- BT’s share prices have fallen by over 25% in the last six months
- The company will sell coffee machines through its mobile and retail brand, EE, in a bid to stay more relevant to consumers
- At-home coffee consumption is still booming since the pandemic, and could be a part of BT’s recovery
STARTING NEXT year, telecommunications and broadband internet provider BT will begin selling coffee machines under its mobile and retail division, EE. This is in addition to other household electronic goods and entertainment products the brand already sells. EE also plans to expand its gaming, insurance and subscription services.
On the face of it, BT entering the coffee machine market is an unexpected move – but it starts to make a lot more sense once you dig deeper.
Despite yesterday’s upturn, BT has experienced disappointing stock performance for about five years. The company’s share prices have fallen by over 25% in the last 6 months.
Considering this, the decision to start selling coffee machines can be seen as a strategy to boost growth and raise the profile of BT’s consumer brand.
“It is less about financials and revenue, than increasing relevance in the minds of consumers. If not, we risk being seen as a commodity service,” said EE’s CEO Marc Allera in a recent interview.
Becoming more relevant
Tapping into at-home coffee consumption is certainly a positive step towards becoming more relevant. The pandemic saw the at-home coffee market boom. For example, in the UK, grocery retailers sold £24 million more coffee and tea in June 2020 compared to the same period in 2019.
“Coffee at home continues to see strong growth following Covid,” says Scott Martin, managing director of Sixth Wave, and former founder and managing director of Costa Express and CostaX respectively. “Over 30% of households in the UK have coffee-making equipment ranging from capsules to full-blown espresso machines – both categories show double-digit growth.”
More specifically, the market for home espresso machines soared during the pandemic. For instance, De’Longhi posted an “extraordinary” 320% profit growth in July 2021, reflecting unprecedented demand in the sector.
The pandemic also highlighted that consumers were unwilling to compromise on the quality they had grown accustomed to at their local coffee shop. Instead, they chose to invest in equipment that enabled them to improve their coffee experience at home.
“There is an emerging trend towards a growing cohort of consumers that want to enjoy the ‘art’ of coffee – from buying single origins and limited blends, to handcrafting it,” says Scott. “This ‘prosumer’ will have a significant impact on the market in the near term.”
Essentially, the future of the at-home coffee market appears not only to be positive, but also operating at a more advanced and “professional” level than people might have expected four years ago. For BT, the company has taken this as an opportunity to enter consumers’ homes in a more everyday and obvious way.
Can BT add real value?
Given the company’s background and position as an industry outsider, some believe BT could be primed to deliver something genuinely well-aligned with the evolving at-home coffee market.
“Domestic coffee equipment today is not generally ‘connected’, so it’s no surprise that a communications company (BT) is stepping in – providing the critical conduit between equipment, consumer and a digital marketplace,” Scott says.
“But smart tech won’t be enough – the coffee system has to be amazing,” says Scott. “It’s a congested space with a wide range of price points, from under £100 for a pod machine to over £3k for La Marzzocco linea.”
At the same time, as EE aims to expand its subscription service and develop a more comprehensive digital retail experience, this could open up fresh collaboration possibilities for coffee roasters and other independent brands.
“With this new consumer cohort comes a range of new opportunities from equipment suppliers and roasters alike,” says Scott. “Subscription-based models, e-commerce platforms helping customers find the perfect blend, and online user guides all become infinitely possible and the line blurs between equipment and product.
“For example, Sage (the home coffee equipment company) already operates the Beanz platform, an e-commerce site that gives artisanal roasters a platform to sell to consumers at home.”
On the roasters’ side, there are clear opportunities for collaboration and growth into this evolving marketplace. As always, it will be about who is ambitious and innovative enough to capitalise on the direction the market is headed.
“The connectivity of digital platforms will, in my opinion, evolve and the more progressive coffee roasters will forge their own way,” says Scott. “For example, Grind in London has successfully built a sizeable at-home business from a dedicated and bespoke Direct-to-Consumer platform building on and interacting with its ever-expanding loyal customer base.
“They expect to have over 25,000 Grind machines in households in the next few years, suggesting that smart connectivity is the natural next step.”
Whether or not selling coffee machines (as well as a wider consumer goods range) can salvage BT’s stock performance remains to be seen. However, it’s difficult to see how their participation in the booming at-home coffee market could hurt the company. For those with their glass half full, BT could be in a position to add real value to the sector.
“It will be interesting to see how BT enters the space,” says Scott. “Technology and coffee are a potent mix and, until recently, rarely used together.”
Coffee Intelligence
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