Trade up your coffee offer to maximise on-trade margins

06-Jul-2018 - Last updated on 06-Jul-2018 at 15:23 GMT

Trading-up: Lavazza UK managing director David Rogers stressed that the perception of coffee was changing within the trade

Pubs need to offer a recognised coffee brand to take advantage of the growing demand for premium coffee within the on-trade, according to Italian coffee producer Lavazza.

Speaking to The Morning Advertiser at Wimbledon, where the brand is the official coffee partner, managing director David Rogers stressed that the perception of coffee was changing within the trade, and highlighted breakfast as one area in which pubs could seek to grow their business with a premium coffee offer.

“For a long time the perception of the service of coffee in pubs, bars and other locations was of just a quick refresher at a very low price, but these days each outlet needs to make their space work so much harder,” he said. “For the pub trade for example, it is no longer suitable just to be a traditional pub outlet serving beer to the middle-aged community. Everywhere has a food offering and likewise they require a coffee offering too.

“Breakfast has become such a huge part of this. The Wetherspoon chain realised a few years back that a lot of their staff were in prepping for the day, so why not use that as a commercial opportunity for them? They've moved into breakfast and become an absolutely enormous outlet for the UK.

Opportunities for trading up

“A key part of this is the image of the coffee,” he continued. “If you are serving reasonably good food but the coffee and tea image is low then you won't deliver versus other competitors. So what we have seen is a gradual increase in the premiumisation of the coffee offering across all the public house sector.

“If you have a very low-grade coffee then you can't charge the equivalent of the coffee shop chains. If you have a recognised brand that has great quality behind it you can easily charge £2+ for a cup with the requisite margin that comes with that. So it's an opportunity to trade up and maximise profitability.”

Lavazza is the main supplier of coffee to JD Wetherspoon, as well as a number of Mitchells & Butlers sites. Rogers said that the company was seeking additional contracts, but did not wish to see “saturation” in the UK market.

'Special relationship'

“We take it chain by chain, or group by group, but we don't want saturation,” he said. “We want special relationships with our customers and we want them to buy into our ethos of coffee. We want to maintain the image of the brand.”

Rogers also predicted coffee becoming a bigger part of the on-trade in the future, pointing to it as a key part of the “gastronomic solution” for venues looking to diversify.

“We always say that the lasting impression of a fine meal is the coffee that you serve at the end of it,” he said. “That is the last thing people remember when they get up at the end. So everyone now, from the independent pubs to the chains, are all upping their game on what they are serving, and they need a brand like Lavazza, which resonates strongly with people to be able to do that.”