Starbucks is serious about grocery, and has invested a lot in making the channel a boon for their business.
Canadian Grocer spoke with Diego Gianelli, director of international channel development at Starbucks Coffee Canada about the company's plans for grocery (and java in general).
Canadian Grocer: Can you tell me about your background?
Diego Gianelli: I am originally from South America, where I began my career in marketing and business development, before moving to the U.S. where I worked in financial services.
Over the last 10 years in Canada, I have held various marketing and brand management roles at some of the country’s top-tier consumer packaged goods brands.
What is your role at Starbucks Canada?
At Starbucks, I am responsible for running the consumer packaged goods business, covering grocery, drug, mass merchandisers and wholesale retailers.
Having worked in consumer goods industries abroad, I find Canada a quite fascinating market, with unique characteristics, one that evolves quite fast and in many directions, encourages us to continue to reinvent our portfolio and how we interact with our consumers.
How is the Canadian grocery market different/unique?
Firstly, Canada is a highly consolidated retail market. The top three Canadian retailers – along with their respective banner brands – represent about 50 per cent of the market across the country. Conversely, when looking at the North American landscape, the U.S. retail market is shared more evenly among many more operators, with both national and regional banners spanning from coast-to-coast.
Secondly, some Canadian national retailers operate regional banners that have distinctive positioning and strategies to cater to specific shoppers. This presents a great opportunity for a company like Starbucks, which is focused on creating meaningful connections in a very personal and customizable manner. We take every opportunity to tailor our plans and programs to ensure they are relevant and specific for our customer shoppers.
Thirdly, Canada is a highly diverse nation. While coffee and tea are universal beverages, it is important for a company like Starbucks to create moments of connection that people can identify with outside of our stores. Whether we are looking specifically at the differences in terms of taste preferences within cosmopolitan cities – Canadians in Quebec tend to prefer sweeter, richer, bolder flavours than those in Toronto or Vancouver – or the cultural diversity across the country, we’ve moved far from a one-size-fits-all approach to more targeted, personal solutions. Many of our marketing/shopper activations are customer-specific.We see this happening in other areas around the world but not at the pace we are seeing in Canada.
What have been some key initiatives that have helped the brand in the sector?
The launch of Starbucks Blonde Roast in Canada has been a great success with consumers. In fact, Canadians drink twice as much Starbucks Blonde Roast per capita than Americans. Our research found that 60 per cent of Canadians prefer a lighter roast. It’s the flavour profile most Canadians have grown up with and pairs well with milk and sugar.
We have over 1,200 Starbucks stores across Canada. Through our grocery and channel business, we’re able to bring Starbucks to existing customers wherever they are and also attract new customers in places where we don’t yet have stores. Cross-channel promotion in Starbucks retail stores and grocery, mass, drug and wholesale channels helps us tell a cohesive story and ensure that customers had a consistent experience, regardless of where they were buying their coffee.
When it comes to innovation in the category, what are key trends that you're witnessing?
From Starbucks perspective, we’re focused on delivering an authentic coffee or tea experience that starts with our coffee farmer partners, ethical sourcing and continues with those special moments of human connections; whether is at home, work, on the go and in the digital space.
In the grocery channel, we see a major opportunity for Starbucks to lead the premium single-serve category as the platform of choice for those consumers looking for a consistent high-quality hot beverage at home. Similarly to how our consumers come to our cafes to explore all possible customizable drinks, we are investing to bring that experience to their home through the several choices of Starbucks coffees and Tazo teas single-serve pods.
We’re also seeing movement in the historically stagnant instant coffee category. When we introduced Starbucks VIA Ready-Brew in 2009, we reinvented instant coffee and offered consumers the opportunity to enjoy a rich, aromatic instant coffee that tastes like a freshly brewed cup of Starbucks Coffee. Today in Canada, VIA sales continues to outpace category growth. This is also supported by great, limited time offerings of seasonal favourites like Starbucks VIA Ready-Brew Christmas Blend and Starbucks VIA Ready-Brew Peppermint Mocha.
Are there things you're trialing or have trialed in Canadian grocery that worked, and now you're introducing in other markets?
Having the ability to do cross-channel promotion in grocery channels and through our 1,200 retail stores is a key point of differentiation for Starbucks and one that is part of our blueprint for profitable growth. This is particularly evident when it comes to seasonal programs.
For example, our holiday portfolio includes signature, limited-time offerings like Starbucks Christmas Blend coffees; Starbucks Peppermint Mocha and Joy Tazo teas. Not only do we offer these in various formats like Starbucks VIA ReadyBrew, K-Cup pods and Roast and Ground, but we also sell and support them through fully integrated 360-degree marketing campaigns.
We have executed very cool cross-channel activations with specific offers that drive traffic and sales in both Starbucks stores and Canadian retailers. For example, we may offer a free tall beverage in our stores with the purchase of any Starbucks Whole Bean or Starbucks Roast and Ground in grocery.
What are the key areas of grocery retailing that you are trying to improve (through merchandising/marketing/etc) for your brand and others?
We have recently redesigned and optimized our Starbucks coffee portfolio as well as our Tazo Tea packaging to better connect with customers in the aisle. Our new coffee packaging is simpler, designed to make it easier for our customers to identify in the grocery aisle and to make shopping in the aisle a more engaging experience. The packaging is cleaner, with bolder emphasis on the taste profile of each of our blends and single origin coffees.
We know our consumers want to know how coffee tastes and shoppers look for the Roast level as the keydescriptor that communicates the flavor of the coffee. This insight sparked the idea to group our coffees under three roast levels and made it our second most important messaging in our packaging communication hierarchy. Now shoppers can better relate to our coffees and have a better anticipation of what taste/flavour to expect depending on the roast spectrum: bold, medium, blonde.
In the tea category, Tazo has also undergone a packaging redesign. The new refreshed Tazo branding better reflects the brand promise of “Tazo is Life Reblended.” This simplified aesthetic features crisp and clean ingredient-forward images that are inspired by the culture of tea.
Similarly with the Starbucks Roast & Ground coffee packaging redesign, Tazo’s new packaging makes it easy for customers to shop, offering clear communication of flavours and ingredients and caffeine amounts.
Tea has been a bourgeoning category over the past few years. What are some interesting initiatives for grocery?
Tea is the second-most consumed beverage in the world. Tazo is one of the fastest-growing brands in the total tea category and is outpacing category growth in Canada. Tazo Tea is available in a variety of formats, flavours and usage occasions including 11 Filterbag Teas, four Full-Leaf Teas, four Chai latte Concentrates and two K-Cup Packs. It’s certainly a category we are focused on maintaining growth in.
What's the company's focus in grocery over the next year?
We’ll maintain focus on delivering quality and convenience; and to delight consumers with new ways to experience coffee or tea. We’ll continue to drive cross-channel opportunities in our own Starbucks stores and with our retailers across Canada as well as further developing turn-key merchandising solutions for our retailers to create experiences beyond a product in an aisle.
Another key area of focus for us is to build strong, strategic relationships with retailers. It’s our goal to work more closely in partnership with our trade customers to share insights and consumer trends all in effort to help grow the entire category, one cup at a time.