Coffee Subscriptions Wake Up and Smell Consumer Thirst for Flexibility

Research shows consumers are dropping retail subscriptions, yet coffee is in its own category.

One part essential commodity, one part affordable luxury, consumers’ caffeine fix is not to be messed with, but that demand is also not to be taken for granted, especially with the proliferation of brands, brews and baristas that dot the landscape.

Speaking with PYMNTS for the Subscription Smarts™ series, Jim Fosina, founder and CEO at direct-to-consumer (D2C) brand Amora™ Coffee, delved into the profound relationship that billions of consumers have with a cup of joe in its many forms. That includes coffee subscriptions, and it’s an eye-opener.

Introduced to D2C coffee early in his career while working with Maxwell House Coffee and its direct-to-consumer Gevalia line, Fosina developed a taste for the business.

While many of us can’t imagine life without a monthly coffee subscription box arriving, the latest “Subscription Commerce Conversion Index: Subscribers Seek Affordability And Convenience,” a PYMNTS and sticky.io collaboration, noted that “the average subscription per retail subscriber dropped to the lowest level since early 2021. The average consumer dropped at least one retail subscription, holding an average of 2.9 in September, down from 4.1 in July.”

That’s “the great unsubscribe” rippling through a rough economy, and Fosina said the way Amora manages this is by giving all the power to the subscriber, come what may.

“The consumer needs to be in full charge of their subscription,” he said. “If they want to pause, if they want to skip, if they want a refund, we have no-questions-asked policy. Maybe they just didn’t like the bag of coffee. Maybe the bag was ripped. Maybe they just had too much. We’re not going to ask you to send it back. Keep it. Fantastic. Order again when you’re ready.”

With D2C subscriptions, “the customer just needs to feel like that they can control this as much as they can control their retail shopping,” Fosina said.

Read the report: Subscription Commerce Conversion Index: Subscribers Seek Affordability And Convenience

The Old Brand Loyalty Is Dead

The coffee sector broadly — and coffee subscriptions specifically — has undergone a pandemic shift and created a piping-hot competition that subscription offerings can help with.

“With the pandemic, everybody who had a coffee shop has spun up the website and made their local coffee available,” Fosina noted, which means brand loyalty has never been more important. Except that he thinks brand loyalty as it was once defined is over.

“We want to overcompensate. We want to remind our customers that we’re grateful to them. It is our job to be loyal to them,” he said. “The days of a customer being loyal to a brand left a decade ago.”

Some would disagree, but he makes a sound point in that choice has proliferated and consumers have countless coffee subscriptions available, to say nothing of buying it at the store. To keep subscribers engaged in this macroeconomic climate takes a combination of product, pricing, branding and service.

Saying he doesn’t see consumers weighing rent or essential services against their coffee budget, he does acknowledge that retail subscriptions are a luxury, and it’s best to market them that way and simply let the consumer drive the outcome.

“When you look at wants and desires, like home delivery of coffee and Amora Coffee or home delivery of any product that is more of a luxury, you need to work with your customer base to help reinforce a value proposition and reason for being,” he said.

“If you’re going to be self-indulgent, make sure that you’re marketing to your consumer as self-indulgence. It’s unlikely that share-of-wallet purely based on subscription behavior is going to come into play. Maybe they’ll just go buy it at Costco. It’s the same for food [subscriptions].”

Back to all those indie coffee shops that have started selling direct since 2020, Fosina said: “What you have to watch for is more of share-of-wallet amongst your competition in the vertical. That’s where I think you need to be mindful of share-of-wallet and where the customer is making decisions on how to spend their subscription dollars.”

Continuity Means Change

Faced with legions of new competitors and an economy that can be unkind to indulgent subscription offers, subscription smarts dictate that D2C brands show optionality.

“We have customers that have been with us for a very long time, we’re always giving them the opportunity to try something new, to expand beyond the traditional roast that they are used to,” he said. “It’s really important that you reconfirm that purchase decision with your consumer. Not everybody stays.”

While subscription brands can — and should — try creative ways of keeping subscribers engaged, Fosina said, “I think it’s about meeting a need. And for some people, with coffee, that need is, ‘I’m used to this taste profile, and I don’t want to change it.’”

Then there’s the undeniable convenience of retail subscriptions. “We could say it just shows up and it shows up on time, and you never have to worry about running out of coffee, and yes, that is absolutely convenient,” he said, “but the real convenience side of it is we make sure we remind you before the shipment’s coming out.”

That heads up allows Amora Coffee subscribers to change their order dynamically before it ships, possibly trying a different blend, maybe adding tea, or perhaps even canceling.

“The old continuity days of just ship the shipment and that’s the convenience factor [are over],” Fosina said. “For us, the convenience factor is making sure that every shipment that goes out is pre-notified so that the consumer has the opportunity to say ‘I want to change something up.’ Sometimes that changing something up is ‘I want to cancel.’ And you know what? A lot of them come back later.”