Coffee retailing in Australia & New Zeland is changing - fast

Date Posted:19 July 2016 

We have mentioned in our articles about the current state of the Australian and New Zeland roasted coffee market - it's tough, it's crowded and saturated.

The roasted coffee market is ultra competitive and consumers are spoilt for choice. Unfortunately, it also means that consumers are somewhat confused by the plethora of new brands.

So........how do you navigate through the constant barrage of "we are the best, we source the highest quality and we roast fresh".

For the general consumer, it would appear everyone is shouting the exact same set of core messages.

Just like the gold rush of the 1850's, there are now so many new brands entering the coffee retail market that selecting a trusted coffee supplier has become confusing for coffee lovers with so many exciting, vibrant offerings to sample.

Just 10 years ago there were a handful of recognizable brands but now there is such an unstructured density of coffee brands and labels that customers are unable to identify any true leaders. Yes, some are high volume or high visibility, but being a leader of volume or visibility will not guarantee that it translates into quality, freshness or value - in many cases as the company grows bigger, they lose the ability to control quality and freshness.

In populated Australian capital cities, you can literally go anywhere and be confident of being able to purchase a coffee beverage, day or night within easy walking distance. We call it "coffee anytime, anywhere".

Whether it's watching your children run around the park on a weekend footy match or attending a social or charity event in public spaces, you are almost guaranteed that not far away will be a cafe, kiosk or mobile coffee van, an in-house venue outlet, any time of the day or night able to pump out a coffee.

Competition has been good for the coffee industry in general - stimulating innovation and pushing providers to step outside of their comfort zones to constantly improve the general standards for their product offerings.

With so many brands, a company can no longer sit on their hands or do the same thing month after month and year after year. If you are not constantly improving you soon become obsolete or irrelevent in this ultra competitive coffee market.

At the same time that product quality has improved, so too has the expectation and demands of the typical coffee drinker.

In fact, the Australian and New Zeland coffee consumer is now smarter and more informed about the key fundamental concepts of coffee freshness and quality. It's not surprising to learn that Australian and New Zeland coffee drinkers are some of the most savvy and discerning groups in the world when it comes to identifying coffee quality and value.

This point becomes clearly obvious when we travel overseas and struggle to find a coffee beverage comparable with what we are accustomed to drinking back home - we have all heard the story before from our friends and family travelling overseas - the holiday was great, but the coffee was crap - so glad to get home to some decent coffee.

Retailing of roasted coffee beans has been wrong for too long - things are changing rapidly

Unfortunately, some segments of the coffee supply market - such as supermarket and many styles of roasted coffee bean retail outlets, they stubbonly refuse to see the need for change.

Supermarkets are typically retailers of many products of which coffee is just one. They don't have the focus or attention to improve their quality benchmarks because for coffee as they are committed to filling the basic needs of making their important margins and trading on the convenience of their outlet - the benefits of bricks and mortar retailers.

For our business, we have been rather fortunate these monoliths of inferior coffee retail - supermarket and retail stores -  continue to fail in managing coffee quality, so it's helped us grow and continue to create distinctly clear points of difference in the retail coffee beans supply market.

Many of these volume based, mass-produced coffees sold in supermarkets and retail stores will occasionally freshen up their external packaging every couple of years with a more modern style, run advertising and promotions to keep you looking at their product brand on the retail shelf, or they attempt to generate marketing spin about why their product is the bes - but the reality is this is just pure smoke and mirrors - they are locked into the same supply models.

European brands of coffee are particularly adept at using these deceptive tactics to keep you believing that their product has inherent quality - tricks like advertising with beautiful people or luxurious settings to create the illusion of a premium quality product. Ironically, many of the imported European brands source the lowest quality raw coffees as they are constrained by cost in their domestic markets.

Recently many of the European coffee brands available in Australia or New Zealand have seen their market share contracting. Some have even disappeared, beaten by superior local offerings. In response to the quality and freshness of locally roasted coffees, many of the imported European brands have started private label or contract roasting from local Australian and New Zealand roasters.

The reality is that most of the imported European coffee brands are still pushing their same low-grade, commodity rubbish due to constraints from budget sourcing. The only thing positive is that at least it's just a bit fresher thanks to the local roasting (well, in theory it should be fresher, but if the product is sitting in warehouses for periods of time it will be stale!.)

Traditional coffee retailing (Supermarkets, Shops, Cafes, etc.) will always struggle to compete against us because of key distinctions :-

  • They can't improve product quality because of contracts or wholesale margin constraints from buyers that drive down the unit price with little regard for quality. They are locked into a terrible and frustrating cycle of lower price and lower qualities from the retail world's dangerous flirtation with constant discounting. Just Fresh Roasted do not have a middle-man trying to extort the majority of the sale price as margin and therefore Just Fresh Roasted have complete freedom to source the best qualities and roast them in a way that contributes to quality, not a volume or price metric.
  • Coffee is a fresh food and traditional retailers cannot manage freshness the same way that Just Fresh Roaster can. Volume retailers buy products that are roasted to stock, stored in hot warehouses for weeks, ship to retailers and they sit products on shelves for ages or forever - all the time the product degrades, day after day. Just Fresh Roasted's products are roasted, packed and sent to you fast with no intermediate storage or delays - in this regard it's absolutely no contest and our speed is astonishing and difficult (read impossible) for traditional retailers to mimic.
  • Supermarkets and many coffee retailers just don't get it when it comes to fresh roasted coffee - they don't change their ways, they lack innovation and largely continue to treat coffee drinkers as fools because they think a 12 month expiry date means it's still fresh.

We started a coffee retail revolution back in 2007 when online shopping was limited to just a handful of die-hard coffee lovers seeking a fresher alternative that offer better quality and value.

Today, we own and operate one of the best coffee roasting infrastructures in Australia - entirely dedicated to quality, speed and precision in the online market.