Thursday, May 6, 2010

Roasters question: is great decaf really feasible?

"Is it really feasible for a roaster to offer a high-end decaf (i.e. Micro-lots/with certifications), when the demand for it is only part of an already small market segment (all decaf being 15% of total)?" This was on one of the great questions during the Q&A part of my co-presentation for the Roaster's Guild seminar on decaffeination at the SCAA conference in Anaheim. Reuben Mood of Signature Coffee was the "asker" and he was right on target -- this is also one of the most challenging and frequently asked questions I get as an importer of specialty green decaf.

My answer in brief, "niche marketing and niche pricing". One may ask a car manufacturer, "is it really feasible to sell an outrageously fast sports car with no room for luggage and only 1 passenger?" If your entire system is geared up to manufacture and sell low cost, high volume automobiles, it probably isn't feasible to add the high end, branded coup. But if your current business is selling high end SUVs (like Hummers), it might be a profitable expansion of your business to also sell high end sports cars. [Analogy; if you're already promoting high-end regular coffees that are selling for a premium, it won't take much to include high end decaf.]

To bring the analogy a little closer to home, I believe some crazy guys at Peet's wondered one day if they could build a franchise on coffee that costs $3 a cup instead of a $1 a cup. America was very used to $1/cup coffee. But here we are 15 years later with Starbucks on nearly every corner. They used marketing savvy and the let the consumer decide. The same will be true for decaf. Find a great decaf, promote it as premium and make sure you put a price on it that earns you, the roaster, a profit. Our data show that decaf consumers are extremely price elastic and loyal.

Stay tuned for the next question in this series...


4 comments:

  1. Your excitement really comes through on this post. Makes one think about how such interesting connections around the world are made these days, and not anymore just between the suits of one country and the suits of another, but between people who, like you and the reps from Ethiopia, are putting passion into some hands-on enterprises.
    Yeah, it's me, one of your Sunday help.

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  2. Ooops, I meant this comment for your previous post, obviously.

    ReplyDelete
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