Brownes Dairy, one of Australia’s major dairy processors, has taken its RTD coffee brand Hunt and Brew to the UK, launching the brand into Tesco, the country’s largest grocer.
To support the UK launch of Hunt and Brew, Brownes Dairy is working with local manufacturing partners in the country. The group already sells the brand in its domestic market and exports the Hunt and Brew it makes in Australia to a clutch of markets in South East Asia.
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Just Drinks sat down with Brownes Dairy chief growth officer Doni Savvides to discuss the UK’s coffee scene, how it compares to Australia and the company’s ambitions for Hunt and Brew not just in the UK but elsewhere internationally, too.
Dean Best (DB): Why target the UK and what’s your view of the RTD coffee category in that market?
Doni Savvides (DS): Look, I think Australia in very few instances can claim to be from the future but I think when it comes to coffee, we’re a very progressive coffee culture. What we’ve seen everywhere around the world, in particular in the UK, is that coffee culture is evolving fast. It’s come along in leaps and bounds. There’s beautiful coffee shops and amazingly crafted coffee. The people that tend to drive that expectation are younger generations – Gen Zs and millennials – which happen to be the world’s biggest population groups. They’re looking for that deeper connection with their coffee and something a bit purer and more crafted.
But what we’ve seen everywhere in the world, no different in the UK, is that when you get to the chiller that experience isn’t replicated. I can get great coffee on the high street – and we know that that’s growing, we know the UK is now a coffee–drinking country more so than a tea-drinking country – but then for those people who want that craft and experience there’s nothing in the chiller for them. Every single product is either made from UHT milk or contains sugar extracts, acidity regulators, E numbers. Those that claim ‘no sugar’ have sweeteners. There’s nothing that pays respect to someone who loves coffee.
That’s the genesis of Hunt and Brew in Australia. We didn’t set out to create a no-sugar product. We set out to create an amazing coffee experience in a convenient, ready-to-drink format. We were blown away when we visited the UK and how great the coffee experience was on the high street and when you see that gap between the high street and the RTD category that’s when you know that there’s going to be a huge opportunity for Hunt and Brew.
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By GlobalDataDB: It sounds like your product recipe, including within that the single-origin element, will be the main cues you will look to push in retail to try to stand out from the competition?
DS: We call the journey to create Hunt and Brew a journey of a thousand nos, with the hurdles and things that we had to overcome to craft a really good coffee at scale. The high-quality, specialty-grade coffee comes from a single origin. We kind of source the world for really interesting and different coffees. That’s a really strong message in Australia where that level of connection with coffee is expected.
Of course, we didn’t add sugar to it because we didn’t want to spoil such an amazing coffee experience, so it’s a very clean product. What we’re finding in many other countries is that’s a very important message. The UK’s message essentially is real coffee, fresh milk, nothing else. We’ve done some research to look at what are the things about Hunt and Brew that appeal the most. In other markets, it’s ‘Australia’s number one coffee’ because Australian coffee holds whatever credentials but, in the UK, it’s about people wanting real coffee and a clean coffee experience.
DB: So, in your consumer research in the UK, you’re picking up on an increased scrutiny of products?
DS: It’s less that people are looking at the back of the label of an RTD coffee. It’s more that the people want real coffee experiences. It’s a more grown–up experience than a sweetened coffee. Those other brands and products have a role but Hunt and Brew is a serious coffee for serious people. We know that it brings in a new consumer, one that currently isn’t catered to.
DS: We can’t rely on people to pick up our bottle and read the label looking for something clean – and they probably wouldn’t note it because there’s nothing like it, so it is important for us to get that message out there that this is real coffee for real coffee drinkers and that means that it’s clean.
DB: Do these credentials mean Hunt and Brew will be priced at a bit of a premium? How will you look to convince shoppers to try you out? Will you be investing in promotions and then, subsequent to the promotional activity, how can you get consumers to come back at that higher price?
DS: Absolutely, in every market we’re in, it’s priced at a premium. We know that Starbucks RTDs tend to sit usually at that premium price point and we sit usually above them. We tend to compare ourselves more to what a high–street, crafted coffee experience would be, rather than trying to match the RTD category.
You can talk about Hunt and Brew and its proof points as much as you want. The second you try it, you get it and so getting people to try it is critical, so absolutely we want to promote the product heavily to encourage that trial because we know that once people try it, they keep coming back.
It’s always an interesting conversation with customers, right? Firstly, every customer we’ve spoken to in the UK a) recognises the opportunity in the category and understands what’s going on in the world of coffee; b) really loves the product. Immediately, again, as soon as you try it, you can see that it’s quite different to every other product; and then c) asks ‘How are you going convince people to pay?’ It’s well–trodden ground that conversation. We know from experience in every market we play that it works but we do need to make sure we’re encouraging people in the right way to try it, to do the right promotional activity.
DB: You’re launching in the UK through Tesco. Have you spoken to the country’s other major grocers?
DS: We’ve spoken to everyone; we are speaking to many. As you would know, with these guys, there’s range review timings and processes to fit into. Obviously, the retailers that have a more price-sensitive customer tend to want to know more about how it’s going to perform at a premium. We know from here in Australia that it’s not necessarily the right product for a discounted chain but, from a value chain point of view, it still does what it needs to do and it performs well. It delivers higher dollars per store to the customers because of its price point and it brings in new customers, so it’s a compelling story.
It’s always been received positively in terms of the fact that the product is not just another me-too product within the category. I think many of the other ones have distinct and interesting and beautiful brands in many, many ways. Many of them have really strong coffee credentials because a Costa or a Starbucks have chains of coffee shops but the product itself doesn’t necessarily reflect what they would do in a coffee shop.
DB: There is significant competition in the UK, with Arla and Starbucks working together, Coca-Cola backing Costa, Britvic owning Jimmy’s – and Britvic set for sale to Carlsberg.
DS: And do you know what? I get that customers need to make room for us. As I keep hearing from every single buyer I’ve ever spoken to, there’s only a certain amount of room in the chiller.
DB: What’s your sales strategy outside of retail?
DS: In Australia, we are across nearly every channel. You think about the Sodexos of the world who are big customers of ours here, with mine sites, schools and offices. Many QSR accounts are suitable for the products. Certainly, there’s a lot of opportunity in that B2B, out–of–home space. Petrol and convenience is another really big channel where it makes sense. What I’m finding in the UK as well is the long tail is long. Australia’s a much smaller market – bigger geographically and more challenging in that way – but smaller in terms of those sorts of opportunities, so it’s really exciting actually to think about where Hunt and Brew could go.
DB: How are you looking to manage the volatility in the price of coffee?
DS: I think coffee prices are at a 40–year peak. There’s this weird effect where cocoa has been heavily hit this year. Cocoa–growing regions in Vietnam and Brazil have been hit hard by weather events and coffee suffers a sympathetic inflationary effect when cocoa is hit, so, coffee prices are high. For us in the category – although perhaps less so in RTDs because there’s a lot of extracts and flavourings and those sorts of things in the category – but we would go through the same sorts of coffee cost pressures those guys on the high street would. Obviously, the bigger we grow, the more our ability to bring those coffee procurement costs down.
The challenge is always that we want those high-grade specialty coffees. Actually, the origins we’re launching in the UK might be from the same country but the origin itself might be different to our Australian product and so what we’re actually doing is working really closely with the coffee importers in each market. In the UK, Masteroast, for example, who are a big coffee importing company and roasting company are the perfect partner for us to have the scale where they can help negotiate and have those sorts of relationships with those prices.
And there’s also room for us to standardise the brewing process. What we’ve managed to do is match the profile of the product that we have here and it’s definitely a Hunt and Brew product; I would say maybe our coffee in the UK might be better than the one here. Each market is a slightly different process based on the partner that we’re working with, so there’s an opportunity to standardise that.
DB: It’s a challenging time to enter new markets with a new product when you have to be careful with the price consumers can see and, yet at the same time, your principal commodity is facing such volatility in its own pricing.
DS: Absolutely. Coffee’s recent history is volatile in general, so we’re pretty familiar with how it kind of works over here but, like I said, it’s a handcrafted product. I would say coffee is the most significant component when it comes to what the cost is and it’s not a cheap coffee that we’re working with either, right, so we need to manage that carefully. As we build scale, we get a better ability to manage that and smooth that out.
DB: Is Hunt and Brew one of Brownes Dairy’s fastest-growing brands at the moment? Is it providing Brownes overall with a bit of impetus?
DS: Because we’re on the other side of the country, I would say we make probably the most diverse dairy portfolio out of any dairy company in Australia. We kind of had to because we’ve been around so long and are so far away. We’ve got a really good brand awareness in parts of Asia. We do export a lot of Brownes product into Asia as well. There’s good growth opportunity there but you can get good yogurt brands there, in the UK and other parts of the world. For me to introduce Brownes as a brand in the UK and have a contract manufacturer doesn’t make sense whereas Hunt and Brew is globally relevant and globally unique. We’re seeing growth on both fronts but Hunt and Brew could and should be a global brand. Brownes would struggle to do that and it wouldn’t make sense necessarily for Brownes to try to do that, so Hunt and Brew is our biggest growth pillar for sure.
DB: Are Brownes Dairy’s overall sales growing presently year on year?
DS: Absolutely. Last year was a tough one. Everyone had to put through price rises over the last 24 months, so that helped us in terms of our sales. I think the diversity of our portfolio, while it complicates things in the back in the factories, makes things more complex, it helps us weather those kinds of events more so than others.
We have seen growth domestically and there’s still growth to be had. I mean, we dominate in Western Australia but there’s still growth opportunities outside of WA and our exports are growing as well. This year looks to be another good one. So, despite the tough years for everyone in manufacturing, I think last year and the year before, Brownes has performed well.
DB: What other innovation plans does Brownes have in drinks?
DS: Brownes is a super-innovative place. We launch things well before their time. Hunt and Brew was a slog in the first couple of years. No one wanted it. It didn’t make sense. Now look at it. In many instances, Brownes is definitely ahead of the game.
There’s definitely a couple of amazing products that we have launched or are in the pipeline that I think would be, again, globally relevant; whether it makes sense trying to introduce them under the Brownes banner into the UK or manufacture over there is a different story. We’ve recently formulated and launched our own alternative-dairy range. That happened this year and that’s performing really well.
We have this product called Natural Flavoured Milk, which is a no-added-sugar, no-added-sweetener, flavoured milk for kids, which is an astounding product that would be globally relevant but, again, would it make sense to try and do that elsewhere in the world? I’m not entirely sure. There’s too much opportunity in Hunt and Brew for us to not put all of our support behind it.
