We all enjoy a good cup of coffee in the morning, maybe even two. Before the pandemic, a casual drive or walk to our local coffee shop to stimulate us with the popular beverage was a daily ritual before going to the office. Things have changed, but oddly enough, things remain the same. We still go for coffee at our kitchens in our homes, where our new offices are located.
We clearly still drink coffee during the current crisis. But what will COVID 19 imply for coffee consumption around the world? That is a very good question and one that The World Coffee Producers Forum asked during a recent webinar. With coffee sales above US $4 billion around the world and a respected voice in the industry, Walmart was invited to that discussion. That’s how I joined a group of coffee trade and industry experts to help answer the question.
I set the stage by highlighting the strong partnerships we have with many branded coffee suppliers, with whom we have seen the category evolve and grow significantly through single serve offerings and innovation. We are very proud of our private branded (PB) coffee, such as Sam`s Members Mart single origin, or the new products we have developed in the US in the past few years. As part of our overall PB strategy, we ran a full overhaul of how we managed the coffee category. We significantly improved quality, adjusted specs, redesigned packaging and adjusted our shelf space. Furthermore, as part of our integrated Shared Value commercial strategy, in 2016 we committed to sustainably source 20 agricultural commodities by 2025. Coffee is one of those. We lead on Sustainability directly by sourcing all our Walmart US PB coffee with certification, a goal we achieved ahead of schedule. We continue down that path by focusing and traceability through block chain technology, as we do it with our partner West Rock. We also collaborate with non-profits, companies, governments, research institutions and others seeking to advance sustainability efforts in the coffee sector through our membership in Sustainable Coffee Challenge. Walmart was the first major North American retailer to join The Challenge in 2017. All that work has paid off: our renewed PB coffee category has been delivering strong growth for two years in a row. We expect that trend to continue during and after the crisis.
Most panelists were optimistic about the coffee industry “coming back” after the pandemic, as many of us agreed that coffee, the comforting and stimulating drink, is a desired commodity, and a resilient one, even during difficult times. While consumption has dropped due to the closures of restaurants and cafés, at-home consumption and retail purchases have increased.
The significant changes in shopper behavior during the crisis have impacted coffee, increasing online sales. In addition, as shoppers reduced the number of trips to the store, they started buying more coffee in each visit: 48-oz cannister rather than 24-oz and 48 or 96-count K-cups, rather than the smaller counts.
Shelf stable and popular, coffee also benefitted from the shift in categories shopped. Sales have increased well above average for single serve, roast and ground and even soluble, the latter driven by new uses at home (have you tried making the popular dalgona?). We have seen a spike in the sale of coffee machines, which drive more coffee sales.
Finally, coffee consumption is also impacted by economic hardship and uncertainty. It is here where the Walmart value proposition will help us deliver our customer the beverage of their choice at the right price during these difficult times.
We can’t predict the future, but we can try to influence and shape it. We do so by growing and improving our online and omni channel shopping experiences, leveraging and finding new consuming occasions for coffee for customers who spend more time staying and working from home. We continue thinking about quality and value, executing well with our national brand partners and Private Brand offerings, and most importantly continuing to provide our customers with sustainable coffee, and affordable and convenient ways to enjoy their daily ritual.
Please see World Coffee Producers Forum webinar here.
