Can you tell us some of the history of the company?
The business began back in 1994 with coffee buyer, James Sweeting and coffee trader, Simon Herring hand roasting coffee in a garden shed.
With extensive knowledge of coffee and several trips to origin under their belt, the pair set out to become the region’s premier coffee supplier. Originally selling into local coffee shops, golf clubs and even hairdressers, 25 years on, Lincoln & York now supplies over 250 customers across various channels within the market.
Today, the Lincoln & York roastery is a 6,000m2 state-of-the-art facility, located in Brigg, between the two home cities it was named after.
What are the biggest brands you have in your portfolio?
As a private label coffee roaster, we work with and produce coffee for some of the biggest brands in the market. Due to one of our core values being discretion, we don’t talk about who we roast for as it is their story to tell. What we can say though, is that we produce the equivalent of over 10m cups of coffee a week, so you will more than likely have drunk a coffee made by us when you’ve visited your favourite coffee shop.
Is the coffee market in growth? What is driving the growth?
Prior to COVID, the coffee market was in growth – the Out of Home market was valued at £6.5bn annually and was enjoying 2.8% year on year growth [Kantar OOH data 52 w/e 23 Feb]. As consumers have become more discerning over their coffee choice, they are also more willing to pay a bit more for their brew. The average price of a cup was up almost 4% year on year [Kantar OOH data 52 w/e 22 Mar 20] with consumers trading up their drink choice. Seasonal drinks and cold coffee (cold brew/frappe’s) form a big part of this trade up with the average price of an “Iced Coffee” being 60% higher than a “Hot Coffee” [Kantar OOH comparison 52 w/e 22 Mar 20…..Hot = £1.87 and Iced = £2.97].
The key drivers of the in-home market are innovation and coffee bags. Coffee bags are in growth 38% year on year, with a big increase in the number of households buying (penetration is up 82%!) [Kantar Worldpanel, 52 w/e 14 Jun 20]. Out of home, we see seasonal drinks driving consumers to trade up. Future opportunities will exist in the ready to drink market – both in home and out of home – as consumers become more discerning and look to extend the coffee occasion throughout the day.
Has lockdown affected the market performance?
OOH coffee is valued at £4.4bn in the last year, down 33% [Kantar OOH data, 52 w/e 4 Oct 20]. Unsurprisingly – given that the segment represents 43% of the market – coffee shops have been hit hardest, losing £262m in value in the 12 weeks to 4 October [Kantar OOH data, 12 w/e 4 Oct 20].
One significant exception in the market exists, however: symbols and independent 2020 retailers have shown significant double digit value growth for OOH coffee in the latest 12 week period, compared with the same period a year ago, valuing the channel at £16.8m [Kantar OOH data 12 w/e 4 Oct 2020]. In contrast to almost every other channel, major success in attracting new customers, has been the key driver of this growth. While consumers have been developing new ways to enjoy coffee at home – 13% of consumers have recreated their ‘morning coffee ritual at home’ during lockdown – the full experience of drinking it out of home is harder to replicate.
How can wholesalers maximise sales of your products?
With consumer habits having changed so much in the past few months, knowing which products to stock is perhaps now a slightly more complex task. An increased prevalence of coffee beans (+35%*) and ground coffee (+18%*) [Kantar Worldpanel data 12 w/e 14 Jun 20] in consumers’ homes should be reflected in stores: both have been growing ahead of instant coffee (+10%*) throughout the pandemic. Coffee bags however have been the major winner, with the latest Kantar data showing growth of over 40% and, if stocked, this provides a great opportunity to drive incremental sales in the category. [Kantar Worldpanel 12 w/e 14 Jun 20]
Frequency is key to driving sales, because of this, wholesalers need to pull in their customers more regularly by changing up the deals and promotions they offer – linking deals with other, ancillary categories can be a great way to do this.
With the current move towards technology and the increase in online sales during the pandemic, making sure wholesalers have the right taxonomy on their websites for hot drinks and also featuring key products on apps, if they have them, will be very important as more consumers shop online moving forward.
How do you work with wholesalers to improve sales?
We have an extremely flexible approach to coffee and work with each of our customers in a different way to maximise their sales. I feel it is important to understand the end customer & consumer of the wholesaler. For example, if they are serving mainly coffee shops as their customer base, their coffee requirement will be different from a wholesaler’s, whose main customer is pub groups.
What marketing support do you have planned for your range?
While we don’t have a branded range to support in the wholesale channel at present, our support for each of our customers is bespoke – whether it’s training, more blends or POS, we’re flexible in our approach to our customers requirements.
Is there any NPD on the horizon?
We have recently launched our fully recyclable coffee packaging – the first in the UK. This award winning packaging has the same shelf life as traditional coffee packaging but can be recycled in the LDPE waste stream within the UK.
In terms of future NPD, we are always looking at ways to grow coffee sales and get coffee into more consumers’ hands. We’re continually coming up with new blends to suit our growing customer base and new formats – coffee bags are a great example of this with sales in retail up 22% year on year. [Kantar Worldpanel, 52 w/e 14 Jun 20]
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