Early last year, few could have anticipated the far-reaching impact that Covid-19 would have on the coffee industry. Everyone from farmers and producers to coffee shop owners and baristas have been affected, with net imports by coffee-buying countries down nearly 6% in the three months to the end of June 2020 compared to 2019.
Meanwhile, many consumers have been forced to change the way they consume coffee, as working from home has increasingly become the norm. Sales of grinders, coffee subscriptions, and espresso machines have soared, while takeaway orders and home deliveries have also increased.
In the face of this changing landscape, specialty coffee roasters have had to adapt in order to survive. In addition to new health and safety measures, ecommerce has risen to become the most important revenue stream, while the role of packaging as a marketing tool has been elevated.
To find out more about how specialty roasters have adapted to Covid-19, I spoke with 2018 Finland Cup Tasters Champion and Head of Production at The Gentlemen Baristas, Roosa Jalonen.
Covid-19: What challenges have specialty roasters faced?
Coffee shop closures
According to some estimates, up to 95% of all hospitality businesses have been forced to close their doors at some point or another during the last 18 months. For specialty roasters who use coffee shops as their main outlet, this has naturally led to a significant drop in revenue.
Even as doors tentatively reopen in some parts of the world, many coffee shops are continuing to report a notable reduction in footfall. Among the reasons posited are a preference for home working and anxiety over public socialising.
In response to the sudden fall in income, a number of roasters have had no choice but to cut back costs, reduce output, and make staff redundant. In an episode of 5thWAVE podcast, the founder of Australian coffee shop chain Bluestone Lane, Nicolas Stone, describes how the pandemic forced his company to release staff after revenues dropped by up to 90%.
Supply chain issues
The pandemic has had a considerable impact on the shipping and transport not only of coffee beans, but also on packaging. Border closures between countries, fewer freight-carrying passenger flights, and an increase in the number of “blank sailings” in which ports are skipped, have all contributed to bottlenecks across the supply chain.
For example, to limit the spread of Covid-19 during the early stages of the outbreak, several EU countries decided to close their borders, which resulted in 37-mile long queues of trucks transporting goods.
This has had a knock-on effect for specialty coffee roasters, who have, in many cases, found it difficult to meet rising numbers of deliveries on time.
Health & safety protocols
Naturally, Covid-19 has heightened concerns about the proper practice of health and safety in the workplace. This is especially true of the food and beverage sector, where handwashing, social distancing, and the wearing of face masks have become a necessity.
For many specialty roasters, putting the correct health and safety protocols in place have proved more complicated than expected. In small roasteries where everyone is used to being in close quarters, social distancing has been challenging, while sanitisers, gloves, and face masks have all added to monthly outgoings.
How have specialty roasters adapted?
One of the most dramatic shifts since the outbreak of Covid-19 has been the rapid move from in-store sales to ecommerce. Several years of preexisting trends suddenly accelerated, with Microsoft CEO Satya Nadella summing it up best when he commented, “We’ve seen two years’ worth of digital transformation in two months”.
Noticing this trend, many specialty roasters quickly established online shops and started offering their full range of coffees. Roosa Jalonen works as Head of Production at The Gentlemen Baristas in London. She tells me that after being hit by forced closures, they saw ecommerce as a viable means of surviving the pandemic.
“The biggest change over the last year has been the nature of sales,” she says. “Our focus before the pandemic was on wholesale, whereas now it’s centred on ecommerce. We have actually adapted very well, and we’ve been putting more effort in our online store and marketing, which has been very successful.”
Indeed, US consumers alone spent a staggering $861 billion online in 2020, a 44% increase compared to 2019. It’s estimated that Covid-19-related boosts contributed around $175 billion to the total.
However, some specialty roasters went a step further and launched their own subscription services, providing customers with regular home deliveries of their favourite coffee. Not only did this help supplement lost revenue from physical sales, it also allowed roasters to go some way towards recreating the in-store customer experience.
Subscription models allow a greater level of personalisation to products, as well as presenting an opportunity to add more information about the coffee, such as where it was grown, who grew it, and how it was processed.
It’s also enabled roasters to reach new corners of the market, especially the younger generations. In many cases, subscriptions provide greater transparency and traceability, a factor that appeals to millennials and Generation Z consumers. Brands that have made their ethical and sustainable practices clear online have benefitted from higher sales, with a strong social media presence also playing a part.
Adopting new health and safety measures
The way roasteries are set up means that working in proximity to colleagues was part and part of a typical working day. But with new social distancing practices, Roosa tells me all that has changed.
“Some of the Covid-19 measures have affected how we work,” she explains. “Avoiding contact has moved us to work from home whenever possible and all the previous face-to-face meetings are now happening via Zoom.”
In addition to keeping staff safe, roasters have also had to look at ways of making customers feel comfortable when they return to buy coffee in-person. One of the most significant changes is the switch from cash to contactless payments. In some cases, roasters have started accepting pre-payments via apps and websites.
Nicholas says that by focusing on contactless technology, the company has seen a huge growth in use of their loyalty scheme “They all went mobile only exclusively so we have not accepted a credit card payment or a cash payment.
The benefits of this latter option are two-fold: customers don’t have to worry about cash or standing close to people in queues. They can simply order and pay for what they want, before going to the roastery to collect it.
As things gradually return to normality, it’s clear that a number of changes are here to stay. While many will be eager to buy coffee from their local café or roastery again, the growth in ecommerce in particular has opened up new corners of the market, a reality that most specialty roasters will be keen to maintain.
At MTPak Coffee, we have several packaging options to meet the needs of your customers, both online and in-person. From quad seal to flat bottom, stand-up to side gusset, our pouches can be made in a range of sustainable materials, including kraft paper, PLA, and LDPE.
For more information on our sustainable coffee packaging, contact our team here.
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