Talk about a makeover. The classic coffee break where people stand around a standard drip coffee pot is being replaced by single-serve brews, a phenomenon underscored by changing palates and discerning consumers. With half a trillion cups of coffee consumed worldwide annually, the move towards single-serve coffee represents a monumental shift and massive industry.
In the U.S., data from Statista shows that in 26% of coffee drinkers last year were using single serve machines, like the popular countertop unit of Keurig, despite the much higher cost compared to traditional drip machines. As people began fancying themselves baristas, the pour over coffee market experienced a resurgence in the last decade, a trend that has helped bolster the business of NuZee (OTCQB: NUZE), sending shares from around $1.00 early in 2018 to $15.00 today.
Consumers using the manual brewing method can thank Williams Sonoma (NYSE: WSM), the company that played a large role in catalyzing the pour over revolution by becoming the first major retailer to carry the requisite equipment in 2010. To that end, pour over coffee expanded beyond specialty coffee shops and into retailers, supermarkets and, ultimately, kitchens across the U.S.
NuZee, which does business under the moniker Coffee Blenders ®, is a specialty coffee company specializing as a producer and co-packer of single-serve pour over coffee. The company has its own products and produces white label products for customers around the world. Its products can be found at retail locations throughout the U.S., Japan and Korea, as well as many e-commerce platforms.
As of January 1, 2018, a deal between NuZee, Japan’s Fuso Industries and NASA Corp. gave NuZee exclusive North American rights to utilize NASA’s proprietary machinery brand FUSO for manufacturing the Coffee Blenders line of coffee products.
Earlier this month, NuZee said that receipt of large co-packing orders from new and existing customers, along with negotiations with national and global brands expected to lead to more sales, motivated the company to expand. In addition to increasing capacity at its existing facility in Vista, California, NuZee penned a new lease for a 16,603 square foot plant in Plano, Texas that will become a co-packing hub for the company.
NuZee has the market cornered with its exclusive license and the fact that the Vista facility is the only currently operating and certified single-serve pour over coffee manufacturing and co-packing facility in the U.S.
Building upon that, NuZee intends to outfit the Plano facility to achieve a Level 2 Safe Quality Food (SQF) Certification like its Vista facility, which can meet a variety of client demands given that it is also certified Fair Trade, Organic, Kosher, and Halal.
Thursday morning, NuZee said that it is expanding the product bag to meet demand related to sustainability. Starting in the second half of this year, the company will be offering a fully recyclable packaging option to its single-serve, pour over coffee co-packing customers.
The new product is possible through an exclusive agreement between NuZee and Finland-based global food packaging giant Huhtamaki Oyi (OTCPK: HOYFF). Per the pact, NuZee will use Huhtamaki’s next generation blueloop line of recyclable flexible packaging to manufacture the pouch that holds each single-serve pour over drip cup.
NuZee’s single-serve pour over coffee packaging includes a customized box and disposable filter containing pre-measured gourmet coffee sealed in a nitrogen-flushed pouch. While the box, filter and coffee are already recyclable, the pouch isn’t because of materials used to keep the coffee fresh. The agreement with Huhtamaki changes that, with the blueloop packaging film the solution to keeping the coffee fresh in a fully recyclable manner, which management thinks gives NuZee a competitive edge over other single-serve products on the market today.
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