Vittoria ramps up product development as it boosts coffee share
It’s been a whirlwind year for Australian coffee brand Vittoria which recently introduced a new range of 18 coffee blends to Woolworths stores, the largest deal in its 73 years with the supermarket giant.
The distribution deal consolidates Vittoria’s position as the largest manufacturer of coffee capsules and the country’s biggest-selling pure coffee brand.
Rolando Schirato, MD at Vittoria Food & Beverage, spoke to Inside FMCG about the rapid growth in the capsules market and the challenges of launching a new range during a pandemic.
Inside FMCG: Tell me about the thinking behind introducing this new range. Are consumers increasingly seeking the capsule format?
Rolando Schirato: The capsule market has gone from strength to strength. Historically, the traditional beans and ground segments have been around 30-40 years, and within the last 10 years, the capsules market has reached almost the same size. The growth has just been phenomenal across the board, and in the not-so-distant future capsules will overtake the traditional roast and ground market in supermarkets. That’s obviously a huge change overall in the coffee market, but it’s been great because it’s essentially doubled the size of the pure coffee market in grocery, and that’s our core so it’s been a good add on to the category.
It’s definitely about accessibility and convenience. Through our own research we have found that there’s a lot of crossover – people with capsule machines will sometimes make a plunger coffee at the weekend when they have more time. We have capsule consumers also buying our roast and ground product. But overall, it’s a convenience play definitely, it’s a much easier format to produce from home. With the capsule, it’s a guaranteed consistent result every time. And I think that’s I think that’s where it’s a quality proposition.
Inside FMCG: Why do you think it was important to make the products Nespresso compatible?
RS: We got into the Nespresso compatible market some years ago now. We started with the plastic format that was available due to different patents that existed in the market. Now the aluminium format is the most sought after format by consumers. We’re now the only Australian producers that are producing aluminium capsules, which is pretty cool. We could have gone offshore to try and do these things, but for us, we produce all our coffee locally in Australia.
Inside FMCG: Are aluminium capsules more environmentally friendly?
RS: I don’t think anyone could argue the point that capsules aren’t where they need to be from a sustainability point of view. We’re constantly doing whatever we can with the suppliers, consults with R&D around what the best solutions are going forward. There’s a lot of people very focused on making capsules a more sustainable solution. The new format is more sustainable given we don’t have the same amount of packaging required to keep the product fresh. I think that’s the biggest difference from a sustainability perspective, but it’s certainly a product category overall that needs more R&D and more innovation to make it more sustainable.
Inside FMCG: Tell me about how Covid-19 impacted the business and the launch of the new range.
RS: We set up our own facility and were doing that right on the onset of Covid actually, so it was a stressful time. We were installing all this new equipment in our Sydney roastery and we had technicians from Italy and people who had literally just arrived prior to the shutdown. It’s been in a tricky time, a lot of moving parts.
It was an interesting environment to be launching such a huge range. In late May, panic buying and the real significant spikes that the grocery market saw had subsided, albeit, the capsule market was still in over 30 per cent growth. The effects of Covid were still and are still affecting grocery sales positively, so it was a good time to launch from a growth and foot traffic perspective.
Roughly half of our business is food service. Our business started out as 100 per cent food service, supplying cafes, restaurants, hotels etc. But, over the years, we grew a significant grocery business off the back of that. With Covid, there was a significant hit to where half our revenue comes from, but the grocery business has certainly helped greatly. Being a family business we’ve got a lot of very old relationships, especially through the independent supermarkets, in times like this everyone’s trading up but having strong relationships across the trade is something that has really helped us to navigate through that particularly tough period.
Inside FMCG: How do you ensure that the business stays relevant in such a competitive environment?
RS: We’ve been around a long time, we’ve been roasting coffee since 1958, so it’s about making sure that as consumption patterns change, we’re changing with them. A big focus for us and for a lot of the retailers is ensuring that as new trends emerge we have to make sure that we’re educating consumers and making sure that our brands are available in the best possible format to suit their drinking habits. That’s always been our philosophy. It’s very important that we don’t miss out on the growth of the capsule market.
It is an extremely competitive category. We’ve always had big multinational competitors, and over the last 10-15 years a lot of small local competitors. There’s constant product development and innovation in the category, but sometimes it’s less about innovation, and more about more about trends.
Inside FMCG: What can we expect from Vittoria in the next year?
RS: For us, as a business, we’ll be launching more new products in the next 12 months than we have in the last five years. We’ve got a really solid development pipeline. We’ve always been about taking a tea drinking nation or an instant coffee drinking nation and introducing Italian-style espresso coffee to the market, so for us it’s really just a continuation of that. It’s looking at all the different coffee formats and categories.
Having half of the business in food service, it’s a real natural innovation pipeline for us because we get such great insight into all the trends in cafes and hotels all around the country.