Espresso 2.0: how Big Coffee is trying to keep up with the caffeinated masses

Coffee culture and its dregs
George Clooney in an ad for Nespresso

George Clooney’s face has been splashed all over Europe for years as Nespresso’s pitchman

 

Friends came to stay with us recently. Among their suitcases and belongings, they had a cute, quilted shoulderbag, which they plunked on the kitchen countertop. Out came sleeves of aluminum pods, each one a pre-ground single-portion serving of coffee. Then a milk frother. And finally the Pixie, a sleek, pint-sized machine. It turned out this was a smaller version of what they use at home, the Citiz and Milk. The Pixie, my friend explained, a tad embarrassed, was their travel-sized Nespresso machine. It accompanied them on road trips.

My friend apologized for imposing another appliance on my cluttered kitchen counter. “No messy grounds,” she offered by way of explanation. “Besides, even he can use it!” she added, glancing over at her uniquely disastrous-at-any-type-of-cooking husband. Indeed, all you had to do was pop a capsule into the top slot, push a button, and out came an espresso with a decent-looking crema floating on top. Even the spent capsule dropped automatically into a holding drawer.

At first, I chalked The Pixie up to the gadgety eccentricity of our coffee-crazed friends. But soon after, I couldn’t ignore other clues that this “single-serve” java culture was breaching the levees long held by workaday automatic drip machines and the nerdish luxe of home barista contraptions.

Last year, Nespresso launched its first big North American television ad campaign just in time for Christmas.

Penelope Cruz seductively lisped over and over again how “just one touch creates the perfect coffee.” George Clooney’s face has been splashed all over Europe for years as Nespresso’s pitchman. More recently, John Malkovich has joined Clooney in the company’s TV ads. You can view their work on YouTube.

At the same time, other companies were amassing their lines of single-serve capsules and delivery devices—at all price levels. Keurig, Tassimo, Bosch, Cuisinart, Krups (Nescafé), Sears, Black & Decker, and other brands overtook shelves at Williams-Sonoma, Crate & Barrel, Home Outfitters, The Bay, Future Shop, and Canadian Tire.

Everywhere — everywhere! — kitchen and housewares stores had pop-up ‘espresso boutiques.’ Perky sales clerks were at the ready to demonstrate just how easy it was to brew a foolproof cup. Not to mention the growing line of ‘must have’ accessories, from carousels that arranged your capsules in a twirling, pleasing manner to matching serving cups. In grocery aisles, those little five-gram single-use capsules were crowding out regular beans and bags of ground coffee.

As 2012 came to a close, even Tim Hortons and Starbucks threw their hats into the ring, offering single-serve at-home versions of their trademark brews for devotees who could no longer be bothered to wait in the morning lineups.

The skeptic in me assumed that this was a well-orchestrated campaign where the tail was wagging the dog—that clever marketers were creating demand out of thin air. But with a quick look at the research statistics, I soon realized that Big Coffee was merely trying to keep up with the fickle whims of the caffeinated masses.

According to the NPD Group, a market research company that tracks restaurant and consumer food trends, over one quarter of us are drinking more cups of joe at home, and less in restaurants and cafes, partly to save money. And as we do, we’re going berserk for the single-serve machines. Even before 2012 was over, NPD reported that single-serve machines had become the second most popular coffee makers at thirty-one percent of the market share and the Canadian market for machines alone had reached $113.2 million in sales, a growth of fifty-eight percent over the previous year.

Josh Hockin, the 2011 Canadian National Barista Champion, is director of training and quality control at Transcend Coffee, a craft roastery with two cafés in Edmonton. When I asked his opinion on these machines and this trend, he used words like “burnt,” “thin,” “bitter,” and “uninteresting” to describe the espresso that a plastic machine could produce.

Without fairly expensive equipment, and without a lot of training and experience, “brewing espresso at home is actually pretty hard,” Hockin said. This is why he thinks there’s been a parallel growth in the business of at-home specialty coffee and its mass-market contender of single-serve systems.

Hockin cautions that single-serve contraptions are not a great choice, though he understands the convenience and the lack of mess. For what they are, he admits, they produce consistent coffee if nothing else. Of all the brands, he credits Nespresso as being  “the best at what it does.” (It is the only brand that uses actual grinds in the capsule and not an instant.) But it’s definitely a compromise. “When was the coffee roasted? Probably a year ago.”

Poul Mark, Transcend’s founder and owner, added that the “single-serve revolution” has been the dominant topic of North American coffee conferences for the past two years. “Obviously, we’re not fans,” he told me, concerned not only as a business owner in the specialty bean trade, but as a lover of quality, hand-roasted coffees. He pointed to the massive money being made on what are at best mediocre beans, fuelling the “ridiculous growth” in this retail segment, and encouraged me to consider the cost of the product inside those little capsules.

I did the math. Single-serve capsules cost between 50 to 75 cents each for five to seven grams of coffee. This means that the cheapest coffee inside a capsule prices out at about $100 per kilogram or $45 per pound. Transcend’s most expensive beans sell for $43 per pound, while the majority of their single-source fair-trade beans sell for $25 per pound. With relatively cheap machines, the capsules are the real bonanza for these companies. It’s analogous to the model that printer companies developed to sell us cheap machines that require expensive ink cartridges. No wonder companies like Nespresso could afford George Clooney and Penelope Cruz to pitch their products.

The Bay in Southgate Mall in Edmonton has one of six Canadian Nespresso Boutiques. The other five are tucked in as stores-within-stores at select Bay locations in Toronto, Yorkville, Montreal, Quebec City, and Vancouver.

The Edmonton boutique manager toured me through the various machines, distinguished by their minor differences in shape, the colour of the exterior molded plastic, whether there was a milk frother attached or not, and price. It appeared that you could pay anywhere from $199 to $1599 for essentially the same appliance. Sleeves of shiny aluminum casings in palettes of colours like makeup displays were the eye-candy at the “capsule bar.” A sleeve of ten servings ranged from $6.80 to $7.20.

Dozens of people were browsing the glossy plastic machines alongside me, merrily buying indigo blue and scarlet red capsules. There was a sophisticated feel to the whole affair. You were part of a club, literally, with membership discounts and loyalty perks. Nespresso even has its own hip product-placement magazine. Glossy stories on chefs, exotic destinations, architecture, and art were layered in between soft-focus close-ups of machines, capsules, and accessories. There was an article about the Nespresso-sponsored Team New Zealand’s twenty-two metre Catamaran in the most-recent America’s Cup. I lost count of the full-page ads for watches.

When the moment came for a taste-test, I chose a decaf, reasoning that if such a machine could extract a superior decaf, I would be won over. Sadly, I was not. The coffee was thin and lacked the finish that a proper machine can extract from good, freshly roasted beans, even decaffeinated ones.

I left the boutique asking the obvious question: Was good marketing and convenience enough to make 2013 the year of the single-serve revolution? Or would quality carry the day, and make this year’s machines next year’s yard sale items?

Of course, who’s to say the coffee war will even be fought on quality? It’s losing ground already to the personal microeconomic decisions we are making every day in our downward-facing economy. We still love our espresso drinks, but at $4 or $5 per latte, they’re getting harder and harder to justify.  Single-serve lattes, macchiatos, and cappuccinos seem to be the new affordable luxury, with the added bonus of at-home convenience and affiliation with Clooney, Cruz, and Malkovich.  The question, in the end, may not be whether it’s as good as a top-notch barista-made espresso, because, of course, it isn’t. The point is that, for many, the actual quality of the coffee might not matter, and the coffee companies have figured this out.

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