By Claire Reilly
Even though they only make up a single section of the small appliances category, coffee machines are a huge part of electrical retail. There are three distinct varieties of machine to choose from, there is plenty of new technology driving change and the whole segment is characterised by a sense of style and sleek design that makes the coffee machine a must-have appliance in the modern kitchen.
After more than three decades in the industry, Harvey Norman brand manager Gary Brown has seen his fair share of changes in the coffee category. Australians have significantly changed the way they drink their coffee and, as a result, buying habits have dramatically shifted too.
As Brown explained, if you walk into a Harvey Norman store nowadays, you’ll see an increased hive of activity in the coffee department.
“Certainly there has been a lot more focus on coffee,” said Brown. “Twenty years ago, the only people that put coffee machines in their kitchens were those that liked to mimic the cafe at home. There also weren’t as many cafes as there are today, so there are more and more people drinking coffee now.
“I think there are more and more people that want a consistent coffee, regardless of whether they’re at home or they’re out and about. And coffee machines have also improved and become more efficient.”
Despite the growing cafe culture and the increasing uptake of coffee machines in Australian homes, Brown said deteriorating average selling prices continue to be a problem in the category, as is the case in “many categories in electronics”.
“The minute mass-merchants want to get a hold of something and it’s not really their profit source: price is an easy way to grab unit share and move a lot of stock,” he said. “And there are companies out there that want to bring stock in and have it sit in a mass merchant or a grocery store. These guys also make money on the capsules — you’ve got to remember [that] as well.
“It’s happening in just about every market that we’re dealing with, it’s not like it’s a surprise for any of us.”
“With the additional volume in the market, the price points have become lower. There was a huge market for coffee machines $2,000 and above a couple of years ago, but you can buy a fully automatic machine now for $1,000, and you can buy a fully automatic machine without all the fancy displays for as cheap as $500.”
That said, Brown noted some positives that had come out of the shifting prices in the coffee category and the arrival of more entry-level models in mass merchants such as Coles and Woolworths.
“Since late last year, when machines got to ridiculous volume price points, coffee machines and capsule machines, in particular, have even started to attract the instant coffee drinker as a serious alternative.
“It’s created a separate market at a whole new price point and attracted a different consumer more than anything.
“If you’re a coffee drinker that has invested $400 or $500 in a coffee machine, you’re certainly not going to look at a sub-$100 machine as an alternative. Chances are, you’re drinking out of a $500 coffee machine because you enjoy the coffee that it produces.
“For a lot of consumers, it leads to a realisation that there is a better coffee out there. And let’s face it, from a market perspective, the more people that have a coffee machine at home — regardless of whether it’s capsule, manual or fully automatic — the better it is for the marketplace and the industry.
“People with second, third or fourth generation coffee machines tend to trade up, rather than trading sideways or downwards.”
Although the category is constantly changing and developing, Brown said coffee machines were still a very strong part of Harvey Norman’s offering.
“It’s a fantastic part of our business,” he said. “It’s still a growing business for us, hence our investment in the support we give the category.”
That investment includes trained baristas in “every store across the country”, who spend time with customers and help qualify them on the differences between the machines on offer and what features they get for different price points.
Harvey Norman has also made buying guide videos for its e-commerce sites, featuring baristas speaking with the editor of Super Food Ideas magazine, Kim Coverdale, about the benefits of different coffee machines.
The retailer has also developed the Harvey Norman Coffee Institute, a series of barista training events held in conjunction with the Barista Basics Coffee Academy and sponsored by De’Longhi, where consumers can come learn the essentials of coffee making, and learn about the merits of different machines.
“It’s about getting them in and having trained baristas that know the ins and outs of everything, from the coffee beans to the machines, and giving them a better education so they can make a more informed decision,” Brown said.
“So once you take them through the differences between the capsule, the bean and the fully automatic, and then the different grades of product available in each of the categories, they get a better idea.
“That’s why most of our advertising around coffee is ‘Come in and have a coffee on us and let us help you find the right machine for you’. Because people don’t always want what they think they want, and a better alternative normally isn’t that far away.”