Peet's Coffee & Tea:
Who's Buying, Who Isn't, and Why
X.460.6 Marketing Research
March 7, 2016
Table of Contents
INTRODUCTION .................................................................................................................... 3
RESEARCH QUESTION .......................................................................................................... 4
SURVEY INSTRUMENT .......................................................................................................... 5
SURVEY RESULTS ................................................................................................................ 8
RECOMMENDATIONS .......................................................................................................... 11
APPENDIX .......................................................................................................................... 13
ANNOTATED BIBLIOGRAPHY ............................................................................................. 17
2
INTRODUCTION
Specialty coffee refers to "the highest-quality green coffee beans roasted to their
greatest flavor potential by true craftspeople and then properly brewed to well-establish
standards,"1 and Peet's Coffee & Tea is known as the "grandfather of specialty coffee."2
Founded in 1966 by Alfred Peet, Peet's was originally a single store in Berkeley,
California that specialized in roasting high-quality coffee. Now Peet's sells its fresh
roasted coffee, hand-selected tea, and other related items in 112 retail stores across seven
states, as well as through other distribution channels.
Unlike Starbucks, one of Peet's main competitors, Peet's has been "content to
hang on the sidelines and grow slowly"3 rather than focus on aggressively expanding
across the United States. This has allowed the company to concentrate on being at the
forefront of developing fresh, specialty coffee.
A premium market for Peet's coffee is the baby boomer generation. This post-war
generation is primarily made up of women age 50 or older, few minorities, and holders of
a large amount of the nation's disposable income.4 "They are among the least interested
in trying truly new foods, eating gourmet regularly…" says Elizabeth Sloan, and this
makes them more likely to prefer an "old-fashioned" cup of coffee versus the kind of new
gourmet coffee beverage one might find at a place like Starbucks.
Currently, Peet's has several different ways of selling its whole bean and preground coffee: in its retail stores, through a mail order catalog program, online at
1
http://www.scaa.org/pdfs/Press-What-is-Specialty-Coffee.pdf
http://www.peets.com/who_we_are/history_vine.asp
3
"Coffee Supplier's Cup Runneth Over with Plans to Widen Reach," Investor's Business Daily.
4
"Health Vending & Other Emerging Trends," Elizabeth Sloan.
2
3
peets.com, and wholesale at a variety of supermarkets and specialty grocery stores. In
addition, Peet's sells directly to hotels and offices.
Peet's whole bean coffee's pricing is the same whether sold online at
www.peets.com or at their own retail stores. The prices range from $9.95 per pound for
House Blend to $24.95 per half-pound of Reserve Coffee beans.
At supermarkets like Safeway and Albertson's, Peet's is sold at $11.49 per 12ounce bag, except for House Blend, which is $10.29 per 12-ounce bag. Being a high
quality, gourmet coffee that is in high demand, Peet's is usually located in a premium
shelving location: close to the middle shelf, right within easy reach.
By staying true to its traditional values of roasting coffee by hand, maintaining the
highest level of bean freshness, and listening to the desires of their most loyal customers,
Peet's has set itself apart from its competitors, especially within California. According to
coffee industry analysts at Roth Capital Partners, "Peet's share of the specialty coffee
segment is estimated at about 30 percent within California."5
RESEARCH QUESTION
As mentioned previously, Peet's does very well with the baby boomer generation.
Its focus on tradition and lasting quality are characteristics with which baby boomers
closely identify and appreciate. But how is Peet's faring with other generations? Since
such information is invaluable to how Peet's may wish to market itself in the future, the
research question for this study is "Who is buying Peet's coffee? Why or why not."
5
"Peet's Growth Plan Stays Close to Home," Michele Chandler.
4
The study focuses mainly on coffee consumption in the San Francisco Bay Area,
with the objective being to ascertain who is and is not buying Peet's whole bean or preground coffee. Does a particular age group buy Peet's coffee beans more than other age
groups? How about a particular gender? And does one's income and home location
affect this purchase decision?
Additionally, the study examines some of the reasons behind why Peet's is and is
not being purchased. For example, does a particular age group believe Peet's coffee is
too expensive and that is why it is not being purchased?
By examining these and similar questions, the study hopes to identify which
population segments like and are familiar with Peet's, as well as which segments do not
like and are unfamiliar with Peet's.
SURVEY INSTRUMENT
The survey is a self-administered online survey housed at SurveyShare.com. It
contains a total of 12 questions that query one's consumption of coffee, other drinks of
choice (if coffee is never consumed), and coffee bean purchase preferences. Pages five
and six of this report contain the full text of the survey questions. Skip patterns are
indicated by italicized brackets.
5
1. What is your gender?
 Male
 Female
2. What is your age?
 18 to 24
 25 to 34
 35 to 44
 45 to 54
 55 or older
3. What is your annual household income?
 Less than $50,000
 $50,000 to $99,999
 $100,000 to $149,999
 $150,000 to $199,999
 $200,000 or more
 Decline to state
4. What best describes the area in which you live?
 City
 Rural
 Suburban
5. Do you drink coffee at all?
 Yes [skip to Question 7]
 No
6. Since you do not drink coffee, what beverages do you enjoy
drinking the most?
 Milk [skip to end]
 Soda [skip to end]
 Tea [skip to end]
 Water [skip to end]
 Other (i.e., juice, sports drinks like Gatorade, alcoholic
drinks, etc.) [skip to end]
7. What style of coffee do you buy most often?
 Whole beans
 Pre-ground beans
 Pod/Capsule
 Do not buy any type of beans because I do not brew my own
coffee [skip to end]
8. What size bag of whole bean or pre-ground coffee do you
usually buy?
 1/2 pound bag
6
 1 pound bag
 2 pound bag or larger
9. Where do you most often buy your whole bean or pre-ground
8. What size bag of whole bean or pre-ground coffee do you
usually buy?
 1/2 pound bag
 1 pound bag
 2 pound bag or larger
9. Where do you most often buy your whole bean or pre-ground
coffee?
 Discount or Warehouse store (e.g., Costco)
 Farmer's market
 Online
 Supermarket or Grocery store
10. Do you buy Peet's whole bean or pre-ground coffee?
 Yes [skip to Question 12]
 No
11. Why don't you Peet's whole bean or pre-ground coffee?
Please only choose your main reason.
 Beans are overpriced/too expensive [skip to end]
 Beans brew coffee that is too strong [skip to end]
 Difficult to purchase (i.e., not sold everywhere) [skip to end]
 Have never heard of Peet's / Not familiar with Peet's [skip to
end]
 Peet's caters to yuppies [skip to end]
 Peet's doesn't sell coffee pods/capsules [skip to end]
 Prefer beans from a different brand/company [skip to end]
 Too much variety to choose from [skip to end]
12. Why do you buy Peet's whole bean or pre-ground coffee?
Please only choose your main reason.
 Beans are freshly roasted
 Beans are of a high quality
 Beans are well-priced
 Beans brew strong coffee
 Beans produce good coffee (i.e., full flavor, rich taste, etc.)
 Convenient for me to buy
 Good variety to choose from
 Peet's has a good reputation
 Peet's is environmentally friendly
7
Questions one through four are demographic questions that profile the
respondents and allow for more in-depth analysis of latter questions. Question five is a
filter question that ensures only respondents who drink coffee are asked questions that
deal with the purchase coffee beans. Question six is asked only of those who say they do
not drink coffee at all. Since Peet's is a purveyor of tea as well as coffee, question six is a
part of the survey to see if tea is a drink of choice for those who do not drink coffee.
Questions seven through nine examine one's preferences in style, bag size, and
location/type of store when it comes to buying coffee beans. Lastly, questions ten
through twelve delve into the specifics of who is buying Peet's coffee beans and the
reasons behind this purchase decision.
SURVEY RESULTS
A total of 112 respondents completed the survey. This sample, which was one of
convenience and not randomly select, is predominantly female (66%), 44 years old or
younger (87%), earners of less than $100,000 a year (58%), and city dwellers (61%).
Pivot Table #1 -- What beverage do you enjoy drinking the most [other than
coffee]? (question 6) by Type of area live (question 4):

Regardless of the type of area in which a respondent lives, the majority of
non-coffee drinkers (56%) enjoy drinking water the most.

Of the nine respondents who live in a city: 44% prefer water, 33% prefer
juice/sports drinks, and 22% prefer soda. None of them chose tea.
8

Of the seven respondents who live in suburbia: 57% prefer water and 29%
prefer juice/sports drinks. Once again, tea was not chosen, and neither was
soda for this segment of the non-coffee drinking population.

The one respondent who lives in a rural area chose water as the beverage
he/she enjoys drinking the most.
Pivot Table #2 -- Where do you most often buy your whole bean or pre-ground
coffee? (question 9) by Income (question 3) and Type of area live (question 4):

More than 80% of the people living in a city will buy coffee beans at a
specialty store/café or supermarket.

38% of the people living in a suburban area will buy coffee beans at a
specialty store/café. An additional 22% will buy coffee beans at a
supermarket or discount club.

Around 10% of people who live in either a city or suburban area will buy
coffee beans online.

There is a 50-50 split between specialty stores/cafés and supermarkets for
where people earning less than $50,000 a year will buy their coffee beans.

People earning $50,000-$99,999 a year tend to buy coffee beans at
supermarkets.

People earning more than $100,000 a year appear to prefer buying their
coffee beans at specialty stores/cafés.
Pivot Table #3 -- Do you buy Peet's whole bean or pre-ground coffee? (question
10) by Age (question 2) and Income (question 3):

Regardless of income, 18-24 year olds are less likely to buy Peet's coffee
beans, while 35-44 year olds are more likely to buy Peet's.

Fewer 18-24 year olds with an annual household income of less than $50,000
buy Peet's beans (25% buy, 75% do not).

More 35-44 year olds with an annual household income of at least $50,000
buy Peet's beans (71% buy, 29% do not).
9
Pivot Table #4 -- Why do you buy Peet's whole bean or pre-ground coffee?
(question 11) by Gender (question 1) and Age (question 2):

Of the 32 respondents who report buying Peet's coffee beans, most are female
(72%) and between the ages of 25 and 44 (68%).

Regardless of gender or age, the most popular reason for why our coffeedrinking respondents buy Peet's beans is because the beans produce good
coffee that has a full flavor, good taste, etc.

Those ages 25-44 are more concerned with buying beans that produce good
coffee than those ages 18-24. For 18-24 year olds, buying beans of high
quality and/or beans that produce strong coffee is more important to them.
Pivot Table #5 -- Why do you not buy Peet's whole bean or pre-ground coffee?
(question 12) by Age (question 1), Income (question 3) and Type of area live (question
4):

18-24 year olds find Peet's beans to be too expensive or difficult to purchase
because they are not found everywhere.

25-34 year olds also do not buy Peet's beans because the beans are not sold
everywhere, but their lack of familiarity with the Peet's brand is their
predominant reason for not buying Peet's.

Around 55% of the people living in a city earning less than $50,000 per
annum will not buy Peet's because:
o they either have not heard of it or they are not familiar with the
brand.
o the beans are too difficult to purchase because they are not sold
everywhere.

Other reasons for not buying Peet's are:
o The beans are considered to be overpriced or too expensive.
o Respondents prefer beans from other brand/company.
Please see the Appendix for selected charts of these Pivot Table analyses.
10
RECOMMENDATIONS
Based on the above data, Peet's should place its advertising focus on people who
are getting married, looking to buy their first homes, and are settling down in their lives.
In other words, Peet's should market to those who are in their mid-30s to mid-40s.
With more disposable income than they had during their 20s and early-30s, this
segment of the population is exhibiting many of the characteristics of the baby boomers
Peet's has claimed is its premium market. That is, buying beans they know will produce
good coffee is more important to those ages 35-44 than such other factors as convenience
and price. Consequently, we recommend Peet's focus more on advertising and promoting
coffee gift packages that may be bought as wedding and house warming gifts. These gift
packages could include such items as coffee bean samplers, coffee grinders, a set of
matching mugs, etc.
Our survey has also shown that buying beans known to produce high quality
coffee is important to coffee drinkers. As a result of this, we believe Peet's should
advertise this point -- and the fact its beans are known for producing good coffee -- more
strongly. If more coffee drinkers are made aware of Peet's high quality, good coffee, we
think that will boost the company's sales figures.
Furthermore, Peet's should consider expanding its distribution channel stores to
places such as Whole Foods, Target, etc. Offering Peet's at Whole Foods might attract
the attention of those who are more conscious of brand reputation and high quality beans.
Offering Peet's at Target, meanwhile, might entice those who are younger and/or more
price-conscious. Peet's should also consider expanding its $10.29 price point for a 12ounce bag to include other blends of beans aside from its House Blend.
11
Since the majority of the non-coffee drinkers who completed our survey said
water is the beverage they enjoy drinking the most, we recommend Peet's stock bottles of
water, as well as other non-coffee beverages, at its retail stores. This would allow Peet's
to entice non-coffee drinkers into its stores, and that, in turn, would boost its sales and
increase its reputation. Peet's might also want to consider partnering with a well-known
distributor of high-quality bottled water, such as Evian, and offering this brand's water in
its retail stores.
In 2005, the University of California at Berkeley opened its own Peet's café as a
campus restaurant near one of its existing dining areas.6 We believe Peet's needs to open
similar cafés and retail stores around or in major colleges and universities to increase
awareness of Peet's among 18-24 year olds. Implementing some sort of "college special"
on beans at these cafés and stores may also help encourage 18-24 years old, who often
have a limited budget, to buy Peet's coffee beans.
In terms of future marketing research, we recommend this survey be conducted
with a larger sample that has been randomly selected. Hopefully that will produce data
that does not skew to those who are young and female, as the sample in our survey did.
Focus groups should also be conducted with those who buy Peet's beans and those who
do not for a more in-depth discussion of the exact reasons behind those purchase
decisions.
6
http://en.wikipedia.org/wiki/Peet's
12
APPENDIX
Figure 1. What beverage [other than coffee] do you enjoy the
most?
12
# of respondents
10
8
6
4
2
0
Other (e.g. juice sports
drinks like Gatorade
alcoholic drinks etc.)
Soda
Tea
Water
Figure 2. Where most often buy coffee beans? by Type of
City
area live
Rural
Suburban
16
# of respondents
14
12
10
8
6
4
2
0
Cafe or Specialty
store
Discount or
Warehouse store
(e.g. Costco)
Farmer's market
13
Online
Supermarket or
Grocery store
14
# of respondents
14
12
Figure 4. Why buy Peet's beans? by Age
9
8
Peet's is
environmentally
friendly
no
Peet's has a
good reputation
Convenient for
me to buy
Beans produce
good coffee (i.e.
full flavor rich
taste etc.)
Beans brew
strong coffee
Beans are of a
high quality
Beans are
freshly roasted
# of respondents
Figure 3. Do you buy Peet's beans? by Age
10
8
6
4
2
0
yes
18
25
35
45
55
to 24
to 34
to 44
to 54
or older
18
25
35
45
55
to 24
to 34
to 44
to 54
or older
7
6
5
4
3
2
1
0
Figure 5. Why buy Peet's beans? by
Income
# of respondents
5
4
Less than $50 000
$50 000 to $99 999
$100 000 to $149 000
$150 000 to $199 999
$200 000 or more
Decline to state
3
2
1
Figure 6. Why not buy Peet's beans? by Age
5
Peet's is
environmentally
friendly
Peet's has a
good reputation
Convenient for
me to buy
Beans produce
good coffee (i.e.
full flavor rich
taste etc.)
Beans brew
strong coffee
Beans are of a
high quality
Beans are
freshly roasted
0
18
25
35
45
55
to 24
to 34
to 44
to 54
or older
# of respondents
4
3
2
1
0
Beans are
overpriced/too
expensive
Beans brew
coffee that is too
strong
Difficult to
purchase (i.e.
not sold
everywhere)
15
Have never
heard of Peet's /
Not familiar with
Peet's
Prefer beans
from a different
brand/company
Too much variety
to choose from
16
6
5
Too much
variety to
choose from
Prefer beans
from a different
brand/company
Have never
heard of Peet's
/ Not familiar
with Peet's
Difficult to
purchase (i.e.
not sold
everywhere)
Beans brew
coffee that is
too strong
Beans are
overpriced/too
expensive
# of respondents
Figure 7. Why not buy Peet's? by
Income
Less than $50 000
$50 000 to $99 999
$100 000 to $149 000
$150 000 to $199 999
$200 000 or more
Decline to state
4
3
2
1
0
ANNOTATED BIBLIOGRAPHY
Journals and Magazines

"Can Advocacy-led Certification Systems Transform Global Corporate Practices?
Evidence, and Some Theory," Michael E. Conroy, Sept. 2001.
This document discussed fair trade products, such as coffee, and international
regulations that have been made or need to be made. It also lightly discussed
trends in coffee.

"Coffee and Music Create a Potent Mix at Starbucks," Steven Gray and Ethan Smith,
Wall Street Journal, 19 July 2005.
This article, originally published in WSJ, discusses Starbucks journey into the
music industry.

"Coffee, Coffee, Everywhere," Sam Whiting, San Francisco Chronicle, 7 May 2000.
This article is about how, in the Bay Area, people still flock to Peet's for their
coffee despite the influx coffee stores that have opened.

"Coffee Supplier's Cup Runneth Over with Plans to Widen Reach," Marilyn Much,
Investor's Business Daily, 11 Dec. 2002.
This article in Investor's Business Daily is about Peet's move into selling coffee in
supermarkets.

"Health Vending & Other Emerging Trends," Elizabeth Sloan, Feb. 2005.
This document discussed the transition of products being sold in vending
machines from the traditional "junk food" to healthier foods. It also discussed the
baby boomer generation as being more traditional and less likely to enjoy these
foods, and that they relate to products that are "made just for you" such as Peet's
Coffee & Tea.

"Improving Packaging Production," Beverage Industry, 1 May 2002.
This is an article about how Peet's went about improving the efficiency with
which they package their beans.
17

"Peet's Growth Plan Stays Close to Home," Michele Chandler, San Jose Mercury
News, 3 June 2005.
This article discusses how Peet's has chosen a different expansion plan from that
of Starbucks.
Websites

http://www.peets.com
Peet's Coffee & Tea's corporate website. Offers a plethora of information on
Peet's including its history and roasting technique.

http://en.wikipedia.org/wiki/Peet%27s
Wikipedia entry for Peet's. Provides an overview of the company's history, retail
store operations, and current store locations.

Peet's Coffee & Tea IPO, http://pro.edgar-online.com
Text from Peet's IPO.

http://www.starbucks.com
Starbucks's corporate website. Provides information on their coffee, their drinks,
their company mission statement, etc.

http://en.wikipedia.org/wiki/Starbucks
Wikipedia entry for Starbucks. Provides detailed information on the company's
history, retail stores, ventures into music and movies, and criticisms and
controversies.

http://www.tully's.com
Tully's Coffee's corporate website. Offers information on the company's history,
wholesale ventures, press releases, etc.

http://en.wikipedia.org/wiki/Tully%27s
Wikipedia entry for Tully's. Provides a short overview of the company.
18

http://www.jcuea.org
John Carroll University Entrepreneurs Association's explanation of how to create
a SWOT analysis.

http://www.coffeeresearch.org/
Website on coffee consumption and various statistics.

http://earthtrends.wri.org
Website on the changing face of coffee production and its environmental issues.

http://www.drinks-business-review.com/
Website on drink research.

http://www.geocities.com/RainForest/Canopy/1290/basics.html
Website on coffee trends.
Books

Uncommon Grounds: The History of Coffee and How It Transformed Our World
(Paperback) by Mark Pendergrast.

Coffee: A Dark History (Hardcover) by Antony Wild.

The Coffee Book: Anatomy of an Industry from Crop to the Last Drop, Revised and
Updated Edition (Paperback) by Gregory Dicum and Nina Luttinger.

The Devil's Cup: A History of the World According to Coffee (Paperback) by Stewart
Lee Allen.
19
Associations

National Coffee Association of U.S.A., Inc. (NCA).
Founded in 1911, NCA is one of the first trade associations for the U.S. coffee
industry. NCA has helped American coffee companies through a variety of rough
times by representing the U.S. coffee industry before the legislative and executive
branches of government, including the U.S. Department of Agriculture, U.S.
Trade Representative's Office, U.S. Food and Drug Administration and
Congressional committees. Its members may be found throughout the United
States, as well as overseas. NCA also produces Coffee Trax, a quarterly statistical
report on the U.S. coffee market. The report offers 20 pages of charts, tables, and
graphs focusing on exportable global coffee production.
http://www.ncausa.org/i4a/pages/index.cfm?pageid=1

Specialty Coffee Association of America (SCAA).
The SCAA is the trade association for the specialty coffee industry. One of the
SCAA's primary functions is to set the industry's standards for growing, roasting,
and brewing. It offers membership to both coffee professionals and coffee
enthusiasts. Members are provided with access to professional tools, training
seminars, market research, and more. http://www.scaa.org
20