"Peet’s has been eyeing this segment for a while," Koch told FoodNavigator-USA at the National Association of Convenience Stores (NACS) annual trade show in Atlanta last week.
The US RTD coffee segment has rapidly grown to approximately $3bn (for the year ended July 27, 2019, according to Nielsen), up 16% compared to one year ago, as consumers replace brewed hot coffee with the increasing number of on-the-go, chilled coffee products available.
The category got its start in the US with Starbucks' bottled Frappuccino drinks (introduced in 1995) and the sector has since exploded with the introduction of cold brew, draft lattes, and butter-infused coffees available in a RTD format, with 'creamy, indulgent' coffee products holding the largest share, according to Koch.
"This is actually the largest segment of the RTD coffee category (roughly 50%)... and it's not going anywhere despite all the other entries in the category," Koch said.
While healthy, better-for-you marketing has extended to nearly every category of food and beverage, including RTD coffee, Peet's blended coffees are firmly in the decadent, 'treat yourself' space.
"I wouldn’t say it’s permissive indulgence; it’s straight up indulgence," said Koch. "What was really important was that this would taste like a beverage you get in a coffee shop so everything’s balanced."
The four new SKUs, which will launch in January 2020, are made with cream, milk, and cane sugar (and free from additives to make the liquid creamier) with 240 to 260 calories per bottle, available in dessert-like flavors such as chocolate truffle and caramel dulce.
'No one in the category talks about where the coffee is from'
Founded in 1996, Peet's has grown into a national premium coffee brand with more than 15,000 cafes servings its coffee and a presence in retail with its iced espresso cans. The coffee brand has also made key acquisitions in the third-wave coffee space with the purchase of Intelligentsia and Stumptown coffee chains.
With its background and experience in premium coffee and the fact that 49% of consumers prefer RTD coffee from a coffee shop brand, Peet's believes its new products are an upgrade to the indulgent RTD coffee drinks currently on the market today.
"We felt like Peet’s is known for bringing an elevated coffee experience," said Koch, noting that it uses 100% Colombian coffee in its four new blended coffee products.
"No one in the category talks about where the coffee is from (except for a few cold brew brands)," Koch noted.
The adult Frappuccino drinker?
With such a growing emphasis on health and making better-for-you choices when it comes to food and drinks, will consumers be interested in a decadent product such as Peet's Blended Coffee?
Koch says 'yes', noting consumer research that shows consumers indulge at least two to three times per week, and the coffee shop is a common destination to get their sweet fix.
"We're targeting the decadent brownie type of person," she said. "People talk about this the way they talk about ice cream."
Peet's believes it will also attract the original Frappuccino consumer who may have strayed away from the category but could be pulled back in if there was a premium option available, according to Koch.
"Frappuccino has been around a really long time, and maybe they consumed it when they were younger and think that they’ve outgrown it. They may not be looking at the category because there aren't many fresh things happening," continued Koch.
'We feel we really have the credentials to win in RTD'
Launching in January 2020, Peets is targeting the convenience channel where it currently sells its lower-sugar iced espresso canned products. The company added that it was at the NACS show to drive awareness of the Peet's brand within the convenience channel since the company is most known for its bagged beans and K-cup products, which are not commonly found in convenience and small format stores.
"It's the best place to drive brand awareness [for Peet's RTD blended coffee]," said Koch.
"Peet’s is really looking to be a strong player in RTD coffee, we came to the category much later because we were very focused on hot coffee," said Koch. Peet's is the #2 premium roast & ground coffee brand in grocery behind Starbucks (Nielsen sales data, 52 weeks through June 15, 2019).
"Given our success, we feel we really have the credentials to win in RTD."
