While the US launch for Costa had been delayed by the pandemic it is now underway, with the National Restaurant Association Show in Chicago last month marking the official debut in the US market.
While Costa coffee – a UK coffee shop chain founded in London in 1971 - has a huge footprint across Europe and Asia, it’s practically unknown in the US. And while Coca-Cola has already dabbled with other coffee products in the US, Tim Warner, GM, Costa Coffee US, explains this is the first time Coca-Cola has brought a premium, global heavyweight into the US – and believes this one has the power to change the entire coffee market in the country.
US consumption of espresso-based drinks has surpassed pre-pandemic levels
Smart Café and Proud to Serve products are already piloting in select markets, while at-home offerings are available online.
“As one of the biggest consumers of coffee in the world, and with an industry standard of drip coffee, the US is poised for disruption," said Warner.
"Consumption of espresso-based beverages is on the rise at 26% and has surpassed pre-pandemic levels (source: National Coffee Association: 2022 Specialty Coffee Report) – making now the right time to launch an excellent, espresso-based coffee into the US.
“As a total beverage company, Coca-Cola has offered a variety of coffee solutions in the US over the years, including options from multiple brands and in various formats. Costa Coffee’s US debut marks the first time we are bringing in a premium coffee offering with an established, global fanbase. Our goal in launching Costa in the US is to reimagine the coffee category, transforming the perception of coffee from a functional beverage to a premium, quality experience for all.
“This is the latest example of Coca-Cola’s lift-and-shift strategy to scale successful beverage innovations from market to market via a disciplined, test-and-learn approach.”
Costa’s US portfolio spans a number of options: although the main launch focus will be on its coffee machines.
“We are focused on delivering a full range of innovative, flexible options for our customers – including served and self-serve propositions for every consumer occasion," continued Warner.
"Although we also offer whole-bean coffee, ground coffee and single-serve pods directly to consumers, our primary presence will be in-outlet via Smart Café and Proud to Serve."
“Costa Smart Café is a revolutionary piece of autonomous equipment that provides barista-quality coffee at the touch of a button – essentially an unmanned coffee shop in a box. It’s perfect for convenience retail, grocery, lodging and leisure outlets. The hot and cold drinks are always crafted using fresh beans, which are ground inside the machine, and fresh milk, which is frothed by the machine. Designed to dispense over 100 drinks before any human assistance is needed, Smart Café is a huge asset in today’s labor market.
“Costa Proud to Serve is our in-outlet coffee solution for customer locations that want to serve our world-renowned Costa Coffee by name. Equipment options include a countertop format, which features the best range of fresh Costa coffees made using the world’s best coffee equipment together with a digital ecosystem that supports the customer in building its coffee business. This platform is ideal where a premium coffee offer is wanted but coffee isn’t the main priority for the customer. It can be set up as self-serve for consumers or back-of-house for the crew to prepare beverages as ordered. It’s perfect for foodservice, hotels, leisure and the retail channel. Other Proud to Serve equipment options include high-capacity hot brewers, cold brewers, airports and single-serve pod brewers.”
Lessons from Europe
Costa has been rolling out its products across Europe since 2019, even launching in some markets during the height of the pandemic. So what has the brand learned from this?
“We have gleaned a number of learnings from our EU expansion that we expect to hold true in the US," said Warner.
"For example, demand for better coffee increases over time, as consumers are exposed to the premium quality and taste of Costa.
"Secondly, we’ve seen that espresso-based coffee is resilient to market fluctuations – regardless of other factors, consumers prioritize the experience and moment of escape that it provides.
"We’ve also seen a demand for customization, which we know exists in the US. Costa Smart Café meets the desire for customization and personalization through more than 250 drink combinations. The patented technology allows consumers to build their drinks exactly as they want them, whether sweetened, with syrups, hot or iced, etc.
"From an operator perspective, we’ve observed the power of data in maximizing sales and profits. Smart Café records and reports robust analytics that empower operators to understand trends, keep ingredients stocked and get ahead of maintenance needs.
"We intend to apply all of these learnings in our US rollout.”
Goliath takes on Goliath
Costa is the world’s second largest coffee shop chain – but American giant Starbucks is the largest. There’s also numerous other coffee chains and brands to compete with in the US. So why does Warner think Costa can stand out?
“Costa is unlike any other coffee brand. Fifty years ago, the founders of Costa Coffee had a dream to bring amazing coffee to more people and to accept nothing less than perfection. Today, that same vision lives on for the US Costa team. Using the same blend of the best coffee beans, slowly roasted to maximize the flavor, the goal is to reimagine the US coffee category, transforming the perception of coffee from a functional beverage to a premium, quality experience for all.
“What makes us different is our belief that an exceptional cup of premium coffee should be available to everyone at a fair price. By partnering with thousands of Coca-Cola customers, we are working to make this dream a reality through ground-breaking, autonomous technology – like Smart Café – and more than 50 years of experience in coffee craft. Every coffee we have is tested and perfected by a master of coffee who ensures we use the world’s best coffee beans as the perfect base.”
The launch priority for Costa, says Warner, will be to establish the brand with customers and consumers: and he is confident that expansion will follow naturally.
“We’re taking a gradual, disciplined approach to our expansion in the US. We’re focused on building brand love, trust and respect with American customers and consumers, and our expansion will follow demand."
