Java Straight Up - coffee products

American Demographics, Feb, 2001 by Matthew Grimm

Younger consumers want their caffeine fix. But P&G's Cafe Latte may be too weak for their bold tastes.

Not so long ago it seems, giant packaged-goods companies watched with irksome impotence the demise of coffee as a staple of the American diet. Given pause by the weekly wellness fads of the 1980s and early '90s, and spurred by the mass realization of mortality by Baby Boomers, consumers began trickling away from demon caffeine at roughly the same rate that health clubs popped up in their neighborhoods.

However, mortality weighed less heavily on Generation X. As they assumed their place in the rank and file of the work force and put their stamp on American leisure pursuits, caffeine's amphetamine properties became a boon, not a bust. Steadily over the past decade, a wave of retail concepts began sating that jones with java formulated for contemporary tastes - typically espresso-based, hot or iced, all high-octane. And so it's about time the foremost of all packaged-goods behemoths woke up and started smelling the adrenaline, as Procter & Gamble seems to have done with its new Folgers Cafe Latte mixes.

For years, instant coffee has been sort of the trailer-park sister of the coffee business. Taster's Choice, Folgers Crystals, Sanka - these seem to be things freeze-dried in time, a legacy of the 1950s Wonder era, when faster, automated, and more convenient held a whiz-bang allure for a newly minted suburban bourgeoisie. These days, those products still reside in the homes of that generation, or maybe in the cupboards of college students as emergency rocket fuel. Even more enhanced versions of the product, such as Kraft's General Foods International Coffees, have in recent decades settled for a role as hot chocolate-plus, an exclusively female comfort food with which to celebrate quiet, special moments, or perhaps watch The View.

P&G's campaign for Cafe Latte blasts out of such cultural stodginess, taking a subtle swipe at GF International Coffees for good measure. A TV spot, running on MTV among other media, shows three twentysomething adults relaxing on a couch sipping coffee. Once we are shown it is Folgers Cafe Latte, a voice-over tells us, "This isn't one of those coffees you sit and sip as the world passes you by." Soon the youth have pulled the vinyl cushions off the couch and are using them to sled down a snowy hill, while the voice-over bids, "Break into

your day."

To stress a pseudo-beatnik, coffeehouse image and the brand's espresso-esque flavor cues, P&G is sponsoring free shows of world, funk, and jazz music bands across the country, and the Cafe Latte Web site offers a free MP3 player download, as well as MP3 recordings of the featured acts. The flavors also reflect the theme: Vanilla Vibe, Mocha Fusion, Chocolate Mint Mambo, Mocha Almond Jive, Caramel Groove, and Straight Up Latte.

At first blush, the launch of the product and its positioning makes sense. After a steady decline in consumption in recent decades, daily coffee-consuming Americans accounted for just 47 percent of the total population in 1995, before rebounding to 54 percent in 2000, according to the National Coffee Association's (NCA) exhaustive annual "National Coffee Drinking Trends" survey. Largely driving that trend carom has been an infusion of 18- to 24-year-olds, whose representative daily coffee intake rose from 19 percent of the total group in 1998 to 23 percent in 1999, and again to 25 percent last year.

Moreover, what's brought them to the party is the richer blends and varieties sold by the likes of Starbucks, Gloria Jean's, Caribou, and New World Coffee - gourmet coffeehouses that have grown in number from 2,800 in 1994 to more than 8,000 today. These outlets provide a wide assortment of menu offerings that the Cafe Latte flavors attempt to approximate. Among daily drinkers, this gourmet or specialty category has tripled in three years, from 3 percent of the adult population in 1997 to 9 percent in 2000. Occasional use has also boomed, from 35 percent of the population in 1997 to 53 percent in 2000.

Against this background, there would seem to be a ripe market for an easily prepared, hip-positioned coffee product. P&G has chosen wisely to ride the same groove as PepsiCo's Mountain Dew with its hyper-caffeinated soda, Coke's similar Surge, or even a new wave of energy drinks such as Red Bull. All are spun as "extreme" drinks, in the context of an on-the-go (if not "go-go '80s") leisure environment, sort of "fun juice" without the alcohol. Further, traditional beverage players, such as Arizona, Pepsi (through a Starbucks joint venture), Coke (in a distribution deal with Planet Java), and any number of smaller regional players, have all made their own inroads with milk-heavy, ready-to-drink (RTD) iced coffees.

But the market seems still to await a packaged product - RTD or canister-borne - to feed youthful caffeine-fiends' heads as a sort of "It" brand. The Dew of java, as it were. All this said, Folgers Cafe Latte likely won't fit that bill. P&G would not comment on the launch, but its problem is basic: living up to its positioning.