German coffee brand Tchibo arrives in the U.S.29 Sep 2020
Tchibo is debuting four of its blends at retailers throughout the U.S. Midwest as part of a pilot program that will determine the viability of a nationwide rollout at an unspecified later date.
The German coffee brand will begin its pilot in October at a variety of retailers in Illinois, Indiana, Iowa, Ohio, Michigan, Minnesota, Missouri and Wisconsin where it will sell four blends: Morning Blend, Colombia Origin, Classic Blend and Röstmeister. These flavors will be available in both whole bean and ground formats for prices ranging between $9.99 and $17.49.
Coffee consumption in the U.S. has been on the rise in recent years with Americans drinking the most coffee since 2012, according to a survey from the National Coffee Association. At the end of last year, 64% of U.S. adults enjoyed a cup of coffee daily.
This growth in the U.S. coffee market has prompted big chains from Coca-Cola to Nestlé to invest in the space and snap up well-known brands – Coke bought the U.K.’s Costa Coffee for $5.1 billion in 2018 and Nestlé bought Starbucks retail products the same year – as well as smaller, artisanal options to pad their portfolios.
This ever-increasing demand for a caffeinated pick me up has led to the International Coffee Organization predicting that coffee consumption will soon overtake global production. However, not only does the coffee industry have to contend with a dwindling supply due to demand, but climate change has had a significant impact on production in recent years. Sustainability in the coffee industry has long been under scrutiny. Climate change is slowly chipping away at the landmass available for production and drought has repeatedly curtailed overall supply.
Nevertheless, this reality has not yet affected demand. Earlier this year, Reuters reported that when borders began closing due to the pandemic, manufacturers and retailers were stockpiling coffee to equip themselves to outlast a potential shortage of the commodity. Although this approach caused future prices for coffee to spike over 15% in May after coffee prices had previously hit the lowest levels seen in a decade, sales of coffee continued to rise. IRI data from the period showed coffee spending in France and Italy rose during that time period.
Tchibo is coming into the American market at a time where coffee continues to be a hot commodity and is reaching a more affordable price point. The World Bank shows that coffee prices have been declining steadily since their spike in May and are now below the lows seen this past February. With prices nudging toward more affordable, a brand like Tchibo that produces blended coffee at an accessible price point may not be as appealing to consumers that are seeking a high-end experience with their coffee. The National Coffee Association published data last year showing that more than half of all coffee consumption is now gourmet coffee.
Still, the economic reality of the U.S and the continued elevated numbers of unemployment claims has a good chance of changing consumers’ tastes long term. As such, a brand like Tchibo that has the cachet of a European brand but remains affordable may find itself welcomed with open arms by American consumers.
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