At the same time, the modern world demands focus, whether when working, studying, or even during leisure activities like playing video games. How are people to square this need for focus with a world seemingly designed to take it away? In part, though a larger role for coffee and tea products specifically designed for focus-enhancement.

Caffeine: The Nootropic That Dare Not Speak Its Name

One of the most interesting things about the focus-enhancing segment is how very few products actually position themselves as such. There are a great many people who have been reaching for coffee or tea their whole lives when they feel their mind slipping yet may have never heard the term ‘nootropic’, which is technically the correct way to refer to products that boost cognitive abilities like focus.

Therefore, there is the odd situation where caffeine and L-theanine are the world’s most used nootropics yet they are almost never referred to as such. This is important because there is a wave of new products hitting the market that are being explicit with their focus-enhancing abilities, threatening to muscle in on turf that has traditionally been dominated by coffees and teas. To avoid this, coffee and tea will need to be louder about their naturally occurring focus enhancing abilities.

Coffee and Tea on the Defensive in a Focus-Hungry World

These newer focus products tend to highlight more exotic and unfamiliar ingredients like lion’s mane, ginkgo biloba, or creatine. There are certainly coffee and tea brands who work with such ingredients (Four Sigmatic being perhaps the best-known) but increasingly nootropics are being used in the soft drinks space, especially in energy drinks. The energy-drink segment is attempting to diversify its appeal to new occasions and demographics and is increasingly launching products specifically designed for cognitive uses.

This year, for example, Rockstar launched a new product line called Rockstar Focus with a more explicit cognitive positioning than has previously been seen in energy drinks. In the years ahead, energy drinks will offer increasingly tailored energy boosts for specific usages instead of the more general energy positioning the category rose to prominence with – and cognitive enhancement is likely to prove among the most important.

They are likely to highlight their unusual nootropic ingredients to distinguish themselves from coffee and tea although in practice caffeine will probably provide most of the actual cognitive boost. Energy drinks are almost certain to be the most important emergent category, though powder concentrates and functional waters have also been experimenting and should see more product launches in the years ahead. Regardless of what formats end up on top, they will move straight into territory traditionally held by coffee and tea.

That will leave two options for coffee and tea. One will be to make themselves into pseudo energy drinks through adding additional nootropic ingredients, using RTD or on-the-go formats, and using splashy marketing highlighting how different they are from traditional beverages. The other will be to
double down on what they have always done with some tweaks to the marketing message.

It is likely that the coming years will see plenty of both. Products fortified with nootropic ingredients or even just extra caffeine and L-theanine (which brands like Bigelow have been experimenting with) will become more common. More importantly, the coffee and tea industries in general will become louder in the promotion of their products as already ideal for focus, leveraging its inbuilt advantages: a proven track record, widespread availability, affordable price points, and naturally occurring focus enhancing ingredients.

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During the recent “The Impact of Covid-19 on Coffee E-Commerce,” webinar presented by the National Coffee Association (NCA) of the United States, Kathy Cummins, head of analytics at Hinge Global, said that amid Covid-19, online retail purchases (including curbside pickup) increased but have dropped slightly. However, sales in pure-play e-commerce (e.g., Amazon, eBay, Chewy) have continued to grow.

Cummins explained that online revenue for traditional retailers (such as Walmart, Target and Kroger) grew in March and April, trended down in May, but are still higher than pre-Covid levels. “Brick ‘n mortar shopping can be frustrating at this time because of wait times to enter stores and out-of-stock problems, which are contributing to online shopping. Pure play e-commerce has grown steadily since April, a shift in behaviour that may stay for a while.”

She said that Amazon is and will continue to be dominant in coffee online sales, with an annual market size of $1.08 billion in the US, and +36.9% CAGR. Capsules constitute 86% of the coffee sales on Amazon.

Cummins noted that coffee on Amazon has grown steadily by ~32-38% CAGR — the dip was the result of the lack of ability to fulfill, not a drop in demand. The search for coffee online spiked and remains high since Covid-19 began. Searches for ground coffee peaked in March and have since dropped but are still higher than pre-Covid. She said searches for coffee pods spiked but searches for K-Cups remained consistent. Half as many consumers looking for Nespresso capsules versus K-Cups but search levels are high for both: 766,000 searches for K-Cups and 300,000+ for Nespresso capsules. “Keurig machines are more prevalent in US, but Nespresso capsules are harder to find in brick ‘n mortar stores,” said Cummins when explaining why capsule/pod searches rose.

Amazon has nearly 600 brands of coffee capsules and pods and the top ten brands within that subcategory of coffee have a 55% dollar share, according to Cummins. Although Nespresso and Starbucks have biggest dollar share, she said Bradford Coffee Roasters has the highest sales per ASIN (Amazon Standard Identification Numbers, which is Amazon’s version of a standard SKU number). “We are seeing brands that may not have a lot of SKUs, but each SKU is driving a lot of sales.”

She said Nespresso capsules are less common than K-Cups so brands that offer Nespresso format can benefit from less competition, adding, “there is further opportunity by increasing pack sizes — but make sure copy is clear and concise.”

There are more than 820 brands of ground coffee on Amazon, and the top ten brands make up a 52% dollar share. The leading brand is Starbucks followed by Café du Monde. Cummins shared that niche products do well on Amazon. For example, super-premium products are common in the top ranks for ground coffee, including Death Wish and Four Sigmatic. “In ground coffee, premium and unique positioning help differentiate items, the leading brand is Death Wish Coffee. Four Sigmatic [mushroom enhanced coffee] takes advantage of many keywords to drive search to its product — paleo, immune support, concentration, focus, etc., which is driving sales.”

And echoing the statement made by Fernando Serpa, vice president, Global Sourcing Latin America & Fresh Food, Walmart Inc that I referenced in a previous blog (see “Covid-19 and its effect on Consumer Behaviour”), Cummins said large pack sizes in both capsules/pods and ground coffee are common, and address foodservice and office needs, as well as large households. For example, Café du Monde is driving volume through large-count packs (4-packs of 6 cans = 24 cans).

Cummins also shared drivers of e-commerce success, the first being that if a company is just starting on e-commerce or can choose only one, Amazon best place because it has the best/easiest platform to use, “Amazon has the most sophisticated search — a lot of back end key words.” She also pointed out that consumers are looking for specific brands but emphasized that companies cannot use branded keywords in copywriting, but may can link with paid advertising/PPC (pay per click).

She reiterated that the coffee landscape is competitive (600+ brands in pods/capsules and more than 800+ in ground on Amazon alone) so the number one thing is to win on search — and search is free. To win on searches, and ultimately sales, Cummins advised companies to:

• Make sure copywriting stands out and that the digital component is strong.
• Few key words mean the item is not optimised for organic search (free marketing).
• Sustainability is a big thing in optimising copywriting.
• Brands should have product reviews.
• Mobile-friendly digital content is absolutely critical as 66% of all e-commerce purchases is via mobile devices.
• A+ Content sells the product and drives conversation.

Above all, Cummins stressed that products must not be out of stock. She further emphasized that analytics are crucial, “you can’t manage what you don’t measure.”

She also noted that brick ‘n mortar stores are more receptive to new business/companies/brands when they can first prove their success and the optimal way to do this is through successful e-commerce products.

E-commerce is growing and if a company is not taking advantage of this platform, it is missing a huge revenue-generating opportunity.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com
  Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal.

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Growing awareness of health issues such as obesity and diabetes means that many consumers are seeking healthier, all-natural products that are low in sugar and calories. Through smart devices, consumers can quickly learn more than they ever have about products. From origin to ingredient details, consumers can make smarter choices to “live better.” Offering products with attributes such as preservative free, organic, non-GMO and free-from will attract health- conscious consumers and add to the product’s authenticity (GlobalData Top Growth Opportunities Hot Drinks in the US Report, 2019).

Consumers demand more from their beverages. Functional additives can help individuals meet nutritional targets and are welcomed by consumers to help reach their nutritional goals.

According to a new report from Nation’s Restaurant News and S&D Coffee and Tea, The Future of Beverages: 2020 Trend Forecast, flavour is the top attribute consumers look for in functional beverages, followed by natural ingredients, low calorie drinks and energy. Coffee has been a natural source of energy for decades; however, consumers are also interested in ways to relax.

We know that CBD (cannabidiol) is known for helping with relaxation, pain reduction and treating anxiety which can appeal to a wide age range. Once the Food & Drug Administration (FDA) of the United States approves CBD for consumption in food and beverage, there will be a massive release of new products containing CBD in the market, including coffee and tea as debuted at BevNET Live Winter 2019 Show in Santa Monica, California.

In the meantime, there has been an increased interest in botanicals, plant-based milks and adaptogens. Adaptogens are non-toxic plants like holy basil, mushrooms, maca, ginseng, licorice, and gotu kola, that are known to help the body resist stressors, improve energy, and promote general well-being. These natural herbs are also known to benefit one’s immune system. Many emerging brands are featuring different creative uses of adaptogens; for example, Pure Wild’s Blueberry Holy Basil Collagen Juice, Shroomi’s Adaptogen Shots and Four Sigmatic Adaptogen Coffee. Consumers associate botanicals with a natural approach to wellness. With wellness being a concern for consumers, botanical flavours like rose, elderflower and honeysuckle flavours have wide ranging applications to enhance the taste and complexity of beverage products.

Last year, Wildcrafter Botanicals launched a 100 percent Organic Fair Trade certified coffee infused with “superherbs” that have been tested for over 30 herbicides and pesticides. Wildcrafter Immune Shield Coffee is infused with elderberry and adaptogens such as turmeric, astragalus root and reishi mushroom blend.

Starbucks is responding to all these trends with its January 2020 launch of Starbucks Coffee with Essential Vitamins, Starbucks Coffee with Golden Turmeric and Starbucks Coffee with 2X the Caffeine. The company recently announced plans to expand plant-based options and migrate toward a more environmentally friendly menu.

In an interview with Bloomberg News, Kevin Johnson, CEO of Starbucks Corporation, said, “Alternative milks will be a big part of the solution.” Starbucks currently offers dairy alternatives including soy, coconut and almond milk.

Impact on Flavour

Brands, manufacturers and especially flavourists are challenged to create great tasting, quality formulations that meet consumers’ needs and desires for healthier beverages. Fortifying products with vitamins, spices, plants, and other supplements can be challenging to flavour profiles. According to Nick Viriyasiri, flavour scientist at Beck Flavors, “Adding ingredients such as vitamins and proteins can cause bitter, earthy, minerally, and grassy off notes. However, flavours like citrus, ginger, and honey can complement or enhance the taste, but it’s really a work of science.”

And while adding various healthy supplements is challenging enough, simultaneously lowering sugar and caloric content is quite a feat. “When you take away the fat or calories it is challenging to get that full body flavour perception. For example, if you are looking for something sugary like a cotton candy without the sugar it can be difficult,” said Viriyasiri.

It’s an exciting time in beverages. There are endless combinations of flavours and additives like never before, but consumers will ultimately decide the best-tasting products.

• Janie Page is the senior director of marketing for Beck Flavors Inc, a custom flavour house that delivers innovative flavour solutions for the food and beverage industry. She brings to her role over 18 years of experience in the foodservice, retail and consumer packaged goods industries. With her certification as a Q-Grader by the Coffee Quality Institute, Page brings together insights, innovation and technical expertise.

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Coffee has been a functional beverage for as long as it has existed. Every day people worldwide use coffee to wake up in the morning or for a little boost to get them through the day. What is changing though, is the number of people looking to coffee for more than that.

This is because coffee is now better understood to be a naturally healthy beverage, high in antioxidants and linked to numerous health benefits. As functional trends sweep through beverages in general, many have turned to coffee to serve as a base for emerging functional products encompassing both traditional energy uses as well as some unusual areas.

Energy is, and will remain, the core of coffee’s functional usage. The older offer of regular or decaf is giving way to a much wider set of options. This ranges from a new wave of reduced caffeine choices like cascaras to the emergent ultra-caffeinated segment led by Death Wish and its caffeine levels several times above those of a standard cup. The key thread is the idea of giving consumers a greater array of choice and ensuring they can have the exact level of energy boost they want at any given moment.

Caffeine can be modified in other ways too. The use of L-theanine or CBD (cannabidiol) oil is often done to change the energy boost of coffee to be more moderate and sustained, thus creating a different energy experience without actually toggling with caffeine levels. With rising rates of anxiety and sleeplessness, these mitigated takes on caffeination look set to grow considerably in popularity in the coming years.

Part of a Morning Beauty Routine?

Perhaps the best-known functional coffee brand among the general population is Bulletproof, whose MCT oil-enriched coffee is designed to be just part of an overall system to “biohack” your life. What Bulletproof and its various imitators have realized is that coffee tends to follow very fixed consumption patterns. If you want consumers to consume something like MCT (medium chain triglyceride) oil daily, it makes a great deal of sense to start from a beverage that many people drink reliably every morning already.

How long Bulletproof specifically will be around remains to be seen, but this general idea of coffee as the base of a wider routine will stick around. Particularly interesting here is the brand Vita Cup, whose collagen-infused coffees are designed to make drinking coffee a regular part not just of consumers’ morning routines but their beauty routines specifically. Coffee’s tentative entrance into the ingestible beauty segment shows its versatility as a functional beverage and how many consumers needs it can conceivably speak to.

The Future of Functional Coffee

Another area that coffee has just begun to enter is the nascent cognitive-enhancement, or “nootropics” segment. Coffee is, of course, already widely used to provide concentration and focus. Nootropic coffees like Four Sigmatic ask what could be done potentially on top of that to further enhance someone’s mental capabilities through additives like mushrooms or L-theanine. There is reason to be skeptical of many of the claims floating around in this segment, given its largely unregulated nature, but the undoubted interest from everyone from ageing Baby Boomers worried about memory loss to high school students looking to maximize their ability to study means that there will undoubtedly be more nootropic coffees appearing in the years ahead.

Given this proliferation of functional beverages appearing, coffee will need to consider which functionalities make the most sense for it to be targeting. That will likely be the ones that are most strongly associated with coffee’s traditional usages, namely, cognition and energy. Areas like beauty or cannabis could very well end up being promising areas for coffee, but it does not start with any inbuilt advantages. Regardless of which specific functionalities win out in the end, functional coffee in general will undoubtedly prove one of the most interesting segments of coffee in the future.

• Matthew Barry is senior beverages analyst at London-based Euromonitor International. He is based in the Chicago, Illinois office, and may be reached at: matthew.barry@euromonitor.com.

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