A cup of coffee can provide a boost of energy to an individual. There are many names for coffee brands, but no matter what the recipe – a cream-topped cappuccino or a frothy, whipped dalgona, a cup of coffee awakens and energizes people every morning. Recently, some budget-pleasing beans and artisan products have also spread like wildfire on social media. The product is no longer a productivity booster for long work hours during pandemic lockdowns. It has recently gained attention as a lifestyle product of exceptional value.
A direct-to-consumer (DTC) or business-to-consumer (B2C) business sells its products directly to its clients and avoids third-party retailers, wholesalers, and other intermediaries. A DTC brand usually sells only on the internet and specializes in a single product. There are some direct-to-consumer brands that have opened a few stores to complement their main e-commerce platform through the clicks-and-mortar business model.
A direct-to-consumer coffee company connects local coffee roasters directly with their customers. Increasing demand for single-serve coffee brewers, and the rise in demand for certified coffee products, are expected to drive the direct-to-consumer coffee market.
Direct to Consumer over Traditional Supply Chain
In the traditional supply chain process, the companies get into partnerships with producers, warehouse owners, distributors, and retailers to deliver their products to the consumer.
In contrast, a Direct-to-Consumer brand has no relation with the producer and distributor. They produce the goods and distribute the products to the customers.
A direct-to-consumer campaign is an approach that directly reaches the consumer, often through the Internet. It removes the intermediaries, allowing the brand to fully control production, supply, and customer experience from beginning to end.
The company owns its production facility, warehouse, and delivery agents, and marketing department.
They are free to produce, brand, market, and target their customers as they see fit by removing the traditional barriers.
Merits and Demerits of Direct-to-Consumer
Several merits and demerits of direct to the consumer are listed below:
Merits of Direct-to-consumer
• Control Over margin: The elimination of resellers allows brands to control their margins better. Direct-to-consumer brands market their products online in order to reach a much broader audience. Their strategy involves building awareness of their brand by leveraging their social media presence.
• More Customer Information: By eliminating middlemen, businesses are able to acquire customer information directly. In D2C, knowledge of the customer’s location and socioeconomic profile is extremely valuable. It is beneficial to improve your marketing techniques and product placement by having more data.
• Personalized product: It has a direct relation to gathering customer data. It is more effective to design your product around the needs and wants of the clients if the company has more information about them.
Demerits of Direct-To-Consumer
• Cybersecurity: Due to the sensitivity of handling consumers’ data, Direct-to-Consumer e-commerce firms are at risk of data breaches. The security of data has become a top priority, particularly in online businesses. A major concern is not only the threat of a higher security breach but also the sale of personal information.
• Increased competition: In the last decade, the D2C landscape has shifted significantly, with more and more companies capitalizing on the strategy to compete with each other. A few years ago, there were startups selling glasses, makeup, and consumer products. Now, it’s Amazon, Comcast, and Verizon entering the field.
• Increased liability: D2C marketing liberates brands from third-party dependency, but also increases their liability for things they normally share with third parties (like shipping, sensitive customer and financial information, cyber breaches).
Factors Driving the Purchase Decisions of Online Coffee Buyers
The two major factors that drive the purchase decision of online coffee buyers are: Packaging and Flavors
Packaging: Buyers get attracts to attractive packaging and colors. It’s human nature to gets attract to colorful things. Attractive packaging helps the companies to catch the attention of the customers.
For online shoppers, the most important factors in purchasing a coffee are its brand, flavor, and aroma. Taste and aroma are used to describe a product’s flavor, the most important factor in delighting consumers. There are many D2C coffee brands that offer a wide range of flavor options such as French vanilla, hazelnut, caramel, dark roast, cinnamon, dark chocolate, sparky orange, and many other varieties.
How Companies are making their Coffee Brand Stand Out?
Different companies have strategies to make their brand stands out of the box. Things to remember to make your coffee brand stand out:
• Unique Selling Point: The introduction of just another product on the market won’t help the brand stand out. There are already a number of versions of the same product available on the market. The brand must have a USP and differentiate directly from Direct-to-Consumer products, or they will not be valued by customers.
• Cheap Products: The cost of Direct-to-Consumer products is relatively low because there are no complex networks in the middle and the business deals directly with the customer. Further reductions in cost should occur as more businesses shift to D2C.
• Customer Focus: Brands that sell directly to consumers receive direct feedback about their products and offerings, which can help them improve them. Having loyal customers strengthens customer relationships.
• Market Understanding: It is important to understand where the brand stands with the product before bringing it to market. The success of the business depends on this. It takes more than knowing how to do R&D to understand the market. It involves knowing how to do production, packaging, marketing, channel distribution, and how to place products.
Market Overview and Brand’s Story
According to Astute Analytica’s report on the global D2C market, the market will grow at a CAGR of 15.3% during the forecast period from 2021-2027.
The prominent brands that lead the global D2C coffee market are Bean Box, Blue Bottle, Craft Coffee, Gevalia, La Colombe Coffee, Nestle, Pact Coffee, Peets Coffee, Spinn Coffee, Sudden Coffee, Tata Consumer Products Ltd. (TCPL), Tandem Coffee, Vega Coffee, and others.
Bean Box: The Bean Box is a direct-to-consumer coffee bean brand headquarters in the United States. Their coffee is handpicked from Seattle and provides personalized roasted coffee for their customers.
Sudden Coffee: The company was founded by Joshua Zloof and Kalle Freese in 2015 and is based in San Francisco, California, USA. Sudden Coffee launched Specialty Instant Coffee, a line of instant coffee made from single-origin beans, one of the first in the world.
Tata Consumer: Tata Group is an Indian consumer products company with a headquarters in India. In southern India, the company owns 19 coffee estates. Among the largest coffee plantation companies in the world, Tata Coffee is one of the largest.
Nestle: The Nestlé company makes the Nescafe brand of brewed coffee. Various forms of coffee are available. Essentially, it is a portmanteau of ‘Nestle’ and ‘cafe.’ Their flagship coffee brand was first introduced to Switzerland on 1 April 1938.