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The elevation of the plain old cuppa Joe to a work of art has been years in the making. No longer simply a morning jolt, coffee and its espresso permutations have become beverages that are enjoyed throughout the day, and ones which have, for some, been promoted to the highest levels. Through industry efforts from producers and roasters to retailers and The Specialty Coffee Association of America (SCAA), consumers have come to expect much more from their cup of coffee.

As coffee becomes more pervasive in our culture, so has consumer desire to understand more fully what it takes to prepare a quality cup of coffee. Hand in hand with growing consumer understanding of the nuances in coffee tastes and flavor profiles is the knowledge that the equipment used to produce coffee plays an irreplaceable role in the beverage's final taste.

Retailing the equipment required to prepare coffee (we're talking the electric stuff) has posed a great challenge for specialty retailers. The market is replete with makes and models of coffee makers and espresso machines, to the extent that competition for sales is strong. Specifically, most independent specialty retailers don't have the deep pockets necessary to purchase large volumes and receive discounts, as do the department stores or mass merchants. This, coupled with the fact that so many distribution channels compete with each other to make the same sale, has forced many specialty kitchenware and coffee retailers to nearly abandon the category. More often than not, these retailers say, "I carry a coffee maker not because I make any money from it, but because I have to if I'm in the coffee business." To them, the coffee electrics category has turned from a potential windfall to one that consumes shelf space, offers small margins, and instigates stiff price competition — a competition they don't often win.

But manufacturers disagree, citing a wide variety of products in the market that should enable specialty retailers to discover their niches and make the category profitable. Their suggestion: high-end professional models work best in the specialty environment where staff can pay more attention to the customer during the sale.



Stepping Up

A recent International Housewares Association (IHA) consumer survey showed that a whopping 26 percent of U.S. households who own an espresso or cappuccino maker purchased a new one in the past year. Similarly, 25 percent of households purchased electric coffee makers last year. With a quarter of households replacing their electric coffee or espresso brewing machines, one might infer that they are stepping up in quality.

And, it is that step up in quality that both manufacturers and specialty retailers are banking on. As consumers learn more about the flavor profiles of coffee and the right and wrong way to brew it, they begin to realize that their equipment is an essential portion of the equation.



Coffee Makers

Small retailers have always had a tough time selling basic coffee makers since discounters and mass retailers generally price coffee makers so much lower. Yet once the retailer takes the coffee maker category up a few notches, it becomes a completely different picture. It now becomes a category associated with features and benefits.

While the consumer is much more erudite about how essential the coffee maker is to the coffee's final taste, most aren't really interested in the technical aspect of how that is accomplished. More salient to the sale is how convenient it is for them to brew a great-tasting pot of coffee. That is the turning point at which the features and benefits become an important part of the coffee maker sale.

There are a multitude of price points in the category, with offerings stepping up from $50 to $70, $90, $150, and beyond. As the prices rise, so do the features that count to the consumer. For instance, a clock is almost a necessity on a coffee maker these days. Other "must-have" features include thermal carafes, preset brewing times, gold filters, and water filtration, all of which add to the coffee maker's cost, but also to its convenient use. Consumers are much more willing today than ten years ago to make the trade-off and pay a higher price for convenience and quality.

Although many of these features have become standards in the category, new features are always being added to upscale machines with consumer convenience in mind. Coffee makers with built-in grinders hit the specialty market about five years ago. An instant success, these machines offer consumers two appliances in one, not only freeing up space on the kitchen counter, but also contributing to the overall convenience of brewing quality coffee.

Enhancing the machine's versatility, milk frothers have been incorporated into some coffee makers. Paralleling the increasing popularity of cappuccino, the machine is capable of producing a variety of beverages. Stand-alone milk frothers recently hit the market aimed at consumers who already own a quality coffee maker but who desire the ability to conveniently make cappuccino as well. Niche items, these electrics allow specialty retailers to distinguish themselves from the competition.

Other interesting twists on products in the market include the cordless electric French press. Taking the popular press pot method one step further, this new coffee electric shuts off once water is boiled. The user then fills the press with coffee grounds and allows them to sit until ready before plunging the filter to the bottom. For cordless serving, the press pot can be removed from its electric base. Addressing the need for convenience on the go, a new to-go coffee maker brews directly into one or two travel mugs, yielding travel-ready coffee. On the nostalgic side, electric percolators have made a comeback. But these new versions make high-quality coffee much better than those of our grandmothers.

Merging the grinding and brewing of both coffee and espresso has resulted in another new trend in coffee electrics — fully automatic coffee and espresso makers combined into one unit. Comprising a category that didn't exist until a few years ago, these machines incorporate a built-in grinder and a doser tamper, and with the push of a button, grind the correct amount of coffee for coffee or espresso by the cup. Though these machines can retail for anywhere from $500 to $2,000, as one manufacturer pointed out, "You'd have to sell a lot of $20 coffee machines to make the same profit you can earn with a $900 machine." With the higher-price point machines becoming a major purchase, retailers must treat them as such. The customer expects more service when making a $1,000 purchase and by delivering the machine and setting it up in the customer's home, retailers gain points with the customer.

The coffee electrics category has posed a challenge for traditional coffee café retailer Caribou Coffee Company based in Minneapolis, Minn. Since the company focus has traditionally been on beverage sales, selling coffee electrics has been an uphill battle. "The category hasn't really done well for us in terms of velocity of sales — they have been pretty modest," said Chris Toal, director of marketing. "In general, coffee equipment has not been among our best-selling items. We tend to do better with coffee mugs because the nature of our business is beverage sales. However, being a premium coffee retailer, we feel we should offer some electrics to our customers."

Toal said that consumers frequently ask why they can't make as good a coffee at home as they can get at Caribou. "Our objective is to help them with that problem," he noted. A few years ago, Caribou carried three or four different coffee makers, but felt that a more focused offering would prove more responsible in terms of inventory. It would also clarify the purchasing decision for the consumer seeking a coffee maker.

"Our intent was to preselect for the customers," said Toal. By collecting coffee machines from major manufacturers, Caribou set out to test brew times, water temperatures, and all the mechanics of the machines, plus conduct the all-important taste test. Toal explained that they did several flights of taste tests with a variety of coffees. "We tested brighter and light coffees such as Kenyans, along with a darker coffee like Sumatra, as well as our Caribou Blend. Ultimately, we narrowed it down to one vendor," he said, noting the service level of the manufacturer was also a determining factor in the final decision. "We wanted a manufacturer we could rely on to stand behind the product, as well as be reliable in deliveries."

All the excitement surrounding the coffee-brewing category in the past decade has helped advance coffee brewing from being taken granted by customers to becoming a central focus of their homes' small electrics. The coffee machine has been moved from the back burner to become an essential kitchen component.



Espresso Machines

While a coffee maker resides on most kitchen counters, the number of households with espresso machines is considerably smaller. According to the IHA, 11 percent of households own an espresso or cappuccino maker, compared to 78 percent of households who own an electric coffee maker.

Why buy an espresso machine for home when you can get your beverage perfectly brewed at the local café? Espresso has become so popular that many consumers wish to consume espresso beverages all day long.

Once again, the two key issues in consumer satisfaction are: (1) the quality of the final product and (2) the convenience of use. The traditional espresso maker requires the consumer to understand a whole host of variables — from proper grind to tamping to extraction — in order to produce a café-quality espresso. Oftentimes, the results were less than satisfactory. And, since the price paid for an espresso machine didn't prove to be a good payoff, back to the corner café they went.

For this reason, the espresso machine category has enjoyed greater success at the high end of the spectrum. Most consumers first purchased a steam espresso machine and after a few uses, realized they were unsatisfied with the results. This trend would lead one to believe the espresso craze has waned.

However, while perusing The International Housewares Show in January, I was surprised to see a glut of introductions in the home espresso machine category, particularly at price points of $500 and above. There was definitely a movement toward fully automatic machines.

Are consumers really so interested in brewing espresso at home that they will pay several hundred, even thousands of dollars for a home espresso machine? Resoundingly, manufacturers answered "Yes!"

"Espresso has gone beyond trendy," explained one manufacturer. "Espresso is so popular that consumers are now willing to pay $600 and up for an espresso machine."

The three criteria for success in the category are: quality results, convenience, and eye-catching design.

Consumers want a quality, yet easy-to-prepare espresso. To meet those demands, home espresso machines in all price points were introduced, but upper-end ones particularly focused on café-quality product and convenience.

Just as in coffee makers, consumers aren't interested in the technical side of how the espresso machine works. Instead, they ask two key questions: "Does it work? and "Is it good?" They're not interested in how the machine's insides function, as long as it does what they want — a rich extraction brewed hot — all at the touch of a button.

To satisfy the desire for convenience, several Italian espresso machine manufacturers have designed their products with the U.S. consumer in mind. From a country that prides itself on the professional hand of the barista who effortlessly performs the espresso-making process, Italian espresso machine manufacturers have realized the potential of the U.S. market. Since the majority of espresso drinks served in the U.S. are milk based, successful frothing of milk is an integral part in the satisfaction equation. Many of the new espresso machines at the spectrum's upper end now incorporate easy frothing devices to quell consumer apprehension about making lattes and the like.

Additionally, easy-to-read LCD displays and universal buttons that simplify the brewing process are so simple to understand that consumers can virtually use the espresso machine for the first time without reading the directions. (Of course, we wouldn't recommend that). Buttons denote how long or short the espresso will be and milk is steamed and frothed for perfect cappuccino. Various models even offer indicator lights that show when a mechanism needs to be serviced.

To the specialty consumer, price isn't as important as convenience. "We tried selling less-expensive machines, but they're not as user friendly as the high-end machines," said Shauna Halawith, president and buyer for Phoenix, Ariz.-based Kitchen Classics. "We found our clientele want coffee and espresso preparation to be easy — they don't want to study a user manual."

As for the cost of the espresso machine, Halawith says customers don't even balk at the price. The consumer who is spending money three times daily for an espresso or coffee can pay for the machine in three or four months.

Further helping make espresso preparation and cleanup as convenient as possible is the advent of the E.S.E. system. More than a decade ago, the E.S.E. (Easy Serve Espresso) system was invented by illycaffee, with the aim of making the preparation of good espresso coffee as easy as possible and guaranteeing consistent quality. Because espresso is increasingly linked to serving, the individual prepackaged portions, when used with E.S.E.-branded machines, make preparation simple, convenient, and consistent.

The idea was conceived to utilize new technology for friendly, easy operation. According to The E.S.E. Consortium, the spreading of the E.S.E. standards will have a positive effect on the market by reducing the barriers to entry in the serving market, increase the number of consumer-owned machines, and enlarge margins.

All this high-tech convenience aside, there remains an interest in traditional pump-driven machines for the purists who enjoy preparing espresso the traditional way. While for most U.S. consumers there is no substitute for convenience, these purists enjoy all the processes that surround the making of a quality espresso.

The traditional machines evoke more emotion from the consumer, with their designs being almost as important as their functions. Espresso machines have become a design focus in the kitchen with colors available to complement or contrast with other kitchen appliances. The most popular colors remain black and white, with stainless steel looks following close behind.

Selling these higher-end coffee electrics, even with increased interest from consumers, still requires customer education and service. Much different than the coffee maker category, espresso machines require much more staff support at retail.

"When we first introduced a fully automatic espresso machine priced at $500, it was a hard sell," said Halawith. "Our customers were used to the lower-priced machines and when they came in and saw a machine eight times the price, they were a bit skeptical." Halawith reports however, that following a few months of education, customers have come to understand the higher-end products. "We make them an espresso or latte, so they can see how simple and fast it is," she added.

"We no longer carry espresso makers because they haven't sold well for us," said Toal, speculating that the category required much more staff support during the sale than did a coffee maker. "Our business is based on beverages, with our staff servicing the customers from behind the counter. Selling espresso machines requires the staff to work in front of the counter, and we can't offer that service all the time," said Toal. He did note that competition is also a reason they don't focus on the espresso machine category. "The department stores are constantly having sales in their housewares departments, so we really can't compete."



Grinders

Just as consumers have traded up in quality for their coffee or espresso machines, so have they done with grinders, moving from blade to burr — many with commercial-quality features.

At Kitchen Classics, small hand-held blade grinders are the most popular; however, a high-quality burr grinder is offered as well. "It isn't something that we push, because our grind and brew machines offer the better grinders," said Halawith.

Caribou offers one make of burr grinder for sale, but Toal believes that the consumer still needs to be educated on why a burr grinder is better. "There is a big opportunity in terms of education about grinders," he stated. "The thing that concerns me is the price points. We sell our burr grinder for $39.99, but I've seen many others retail at much higher price points. I think the consumer is more focused on the quality of the brewer than the grinder. They need to be educated that the grinder is just as important a component to the brewing experience. I struggle because I don't see many manufacturers offering a good burr grinder at a modest price point." Consumers have not yet accepted a higher price point in the grinder category like they have in the espresso or coffee maker category. "But with a bit of education, I think the grinder category could withstand an $80 price point," he added.



Home Roasters

For years, home coffee roasting was relegated to what some called the coffee geeks, those so into their cup of Java that they delved deeper into the roasting process to create different blends and roasts to meet certain taste profiles. The home roaster, enjoying the thrill of home coffee roasting, was fanatical enough to learn about the process.

While not a new science, home roasting only found a foothold among true aficionados in the U.S. in the late 19th century. Currently, there is a revival of home coffee roasting, and it's attracting more and more consumers.

At first thought to be only a small niche market, manufacturers of home coffee roasting equipment are now finding that through education, both in-store and through the multitude of home roasting Web sites, it is growing. "Consumers have learned about freshness and this is their next step," explained J.B. Blocker, who calls himself the Caffeine Cowboy. "It is a natural progression. First, consumers moved from preground coffee, grinding their own whole-bean coffees. The next step is home roasting," added Blocker.

Retailers have been wary of the roaster as well, concerned that it might cut into their bean or beverage business, but Blocker, who once ran his own coffee shop and now spends his time lecturing about coffee, believes the home coffee roaster is a tool to be used to teach your customers culinary sensations.

Retailers must realize that if they offer home roasters, they become the mentors of their customers. Offering customers the knowledge and equipment to roast at home opens a host of new opportunities at the retail level. "Once customers roast their own coffee, the retailer has the opportunity to sell grinders, whole beans, and the coffee and espresso machines," he explained. "Home roasting helps consumers learn the coffee and understand the progression of the roast, but also adds to their appreciation of coffee. A retailer can find much success in offering their customers more coffee-related products."



Carving a Niche

In recent years, buyers' habits have evolved to become more refined, along with that of consumers' demands for better quality, convenience, and unique design when it comes to the contents of their kitchens. And, coffee is no exception, particularly if they are investing in better coffees.

The specialty kitchenware or coffee retailer who has struggled in the past to make sense of, and profit from, the coffee electrics category has reason to reevaluate the category. Responding to growing consumer interest in the category, manufacturers are offering a wide range of price points and qualities that make it easier for specialty retailers to create their niches. No longer necessary to adopt a "me-too" approach, specialty retailers can find success, particularly in the high-end of the spectrum. Seek the best of the best and build customer confidence in you as a retailer of high-quality coffee preparation products. After all, you probably aren't carrying the cheapest cookware line in your store.


Read more from our 2001 Coffee Series:

2001 Coffee Series, Part I

Coffee Series, Part II

Coffee Series, Part III

2001 Coffee Series, Part IV