CLUB COFFEE

Today, what is best for the environment is also often very good for business. This has certainly proven true for Club Coffee and its innovative single-use PῧrPod100™ coffee pod.

Located in Toronto, Club Coffee has been manufacturing high-quality ground and roasted coffee since 1906. It is now particularly focused on its role as a major co-manufacturer / co-packer of coffee, tea and other hot beverages for two major types of customers. One is the food service and hospitality sector, with Club producing coffee for sale to food service companies and their restaurant, hotel and institutional customers. The other centres on the production of custom-blended private label coffees for grocery store chains and other coffee brand partners. In 2015, Club Coffee’s annual sales reached close to $200 million, with 40% of that revenue coming from sales to American customers.

Producing coffees for two very exacting industry sectors and in a very competitive North American environment places a premium on Club to be customer-centred and innovative. A key to a customer-centred culture for Club Coffee is its focus on quality and service. The company has won numerous awards from its customers, including Supplier of the Year from Loblaw, Canada’s largest food retailer and VIP Supplier status seven years in a row with Gordon Food Service in Canada and the US.

Part of the commitment to meeting its customers’ needs involves achieving and exceeding key quality certifications such as its AA rating under the BRC Global Standard for Food Safety. It also has the flexibility and capacity to help its customers respond to growing consumer demand for coffees that meet standards such as organic, fair trade and Rain Forest Alliance certified.

Club Coffee has had many changes of ownership and corporate structure over its history. Since 2007, the company has been organized as a limited partnership. At that time, Nestlé Canada Inc., which then owned Club Coffee, sought a buyer for its Canadian coffee production operations. Nestlé reached out to Morrison Lamothe Inc. because their experience with that company as an innovative manufacturer of frozen foods suggested a management culture that would transfer well to Club Coffee’s business. The roots of Morrison Lamothe go back to 1911, when Cecil Morrison and Richard Lamothe started a bakery in Ottawa that introduced innovations such as sliced bread to that market. The company evolved with market opportunities, eventually focusing on frozen food products where it has customer relationships that have lasted decades, while also capitalizing on new opportunities.

CLUB COFFEE NOW HAS TWO MANUFACTURING PLANTS IN THE REXDALE AREA OF TORONTO. ONE PLANT HOUSES THE HEAD OFFICE OF THE COMPANY AND IS THE CENTRE OF THE FIRM’S COFFEE ROASTING AND GRINDING ACTIVITIES, INCLUDING THE PRODUCTION OF ROAST COFFEES IN BAGS AND CANS. THE OTHER PLANT WAS CREATED SPECIFICALLY TO PROCESS CLUB’S RANGE OF SINGLE SERVE PRODUCTS.

The company has approximately 250 employees. Most are now college or university-educated as production is largely automated, with skilled operators controlling the processes. Together, the facilities produce approximately 500 custom label products and 160 of the Club Coffee branded products that go largely to food service and hospitality customers.

Single serve coffee has been a central factor in the recent growth and development of Club Coffee. At the time of the transfer of ownership, Club Coffee produced roast and ground coffee in the standard can and bag formats used for traditional drip brewed coffee making. However, discussions with customers and an analysis of industry trends revealed that single serve coffee, particularly in the format established by Keurig® was already beginning to reshape consumer coffee buying in North America. That trend has continued.  The most recent surveys find that almost 40% of Canadian adults have single serve brewers in their home, slightly ahead of US ownership levels. Those brewers are the top-selling small houseware appliance in both countries.

Working closely with customers wanting to provide their consumers with single serve coffee, Club Coffee identified formats, technologies and approaches that would enable it to help those customers meet that consumer demand. It invested in the necessary equipment and acquired the second plant in order to meet the projected need, with the first single serve products from Club arriving on the market in 2012.

At part of that same process, Club Coffee recognized that the waste associated with single serve coffee, tea and other hot beverages was an emerging environmental issue for consumers and it provided a high-profile innovation opportunity. The basis for that issue is the fact that nearly four million single-use pods are used and discarded every day in Canada. According to global market research group Ipsos, the lack of more environmentally-friendly options has presented a barrier to sustaining the rapid growth in single serve coffee sales over the past few years. Nearly 40 per cent of participants in a 2015 survey who did not already have a single-serve brewer said that they would only consider buying one if compostable pod options were available.

In 2013, Club Coffee began to explore compostable alternatives to the conventional laminated plastic pods in the market at the time. Club Coffee determined that a pod that would break down in typical municipal composting programs would be both effective and convenient for consumers as a means of dealing with used pods. The firm worked with researchers at the University of Guelph’s Bioproducts Discovery and Development Centre, as well as its own suppliers on research that resulted in a new single-use pod: PῧrPod100™.

Launched in 2015 and arriving in the market in the United States and Canada in 2016, PῧrPod100™ is the world’s first certified 100 per cent compostable single-use coffee pod designed for use in the most common Keurig® brewers. This innovative product significantly reduces the waste associated with using a single-serve coffee/hot beverage pod. Not only is the pod in line with Club Coffee’s principles as an innovative and customer-focused company that is able to bring new ideas to its partners, but it capitalizes on consumers’ concerns about the waste associated with competitors’ products.

Club Coffee received assistance from the Government of Ontario in the work to develop the new pod. As Club Coffee Vice President of Communications and Government Relation Christopher McKillop notes, “The province is very helpful as a network builder for us. It has been extremely beneficial.” Departments such as the Ministry of Agriculture, Food and Rural Affairs helped to connect Club Coffee with the Guelph researchers needed to develop the PῧrPod100™. The Ontario government also helped to provide funding to build the single serve pod production facility.

Club Coffee expects to continue expanding into new markets by expanding the uses of its single-serve pod technology and extending its market reach through new customers across North America. The company is already pursuing further compostability innovations and may consider funding mechanisms such as the Canadian Scientific Research and Experimental Development tax incentive program. The consumer interest in more environmentally-friendly approaches to packaging suggests that Club Coffee may have significant opportunities to cultivate new markets based on pursuing its strong commitment to innovation and meeting the needs of its customers.

Discover Club Coffee by visiting their website.

Company Profile

Company Description

Overview

Club Coffee is a Toronto-based manufacturer of coffees, teas and hot beverages. It excels at developing and producing coffee in formats such as cans, bags, and single-serve pods, and offers great products for private label and branded customers.

Key Facts

Headquarters: 55 Carrier Dr, Toronto, ON M9W 5V9

Executives:

  • John Pigott, CEO
  • Peter Hobbes, President

Year established: 1906

Number of employees: ~250

Line of business

NAICS: 311920 – Coffee and Tea Manufacturing.

Products

Club Coffee has approximately 500 custom label products and 160 Club Coffee branded products.

Club Coffee developed the world’s first certified 100 percent compostable single-serve beverage pod – PῧrPod100™.

Markets

Customers: Club Coffee sells its products primarily to grocery retailers as their private label offerings to consumers, and to the food service and hospitality sector.

Exports:  About 40% of annual sales are to United States customers. The US is a key market for Club Coffee.

R&D, Skills and Educational needs

Employees: Close to 250 workers, mainly college educated, working in two production facilities.

R&D: used R&D to create PῧrPod100™, including through collaboration with researchers at the University of Guelph Bioproducts Discovery and Development Centre and with suppliers of components used to make the lids, mesh and rings in the single serve pods.

History

Club Coffee has been in operation since 1906. It is the largest producer of roast and ground coffee that consumers buy through retail groceries in Canada. It was acquired by a limited partnership in 2007 from then-owner Nestlé Canada. Morrison Lamothe Inc. (MLI) has a major role in the limited partnership. MLI’s roots began with a single bakery in 1911 and later expanded to restaurant operations before shifting fully to a focus on frozen food production.

Competitive Environment

Competitors

  • Mother Parkers, located in Mississauga, is another major Canadian co-manufacturer / co-packer company in coffee.
  • Keurig Green Mountain is the dominant North American company in the single serve segment. .

Partnerships

  • Government Relationships:
    • OMAFRA made the initial linkage between Club Coffee and University of Guelph researchers
    • Provided funding used in creating second production facility for single serve
    • Considering other programs to secure R&D funding

     

    Education Institution Partnerships:

    • Worked with the University of Guelph on bioresin research for the ring of the compostable coffee pod, PῧrPod100™.

SWOT Analysis

Strengths:

  • Continuous innovation
  • PῧrPod100™ is the world’s first certified 100 percent compostable single-serve beverage pod for the most common Keurig format.
  • Strong and reliable reputation for quality products
  • Marketable “ethical” products that are certified to be Organic, Rainforest Alliance approved, Fair Trade, and Kosher
  • Key geographical location is close to key Canadian and US customers

Opportunities:

  • International market exists for green-friendly pod, potential to expand into more markets
  • Lots of room within current market to grow

Challenges:

  • Low Canadian dollar makes production inputs bought in US dollars more expensive
  • Possibility of competitors to begin development of similar green friendly single serve pods

Performance

Community

Club Coffee has an active Facebook page and Twitter page.

Awards

  • 2016 Innovation in Bioplastics Award
  • 2016 Bio-Based Product of the Year (Americas)
  • PAC 2017 Global Leadership Award for Package Innovation finalist.
  • Store Brands Editor’s Pick – PurPod100™
  • One of the 42 Best Package Designs according to Packaging World Sustainable Packaging Design.

OTHER PROFILES