You wake up on a lazy Saturday morning, and instead of rushing out the door to your favorite coffee shop, you simply stroll into your kitchen. With a bag of coffee beans on hand, you can easily brew your favorite cup of Joe, all while wearing your pajamas. The convenience of brewing coffee at home is hard to beat.
In 2010, Starbucks recognized the power of this and introduced its line of at-home brewing options. And just 10 months after this launch, Starbucks announced that it had achieved a milestone, surpassing the $100 million mark in global sales for its at-home brew products.
At the time, Starbucks reported that 55% of Starbucks customers surveyed enjoyed it at home, 25% at work, and the remaining 20% while on the go, making Starbucks home brew options a convenient way to enjoy the brand anytime.
As of today, Starbucks has reported a total revenue of $35.016 billion for the 12 months ending June 30, which encompasses revenue from various sources, including coffee brew sales.
With these promising outcomes in mind, Blue Bottle Coffee, a brand established by James Freeman, a struggling clarinet player who launched a $700 million brand using $15,000 in credit card debt, is venturing into the realm of home brew options for its customers. This endeavor is being realized through a partnership with Nespresso.
In a Thursday (Oct. 5) press release, the brands announced the release of Blend No. 1, a limited-edition mild coffee blend crafted from a combination of beans sourced from Ethiopia and Uganda that was specifically designed to be compatible with Nespresso’s Vertuo machines. The collection will be available to customers at Nespresso boutiques worldwide beginning Oct. 6, and the product is set for a full-scale launch on Oct. 18.
With this team-up, instead of launching at home options on its own, Blue Bottle can tap into Nespresso’s established customer base and appeal to an audience that Nespresso has already nurtured.
Additionally, it allows the brand to diversify its product line to capture different segments of the coffee market, catering to various consumer preferences.
For Nespresso, the collaboration means capturing the attention of a different audience that Blue Bottle has already cultivated — a younger audience. In the past, Nespresso successfully introduced its affordable and visually appealing Vertuo Pop machines, broadened its range of iced coffee options and forged a partnership with Starbucks to create a limited-edition blend earlier this year.
The move is also timely as more consumers are trading down and finding more ways to still enjoy little luxuries but on more of a budget.
Nestlé, the multinational food conglomerate that owns Blue Bottle and Nespresso, highlighted in a presentation during Bernstein’s Pan European Strategic Decisions Conference in late September that consumer spending on food and beverages is been declining since the beginning of the year.
“People are consuming less. Are they eating less? Are they wasting less? Are they eating more out of home? Difficult to know,” Nestlé EVP, Chief Financial Officer François-Xavier Roger said at the event. “I don’t think that it will last but let’s not forget that we do operate in slightly declining markets by volume, which did not happen that much in the past.”
Grocery stores are also witnessing consumers scaling back due to economic challenges. As an example, retail titan Kroger has observed budget-conscious shoppers reducing their spending and opting for more cost-effective product choices.
“The effects of sustained inflation, reduced government benefits including SNAP [Supplemental Nutrition Assistance Program] and higher interest rates have pressured customer spending, especially for those on a tight budget,” Kroger CEO Rodney McMullen told analysts on an earnings call earlier this month. “These customers are buying in smaller pack sizes, [at] times prioritizing the lowest shelf price, … building smaller baskets and switching to lower-priced items to stretch their budgets.”
Read more: Grocery Shoppers Not Only Trade Down but Now Cut Back
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