Four Sigmatic initially gained traction by combining the health benefits of mushrooms with familiar beverages such as coffee. The bitter taste of mushrooms was masked by coffee, which consumers were already familiar with.
Recently, many coffee shops have updated their layouts to include retail sections, selling everything from high-end tea kettles to exotic coffee filters. It’s all part of the emerging, and fastest-growing category of middle-end coffee products: priced below the $20,000+ machines used by Blue Bottle and Starbucks but above the instant at-home coffee makers many consumers now have on their countertops.
While coffee is the world's second most-traded commodity, after oil, a growing number of consumers want a very non-commoditized experience. In fact, while coffee has been consumed for half a millennium, it wasn’t until roughly 50 years ago that the coffee world generally started to differentiate by origin or beverage type. Until then, instant and undifferentiated coffee dominated the market. Many restaurants offered free refills.
Today, specialty coffee hasn’t just taken over commercial coffee houses but also made its way into the home in the form of specialty beans, advanced grinders, special filter systems, and purified water. Part of this category is the single-dose grinder. While most coffee grinders need to be cleaned each time the bean type is switched, single-dose grinders grind just one serving and don’t leave any residue. It helps move away from needing to set up a whole bag and finish it over the course of weeks, letting consumers more easily alternate between different flavors and setups.
From single dose grinders, to coffee pucks, the influx of specialty coffee and equipment into households has gained considerable momentum.
Gooseneck kettles are praised for their pour control; the long, narrow spout allows a steady, even distribution of water, which some coffee preparers say is essential for making the perfect cup. Many of them are sold as part of an electric kettle system, with down-to-the-degree temperature control. Part of the appeal of great coffee gear is risk aversion—if you don't trust your nose or your tastebuds (especially in a sleep-deprived state), you can trust a process you've paid up to get exactly right. Like sous vide machines, they’re a distinctive-looking way to do a normal food preparation activity better, and that package of appearance and output reassures the user.
One surprising sales channel for gooseneck kettles is coffee shops themselves, an echo of the growth strategy behind oat milk. Blue Bottle Coffee prominently displays and sells an expensive gooseneck kettle in stores and on their site. This is a way for them to emphasize the premium quality of the experience—to get that $3 cup of coffee at home might require the Blue Bottle x Fellow Electric Kettle (almost $200); while selling the customer a gooseneck kettle is a substitute for selling them coffee, offering them an expensive kettle is a complement to the coffee.
Coffee is a massive industry: Over 2 billion cups of coffee are consumed each day, and Americans drink more coffee than soda, tea, and juice combined. While the coffee shop business has plenty of established players, new entrants are popping up to take advantage of new markets that larger chains won’t touch.
Scooter's Coffee is a coffee chain growing its location count at over 20% annually, through a franchise model that focuses on selling coffee through kiosk-style drive-throughs that have a smaller physical footprint than a traditional store, and a startup cost roughly half that of a Dunkin franchise.
Scooter's has identified a low-cost model that allows them to launch locations in places that competitors can't afford. For Scooter's, this means building smaller stores that are purely drive-through, meaning they save on both startup costs and labor. It’s an attractive deal to someone who wants a side hustle in the restaurant business but can’t afford the startup cost of a larger chain. Many companies have competed with higher-priced brands by letting their customers trade convenience and quality for price; Wish has been able to undercut Amazon on price by selling products to customers who are willing to wait for slow shipping, for example. Scooter’s uses the same approach by starting smaller stores in more out-of-the-way locations.
This means that Scooter's can enter a market too small for a Starbucks and Dunkin—and if that market grows to the point that it can support a competing chain, that chain would then be splitting the market with an incumbent, worsening its economics. That model works for stores in dense places where there's a high value to getting the quickest possible cup of coffee on the way to work. It’s important for coffee companies to be cognizant of what other companies do, because it’s a fiercely competitive market; Dunkin’ Donuts changed its name to Dunkin’ in 2018 in recognition of the fact that 60% of its revenue comes from beverages, not food.
Single origin coffee comes from one particular area, instead of being blended with beans from various locations. This kind of coffee is gaining popularity as it lets people experience the distinct flavors unique to certain regions. Moreover, consumers appreciate knowing the exact source of their coffee, which is important for those who care about environmental issues and want to support small-scale farmers.
Keyword | Graph - 5 Years | Growth - YoY | Search Volume |
---|---|---|---|
Specialty Coffee | 24% | ||
Single Origin Coffee | 16% | ||
7 Brew | 147% | ||
Scooter's Coffee | 4% | ||
Electric Coffee Kettle | 11% | ||
Gooseneck Kettle | 19% |