Despite a slowdown in the number of coffee shops opening on the high street, the big three – Starbucks, Costa Coffee and Caffé Nero – are focusing on the quality of their food offering for future growth. With recent figures showing mixed fortunes for muffins in the retail sector, the growth in branded coffee outlets could see gains for a select few muffin suppliers.The coffee bar sector is now worth £2.2bn and continues to grow by 10 to 15% a year, with branded outlets taking market share from the independents. The branded retail coffee market is set to break through the £1bn barrier in 2007, from £630m in 2004, according to Caffé Nero. Muffins are fetching a premium as one of the primary add-on sales with coffee.Caffé Nero claims to be the fastest growing of the coffee chains. It sells around 53,000 muffins each week across its 245 stores. Paul Ettinger, commercial director, told British Baker’s Baking Industry Summit in November that the firm’s strong position has been built on the quality of its food offering.Recipe developmentHe explained that, alongside Viennoiserie and sandwiches, muffins are a key part of the coffee experience. A focus on recipe development has helped distinguish the Caffé Nero brand. “This is what has pulled us out from our competitors. A large part of our success has been down to the level and depth of detail we are prepared to go into to get each product absolutely right for the market. Each muffin sells with a coffee – it is an absolutely critical part of our business,” said Mr Ettinger.The British public will be tempted by new flavours, such as Caffé Nero’s recently introduced apple and ginger muffin. But UK tastes are essentially conservative, with blueberry and chocolate the leading sellers, he said. “I think there is a level to which people are prepared to experiment but it is a very well-defined level. We have seen that with our muffins. Chocolate and blueberry are still by far and away our biggest sellers. When we brought out innovative recipes they didn’t work.”Consistency of appearance is also key – a sad, under-risen batch will be rejected. Selling huge volumes of muffins – and the company has sold in excess of 2.6m muffins this year already – means that producing flawlessly consistent product is a challenge for muffin suppliers. “If we suddenly have a bad batch, where the ‘mushroom’ comes out a bit flat, our sales will halve. It’s absolutely extraordinary. Getting, not just that consistency of flavour but that consistency of shape, is vital,” said Mr Ettinger.A mistake it has made in the past was thinking people would sacrifice taste and texture for a healthy option. Caffé Nero’s original low-fat muffin was a disaster, he admitted. But he claims to have got the balance right with a reduced-fat blueberry muffin, which is slightly less indulgent at 14.5g of fat and 353 calories, compared with 23.6g and 432 calories for its regular blueberry muffin. “We had lots of complaints that the low fat muffin didn’t taste good, the texture was bad, and it wasn’t what people expected from Caffé Nero,” he said. “What they actually wanted was something that made them feel good that also tasted good.” Muffin BreakAnother company with its eye on the coffee and muffin market is Muffin Break, a brand of franchised foodservice outlets with 300 stores in six countries. The brand announced its move into the UK in 2001, opening two outlets in Derby and Nottingham. It now has 18 across the UK.New Zealander Mike Arbuckle, director of Foodco UK, the owner of the Muffin Break trademark in this country, says a niche exists in Britain for a coffee chain freshly baking goods on-site. All its muffins are baked daily on the premises from a premix imported from Australia, made from Queensland flour.“The British market is used to buying this kind of product in packaging with a use-by-date,” says Mr Arbuckle. “They’re not as used to freshly baked product and there’s not many people doing that. We came here in 2000 and carried out a market study. We determined that the coffee quality, in general, was poor and that there was no national retail café/bakery chain. We are now using franchisee’s investment to grow our business in the UK.” The business’s expansion, he says, is opportunity led, without set targets. “We are very careful where we open. We have a planned growth strategy – I want to build a strong business and we haven’t found any trouble attracting franchisees.”The prime product is coffee, supported by muffins and a small range of cookies, sandwiches, savoury items and cakes. “Our theory is that if you get the coffee business, you get the food business. We’re beginning to see that shopping centre customers will go to where the best coffee is, and they’ll buy a muffin to go with it.” It also offers a range of ‘frappé’ and milk-based products, as well as traditional soft drinks.“There are a lot of differences in the market from where we’ve come from. It’s been a learning process. Customers here lunch more than snack and there’s a general misunderstanding about coffee – there’s a lot of bad coffee out there!”The Muffin Break shopping mall and convenience foodservice format originated in Canada and developed in Australia and New Zealand (where it has 170 stores). With 200 choices of muffin mix available, the company is some way ahead of the UK market. But what works in Australia does not necessarily meet with success here, comments Mr Arbuckle.Paying a premium As with Caffé Nero, a muffin will carry a premium, selling for between £1.40 and £1.60. “We are at a premium over other operators, but we will still sell 28 dozen in one day in Nuneaton, for example,” he says.“You could actually make anything into a muffin, like rhubarb and pumpkin, if you thought people would eat it. As a franchise we have operational guidelines and recipe books. But we don’t dictate other than that there should be five standard muffin varieties per day. Every day we will arrange 16 different varieties in our cabinets.Sales of healthy options are picking up, he adds, including a high-fibre sweet muffin, a low-fat muffin and a soon to be introduced gluten-free muffin, which has done well abroad. Dawn FoodsMaggie Dagostino, marketing director at Dawn Foods, which supplies coffee chains, agrees that there is room for healthier products. Market leader Starbucks already sells a variety of ‘Skinny’ muffins, including chocolate vanilla, blueberry and peach and raspberry, she notes.“If you asked me if you thought health was a big driver in the sweet bakery sector, I’d say no. But there are areas of the market that need servicing and low fat is attractive to certain people – not so much in the traditional high street craft bakeries, but certainly in the more cosmopolitan side of foodservice,” she comments. In response, Dawn recently introduced a lower-fat, lower-sodium muffin. Ms Dagostino also thinks a lot more could be done with flavours for smaller children’s products. “You can make them slightly healthier and mums would buy into that,” she says.Commenting on the TNS data, she voices doubts about whether the category is in decline in retail, despite figures suggesting a fall in muffin value sales by 12.6% and huge disparities between individual supermarkets’ performance. “That rings alarm bells because, generally speaking, a trend is a trend. My feeling is the market is still showing growth. People are developing formats and shelf space is still being provided. We have seen retail price rises recently, which the market seems to be sustaining.”A more surprising trend might be the decline of the blueberry muffin, she observes. “We did a huge amount of research last year and people still want traditional flavours. But they are turning more towards red fruits and that is where the growth is. Blueberry muffins can sometimes look a bit murky.”
National Sweet American Bakery Week has wrapped up for its second year after bakers nationwide got involved with the event. From 1 to 7 July bakers were encouraged to maximise the popularity of American-inspired sweet treats, with product ideas from across the ponds.Graham Ryder, owner of Peter’s Bakery in Manchester, who has taken part in the awareness week for the last two years, said: “This year we wanted to do even more to celebrate the event. We styled the bakery with red white and blue decorations and opted for a Vegas theme, producing cupcakes topped with chocolate dice, playing cards and even roulette chips – they were a big hit with our customers.”Jacqui Passmore, marketing manager UK and Ireland for Dawn Foods, said: “We were delighted to have more bakers than ever register for this year’s National American Sweet Bakery Week. We’ve received excellent feedback from those who took part in the event, with many reporting incredible sales increases during the week.”Bakers can still get a taste of the USA through Dawn’s wider Authentic American Bakery Campaign. Follow Dawn’s virtual food blogger and bakery enthusiast Dan Jackson’s adventures across the USA as he reports on trends and sends back recipe and theming ideas using Dawn’s American bakery products.Go to www.dawnbakery.co.uk for full details, as well as the chance to enter monthly American-themed competitions and giveaways.