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America has a love affair with coffee. Every day, more than half of the country’s adult population admits to habitually downing a cup of joe—the liquid equivalent of 146 billion cups each year. And America is not alone. Coffee has captured the adoration of the entire world as well. Second only to water, coffee ranks as the most consumed beverage on the planet.
The relationship Americans have with coffee has evolved in both price and presentation over the years. The simple five-ounce nickel-cup of coffee from the 1950s is a thing of the past, now replaced by gourmet roasting systems, organic beans and 32-ounce servings. Retailers ranging from Dunkin’ Donuts to burger giant McDonald’s have jumped on the gourmet coffee bandwagon, priming consumers to not only expect more from their coffee, but to pay more as well.
On cue, the direct selling industry has begun to take advantage of coffee’s robust market, adding new coffee-focused companies to its ranks with overwhelming success. Direct selling companies like Boresha Coffee and Organo Gold have entered the market pushing coffee as their marketed frontrunner, and many other companies are following suit. “Coffee is a hot item in direct sales,” says Steve Wallach, CEO of AL International Inc., which is the new company name for recently merged Youngevity Essential Life Sciences and Javalution Coffee Company. This merger has since brought coffee to their extensive line of products. “It’s like a land rush for a coffee product.”
The pairing of coffee and direct selling, however, is not necessarily a new concept. Amway, who began selling coffee in 1986, was one of the first direct selling companies to enjoy the revenue and marketability coffee provides. “Coffee accounts for around 10 percent of sales within our beverage line,” says Michael Herblet, Manager of Private Label Sourcing for Amway North America. “It has a following right out of the starting gate.”
AL International Inc. has experienced impressive sales growth with the addition of coffee to its product line. CLR Roasters, the company’s retail and wholesale coffee company and maker of JavaFit®, is experiencing tremendous growth–in excess of 100 percent year after year. “AL International’s organic growth has been about 49 percent year over year,” Wallach says. “Bringing in JavaFit and CLR Roasters, and unifying the sales as AL International has been a great combination. The last year and a half has been good from a marketability standpoint, and coffee is a big part of our strategy.”
Why Consumers Love Coffee
One glance at a coffeehouse drive-thru during the morning commute will tell the tale of Americans’ adoration for their morning liquid wake-up call. But what is it about coffee specifically that creates such an attachment and drives such need among consumers? Caffeine is often named as the No. 1 culprit that makes coffee drinkers keep coming back for more, but it does not tell the whole story. Other caffeinated products like sodas and tea can be addicting as well, but none with as much power or following as coffee.
A large piece of the puzzle, many direct selling leaders say, is how coffee makes consumers feel. “Coffee is a very sensuous, marketable product,” Wallach says. “People like the imagery of coffee; they’re familiar with coffee shops, the aroma, and the visual aspect of deep, rich coffee beans.” With such a recognizable aroma, coffee is an emotional product that evokes certain feelings. For some, it signals the start of a new day; for others, it is a reminder of relaxed afternoons spent around the kitchen table catching up with friends and family. Flavored varieties of the beverage only increase the emotional tie consumers feel for their favorite drink. Flavors like pumpkin spice ring in the fall, while peppermint-flavored coffee may bring thoughts of Christmas. By adding flavored coffee varieties, these direct selling companies experience a surge in customer enthusiasm for the products, and allow room for extensive product expansion that in turn provides additional opportunities for sales growth.
With such strong consumer affection, coffee has become an ingrained part of daily life in America. What’s more, for those who depend on it to kick-start their day or for gathering with friends and family, the product is a vital part of their identity.
As Americans’ relationship with coffee has evolved, so have their views on health and wellness. Thanks to increased awareness and education, diet and healthy food choices are often at the forefront of consumers’ minds. For many health-conscious coffee drinkers, worry about the possible adverse health effects associated with drinking coffee has raised concerns. However, recent scientific research offers good news for coffee drinkers and disproves previous misconceptions.
Coffee: A Health Food
Coffee is no longer a guilty pleasure. Many reputable studies, including a Harvard study released last year that followed 50,000 men over two decades, are proving quite the opposite. The Harvard findings show a 60 percent decreased risk rate of prostate cancer—an astonishing number that persisted even among other risk factors like smoking and obesity. And that is just the tip of the iceberg. Earlier studies have shown coffee to reduce the risks of diabetes, liver disease, breast cancer, gallstones, Alzheimer’s disease and Parkinson’s disease. Even caffeinated coffee, which had a particularly bad reputation in past years, is now being touted as a tool for improving memory and mood and even boosting endurance in athletes.
While coffee’s preventative health properties are a morale booster for coffee fans, direct selling companies are taking the beverage’s benefits a step further through fortification and enhancement. Boresha Coffee Co-Founder and Vice President Michael Babcock explains how there is very little difference between offering customers simple, black coffee and fortified coffee. “We’re still using the best, 100 percent organic Arabica beans,” Babock says. “We’ve just added our proprietary science to the coffee, so when customers drink it they get healthy benefits.”
The most important factor for both consumers and marketers alike is great-tasting coffee. The additional health benefits made available by each company’s uniquely fortified coffee offerings serve as a bonus that keeps customers loyal and coming back for more. JavaFit’s coffee line offers customers coffee products with targeted benefits like mental clarity, energy or immune-boosting properties, while others like Gano Excel International’s Ganoderma lucidum extract-infused coffee focuses on the benefits of one powerful supplement. These nutrition-packed coffee products combine habit with health, allowing coffee drinkers to receive the benefits of a daily vitamin supplement through a liquid medium that many consume daily without giving it a second thought. “People forget to take their special vitamins or drink their special juice,” says Mike “The Samurai” Marumoto, Director of Field Relations for Gano Excel International. “People might forget to drink their water, but no one forgets to drink their coffee. It is a way to get nutrients into your body without even thinking about it.”
The Perfect Fit
Direct selling and the coffee market seem almost made for each other. The combination of the two has proven to be a powerful sales opportunity, and is securing rapid, steady growth for the companies who have jumped into the market. “Our first year we did $2 million in sales,” says Holton Buggs, Vice President of International Sales for Organo Gold. “Our second year we did $9 million, our third year over $40 million and in 2011 our sales totaled over $100 million. Our focus for 2012 is $300 million.”
One of the most unique facets of selling coffee is the irony that it is both the product and the natural catalyst for gatherings. Regardless of the product, when distributors want to get the word out about a product, a meeting over a cup of coffee is usually suggested. For distributors who represent a coffee product, the sale is often made the moment customers walk in the door and smell the aroma of a fresh pot brewing. “The aroma of coffee grabs people’s attention,” Wallach says. “When you introduce coffee, you have an advantage because the smell attracts people. If you have a pot of coffee going, people ask about it.”
Fortified and enhanced coffee products offer a marketing angle that gives distributors an additional edge when approaching new customers. “I was on a plane last week and told the lady next to me that we had the best-tasting coffee in the world that also burns fat,” Boresha Coffee’s Babcock says. “She and three people in the row in front of me were all giving me their business cards because they wanted samples. Coffee drinkers love a good, rich cup of coffee; it is a language everyone understands, regardless of where you are from.”
Gaining new customers is only half of the objective in direct sales. To create a life-changing residual income, distributors must promote products and opportunities that create loyal customers who habitually purchase products. “Coffee is one of the very few truly residual products out there,” Marumoto says. “It is a product that eight out of 10 Americans use. If they buy yours, they will continue to do so, and you will continue to get paid.”
Sipping, Shipping and Sharing
Distinguishing itself from other products in the market, coffee enjoys great consumer awareness. Even if distributors encounter a customer who does not typically consume the product, it is likely that they at least know someone who does. “Coffee opens doors,” Wallach says. “No matter what culture or country you are talking about, people are aware of the product and know someone who drinks coffee. From a direct selling standpoint, when you have a product that has such a heightened public awareness, and is highly consumable, you have a great product opportunity.”
The marketing strategy behind selling coffee is as simple as inviting friends over to have a cup. “There is not a lot of selling involved,” Babcock says. “It is more about sharing a great product with people. We do tasting parties and invite friends over to the house. They drink our coffee, think it tastes great and want to know where they can get it. This is an impact drink.”
Sharing coffee with others can easily become a global opportunity, thanks to its simple form. “We offer single-serve sample packets that our distributors can hand out or mail out,” Wallach says. “It’s an easy product to sample because it can be popped into an envelope and sent to people around the world.”
The Next Generation of Coffee Drinkers
Few products are more effective at serving as ice breakers and equalizers as coffee. In its many forms, coffee has the ability to draw people from all demographics and age groups. In its 2011 National Coffee Drinking Trends study, the National Coffee Association of USA Inc. learned that 40 percent of 18- to 24-year-olds drink coffee daily, an increase of 9 percent from the previous year. In addition, the study showed a continued devotion to gourmet coffee even amid economic constraints among those surveyed. Such strong category loyalty among the younger generation proves what many direct selling leaders are already discovering firsthand—that the future of the coffee market will continue to be strong.
For a generation raised on gourmet coffeehouses and used to paying higher prices for a cup of coffee, direct selling offers an interesting opportunity. And it seems that while these mass or even niche retailers have often borrowed innovation from a direct selling company, in the case of coffee, the opposite may be true. A major retail brand like Starbucks may have actually paved the way and enhanced opportunities for direct sellers. “The Starbucks of the world are our best friend,” Buggs says. “They are not our competitor; they enhance our business. Prior to Starbucks, it was not socially acceptable to pay three to four dollars for a cup of coffee. It makes it easier to market to customers because they experience our coffee and expect a Starbucks-like price, when actually they can get our coffee for less than half of what they are used to paying. It makes it an easier transition for customers.”
“The Starbucks of the world are our best friend. They are not our competitor; they enhance our business.”
—Holton Buggs, Vice President of International Sales for Organo Gold
By offering a premium product at a lower cost, direct selling coffee companies are quickly building a loyal following. With the appearance of fortified and enhanced coffees on the scene, the forecast for market growth is undoubtedly positive. “This vehicle is not based on technology or fads,” Marumoto says. “Coffee has been popular since A.D. 1000, and it is not going away anytime soon. Health and wellness and herbal supplements are not going anywhere either. This is a sustainable product and will continue to be.”
Fortified Coffee: A Peek Inside
Simply looking at and smelling fortified coffee offers little evidence that nutritive properties are locked inside each steaming cup. But direct selling companies offering enhanced coffee products are proving that great coffee can offer more than great taste.
AL International Inc.’s JavaFit® brand offers a broad range of varieties of health-improving coffee—from their JavaFit Energy Extreme coffee that relies on green tea extract to JavaFit Immune Plus with Multi-Vitamins that boasts Echinacea. “We take quality gourmet Arabica coffee and add supplements, depending on the different function,” says Dave Briskie, President of Commercial Development for AL International Inc. “Just as orange juice might be fortified with calcium, our coffee is fortified with a supplement or group of supplements.”
Rather than utilize an array of natural additives, companies like Organo Gold have chosen one powerful supplement and infused it into all of their coffee products. For Organo Gold, the Ganoderma extract, from the Ganoderma lucidum mushroom, was the obvious choice because of its long Asian medicinal and preventative health track record, including being rich in antioxidants and phytonutrients. “This plant has about 4,000 years of history and is still a national treasure of China,” says Holton Buggs, Vice President of International Sales for Organo Gold.
While the benefits and supplements included in fortified coffee are significant, distributors are not spending much energy on educating customers. Instead, they choose to let the fortified coffee speak for itself. “If you have to explain coffee and give a brochure along with a cup of coffee, it puts up a hesitation for a person wanting to consume it,” Buggs says. “We just market it as great-tasting coffee. We already know the benefit is going to be in every cup; we do not have to sell it. We tell customers to drink the coffee and then tell us what they think and how it makes them feel. What we find is that within 20 minutes to 48 hours, a person will actually notice one of the benefits. Customers are able to educate themselves based on their results, versus us giving them a lot of information.”
Fortified coffee is making waves in an already thriving market. With strong consumer loyalty, and results that speak for themselves, the potential of the already explosive direct selling coffee market—now receiving a powerful revenue infusion from fortified coffee—is seemingly limitless.