 per cent annual growth for the last five years. This makes it the fastest growing beverage in terms of total foodservice sales.

* Information courtesy of the Tea Association of Canada. Commissioned by the Tea Association of Canada, an NPD Group survey in 2011 found there is an opportunity for restaurant operators to boost their sales.

Results from the study found that while the average tea drinker had an average 6.56 cups of tea weekly, very little of that was ordered in restaurants. NPD discovered that “the majority of tea drinkers feel that restaurants are not doing a good job when it comes to serving tea, rating restaurant tea offerings relatively low to extremely low.”

“We found from our study that tea drinkers are passionate about how they want their tea served,” said Vince Sgabellone, a restaurant industry analyst with NPD in Toronto.

“At casual dining restaurants, 31 per cent of tea drinkers told us they order tap water rather than get a poor cup of tea,” he said.

The report suggests the lack of tea sales at restaurants is due mainly to limited top of mind consideration, poor quality, little to choose from and poor execution.

NPD said restaurant owners can boost sales by printing the entire tea selection on the menu, offering servers better education, allowing them to make suggestions to diners, and promoting tea with promotions and in-store displays.

“Research confirms that consumers are more interested in drinking tea than ever before,” explained Louise Roberge, president of the Tea Association of Canada.

“They are interested in trying a variety of teas and they want to be served a good cup of quality tea when they go out. We encourage tea lovers to demand the best.”

The study found that proper serving is also important to tea drinkers—tea should be served in a teapot, at the proper temperature and in the proper cup.

** Originally published in RestaurantNews.com and Ontario Restaurant News (Volume.27, No.1) by Chris McGregor, Ontario Restaurant News' Contributing Writer, February 21, 2012.