Peet’s Introduces a Fresh Take on Cold Coffee

By Stephanie Storm

March 26, 2015

A storm is brewing in the world of cold coffee.

On Wednesday, Peet’s Coffee & Tea, the company that introduced America to dark roasts, will begin selling a new crushed-ice coffee drink it calls Javiva — and will emphasize that, unlike its competitors, the concoction is made from “fresh, brewed coffee.”

While that might seem obvious, Peet’s marketing is aimed at drawing attention to the fact that most competitive coffee-and-crushed-ice drinks, known in the business as “blended iced coffees,” are made from instant coffee powder, coffee syrups and coffee extracts, not from pots of brewed coffee sitting in the stores where they are sold.

“We brew fresh coffee in the stores, and it only makes sense that fresh coffee would go into these beverages,” said Tyler Ricks, chief marketing officer at Peet’s. “But as we talked to consumers, we realized they had the impression everyone else was using fresh coffee, and that’s not the case.”

The company’s efforts to distinguish its products from rivals are occurring as it concentrates on expanding into major urban markets like Chicago and Washington.

Dunkin’ Donuts Coolattas are made from a “coffee extract,” which a spokesman described as a “very concentrated brewed coffee.” Coolattas are “made with coffee extract in order to ensure product consistency and to deliver the signature coffee flavor our guests love, only in frozen form,” John Costello, president for global marketing and innovation at Dunkin’ Donuts, said in a statement.

Lisa Passe, a spokeswoman for Starbucks, said that its blended ice drinks were made with Frappuccino Roast, “a blend of soluble coffee made from 100 percent Arabica beans crafted specially for our Frappuccino beverages.”

“Using hot brewed coffee doesn’t offer the creamy texture our customers are looking for,” Ms. Passe wrote in an email.

She noted, however, that customers can customize their Frappuccinos in a variety of ways, including by adding shots of espresso for a more “coffee-forward” flavor.

With its new “Stand Up for Fresh” marketing campaign, Peet’s is hoping to capitalize on the increasing desire of consumers — particularly the generation known as millennials — for “authenticity” and simplicity in the foods they buy.

Peet’s, formally named Peet’s Coffee & Tea, is undergoing a bit of an overhaul since its acquisition by Joh. A. Benckiser, a German consumer products conglomerate that paid $974 million for the company in 2012.

The company, now known as JAB Holding Company, also bought Caribou Coffee that same year and has been closing stores in smaller markets and turning Caribou stores into Peet’s. Mr. Ricks said the only other coffee company he knew of using fresh brewed coffee in its blended ice drinks was Caribou.

Founded by Alfred Peet, a Dutchman who had worked in his family’s coffee business before settling in San Francisco, Peet’s opened its first store in 1966 in Berkeley, Calif., at Walnut and Vine Streets. Alice Waters opened Chez Panisse just around the corner a few years later.

Smack in the middle of what Peet’s chief executive, Dave Burwick, calls “ground zero of the gourmet food movement,” the shop quickly became a destination for foodies, including Jerry Baldwin, Gordon Bowker and Zev Siegl, who foundedStarbucks in Seattle in 1971.

Some of the coffee sold in the early days of that first Starbucks store in Pike Place Market was roasted by Peet’s, and in 1984, Starbucks bought Peet’s, which then had just four stores.

Three years later, Starbucks was sold to an investor group that included Howard D. Schultz, who remains the chief executive of the company, whose market capitalization is now above $70 billion. Its founders and some other investors then went to work to build Peet’s, taking it public in 2001.

While Starbucks opened stores on what seems like every significant street corner, Peet’s focused more on building its business through grocery stores, cobbling together a robust distribution system for a company its size.

“We have about 500 routes around the country, and our reps go into stores two or three times a week,” Mr. Burwick said.

The company stamps each bag of coffee it sells through some 14,000 grocery stores with the date on which the beans inside were roasted. Distributors are ordered to buy back any bags close to 90 days from that roasting date.

Such systems are common in much larger companies like PepsiCo, where Mr. Ricks and Mr. Burwick once worked, but not as much in smaller businesses like Peet’s.

Similarly, coffee brewed in some 235 Peet’s stores is discarded every half-hour. “We are meticulous and maniacal about freshness,” Mr. Burwick said.

Peet’s previous blended ice drink, called Freddo, was an also-ran, Mr. Burwick said. “To me, Freddo was a good example of one of the quirky things about Peet’s — you couldn’t buy a small one,” he said. “We only made it large sized.”

The product, which Peet’s introduced as a defensive play as it saw business migrating to competitors who had strong blended ice drinks, never performed particularly well. Cold coffee drinks, though, are gaining market share, according to research in 2013 by Mintel. The research firm found that cold coffee drinks accounted for 24 percent of all coffee sold in United States restaurants and coffee shops that year, compared with 19 percent in 2009.

“Right now, the blended ice category is extremely underdeveloped at Peet’s, so this is one of our biggest growth opportunities,” Mr. Burwick said.

Javiva will be made from coffee brewed at double strength to hold up under the ice and 2 percent milk. It also will contain a powder, a proprietary blend of vanilla powder, sugar, monk fruit extract and other ingredients, to give the blend a smoother texture. “The coffee flavor will come from the fresh brewed coffee we brew in our stores,” Mr. Ricks said.

A storm is brewing in the world of cold coffee. On Wednesday, Peet’s Coffee & Tea, the company that introduced America to dark roasts, will begin selling a new crushed-ice coffee drink it calls Javiva — and will emphasize that, unlike its competitors, the concoction is made from “fresh, brewed coffee.”…

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