Coffee Subscriptions: Here to Stay

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More and more people around the world are foregoing the high street and getting high-quality beans sent straight to their doors.

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With coffee subscriptions, customers can be home baristas. Image via BeanBox.

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With coffee subscriptions, customers can be home baristas. Image via BeanBox

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Most coffee subscriptions offer a customizable experience for customers and send them a variety of beans according to their preferences.

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Coffee is still the most popular drink in the world, with an estimated 2 billion cups being consumed every day. But with rolling lockdowns and cautious customers avoiding cafes, people increasingly turning to alternative ways of getting their caffeine fix.

Covid-19 changed so much about our day-to-day lives – including the very way we take our cup of joe in the morning. Rather than heading out for their espressos, people increasingly use subscription coffee services. A study by SquareUp reported a 109% increase in subscription coffee sales and a 25% increase in coffee companies offering subscriptions services from 2019 to 2020. And data from Google trends shows December 2020 as the peak of search interest in the topic, but with interest still on a general upward trend at the time of publication. And it’s not just in the US; queries for coffee subscriptions are also soaring in Canada, the United Kingdom, and Vietnam.

But is this a real change in consumer consumption patterns or just the latest trend? After all, how many of us are talking about dalgona coffee anymore?

What’s the attraction of the subscription model?

There’s a lot of wiggle room in the world of subscriptions. Price points vary; some allow you to set preferences like source or level of resting, while others offer a more bespoke “barista’s choice” type of service. Some offer enough beans to get you through winter, while others provide a white glove “bean of the month” experience.

And some don’t even deliver. South Korean coffee and bakery chain Paris Baguette implemented a subscription service allowing customers to pick up a coffee or coffee/sandwich set every day, coming in at around $16-$40. So, in a myriad of forms across the world, subscriptions are here.

But what draws people to the subscription model over alternatives? If they were avoiding the high street because of Covid-19 worries, couldn’t they just buy some beans from the local store?

“Customers want a tasting experience at home,” said Matthew Berk, founder of Bean Box, a Seattle-based coffee company that’s been around since 2012, with a business is almost entirely focused on coffee subscriptions. “The emphasis is on the sampling experience. We want customers to try lots of different coffee side by side to see what they like. A lot of people are dipping their toes into coffee and a subscription box is a great way to help people figure out their preferences.”

Another part of the draw is freshness. As anyone passionate about coffee already knows, the quality of your morning cup of joe is directly correlated to how fresh your beans are. “Ordering direct from us at the roastery is the best way to get this level of freshness,” said Andy from Two Chimps Coffee in the UK.

You might be forgiven for thinking that the subscription model arose as a response to the pandemic. But subscription services have been around for years before that. The term first appeared on Google way back in 2005, but it wasn’t until 2014 that companies in the coffee industry began to see a huge retail demand for specialty coffee. And they saw that people were turning to at-home consumption over retail. When Coviid-19 swept the world, this merely accelerated the process.

“The pandemic and its lockdowns have sped the process up for the last 12-18 months,” said Andy. “Most of those who have found a coffee subscription online and now get it to their door, hassle-free, I believe have been shown the real benefit of the freshest coffee and could never return to mainstream supermarket coffee.” No one in the industry was surprised at the change in consumption patterns. Covid-19 merely supercharged the rate at which it was happening.

“Will they venture out to coffee shops still? Definitely, but I believe they will pick wiser than they did pre-pandemic, searching out the best independent coffee shops, with the best coffee, just like they can now make at home.,” said Andy. And the stats back him up – in the UK 80% of people visit a high-street cafe once per week, with 16% visiting daily.

The future of the coffee subscription model

For a lot of the Western world, the ravages of Covid-19 are slowing. Economies are creaking open, and countries are tiptoeing out of lockdown. With high streets open in most of Europe and North America, are the coffee subscription businesses growing worried about their business model?

Matthew is confident about the future saying it was less a question of whether customers wanted subscription-based coffee and more a question about consumer behavior. Are people drinking coffee at home or in cafes? Will this continue? He’s betting yes. They’ve seen growing patterns in the industry of people buying more manual at-home coffee equipment and less automatic equipment. “The switch has been flipped. We’ve seen a huge increase in at-home consumption, and that’s going to continue.”

The challenges of running a subscription-based model

There’s been a lot written about the upsides of running a subscription model. From a business point of view, you have stability. Andy told us that it really relieves pressure to have subscription orders already on the books. That equals better cash flow and inventory management.

But it’s not all smooth sailing for the coffee subscription industry. It can be a challenge to get customers to keep coming back, plus the coffee industry (and the coffee subscription industry in general) is one of the most crowded verticals out there. With that in mind, how’s a business supposed to stand out from the crowd?

According to Matthew, there are three main hooks. Firstly, it’s a tasting experience. When you send out a subscription box, it’s curated to their preferences, sure, but there’s variety within that. They’re trying coffee from South America, North America, Asia, and Africa. Within that, there are dark and light roasts. Customers get to try and make notes on all of these coffee types which is something you can’t really do in a cafe.

Secondly, you have to ensure quality over quantity. The advantage of the subscription model is that it allows companies to post fresh-roasted beans directly from the roasters. And not just any roasters, you can partner with artisanal roasters that your customers might otherwise have never even considered trying. “You can brew our coffee in a paper cup with hot water and it still tastes good,” said Matthew.

And thirdly, you have to make subscriptions accessible for everyone. For some people, cafe culture might come across as a little snobby. There’s a psychological hurdle when you enter. You don’t want to be looked down on for not knowing the difference between a pour-over, or between Kenyan and Ethiopian coffees. But with the subscription model, you can educate customers in a non-pandering way.

“We tell stories about coffee via email, websites, and packaging,” said Matthew. “In the coffee industry, people tend to get technical quickly, talking about grinds and water temperature. But if you want mass-market adoption, you have to stay clear of that. Make it accessible.”

So, it looks like subscription-based coffee services are here to stay. The switch has been flicked, consumer consumption patterns are changing worldwide and at-home consumption will take an increasing share of the market each year. The only question remains--will consumption patterns take off worldwide or will they remain limited to customers in the US, UK, Canada, and Vietnam?