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From the Editor


"They're all part of it. They're all pods, all of them!"


This quote from the classic sci-fi film Invasion of the Body Snatchers could just as easily be a statement from an alarmed roaster, referring to the growing number of converts to single-serve coffee machines.

For small and midsized specialty roasters, there’s reason to be distressed. I know a few “pod people,” and they can’t stop talking about how much they love their machines.

“After my wife’s boss got a Nespresso and offered her a cup, we bought our machine immediately. Now we have no reason to go to a coffee shop,” says a Minneapolis-area coffee drinker in his 60s who uses his single-serve machine to make espresso and lattes. He and his wife go through about 30 pods per week, at 55 to 60 cents a pop. They also purchase whole-bean coffee for a stovetop espresso maker, but say they are put off by $3-a-cup coffee drinks at local coffeehouses and never go out for a cup.

A Portland, Ore.-based coffee drinker in her 30s told me that she purchased her single-serve machine about four years ago. Her husband does not drink coffee, and the machine makes brewing and cleanup a snap. “It’s very easy and fast—the machine heats up within 1 minute—and the coffee tastes good,” she says. “It’s easy to have several different types of coffee around and not have to worry about the coffee going stale. The machine is also super-easy to clean—dump out empty pods and rinse out the tray every week, and that’s it.”
The Portland pod user adds that she has not purchased whole-bean coffee in the past month, though she does still visit cafes for coffee once or twice a week.

These single-serve enthusiasts say that their machines have downsides—there’s the packaging waste factor, plus some machine brands lock users into purchasing one particular brand of coffee pods. Though some machines allow users to pack pods with their own coffee, this method is messy and time-consuming, and counteracts the speed and convenience that these machines offer. And, of course, there’s the cost of the coffee capsules themselves.

“We definitely spend way more” on coffee since purchasing the single-serve machine, says the Minneapolis coffee drinker. He estimates the cost of his coffee purchases—both capsules and whole-bean coffee for his espresso maker—at $1,000 per year.

In a 2012 article, New York Times coffee writer Oliver Strand calculated that Nespresso capsules are loaded with 5 grams of coffee each—which adds up to roughly $51 per pound of coffee. At press time, Stumptown Coffee Roasters was offering a 12-ounce bag of Panama Esmeralda Especial Peaberry for $45 (or $60 per pound).

According to a presentation at the National Coffee Association’s 2012 Coffee Summit, single-serve consumers are willing to pay more for convenience, compared with traditional coffee drinkers. Ross Colbert, who delivered the presentation, is the global strategist for beverages at Rabobank International, which offers financial services to coffee and tea clients around the world. At this point, single-serve coffee still lags behind bagged and instant coffee for at-home consumption, according to Colbert’s presentation. But that’s about to change—and quickly.

Colbert shared results from a recent survey that suggest that more consumers are interested in purchasing single-cup brewing systems. The number of Americans who said they “definitely” or “probably” would buy a single-cup brewer for home use has increased by 45 percent in the past two years. Single-cup coffee sales are projected to more than double in the United States, reaching $8 billion in sales by 2017, Colbert added.

This rapid growth of the single-serve market has prompted Nespresso (a subsidiary of Nestlé) to open boutique bars to showcase its coffeemakers and capsules in the U.S. market. Adding to its presence in New York, Boston and Miami, Nespresso recently opened a 7,500-square-foot bar in San Francisco and is scheduled to open another outpost in Los Angeles this year. These light-filled, modern showrooms that resemble Apple Stores are stocked to the ceiling with colorful coffee capsules and single-serve machines for demonstration.

Frederic Levy, Nespresso USA’s president, was quoted in The San Francisco Chronicle in November saying that capsule systems do not compete with coffee shops because single-serve machines are intended for home use. Speaking for roasters who provide coffee to these shops, I beg to differ—single-serve systems do cut into the market for whole-bean coffee sold through coffee shops. Additionally, the speed and convenience that single-serve machines offer often mean that users can quickly make a cup to take on the go and bypass their local coffee shop on the way to work.

So what can specialty coffee roasters do to keep up with the pod distributors? There are no easy answers. Large or midsize roasters may choose to invest in either a machine that packs pods or outsource the work to a company, such as Pod Pack International, that offers private-label services. But most specialty roasters simply don’t have the capital—or the interest—to join the pod race. For them, my advice is this: Focus on what you do best as a specialty roaster, and emphasize customer service and quality of experience at your shop. Maintain your high standards for quality. And, of course, keep your eye on these budding invaders, lest they snatch some bodies from your shops.

Cheers,
Kelly


 
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