NetworkNewsWire
Editorial Coverage: Amazon’s food and beverage category has
posted $4.75 billion in sales thus far in 2018 and is the online
retailer’s fastest growing segment.
- Amazon’s food and beverage category is the online retailer’s
fastest growing segment.
- Coffee is the most popular subset of the company’s
category.
- Youngevity International is one of the savvy companies seizing
the opportunity to establish itself as a leader in the space.
A growing number of companies are working to stake their claim
in the online giant’s coffee marketplace, for good reason: coffee
is the most popular subset of Amazon’s food and beverage category.
Youngevity International, Inc. (NASDAQ: YGYI) (YGYI
Profile), a leading omni-direct lifestyle company with
emerging holdings in the coffee industry, announced recently that
it would be getting in on the action with its wholly owned coffee
manufacturing subsidiary, CLR Roasters. Starbucks Corp.
(NASDAQ: SBUX), Keurig Dr. Pepper, Inc. (NYSE:
KDP), and Nestle (OTC: NSRGY) were the
top three sellers of coffee on Amazon in 2018, with year-to-date
sales totaling more than $16.8 million, $12.6 million, and $11.2
million, respectively. The J.M. Smucker Company (NYSE:
SJM) has also been focusing on increasing its presence in
the premium and single-serve coffee space.
To view an infographic of this editorial, click here.
On the Rise
The price of coffee
futures overall has been steadily on the rise over the last few
years, and Amazon has taken advantage of the promising trend.
Analysts predict that the company’s share of the online U.S. food
and beverage market will reach 31.8 percent
in 2018. And the news gets better for the innovative
organization: online grocery sales are expected to reach $100 billion by 2025, with Amazon’s market share of
the industry only expected to grow.
Coffee sales will be a significant part of that growth.
According to Edge Market
Share, coffee sales on Amazon have totaled more than $140
million so far this year, and with the trend consistently moving
up, the numbers for companies selling on the site are likely to
increase as well.
Seizing the Opportunity
Youngevity
International, Inc. (NASDAQ: YGYI) is one of the savvy
companies seizing the opportunity to establish itself as a leader
in this growth. Earlier this month, the company announced that its
CLR Roasters brand had accepted an
invitation to sell its Café La Rica® espresso and Josie’s Java
House® single-serve coffee on Amazon’s Vendor Central. According to
the agreement, CLR Roasters will provide the coffee brands while
Amazon handles the logistics of sales, order fulfillment and
customer support.
Along with the Amazon Vendor Central agreement, Youngevity
announced a partnership with Digital
Operative, an award-winning San Diego-based full-service
digital agency, to assist in the brand’s expansion. “We are excited
that two of our company-owned brands are gaining national
distribution on Amazon,” said Dave Briskie, president and CFO of
Youngevity. “We believe the team at Digital Operative will have a
significant impact on the growth of Café La Rica and Josie’s Java
House nationally.”
Digital Operative prides itself on working with innovative,
unique brands that have a focus on growth, said BJ Cook, founder
and CEO of Digital Operative. “CLR Roasters’ brands perfectly fit
that mold. With the Amazon Vendor Central agreement in place,
Digital Operative is excited to help both brands seek to become
household names nationally.”
A Full-Sized Coffee Roaster
Established in 2001, Youngevity’s coffee manufacturing division
CLR Roasters is a full-sized coffee roaster that produces gourmet
coffees under its own boutique brands, including Café La Rica,
Josie’s Java House, and Javalution®. The division also manufactures
a variety of private labels for major national chains as well as
for Youngevity’s direct-selling channel. In addition, the company
is one of North America’s largest suppliers to the cruise line
industry.
CLR has been a pioneer in coffee innovation, being the first
entrant into the fortified coffee niche with its Youngevity
JavaFit® brand. And in May 2014, CLR acquired a coffee plantation
and processing facility in Nicaragua, allowing the entity to
control coffee production and quality — from field to cup.
Recipe for Success
With a recently executed five-year contract in place, Youngevity
is slated to sell and process more than 41 million pounds of green,
high-grown washed Nicaraguan conventional coffees per year. Based
on recent coffee future prices, that production should add an
estimated $250 million to
the company’s numbers from 2019 through 2023. Extensive regional
work by the company’s wholly owned Siles Family Plantation Group
was instrumental in securing this significant contract, and
Youngevity’s partnership with Alain Hernandez of H&H Export
Group bodes well for the company’s further expansion in
Nicaragua.
CLR Roasters’ roasting operation roasts around 25,000 to 28,000
pounds per day, totaling 10 million pounds per year, with an annual
grinding capacity of approximately 15 million pounds. The company’s
field-to-cup strategy provides control over the process every step
of the way, allowing Youngevity to consistently meet the industry’s
high standards. This same strategy means that CLR Roasters can work
directly with its customers to develop unique, customized
blends.
The company offers its customers a variety of packaging options
to meet every consumer’s needs. From two-ounce fractional packs and
five-pound bags to single-serve K-Cups of customized blends — which
it can produce at the rate of 220 per minute — the company’s
production facility provides both versatility and speed. And in
addition to the impressive operational scale of its facility, CLR
Roasters prides itself on the retention of boutique roasting
methodologies, including visual, touch and smell-based analysis by
in-house roasting veterans.
A Growing Sector
Amazon’s grocery sector in many ways remains the Wild West of
online retail, with near-unlimited potential and opportunity for
growth. Edge Market Share reported that in 2017 Amazon owned an 18 percent share of the U.S. online
grocery market. In 2018, that number has already jumped by more
than 30 percent, with a particular focus on the online coffee
space. Youngevity isn’t the only company eyeing the promising
potential online coffee sales provides.
Starbucks Corp. (NASDAQ: SBUX) claimed 12
percent share of Amazon’s total first-party coffee sales. The company’s sales for key coffee items nearly tripled
in size since last year, putting it in the top spot in the
category in 2018. A premier roaster and retailer of specialty
coffee worldwide, Starbucks is also exploring other avenues of
delivering its coffee to consumers. The company recently announced
that by early next year, nearly a quarter of
its more than 8,000 company-operated U.S. stories will offer
Starbucks Delivers via Uber Eats.
Earlier this year, Keurig Green Mountain and
Dr. Pepper Snapple Group announced a merger, creating the
seventh-largest company in the U.S. food and beverage section and
the third-largest beverage company in North America. The resulting
company, Keurig Dr. Pepper, Inc. (NYSE: KDP),
produces the Green Mountain Coffee brand, which garnered 9 percent
of Amazon’s burgeoning online coffee sales. In addition to online
coffee sales, the company markets the top single-serve coffee
brewing system in the country.
Nestlé (OTC: NSRGY) produces the Nespresso
brand, which ranked third on Amazon’s list with 8 percent of the
online retailer’s sales. Nestlé works with more than 75,000 farmers
in 12 countries through its AAA Sustainable Quality™ Program to
embed sustainability practices on farms and the surrounding
landscapes. Launched in 2003 in collaboration with The Rainforest
Alliance, the program helps to improve the yield and quality of
harvests, ensuring a sustainable supply of high-quality coffee and
improving livelihoods of farmers and their communities.
J.M. Smucker Company (NYSE: SJM) has been
working on increasing its presence in the premium and single-serve
coffee space. Earlier this year, the company unveiled one of its
most significant coffee growth initiative to date: a new line of
premium coffees designed to strengthen its position in the fastest
growing market segments and serve as a broad platform for future
growth and innovation. The new line, 1850, draws on the
rich heritage of The Folger Coffee Company, which was founded
during the 1850's Gold Rush in California. The company hopes the
line of coffee will appeal not only to traditional Folgers drinkers
but to a younger generation of consumers that generally prefers
richer coffee blends.
For more information on Youngevity International, visit Youngevity
International, Inc. (NASDAQ: YGYI)
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