EMERYVILLE, CA ? In an effort to expand beyond its West Coast cult following, Peet?s Coffee & Tea Inc. is adding a medium roast (blasphemous by West Coast standards) and expanding in the competitive East Coast, The Wall Street Journal reports.
The company has 196 stores in the U.S., though only five on the East Coast. It has grown rapidly the past few years, generating sales of $284.8 million in 2009 and $333.8 million last year. Those figures pale in comparison to Starbucks and its market capitalization of $32 billion, while in grocery stores, Peet?s faces stiff competition from Gevalia and Dunkin- Donuts-brand coffees.
Peet?s developed a medium roast after its research identified a distinct intensity preference among East Coast consumers.
?[W]hat we learned is that they are very intrigued by our quality tenets [but] we just didn't have the taste profile they were looking for," said Jessica Mitchell, a Peet's senior marketing manager, adding that 40% of East Coast coffee drinkers prefer medium-roast coffee.
Medium-roast coffee is the largest segment of the $1.2 billion grocery store-specialty-coffee market and represents nearly one-third of sales, said analyst Joseph Gabelli of Gabelli & Co.
Canton, Massachusetts-based Dunkin? Donuts dominates that segment in New England, with 2,000 locations. Despite such a hefty presence, Peet?s isn?t overly concerned about the competition.
"There are many medium-roast consumers who will not fit our target," said spokeswoman Judy Rowcliffe.
Historically, Peet?s coffee has had a trademark ?dark roast? taste, and only moved into medium roasts this past August, adding two blends to its lineup in 5,800 of the grocery stores where it sells coffee. They will eventually be sold at all stores where Peet?s coffee is sold.
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