Coffee, Tea and Cocoa is a Highly Caffeinated Amazon Category
John Rode
on Apr 17 2019

The coffee, tea and cocoa category on Amazon has more kick than a triple espresso. With 22 brands, this category is highly concentrated. And interestingly, only Amazon itself has achieved a degree of separation from the pack. However, no brand has greater than a 5% share of voice, making it one of the most evenly distributed categories we've studied. For revenue leakage, the category is split about evenly, with half losing 10% or more of revenue to 3Ps or availability issues, and the other half losing less than 10%.

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This BrandIQ Quadrant benchmarks brand performance by the critical disciplines of supply chain operations and marketing. Who is best able to both drive and fulfill demand on Amazon in this category? The metric that underpins marketing is Share of Voice (how often your brand appears in organic or paid search results), and for operations it's revenue leakage (how well are you able to avoid losing sales because shoppers are unable to buy your product because it's unavailable, lost buy box to 3Ps, etc.). Given Amazon's ever-increasing complexity and speed, mastering both is not simple.   

  

High IQ Brands

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Amazon is the king bean. But even though there is a lot of space between Amazon and its competitors, the race is tighter than it looks. Amazon has a shade over 4% share of voice, which puts it right near the top with Starbucks and Unilever. But it's on supply chain execution that Amazon earns the whipped cream. Amazon is losing less than 0.5% of revenue to 3Ps and availability issues. That's about as close to the perfect pour as you can get. Looks like Amazon is serious about selling its private label items into the coffee, tea and cocoa category.

 
Niche Performers

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The niche performers quadrant is a crowded place in this category. Peet's is on the verge of joining the High IQ quadrant, largely due to its losing less than 3% of revenue to leakage. Most of that loss is due to availability issues, but Peet's has things under control. However, being in 11th place in paid share of voice is likely what's holding them back. 
 
Dunkin and Lavazza are square in the middle of the niche performers quadrant. Lavazza is doing quite well by losing only 1.5% of revenue to leakage. Dunking however burned its tongue by losing the buy box to 3Ps, resulting in over 8% of revenue loss. The rest of the brands are pegged to the x-axis with quite low shares of voice. But what they are marketing they are able to fulfill effectively.
 
Interesting that McDonalds is the top advertiser in the quadrant, followed by Starbucks, Unilever, and Smuckers. No single brand has captured more than 5% share of paid voice though. This really is a competitive category.

 

Large Leakers

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 This is a pretty heavily populated Large Leakers quadrant relative to other categories we've analyzed. Here we have four large brands with decent share of voice who are suffering significant revenue losses. Smuckers is losing almost 25% of revenue, due largely to availability issues. Unilever, Keurig and Starbucks are not suffering nearly as much with leakage of 16%, 16% and 14%, respectively. Unilever is the only one losing more revenue to 3Ps as opposed to availability issues. Keurig is looking good holding on to the buy box and only losing a bit over 2% of revenue to 3Ps. Things are a little rougher for them on availability though as they're losing almost 10% of revenue there.

Laggards

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The Laggards quadrant has two distinct stories. Trilliant, KraftHeinz, CoffeeMate and Caribou are all on the cusp of stepping into the Niche Performers quadrant, or perhaps even the High IQ Brand quadrant. The challenge for Trilliant is apparent as they're losing almost 7% of revenue to availability issues. CoffeeMate (Nestle) is in a similar position losing almost 10% to availability issues. Trim just a bit off that and they're in a much happier quadrant. 

KraftHeinz is straddling the line between Laggard and Niche Performer. By losing 5.6% of revenue due to availability issues and just over 4.5% to 3Ps they are right in the mix.

The remaining brands are pretty well pegged to one (or both) of the axis. They either lack a significant share of voice and/or suffering so steeply on revenue losses that they're residing deep in the quadrant corner (Death Wish, Conagra).

 
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Methodology

Our data was drawn from an automated, daily analysis of top keywords in the Amazon coffee, tea & cocoa category over a one-year period. Our method focused on 1P brands and their associated SKUs. Marketing performance was determined by analyzing Share of Voice which essentially divides how many times a brand appears in search results, by the total available slots in the search results. Our system looked at both organic and paid ads for the top keywords discovered for the coffee, tea & cocoa category on Amazon. Our system focused on page 1 search results and the product page for each SKU. Each appearance of the brand in organic search and paid ad slots was given equal weighting. Revenue Leakage was determined by an algorithm that analyzes inventory availability of the SKUs on the product page and translates that into estimated revenue missed for each brand due to things like a SKU being Currently Unavailable, Inventory Encumbrance, Item Under Review, a 3P seller taking the buy box, etc. 

 

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