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NCA's Nelson Provides Overview Of Workplace Coffee Opportunity

Posted On: 10/25/2000

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NEW ORLEANS - "There will be many opportunities presented to the industry and to each of you as we move into the new millennium," stated Robert F. Nelson, president and CEO of the National Coffee Association, during a seminar held at the National Automatic Merchandising Association National Expo.

One of the prime challenges and great opportunities facing the industry is to increase coffee consumption. "There is no one simple solution to this. However, I think that if we understand the marketplace and the external environment in which we operate, and if we understand customer expectations, including quality, coupled with improving the image of coffee, I think we'll be well on our way to meeting that challenge of increasing coffee consumption," said Nelson.

He explained that NCA's prime function is to protect, promote and improve the industry through educational programs, an ongoing conference and communications program, and government relations efforts on a national and international basis. NCA also conducts extensive research projects, and much of Nelson's presentation, he said, was based on an NCA study entitled "National Coffee Drinking Trends." Upcoming NCA studies will focus on specialty coffee; young adult consumers; and the ethnic consumer, three areas in which NCA sees notable growth and opportunity.

In the 1990s, coffee transitioned from being a staple beverage to a social and gourmet beverage. What this did for the industry, according to the speaker, is create an expanded menu of coffee products, a more elastic price range for coffee products, and an expanded consumer base. Including occasional drinkers, 79 percent of the population consumes coffee, up from 75 percent in 1998.

Coffee consumption increased from 109 million daily drinkers in 1998 to 110 million in 2000, and occasional consumption increased from 32 million to 51 million during same time period, resulting in what is today more than 161 million coffee drinkers.

"In fact, during the past year alone, the number of past-year drinkers increased by about 3 million," commented the speaker. "So without a doubt, I think we are growing the coffee industry and increasing the pie for everybody. The challenge that we have, though, is to convert the occasional consumers to daily drinkers. I think occasional consumers are ideal consumers for coffee in the workplace."

Occasional consumers are those that are less likely to drink coffee at breakfast, and more likely to consume it in the afternoon and evening hours. "Traditional coffee drinkers drink coffee in morning with breakfast or have coffee with meals. The occasional drinker seems to consider coffee as a stand-alone , a key point in the office coffee sector," said Nelson.

Gourmet coffee drinkers, for the large part, are occasional drinkers. "I think the most significant difference between daily and occasional drinkers is age," remarked Nelson. "The occasional drinker is much younger, with an average age of 33; and almost half are under 30, while the average age of the daily drinker is about 50 years old."

Nelson emphasized the opportunity that lies in converting those young adult occasional drinkers, who populate workplaces nationwide, into regular drinkers.

He noted that 86 percent of coffee and gourmet coffee drinkers drink their beverage of choice at breakfast, the daypart that remains the predominant drinking occasion, even among gourmet coffee and espresso-based beverage drinkers.

"If these beverages were more available at breakfast time, I think it would provide a tremendous opportunity to increase sales," noted the speaker. Beyond that, making a selection of high-quality coffee and coffee-based drinks available during the morning and afternoon also would boost consumption and work to make occasional drinking more frequent, he said. The workplace service industries can do this, if they see the advantage.

Nelson shared the details of "Viva Café Forever," an organization made up of coffee companies, coffee organizations and individuals from both producing and consuming nations, whose goal is to increase consumption worldwide.

The "Viva Café 2000" initiative attempts to increase consumption of coffee among 18 to 25 year olds. The million dollar project attempts to identify what taste profiles are of interest to the 18 to 25-year-old group via surveys, tastings, and case studies.

Nelson observed that this initiative, recognizing the importance of the 18-to-25 age group, concluded that improving the quality and availability of coffee in foodservice establishments frequented by this demographic was essential. It was found that many such operations had little interest in quality, rather regarding coffee as a commodity to be purchased as cheaply as possible. So studies were conducted to demonstrate the bottom-line benefits of upgrading quality and presentation; and, as a result, NCA has developed a complete educational program for foodservice.

How does this help coffee service and vending operators? If it is successful, Nelson emphasized, it will increase the number of daily coffee drinkers, and they will want good coffee at their places of work. The operator who can provide it will enjoy greatly increased volume.

The foodservice initiative has included development and test-marketing of new kinds of coffee beverage , new, at least, to most U.S. market areas.

Chilled coffee-based drinks are an example. Nelson noted that in just two years, the number of drinkers of iced and ice-blended coffee drinks has increased from 750,000 to 3 million, doubling in each of the past two years.

Iced coffee beverages, he said, compete head-to-head with the soft drinks that have enjoyed great popularity with younger consumers. They also potentially address an even wider range of potential consumers, including those with different tastes, buying habits and price points. In particular, he suggested, they have vast potential in cold-drink vending machines.

While soft drink machines are readily found just about everywhere in the United States, in Japan they vie for popularity with equally numerous packaged-coffee venders, the speaker pointed out. These Japanese venders often can be adjusted to chill the packaged coffee in the summer, but to heat it in the winter, insuring year-round sales.

The coffee industry's challenge is to make great quality coffee easily accessible through convenient channels, the NCA president emphasized. And the workplace service industries must rise to the occasion.

From 1996 to 1999, the percentage of coffee consumed in the workplace remained fairly stable at 17 to 18 percent. In 2000, however, that figure jumped to 21 percent.

"At same time as we see an increase in the amount of coffee that's consumed in the workplace, we've seen a decrease in the amount of coffee that's actually purchased or obtained in the workplace , until recently, that is," noted Nelson.

In 1996, 62 percent of the share of cups consumed at the workplace came from within the workplace. By 1999, only 54 percent of coffee consumed at work came from the workplace. "The good news is in 2000 we saw a change. The amount of coffee consumed in the workplace, actually coming from the workplace, increased to 57 percent," Nelson said. "What we see here is an opportunity to increase the consumption of coffee brewed at the workplace. The challenge, of course, is to improve the quality and variety of coffee and the convenience of brewing."

Of the coffee obtained in the workplace, employees brew 25 percent themselves; and purchase 3 percent from the cafeteria; 8 percent from vending machines; 3 percent from carts; and 18 percent from other sources.

Coffee purchased from an outside source is broken down as follows: 20 percent bring it from home; 7 percent purchase it at a specialty coffee shop; 5 percent buy it at a c-store; 2 percent purchase it at a donut shop; and 9 percent get their coffee from other sources.

According to NCA statistics, a greater percentage of coffee drinkers in almost every age group consumed coffee at work during 2000 than in 1999, except for 25- to 29-year-olds. The number of gourmet coffee drinkers at work also decreased in the 25 to 29 age range between 1999 to 2000; 23 percent of gourmet coffee drinkers in the 18-years-plus category drink coffee at work, but only 17 percent of gourmet coffee drinkers are drinking gourmet coffee at work. In the 25- to 29-year-old category, 29 percent of coffee drinkers are drinking coffee at work, but only 12 percent are drinking gourmet coffee at work. "To me, this looks like a great opportunity for the office coffee sector," said Nelson.

He pointed to significant lost opportunities for OCS, and suggested that operators should strive to capture more of the market.

NCA studies show that 56 percent of all coffee drinkers are going outside the workplace to purchase their coffee. "All gourmet coffee drinkers indicate that they go outside the workplace to obtain gourmet coffee," said Nelson. "That doesn't mean none of you are selling gourmet coffee. It may mean that, because the coffee is at the office, the consumer doesn't consider it 'gourmet' coffee. In some of our market research, we try to find out what consumers really consider to be 'gourmet' coffee , it has certain taste profiles; it costs a certain amount; it's packaged a certain way. Everyone defines it differently."

The office coffee sector is in an ideal position to increase coffee consumption by improving quality and variety of product, convenience of brewing (such as espresso "pods") and better holding equipment, such as airpots, Nelson added.

"You should educate employers about the benefits of coffee from the standpoint of improved performance," stated the speaker. "Nobody will argue that the scientific research clearly shows that coffee increases alertness. Also educate them about productivity, about time lost at work because employees are out getting coffee."

In 1997, according to the speaker, 35 percent of the population consumed gourmet coffees, and that figure has steadily increased to 53 percent in 2000. Gourmet beverages include espresso and espresso-based drinks (cappuccino, lattè, and cafe mocha), iced/ice-blended coffee, and premium coffees.

He added that 45 percent of the population drinks espresso-based beverages: 37 percent consume cappuccino; 18 percent drink espresso; and 16 percent consume latte (some drinkers, obviously, enjoy several of these choices). Thirty-two percent drink premium coffee.

Gourmet coffee beverages are most appealing to the youngest adults. Cappuccino is most likely to be consumed across all age groups, with penetration particularly strong in the 60-year-old-plus category. Espresso-based and iced beverages have the highest consumption among 18 to 24 year olds; and 25 to 29 year olds are also strong consumers of this category.

Ethnicity also appears to play a strong role in coffee consumption patterns, the speaker added. Caucasians dominated daily coffee and gourmet coffee consumption, but Asians were more likely than any other ethnic group to have consumed espresso-based beverages in the past year, followed by Hispanics. According to NCA data, Asians were also most likely to have consumed cappuccino, espresso, lattè, café mocha, iced and ice-blended and gourmet coffee in past year, followed by Hispanics.

"While more coffee, overall, is consumed by Caucasians, the penetration is higher in these different ethnic groups," Nelson reported. "We also know that the Asian and Latin populations are growing tremendously. So what are we doing to make sure we're targeting these groups?"

Gourmet beverage consumption is somewhat underdeveloped in the African-American community, the NCA president noted. Again, this is an area in which intelligent marketing can produce good results.

Nelson shared with his audience the results of a recent NCA poll of the total coffee-drinking population. Participants were asked whether the quality of coffee they get away from home is "better than it used to be." Almost 29 percent of the total sample agreed with the statement, while 42 percent of the 18 to 24-year-old segment agreed.


Of occasional drinkers, who don't drink coffee every day, but drink it at some point during the week, 39 percent agreed, as did 40 percent of the younger segment.

"Of all drinkers, 61 percent agree completely or somewhat that the coffee they get away from home is better than it used to be; and 68.3 percent of occasional drinkers agree. There is more agreement among 18 to 24-year-olds, and even more among 'occasional' 18 to 24 year olds. This tells us that coffee is getting better. People believe it's getting better as a result of the focus on quality," noted the NCA president. "The issue, again, is making quality coffee readily and conveniently available to the consumer," emphasized Nelson.

He turned his focus to the external forces that impact the coffee business, with government in the forefront. "The coffee industry is becoming more global in nature. International laws and laws of foreign countries will impact your businesses," said Nelson. "What we must do as an industry is organize a strong and united force committed to protecting the industry from excessive government intervention."

In particular, Nelson said, everyone who sells coffee should be concerned with recent proposals for legislation forbidding the import of food products from countries that do not have food safety laws comparable to those of the United States. While these proposals do not target a product that is heated to high temperatures before consumption, neither do they exclude such a product. If enacted, these laws could seriously reduce the availability of coffee.

Moreover, present country-of-origin rules for food labeling exempt coffee because it is "substantially transformed" by the roasting process. Nelson warned that there is some sentiment in favor of eliminating this exemption, contending that the product is not "substantially transformed." The cost of keeping labels constantly up to date with countries of origin of the coffees used in blends that are varied constantly to maintain a consistent taste profile would be astronomical.

NCA works with the World Health Organization, World Trade Organization and European Union under the auspices of the International Coffee Association to improve the quality of coffee around world. The association also works closely with international labor organizations and the U.S. Department of Labor to ensure that coffee growers in coffee-producing countries comply with the labor laws of their own countries.

"Perceived health issues associated with coffee will certainly impact you," commented Nelson. "We have a program to protect and defend coffee's market position by ensuring the integrity of the product. Thousands of papers written in the last generation focus on cardiovascular, women's health and psychological effects of coffee. NCA is the entity that responds to media; our objective is to provide the truth , and the truth is positive." Too many stories are negative, and based on poor science; if unchallenged, they can raise unfounded fears about coffee, he said.

NCA founded the Institute of Coffee Studies at Vanderbilt University, which is comprised of Central American, Brazilian and Colombian coffee experts, with a mission to identify the health benefits of coffee. For example, chlorogenic acids found in coffee can play an important role in treating alcoholism and depression, stated Nelson.

Everyone can help. "Among 18- to 24-year-olds, 18 percent don't drink more than one cup of coffee a day because of a perceived health risk," he instanced. "And 40 percent of people over 60 dont drink coffee at all, because of the same concern. Getting the positive message out can help your business; and you can carry this message to the office sector.

According to Nelson, coffee consumption is on the rise and the numbers are promising; 161 million Americans drink coffee, up almost 71D2 percent from 1998; and the number of cups they drink is up as well.

The industry is turning a corner, and many opportunities await us all to increase consumption in day parts other than morning; in ethnic markets; to capture the young adult market; to convert occasional drinkers to daily drinkers; and to increase consumption in the workplace by educating consumers that quality does matter," concluded Nelson. "You have an opportunity to get back the customers offices are losing to gourmet coffee shops and convenience stores."

NCA On The Web

NEW YORK CITY , The National Coffee Association of U.S.A. maintains three websites to provide a comprehensive resource. offers general information on storing and brewing coffee, and is divided into consumer, industry and member-only sections. offers health and science-related data about coffee. is a subscription service offering up-to-the minute coffee news.