Coffee and tea trends

By Leslie Wu

For caffeine aficionados, the world abounds with applications: caffeinated beverages, soap, spa treatments and soon, a Broadway musical, scheduled for this fall. Coffee: The Musical promises to include a musical celebration of “topical coffee talk, love stories, and the preparation and enjoyment of coffee.”

Coffee, however, isn’t a song and dance matter—it represents big business both in Canada and globally.  During a recent talk at the CRFA show in Toronto, NPD analyst Robert Carter had some jolting numbers: coffee is the number one foodservice item consumed in both Canada and the United States. Of the 6.5 billion estimated visits per year by consumers, 1.7 billion of those go through Tim Hortons, which means 30 per cent of all Canadian traffic goes to Tim Hortons each day. “If you’re a restaurant owner, you’re sharing market with Tim Hortons and they’re also looking at your business,” said Carter.

As a high margin item, coffee means there’s profit to be had. Is your restaurant maximizing its potential when it comes to this profitable brew?

With steep price increases over the last few years, everyone along the supply chain up to the consumer may soon be paying more for a cup of joe. Here’s how some Ontario companies are making the best of their bean.

In the Black

Soaring prices represent the biggest challenge to coffee in the foodservice industry, says Sandy McAlpine, president of the Coffee Association of Canada. “Prices have increased from the $1.20 to $1.40 range a year ago to the $2.60 to $2.80 range. There’s a competition for high end coffee that has probably pegged a change in differentials.”


“People are going to have to pay more for product, that’s inevitable,” says McAlpine. “It’s too high a level of cost to be absorbed by the foodservice operator. We also see an increase in coffee accompaniments, such as cream and sugar prices, which are all rising.”

“We are starting to feel the effects of the increased commodity price now that we are replacing our coffees,” says Kaelin McCowan from Dundas, ON-based Detour Coffees cafes and roasters. “Most of our coffees have been priced according to market prices except for our espresso. We recently had to increase our price on our espresso to reflect the current market conditions.”

Kayvan Rahmati, marketing director with Vancouver-based Wave Coffee houses, which also has locations throughout Alberta, sees an accompanying rise in cream and sugar prices affecting the bottom line of café owners. “Almost anyone that walks through our doors is getting a milk or cream beverage of some form, and dairy products in general have increased in price,” he says.

Johanna Sinclair, owner of Peterborough-based roasting company and coffee house Dreams of Beans, says prices are also being felt at the level of small independents. “Since June 2010, the price of Green Beans to buy to roast has doubled in cost (100 per cent increase),” she says. “In January, we increased the price of bulk coffee by a dollar.  I usually gauge what Tim Hortons is doing in Peterborough (it’s a big Timmy’s town) and increase my prices when they do in coffee.”

Tim Hortons is looking at the potential for price increases, according to Dave McKay, marketing director for beverages at the company. “We recognize that commodity costs are up, it obviously impacts our business like any other foodservice operations,” says McKay, who told ORN in March that the company was reviewing the potential for any price ingredient in the coming weeks.

“Unfortunately, prices have to be passed onto the consumer – that’s how it goes these days,” says Frank Lambros, president of specialty roaster Javaworks in Mississauga. “It might affect the end user more than roaster. We’re already starting to see signs of cup price increase, but we’re not seeing people avoiding coffee – it might be too soon to say.” Thus far, Lambros hasn’t seen that much of an impact of rising coffee prices, adding “if they do put an increase, it might not be enough to sway people away.”

McAlpine also thinks that the potential increase in price passed along to the consumer will still fall below levels where consumer price resistance sets in (historically, around three dollars.) “People’s interest in having a quality coffee will remain, and people are still buying high end coffee.”

The recent recession saw a clear change in coffee behaviour in the United States, with 15 per cent of people buying coffee in grocery stores to make at home and switching from specialty product, says McAlpine. This behaviour didn’t get paralleled in Canada, however, says McAlpine, where volume is up in pounds sold in grocery stores, but that increased spending is not carved out of the QSR sector or specialty coffee sector.

The coffee landscape has also changed significantly over the last few years, with QSRs such as McDonalds moving into the premium coffee market. “The QSR segment has become very competitive and is still dominated by a couple of places,” says McAlpine. “The foodservice operators that are finding it hardest to compete are in the full-service and midservice segment.”

What’s next? Trends and forecasts

The locavore sensibilities in food-savvy consumers are translating to a coffee customer who is not only increasingly aware of preparation and equipment, but also sourcing.

“There are a lot of cafes where fair trade is a big part of their business,” says McAlpine, who notes ruefully that “the locavore movement leaves coffee in a not good spot.”

“However, the market is still cumulatively small – five to six percent of the total coffee market. As you see grocery stores adopt fair trade, it will move the needle in huge jumps.”

Nonetheless, roasters and cafe owners are witnessing movement in these markets already. “We’ve seen a huge growth in the sustainable and fair trade organics market. There’s demand for single origin or fair trade organic espresso, for example,” says Lambros. “Customer awareness is huge – two fold – for sustainability and on organic side for health reasons, with organic certified plants that are pesticide free. On the organic and fair trade side, consumers are looking to support farmers and that industry. The past three years have been the largest growth in this market.”

Lambros is seeing growth in fair trade not only in terms of coffee, but also items such as cocoa and sugar. He’s also noticed an improvement in product, as money goes back to the coffee producing areas for education on growing.

Pesce has also found an increase in knowledge in fair trade awareness in the consumer. “I’ve always been in coffee and whenever people find that out, I get all kinds of questions about different aspects.  Lately, I’ve found the questions to be far more intricate and involved than they used to be,” says Pesce.

Beyond the fair trade and sustainable coffee trends, consumers and cafes now seek out single origin coffees. “Coffee aficionados are growing in number and are generally demanding higher quality single-origin and microlot coffees; particularly those suitable for espresso preparation,” says Stephen Armstrong, owner of Speakeasy Coffee.

Just one cup

When it comes to preparation, single cup methods seem to be a popular choice.

“We’ve been working with a few customers to develop single-cup programs, that we think are the way of the future for both café and restaurant coffee,” says Pesce. “From French presses to Chemex, sets have been growing in popularity again. Coming off the heat that the high-end espresso trend has given coffee, fresh single-cup and single-origin ‘drip’ style coffees are the way of the future.”

McCowan also sees manual brew methods and French press programs gaining ground with restaurateurs, like their wholesale client Quatrefoil restaurant, recently named to En Route and Toronto Life’s top 10 new restaurants, which does individual French press for customers in Dundas, ON.

Espresso-based drinks and specialty coffee remain strong, with an increased awareness amongst consumers.

“The traditional restaurant that was serving drip coffee is now interested in espressos, how to make latte and cappuccinos and they are interested in equipment that goes along with that,” says Lambros.

“Menus today have coffee sections, whether alcohol-flavoured, or macchiato, which you never saw before. At the foodservice level, especially with what’s happening in coffee market, the expectation now is that the coffee had better be good – it can’t just be water with coffee flavour,” says Lambros, who says that the customers for his boutique business have been “very demanding”.

“They want limited edition coffees, something unique or premium quality. The average high-end restaurateur is buying premium coffee right now, because that’s what they want to put on the table. A diner that’s selling free refills may buy coffee based on price,” says Lambros. “Where we’ve seen changes is in café/specialty independents.”

“I see the trend of specialty coming a long way since it was first introduced to the average consumer,” says De Santis. “Nowadays, you cannot pass a café or coffee shop that deals in specialty coffee and not expect it to be busy. These shops have been the new meeting place for business, socializing and education.”

Anderson says that consumers in Halifax are looking for regional distinctions in coffees along single origin lines. “There’s a third wave of coffee coming to this area, bringing with it a finer appreciation for specialty coffee.”



Tea trends

“You grab a cup of coffee, but you sip a cup of tea,” says Louise Roberge, president of the Tea Association of Canada. Perceived as a languid ritual with international resonance (Etobicoke-based hotel and restaurant The Old Mill is offering a special tea during the upcoming royal wedding), tea also has historical roots as a commodity of value. Although tea prices have not skyrocketed the same way that coffee prices have in the past couple of years, global warming may yet have an effect on tea prices in the future, warns Roberge. The high price of coffee, however, means tea can be a financially savvy choice for restaurateurs looking for hot beverage options.

“Recently we have seen increased demand for luxury quality tea now that the price of coffee has risen to levels not seen since the 1980s,” says Gerry Vandergrift, Tea Master Level 4 with the Metropolitan Tea Company. “The cost per cup of tea ranges from six or eight cents for loose tea to more than one dollar for some teas packed in highly specialized tea bags. Interestingly, the better tea is usually the less expensive loose tea as it is easier to control quality through techniques such as vacuum packing, and higher quality grades can be purchased since the cost of packaging is of lesser importance.”

Like coffee, tea is trending towards increased individualization and specialization, whether by area, processing type or, in some cases, mood.

“There is a trend towards specialty teas, wellness teas and experimentation with the unique. It is not unlike the renaissance of wine during the 1980s. Teas that are known to have higher levels of antioxidants tend to be more popular,” says Vandergrift.

Some companies are pairing with hotels or associations to create personalized tea programs. This spring, the Ontario Restaurant Hotel and Motel Association and Metropolitan Tea are putting together a tea program for ORHMA members, where 42 different luxury quality teas in three different formats are provided, along with internet based staff training modules, menu makers, preparation training and financial modeling to show restaurant owners how to maximize revenue and profit.

Fairmont Hotels has also recently released its signature wellness teas, targeted towards energy boosting, tranquility, equilibrium, digestif or high antioxidant.

Everyone's cup of tea

“In foodservice, we’ve always had a difficulty with tea,” says Roberge. “The number one thing that consumers tell us is that they drink tea at home because they can’t have a good tea in a restaurant.”

Roberge points to the relative difficulty in fixing a proper cup of tea for the wait staff. “It is a bit more demanding on the server to prepare a cup of tea: you need the correct temperature of water and a certain amount of steeping time.”

However, Roberge points out that tea service can be a successful revenue generator for operators that do prepare a good cup of tea. “Tea is not expensive,” says Roberge.

“We see astute restaurateurs turning to loose tea,” says Vandergrift. “They are recognizing that the cost per serving is under 10 cents and the selling price can be in excess of $3.50 - no other item on their menu offers such high margins.”

Another factor in tea’s favour is the increase in drinking and driving legislation in many provinces. “Restaurants need to be able to offer to customers an alternative to alcoholic drinks,” says Roberge. “Tea is a really good way to do that – either regular or herbal tea.”

Running a successful tea program

Tea is an opportunity for foodservice operators, says Roberge, who thinks that tea is always a second thought at the end of the meal. “Wait staff will ask ‘do you want a cup of coffee?’ but not offer tea.”

Pay attention to detail: “Tea is a 5,000-year- old ritual and the best way to steep tea is still the simple pot with infusor,” says Frank Weber of Toronto’s Tea Emporium.

Be sure to monitor different temperatures for different types of tea.

Green tea, for example, is delicate, and doesn’t respond well to boiling water or oversteeping, which could make it bitter, says Roberge, who compares its tenderness to that of fresh asparagus.

Think quality: “Quality is what drives tea sales in restaurant,” says Weber. “A coffee drinker will order a coffee without asking about quality. Many tea drinkers will ask what kinds of tea the restaurant carries and if it is inferior there will be a lost sale.”

But also think quantity: It’s not hard to offer more than one tea, says Roberge. “It’s always a cost factor, but you’ll sell more.” Weber also advises stocking a wide selection of tea offered on the menu. “Selection also speaks volumes about how serious a restaurant is about their teas,” he says. “Having only four teas on the menu is bad.  Fifteen to twenty says “we care”. At the end of the day, the cost in additional inventory for a restaurant is $15 per flavour. That will yield 125 cups and sends the right message.”

Emphasize health: Roberge suggests labelling tea as heart healthy or no calorie on the menu. “Why not add a healthy stamp? It does influence Think about offering different pots for different types of tea, which enhances the experience with the customer.

Offer a tea cocktail: Tea can be used to infuse alcohol, or be incorporated into specialty cocktails.

Incorporate tea into your menu: Some restaurateurs are now using Kenya matcha in salad dressings, antioxidant boosters in smoothies, blending it into orange juice and making cocktails, says Vandergrift. Cooking with tea made the top ten list of up and coming food trends from this year’s CRFA chefs’ survey.

Know your tea: Foodservice professionals can offer value adds with tea, such as employing a tea sommelier. Training for tea sommeliers (a professional certification involving tea procurement and storage, developing tea lists/menus, the overall delivery of tea service, and training of other establishment staff) is offered in schools throughout Canada, such as George Brown College and Vancouver Community College.

Offering a traditional tea service can also be a way to offer a bridge between lunch and dinner service.