The coronavirus has hit the coffee industry hard. But true to its strength and resilience, many businesses are finding creative ways to stay afloat that could extend beyond the pandemic.
The world has been brought to its knees. In just a few short months, the coronavirus spread across continents, shutting down countries, economies, and businesses in its wake.
Australia has fared better than other countries during the COVID-19 pandemic, with confirmed cases and deaths well below those of the United States, Italy, Iran, and China. Stage three restrictions introduced at the end of March left people with few reasons to leave their homes, and mandated that cafés and restaurants function as takeaway and delivery only. These restrictions were necessary to flatten the curve and have since been loosened, but they were not without casualties.
Once busy streets were barren. City cafés that used to flood with workers every morning sat empty at the bottom of office buildings. Many were forced to close their doors, some temporarily, others not. Most of those that stayed open had to drastically reorganise and make cuts.
Hospitality is one of the industries the pandemic has hit hardest. According to the Australian Bureau of Statistics, more than a quarter of all jobs in accommodation and food services were lost between mid-March and the first week of April.
Although JobKeeper payments began at the start of May, some businesses struggled with enrolment or didn’t make the cut, and many of the industry’s casual and foreign workers were omitted.
This hit to cafés has rippled through the coffee industry. Roasters, traders, technicians, and manufacturers were forced to rethink their operations and their future. Despite the challenges, many businesses have found new – or improved existing – ways of operating during the COVID-19 pandemic. From an increased online presence to becoming a broader service provider, these strategies could prove to be long-term solutions, and even the new normal for the coffee industry.
Ona Coffee Marketing Manager Jordan Montgomery says obstacles aside, the coffee community has drawn together in incredible and innovative ways.
“We are in completely uncharted waters at the moment. In our generation, we have never had such a greater threat to our industry, economy, and way of life,” Jordan says.
“Times of difficulty are often the periods that motivate us the most and cause the most amount of change in such a short period.”
Rise of retail
With consumers less able to visit their favourite cafés for their coffee fix, many have turned to home brewing. This had led to roasters around the world experiencing an uptake in online, retail, and delivery orders.
Nielsen data has revealed Australian households have spent an extra 37 per cent on coffee from supermarkets in the four weeks prior to 22 March compared with the same time last year, largely attributed to the increase in premium coffee options. In contrast, the study found that the number of trips to coffee shops plummeted 39 per cent from early March to early April.
“We’ve definitely seen an increase in demand for retail coffee, but it’s come at the same time that wholesale sales to cafes have decreased,” Jordan says.
“We’re doing our best to encourage people across Australia to continue to visit their favourite coffee shops and to buy coffee from them while practising social distancing to maintain the health and safety of others.”
St Ali Coffee Roasters General Manager Lachlan Ward tells BeanScene some of St Ali’s wholesale partners have also turned to retail to increase sales.
“A $20 transaction [of wholebeans] on top of a $4 coffee goes a long way in these times,” Lachlan says.
“A lot of cafés might typically sell a handful of bags per week, but making that central to your operation, even if you are still open for takeaway, makes a massive difference.”
Many businesses have run promotions to encourage online orders, including discounts and free shipping. Others are doing what they can to help. For example, equipment specialist Service Sphere has partnered with several businesses to launch Bean Barn, a one-stop shop for coffee and ancillary products.
Veneziano Coffee Roasters CEO Craig Dickson says the demand for retail coffee has helped the company adapt to the current landscape.
“We’re settling into our new normal and see no impact on our ability to roast coffee through the COVID-19 crisis,” Craig says.
“Our people have been working cross functionally and stepping into roles they don’t normally do. For example, our sales team, HR team, and others have been picking up shifts to support the packing and warehouse team to send out online orders. We’re so proud of our people for banding together, keeping Veneziano united and strong.”
Out of the box
Some roasters are taking the opportunity to promote new or innovative ways consumers can buy and consume coffee. While many businesses produce capsules for the single serve market, customers without a machine can take comfort in Toby’s Estate’s new single serve coffee bags.
Others like Veneziano and Danes are taking advantage of their ability to pre-prepare bottled or canned cold brew coffee for online sale or takeaway. Some, including Seven Seeds and St Ali, have taken this to the next level with four-litre cold brew casks.
“People are looking for ways they can continue their regular life habits in their own home,” St Ali’s Lachlan says.
“We’ve had the ‘coffee goon bag’ on the backburner for a long time and I’m sort of kicking myself that we didn’t release it earlier. We sold a crazy number of units over the first weekend and were thrilled to see how well it went, because every dollar counts at this point.”
For some, restrictions aren’t putting a stop to releasing new blends, single origins, or limited-edition products. Following the success of its Flavours of Spring series in 2019, Ona Coffee shared its Flavours of Autumn special release in March.
Ona Coffee Head Roaster Sam Corra says the blends were intended to provide coffee drinkers with something fun during a difficult time.
“The spread of COVID-19 across the world has had a significant impact on many industries, and the hospitality industry in particular is feeling the strain,” Sam says.
“We wanted to create something fun, exciting, and inventive to keep people excited about coffee, even if they can’t have the same experience of sitting in their favourite café to enjoy it.”
On the move
Delivery apps like UberEats, Deliveroo, and Menulog, and pre-order apps Skip and Hey You were already popular with consumers before the virus. Now, they’ve become almost a staple for cafés to remain operational as takeaway- and delivery-only. Online ordering system HungryHungry has allowed Veneziano to set up a new service structure at its flagship cafés.
“HungryHungry means we can continue serving coffee and food from our cafés to our local customers via delivery, pick up, or drive up. We’re essentially able to turn our outlets into drive-through venues for coffee,” Veneziano’s Craig says.
“With the impacts of social distancing, it enables us to continue providing a quality service to our customers, to make their day during this challenging time. On the flip side, we can keep our people in jobs, give them meaningful work, and a purpose through COVID-19.”
Drive-through has been a particularly popular alternative in the United States, with Starbucks, Dutch Bros, and Caribou Coffee among those embracing the model. A few other Australian businesses have made it work, like Danes Specialty Coffee in New South Wales, which set up contactless drive-through pickup at its Brookvale roastery.
However, not all cafés or roasters have the capacity for this type of service. St Ali’s Lachlan encourages cafés limited to in-store takeaway or delivery to remember what makes them special and continue to offer it.
“It’s about trying to maintain a connection with your regular clientele in a different way through this period,” Lachlan says.
“If someone is coming in for eggs on toast and a latte every day, how can you take that experience home to them? That’s going to mean different things to different cafés.”
When talk of restrictions and social distancing first emerged in March, St Ali began thinking of ways it could continue to operate if cafés were forced to close. One of those was as a grocery store.
This idea came into fruition later that month, when the roaster reorganised its South Melbourne café as the St Ali General Store. This shop format allowed St Ali to continue serving coffee and meals, sell produce and stock from its suppliers direct to consumers, and reconnect with the South Melbourne community.
“When we set about reformatting St Ali, we had in the back of our heads: ‘How can we offer the dining experience that people get at St Ali in a form they can take home and enjoy?’,” Lachlan asks.
“It’s been fantastic. A lot of people who live in the area are home much more, so we’re seeing locals who might only visit once on the weekend come in more often. South Melbourne isn’t just full of offices. It’s also a neighbourhood, and you’re seeing this in suburbs across Australia.”
Many cafés and roasters, like Veneziano Coffee Richmond, have set up similar groceries. Declining café sales have rippled through the industry, affecting business-to-business suppliers too. To boost sales and support, several cafés are selling products like milk, dairy alternatives, bread, eggs, and produce direct to consumers. Some have even bundled these items into care packages for customers apprehensive to visit a busy supermarket.
Part of the solution
Hospitality may be struggling, but the need for sanitary or hygiene products is on the rise. Coffee businesses around the world have adapted their production to assist.
Super automatic manufacturer Eversys has produced protective visors for hospitals in Switzerland. German coffee giant Melitta has shifted its paper filter facility to manufacture face masks. In Australia, Detpak parent company Detmold has employed 160 extra staff to produce respirator and surgical masks for the South Australian and Federal Governments.
St Ali has also gotten onboard, partnering with chemical production company HydroChem to produce and distribute hand sanitiser, a product that has seen a surge in demand during the pandemic.
“HydroChem doesn’t specialise in sanitiser, but when all this started happening, they had one of their major clients reach out and see if they could make it. We happen to be good friends with HydroChem through various connections and had a lot of staff that all of a sudden didn’t have any work. It was fortuitous timing,” Lachlan says.
“This has meant we’ve been able to keep more people employed [saving 72 jobs], have breathing space to continue doing everything we can for our wholesale customers, and keep the lights on. It’s been the lifeline we’ve needed to get through this period and an opportunity we’ll always be grateful for.
“It’s been an enormous challenge to fulfil the volumes we’ve had coming our way, but I think we’re going to come out of the coronavirus pandemic stronger than ever and with a team that has each other’s backs.”
Connecting the community
Roasters may be experiencing a boost in retail sales, but for most, this won’t outweigh the damage done to their wholesale business and partners, and are doing what they can to support the cafés that buy their coffee.
St Ali launched its Wholesale Assistance Package in March to provide its partners with some financial relief for its wholesale customers to still operate. Single O in New South Wales has launched a Kickback program, giving cafés a 30 per cent cut in free coffee credits when their customers buy from its online store. Grinders Coffee Roasters is offering counselling services to customers and released a Coffee Care Kit, including advice on service changes, government assistance, and digital marketing.
Social media and the internet have also provided opportunities for roasters to continue training and education. Campos Coffee, Genovese, Veneziano, and many others are sharing advice and instructions on Youtube, Instagram, and their websites for brewing at home. Ona has even used Zoom to broaden the audience of its training courses.
“We believe that more than ever, it is important for people to have access to information, feel connected to the wider community, and continue learning,” Ona’s Jordan says.
“We are focusing less on practical skills and paying more attention to theory… It’s no use just learning how to make coffee well on one machine. It’s essential to understand brewing variables, techniques, coffee ageing, and more. We’re also looking at providing online training for other techniques, such as the freezing and preservation of coffee.”
Post-coronavirus, it’s unlikely the coffee industry will snap right back into the place it was before. While the financial impact will eventually fade, a cultural shift in consumption behaviour and new demographics of specialty coffee drinkers could persist. Jordan says new technologies, methods, and styles of service that emerged during this period will permeate the industry for years to come.
“The global coffee community is one that is bound in community, sharing, traceability and knowledge,” Jordan says.
“I feel optimistic that no matter what changes occur to our industry and the world at large, these ideals will be upheld and that we will be a brave, new world of coffee that has been thrust into the forefront of the modern world.”