Issue link: http://read.dmtmag.com/i/520302
STiR tea & coffee industry international 37 By Dan Bolton EcoCups Mother Parkers Tea & Coffee rec- ognized the importance of getting their Higgins & Burke brand of specialty teas into capsules early in the game, but not so early that the company surrendered its lucrative private-label opportunities to Keurig Green Mountain (KGM). In 2010, while leading brands like Lipton, Tetley's, and Twinings were sign- ing up with Vermont-based KGM, Mother Parkers, one of the top five tea blenders in North America, began investing in a compatible capsule system. Four years later the Recyclable Re- alCup capsule, with its clear lid allowing customers to see the tea, opened the door to blenders seeking an alternative to the non-recyclable K-Cups. Unlike the No. 7 plastic used by Keurig, the Recyclable RealCup capsules are made of clear No. 6 polystyrene, which can be recycled in 60% of US municipali- ties and many curbside programs. The number is higher in Canada where in some provinces 75% of cities can recycle the plastic. Polystyrene is used to make plastic utensils, toys, Styrofoam cups, and restau- rant clamshells. Once brewed, consumers simply snap the lid then use the tab to pull off the top and recycle the cup. The tea and filter within the capsule are removed and the tea can be composted. "If it helps reduce landfill and improve the planet for future generations, then this is an innovation worth sharing," said Mother Parkers Tea & Coffee co-c.e.o. Paul Higgins on introducing the packag- ing innovation last April. "The easy answer to whether we would share these cups with competitors is 'no,' but the right answer is 'yes,'" said Bill VandenBygaart, v.p. for development at Mother Parkers Tea & Coffee. "The right thing to do is make the technology available to the industry," he told the New York Times. Higgins & Burke is part of the tea di- vision of Mother Parkers, the fourth larg- est coffee roaster in North America. The Recyclable RealCup capsule followed the 2012 introduction of the RealCup format, a non-licensed Keurig- compatible No. 7 capsule popular with Tim Horton's and mid-tier brands like Martinson, Brown Gold and some specialty coffee roasters including Marley Coffee and Wolfgang Puck. The original RealCup cap- sules are not compostable. Higgins & Burke has a full range of single-serve tea, pricing their 24-ct packs competitively around 55- to 60-cents per cup and saturating sales channels from Amazon and Staples to grocers, gourmet shops, coffee shops, restaurants, office coffee, capsule superstores like ESC Cof- fee and convenience outlets. The capsule's non-woven filters are designed to enhance steeping of blends like sencha with lemongrass and lemon balm herb and verbena that sell for $12.95 to $14.95 online. Unlike Lipton, Tetley, and Twinings, which are all packed in Keurig licensed capsules, Higgins & Burke opted for a design that appealed to specialty blend- ers who could charge a little more for their capsules, in part because they were not paying Keurig's 6.8 cent per cup royalty. Numi Tea, an Oakland, Calif., blender was the first to sign on. Yogi Tea, with an- nual sales of $40 million in grocery and department stores, offers four of its teas in recyclable RealCup capsules. Tradi- tional Medicinals is also offers some of its herbals in the recyclable format. This spring Marley Coffee c.e.o. Brent Toevs announced their coffee would be packed in the Recyclable RealCup format and available later this year. Marley Cof- fee was founded in 2007 by Bob Marley's son Rohan and is one of several coffee brands that market their offerings as sus- tainable and environmentally friendly. Estimates put global production of plastic at 300 million tons, consuming about 3% of the petroleum refined annu- ally. Capsules, despite their large num- bers, represent a small sliver of that total but the 100 billion manufactured since their introduction has caught the attention of consumers who object to waste but in- sist on convenience. Portion pack tea Sales of tea in capsules declined for several Keurig-licensed tea companies through March but there is evidence that a large number of tea companies are finding suc- cess. These include grocery brands like Yogi Tea, restaurant and office coffee brands like Higgins & Burke, small chains like Capital Tea, and large retailers of spe- cialty tea such as Harney & Sons. Tazo is doing exceptionally well in grocery and department stores with sales of its traditional line earning $43 million, up 22% in the past year. Its Zen tea line earned $17 million through March, ac- cording to IRi Infoscan which tracks sales in grocery, drug, multi-outlet de- partment stores, and convenience stores. Sales of Yogi Tea which include its new portion-packs in four flavors led all tea categories with 27.6% growth to $38.5 million during the 52 weeks ending March 15, according to IRi, the leading global provider of enterprise market in- formation solutions. Starbucks shipped 100 million coffee and tea capsules in December 2014. Sales of the top four Keurig licensed tea capsules were $75 million with Keurig Café Escapes selling $30 million, Celestial Seasonings at $23 million, Snapple selling $11 million, and Bigelow Tea $10 million worth of tea for an average unit price of $8.72 (12-ct) or 73 cents per capsule. IRi does not breakout sales of cap- sules by Unilever/Bestfoods North America, the leading brand of tea with $635 million in grocery and department store sales but assuming capsules repre- sent 6.5% of total sales Lipton earned an estimated $41 million from its capsules. "The pods market has tripled in value in five years," said Euromonitor bever- age analyst Howard Telford. Euromoni- tor estimated tea sales at 2% of the total bagged/loose leaf market in 2009, rising to 4.5% in 2012 and to 6.5% in 2014. In 2015 that number will be closer to 10% of all bagged/loose leaf given the large amount of online sales on Amazon and through office coffee and private la- bel brands, many of which are just enter- ing the capsule segment. The basics There are two kinds of capsules: open mesh (ring or cup) and sealed capsules (generally packed in nitrogen). Tea gets