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JDE Coffee ready to “turn on a dime” for traffic light system

3rd December 2021 By Bridget O'Connell | bridget@foodticker.co.nz | @foodtickernz

The boss of New Zealand’s largest hot drink manufacturer says it has had to “turn on a dime” to meet shifting Covid demand, and is bracing for more change with today’s traffic light system.

Hospitality in Auckland opens today but expect the environment to be fluid, says Nick Cowper.

Director and country manager of the New Zealand arm of the Dutch-listed coffee giant formerly known as Jacobs Douwe Egberts, Nick Cowper, said the broad base of the business across segments and price points has been beneficial, as well as the fact that it manufactures some products on-shore.

JDE’s portfolio included imported coffee brand L’or, Moccona and Kona, as well as homegrown favourites like Bell and Ti Ora tea, and Hummingbird, Jed and Gravity coffee, with manufacturing sites in Auckland and Christchurch, where Hummingbird was founded.

It acquired the New Zealand brands through the circa $100m acquisition of BrewGroup in 2017. This purchase saw Cowper – the son of hummingbird founder George Cowper – join the group as a business manager and work his way up to become country manager in June this year.

“The benefit of our broadness over channel, our broadness over price partition from the brand perspective, and segments in terms of different formats and then that final one in terms of local versus imported has given us the ability to turn on a dime and ramp up production fulfil demand as channels shift,” Cowper told the Ticker.

This gave it some degree of flexibility over the past 18 months when it – like the majority of FMCG businesses – was battling supply chain delays.

“Having that manufacturing gives you the ability to surge,” Cowper said.

JDE splits its activity between its ‘out-of-home’ business – around 40% of total sales in segments such as foodservice, offices, hotels, and leisure like airports – and ‘in-home’ which is roughly 60% of sales through retailers and includes its Hummingbird direct-to-consumer channel.

After a period of subdued activity in some of its out-of-home segments in Auckland, Cowper said the country’s move today to the government’s traffic light Covid-19 Protection Framework, which will see settings reviewed regularly, will again be relying on the agility it has been developed over the past 18 months.

“There has been a channel shift in where the customer is consuming coffee, but we’d like to think as we change alert levels or traffic lights that people will get back to some degree of normality and we start to see that channel mix shift again,” Cowper said.

“As of this week hospitality business in Auckland will be able to get things going, which is such an important channel, but we expect it to be continually quite fluid.”

Despite a period of patchy trading out-of-home, Cowper said the firm has benefitted from a surge in retail sales as in-home coffee consumption by locked-down consumers skyrocketed. More people investing at in-home coffee equipment contributed to “good growth” in sales.

As a whole, total coffee sales in all retail segments – beans, capsules, ground, and instant, for example – jumped a significant 14.4% in 2020, and has continued to creep up this year with a further 1.4% growth recorded in the year to date, according to Neilson.

As at 31 October, JDE Coffee had a market share of 30.9% of retail sales value, making it New Zealand’s largest hot beverage manufacturer, ahead of Nestlé, which had a share of 24.7% at the same date with its brands including Nescafé and Starbucks.

Looking ahead, Cowper said the priority for the business was “to be at the forefront of where demand goes” to drive organic growth with expectations of continuing covid disruption high.

In its half-year results to the 30 June 2021, Dutch parent company JDE Peet said sales were up 4.2% overall, with in-home up 4.9% and out-of-home up 0.7%. It posted an EBIT of €636m, up 0.8%.

 

 


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