Local Coffee Roasters Hummingbird Plunge Into the Capsule Market

Coffee snobs might turn up their noses at drinking a brew made from a capsule, but some New Zealand specialty coffee roasters are giving them a go.

Hummingbird Coffee launched Nespresso-compatible capsules just over two months ago, and chief executive Nick Cowper predicts they could end up accounting for nearly half of all roast and ground coffee sales.

“One of the reasons we sat on the fence for a while was to see if it was going to be a fad.

“But the market just keeps on going from strength to strength, so now it’s bigger than pre-ground espresso.”

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Cowper said figures from the country’s five largest supermarket chains showed capsules had cornered almost 20 per cent of the fresh coffee market, with sales worth $13 million annually, more than double what they were two years ago.

JOHN KIRK-ANDERSON/FAIRFAX NZ

Hummingbird Coffee had to change its roast and blends for coffee capsules.

Although capsules had overtaken espresso grind, and were gaining on fresh beans (25 per cent), they were still well behind plunger and filter coffee (37 per cent).

Cowper said it looked as if coffee drinkers used multiple brew methods, snatching a quick Nespresso​ in the morning and saving their freshly ground coffee for plungers or espresso machines at the weekend. 

​He knew of about half a dozen other coffee roasters producing capsules but it was a big investment. 

JOHN KIRK-ANDERSON/FAIRFAX NZ

Hummingbird chief executive Nick Cowper says plunger ground coffee is still the number one fresh coffee product in major supermarkets.

Nespresso​ coffee capsules were the subject of court action in Europe and Hummingbird took legal advice before hitting the market.

Its packets carry a disclaimer making it clear the product is not endorsed or associated in any way with Nespresso.

Hummingbird had to adjust its roasting to get the right flavour from capsules, which also require a different kind of grind. 

For that reason the coffee for Hummingbird capsules is roasted, ground and packed in Sydney where the necessary specialist equipment is available.

However, other roasters wanting to test the capsule market are calling on the services of Auckland engineer Darryn​ Alexander who can custom fill several thousand capsules a day in his Auckland garage.

So far his fledgling company Quantum Specialities Ltd has a few coffee roasters on board, “we’re talking less than 10 currently.”

He also gets orders from larger companies and individuals wanting their favourite roast in capsule form. 

“I can get about 180 capsules from a kilo of coffee and it’s still about 85 to 90 cents per cup.”

Alexander said specialty coffee roasters tended to be dismissive of capsules and he won them over by brewing them a cup of their own coffee in his Nespresso​ machine. 

“Their faces drop and they go ‘oh, it’s better than I thought it would be’ …It’s never going to compete with their cafe, that’s not what they need to fear.

“What they need to fear is that people who used to buy plunger coffee from their local roaster have graduated to a Nespresso machine at home, and their only option is to go to the supermarket and buy an imported brand.

“What the local roasters have not clicked onto is that the Nespresso​ machines are just a delivery system, just like a plunger.”

Vice president of the New Zealand Specialty Coffee Association David Burton said coffee capsules were good for the industry because they had the potential to help convert instant coffee drinkers to ground coffee. 

“The three C’s – clean, convenient and consistent – are very important for the average Joe in the street who doesn’t really understand grinding coffee and making a plunger; they just go ‘oh, it’s so easy.’

“I’ve lost a handful of customers to pods, but I’m confident I’ll get them back. Whereas I’m pretty sure if you go from instant [coffee] to pods, you will never go back.”

Cost remained an issue –  “You’re talking $1 for a cup of [capsule] coffee as opposed to 25 cents for a home made brew” – as was the “foot print” of imported capsules, said Burton.

Hummingbird is mindful of the environmental impact and Cowper said its recyclable hermetically sealed capsules avoided the need for individual foil packaging. 

The company is also  working on a fully compost-able capsule to meet stringent Australian standards requiring worm toxicity tests to check for heavy metals. 

 – Stuff