It has been a long, sometimes jittery journey. But finally, after five years of secretive planning, Coca-Cola is making its foray into the coffee business.
On Wednesday, Coke took the wraps off a new line of hot coffees and teas, starting with an outlet in Toronto. There, and in other places around Canada, locals will serve as guinea pigs as Coke tries out two new coffee-and-tea brands, dubbed Far Coast and Chaqwa.
Eventually, the brands will reach other markets, possibly including the United States.
Coke’s grand goal is to secure a piece of the big but fragmented market for fresh-brewed coffee and tea. The process has turned out to be anything but simple, however, requiring Coke to develop its own, patented machinery, among other things.
The company has tested numerous concepts and equipment, whether in the middle of Atlanta or in far-off Asia. The project, launched in 2001 under the name Operation Buzz, also has survived a sequence of upper-level management changes at Coca-Cola.
“It has had its challenges,” said the man who led the effort, Udaiyan Jatar. “But, overall, the opportunity was so big, we were able to persevere.”
Coke is, of course, best known for its bottled and fountain drinks: Coke Classic, Diet Coke and so forth. Selling fresh-made coffee has never been a focus of the vast Coke system, which is led by Coca-Cola and knitted together with thousands of bottling operations.
In 2001, Jatar was asked to ponder if there was a way to make money in brewed coffee and tea. The appeal was obvious, as the market is about double the size of that for carbonated soft drinks.
What Coke discovered, in talking to its vast base of customers – restaurateurs, convenience store operators and others – is that many have found it too hard to provide good coffee service.
Machines were expensive and sometimes time-consuming to learn or to operate. Much coffee was simply left to sit around, leaving consumers with poor-quality drinks.
Coke’s small Operation Buzz team, made up of four of five people at most times, focused on a system that could make coffee simply and freshly. When Coke couldn’t find a supplier of the sort of machines it wanted, an internal group tackled the job.
That led to many tests, such as when an early machine was installed in Atlanta’s Celebrity Cafe & Bakery in the spring of 2003. Jatar said the device was a forerunner of the system that was finally unveiled Wednesday in Canada.
All along, Coke’s plans were meant to be hush-hush, though they turned out to be far from secret. Jatar said the company tested its hot coffee drinks under various brand names in hopes of avoiding detection.
In some cases, such as with the Celebrity Cafe, word got out. When an article appeared in The Atlanta Journal-Constitution in May 2003, jumpy Coke yanked the machine to guard it from prying eyes.
Now, the idea is clear. The concept, in simple terms, involves using little pods to make a high-quality drink, one cup at a time.
The next step is trying the concept in the real world. That’s where coffee-loving Canadians come into play.
By the end of the year, Coke hopes to have machines working in up to 50 outlets. The Far Coast brand, Jatar said, will be aimed at higher-end outlets, such as restaurants and movie theaters. Consumers will be able to buy espressos, lattes, chai tea and other hot drinks. Prices will vary, depending partly on what the retailer wants to charge.
Chaqwa, meanwhile, will be sold in more mundane spots, such as gas stations. One goal, Jatar said, is to get consumers to buy Chaqwa specialty coffees instead of regular coffee.
Whether the brands catch on might be of much interest to the beverage industry. “If this succeeds and gets rolled out, it could be a multibillion-dollar new business for Coke, though it would take some years for that kind of scale to develop,” said John Sicher, editor and publisher of Beverage Digest, the publication that first reported on Coke’s fledgling coffee plans in late 2002.
Although Coke will sell Far Coast from a retail location in a tony neighborhood of Toronto, the company expects to keep such operations to a minimum. Two more are planned, in Oslo, Norway, and in Singapore, chiefly as promotional tools. Coke doesn’t, in other words, plan on tackling Starbucks or others that have plenty of stores.
“We are not getting into competition with our customers,” said Jatar, general manager of what is now Coke’s new Premium Brewed Beverage operation.