Pouring in the Profits
the Syrupy Solution to Growing Revenue
By Nick Obourn
Illustration by Amanda Wilson

Walk down the aisles of your local grocery store and what do you see? Beyond the massive numbers of slogans and celebrity endorsements, beyond the whining children, what you will indubitably see are options. The cereal aisle-and there is an entire aisle dedicated to cereal-is brimming with dozens of varieties of corn-based, wheat-based and sugar-coated products: Crispix, Lucky Charms, Grape Nuts, Cheerios, Chex. Each one is tailored to create a custom breakfast experience for the consumer. Turn the corner and the same thing will happen with ice cream, pasta sauce and just about every other product sold in the store. Albeit, the supermarket may be the culmination of brand choice, the coffeehouse of today should also reflect this ethos. It should be a center for every possible specialty coffee consumer need. When customers walk through the door, they must not only be presented with what they might usually get, but a whole host of other tempting options as well.
   One of the best ways to allow customers to customize their coffee is by carrying a line of flavored syrups. For certain, this is nothing new for coffeehouses. Syrups have been around for many years, and they have been profitable for many a coffeehouse. But what are syrups, exactly? Why are they so successful? And how can you make them even more profitable for your coffeehouse, whether a small family-owned business or a chain?

The Culture Barrier
Syrups are rumored to have begun in Italy, where they were used for desserts and sodas. But it was in the Northwest in the early nineties that specialty coffee pioneer Brandy Brandenburger, beset with a dream to change the coffee industry, mixed flavors like vanilla and hazelnut in his home kitchen, and created what is known today as the flavored specialty coffee beverage. The idea spread throughout the Northwestern United States, then the entire country and eventually became the powerful industry it is today.
   The syrup industry really started to boom as the specialty coffee movement gathered momentum. Customers lining the counters at these new coffee retail stores immediately sought new ways to expand on the vision of specialty coffee, and the manufacturers supplying the business behind the service counter saw endless opportunities. Fully aware of this consumer demand, the syrup industry is constantly trying to appeal to a broad range of customers with a specialized product that gives the consumer an extra option. This specialization can work for syrup companies or against them. The advantage is the ability to concentrate, funnel resources and perfect their product because of its specificity. The disadvantage, or the hurdle, is converting non-syrup users into syrup users with such a distinct product.
   Because of their option-driven mentality and greater interest in experimenting with coffee, Americans are the driving force behind the proliferation of flavored syrups for specialty coffee. Americans are fervent about variety and paving new paths, and therefore the syrup industry thrives. When specialty coffee drinkers enter a coffeehouse, they want to see the possibilities they have. Perhaps they will have a mocha with raspberry syrup on Wednesday, then Thursday have a cappuccino with vanilla. Maybe they will have the in-house created signature drink. Variety is the spice of life.
   The desire to try new things may not be a constant for every American customer, however. Some drink the same thing everyday, and there is no changing that, barring some instrumental change in attitude. But even for creatures of habit, syrups can become part of the routine. For example, if your coffeehouse has a customer who orders a latté with hazelnut syrup five times a week, you'll be glad you carried the syrups to attract that customer.
   Europeans, though inundated with consumer variety in many of the same ways as people in the United States, are not supporters of the syrup industry to any great extent. And this is mainly due to a tradition in coffee that the United States is lacking. Europeans have been drinking espresso and cappuccinos for much longer and wince at the idea of adding flavored syrup to coffee. For most Europeans, syrups are an addition to club soda that creates Italian sodas. Coffee is something to be savored traditionally, with no additives. Because there is no real demand for syrups in most European countries, they are not carried in coffeehouses, though according to some, the syrup fever is gaining some attention. According to Jamie Day, director of sales for Routin 1883, "Europeans, while not used to the idea of adding milk and syrup to their espresso-based drinks, are starting to indulge a bit more when they enjoy their morning coffee." Perhaps this is just the beginning for the European syrup market.
   European nations, basked in tradition, are reluctant to take syrups under their collective wing, but Asian countries differ. Many syrup companies are reporting growing sales in Japan, China and other eastern locations. For the past ten years or so, Asia has been a reflection of Western culture in many ways. Japan's younger generations are ardent about American music, movies and fashion. It is the younger generations that are attracted to beverages with a lot of flavor and sweetness, pulling the some focus from the East's dominant beverage-tea. The syrup boom is a catalyst for that reaction. "The market in Asia has been strong for a couple of years," says Stacy Cooper Dent, communications manager for Torani Syrups. "Our largest export market continues to be Japan, followed closely by a number of other markets in the region."

Choice and Options
Because the average American consumer is so bound to ideals of choice and option, syrups are a necessary item for coffeehouses to carry. They allow patrons to customize their specialty coffee drink, prevent them from feeling controlled and give them a feeling of empowerment. A happy customer is one who can freely choose his or her product. "The Seattle-originated style of flavored lattes and mochas [is] the ultimate in portable indulgence," says Leanna Mix, communications specialist at Da Vinci Gourmet Syrups.
   While the owner of a coffeehouse may, to some extent, be at a customer's beck and call, there is still a choice involved in what to offer. When looking to choose a syrup line to carry, or to add new syrups to your existing repertoire, it is important to be aware of the trends in the industry, and the availability and cost of particular lines of syrups. Certain brands cost more, contain different ingredients or offer different flavors.
   Routin 1883 is a syrup company that uses real fruit juice, Alpine water and natural flavors to produce its products. They flash pasteurize their syrup to prevent the use of preservatives when it is bottled. "Routin offers two product lines, the '1883' brand which is packaged in one-liter bottles and 250-ml bottles for coffee shops [and] cafés, and the 'Flavors of Summer' brand, which is for gourmet retail," says Day. Routin 1883 currently has 50 flavors in its "1883" product line and 18 in its newer "Flavors of Summer" line. Da Vinci Gourmet Syrups is another market option for coffeehouse retail. Da Vinci was recently bought by Kerry Foodservice and swept up in Kerry's bid to enter the syrup market. Under new ownership, Da Vinci now has expanded market resources and a stronger foothold in an industry it had already been a member of since 1989. "Kerry supports the customer loyalty Da Vinci has nurtured, and through the acquisition, plans to help Da Vinci sharpen its focus as well as strengthen its ability to meet the needs of its customers through streamlined processes and enhanced resources," says Mix. Da Vinci offers over 140 flavors with its Classic, Sugar Free and All Natural product lines. In addition, Da Vinci manufactures a line of gourmet sauces in chocolate, caramel and white chocolate. South San Francisco-based Torani is yet another company adding its personality to the flavored syrups market. Torani was established by Rinaldo and Ezilda Torre in Lucca, Italy, in the early 1900s. The couple began the company's journey with the introduction of five flavors: Anisette, Grenadine, Lemon, Orgeat (Almond), and Tamarindo. Today, Torani retails over 70 flavors of its syrups, including seasonal favorites such as Pumpkin Spice and 'Italian' Eggnog. Torani will also be releasing five new sugar-free flavors in January 2004 to compete with that booming sector of the market. Monin, another popular company in the syrup market has over 75 natural flavors for the syrup-savvy coffeehouse owner to choose from. Monin specializes in fruit flavors and flash pasteurizes its syrups like Routin 1883 to avoid the use of preservatives. "While vanilla continues to lead flavor usage, it is Monin fruit flavors that are world renowned. The greatest demand [is] for blackberry, raspberry, mango, and strawberry," says Bill Lombardo, CEO of Monin. Baristella is a syrup company that offers over 70 flavors under its parent company, Amoretti. Baristella syrups claim 70 servings per bottle, which can be a very profitable amount for a coffeehouse. Italy, the birthplace of syrups is also home to Fabbri 1905. Some of Fabbri's best-known flavors-Mint and Amarena-were created in the first years of its existence. Stirling Gourmet Flavors, based in Renton, Wash., offers today's coffeehouse a variety of over 40 flavors from which to choose. With many awards from the American Tasting Institute under their belt, Stirling Gourmet Flavors make a good choice for a coffeehouse seeking quality and accurate flavor for its customers.
   These are just a few of the companies on the market (see page 36 for more complete list), and while they may not cover everything you are searching for to offer your customers, there are plenty of brands to choose from. If you do not currently carry a syrup line, investigate all the possible options. Examine what kind of clientele you often have walking through the door of your coffeehouse. What kind of customers you have, or what region you are in might affect which syrups you decide to carry. Very often syrup companies have promotional assistance that serves to help operators grow their businesses with the use of syrups. Torani has a good program that includes nighttime coffeehouse activities such as open-mic nights and spoken word poetry events. Monin incorporates a similar program into their business. "At Monin, we heavily support the independent operator, equipping them with complimentary, professionally printed beverage posters, counter cards and recipes of signature quality drinks, allowing them to compete with the major chains," says Lombardo.

Profiting from Syrups
With so many brands on the market making it possible to create so many different specialty coffee beverages, only one problem is left to solve-how to effectively profit from syrups. The answer is easier than one might think. When it comes to profit, syrup companies make it easy for a coffeehouse to add incremental sales to its income. After all, that's what syrups are-an incremental add-on. Forty cents here or fifty cents there can really add up if sales are strong.
   "For the specialty coffee retailer, syrups offer incredible profit potential. Combining some well-chosen flavors and inventing a fanciful name adds up to a signature drink that can command 50 to 75 cents more [per drink],"says Mix. The average syrup costs much less per serving than it can be sold for, letting the coffeehouse profit and giving the customer options at the same time. "Syrups are extremely profitable [for] the coffee shop or café who is promoting them properly. A one-ounce shot of syrup costs the coffee shop between 10 and 20 cents per shot," says Day. When you figure in an average of forty cents profit on every specialty beverage sold using flavored syrups, it's easy to imagine how they can be beneficial.
   The next step is to make an effort to push specialty coffee drinks that require the use of syrups, warranting the added cost for the consumer. Experimenting with flavors is a great way to do this. Invent a drink that is individual to your coffeehouse, and you create a marker by which customers will know your business. "Create specialty and seasonal beverages by combining flavors. As an example, if a café has Torani Cheesecake syrup for cheesecake lattes, it can try adding a shot of Raspberry or Pumpkin Spice for two completely new beverages: the raspberry cheesecake latte to welcome the summer season, and the pumpkin spice cheesecake latte for the autumn months," says Dent. Regional preferences also work especially well for filling this niche. If your coffeehouse is in Boston, create a specialty drink related to Newbury Street or Paul Revere. Try to imagine a flavor that suits the area where your coffeehouse is situated. Serving a signature drink with warmer tones like vanilla or caramel on a cold East coast winter day can be a big hit. While in the summer, or in hotter areas, citrus flavors can sell well.
   One of the ways syrup companies facilitate profit gain is by providing a pourer or a pump with their product. These gauges are necessary tools for calibrating sales and provide the operator with the appropriate dosing for each drink. The proper dosage makes a drink that is not too sweet, yet not too faint. The average shot size for a cappuccino or mocha with two shots of espresso is one ounce. Very often syrups can do more harm than good for a coffeehouse if syrups are being overused. Superfluous syrup use will not only cause your coffeehouse's profits to dip fast, but will result in customers walking out of your business with a specialty coffee drink that is overpowered by the syrup's flavor. One of the keys to keeping this excessiveness in check is by demonstrating the correct dosing technique to your employees. It is important every employee working under your business' roof understands how to use syrups to enhance a beverage, not conquer it.
   Embracing trends in the market is a sure-fire way to take advantage of syrups. As mentioned earlier, syrup companies are always attentive to consumer demand, and what consumers have been calling out for with an almost unanimous exclamation are sugar-free and carb-free syrup products. Almost every company has a sugar-free or carb-free product on the market, and those that don't have one are working on it. The demand for this product has come mainly from the American consumer's eagerness for a healthier lifestyle, and the popularity of the Atkins diet, a diet that has affected almost every sector of the U.S. economy. Torani, as of this year, will offer 20 varieties of sugar-free syrups; Da Vinci carries sugar-free syrups; Routin 1883 plans to launch its sugar-free syrup line as well. Stirling Gourmet Flavors, while in the process of crating a sugar-free line, has also used its syrup knowledge to create a "light" syrup line made with 85 percent Nutrasweet and 15 percent fructose. Monin has also paid close attention to the trends shaping the specialty coffee world and offers an organic syrup line, keeping in tune with the popularity of organic coffee and tea. In addition to the organic line, Monin produces a carb-free, calorie-free, fat-free, and sugar-free product line: Monin O'free. Offering sugar-free, carb-free, or organic syrups is just another option to give your customers that can enhance profits and the breadth of your coffeehouse's customer base.
   Many syrup companies on the market promote their product by selling the same mixture under private labeling techniques. For example, Boyd Coffee Company has sold their syrup line Italia D'Oro as a private label for some time, offering over 30 flavors. This arrangement can be profitable for a company like Boyd who is seeking to enter the syrup industry, but not release the product under the Boyd name. It also can be profitable for a coffeehouse seeking to offer customers something completely different. Many of the syrup companies, operating within their private labeling capacity, can create a label specific to your coffeehouse. Offering syrups with your coffeehouse's name on them can present an image of congruence and individuality throughout your business.

The Flavor of the Future
After more than 10 years of symbiosis with the specialty coffee movement, it is apparent that the syrup industry is here to stay. Syrups have proven themselves not only a worthy addition to the specialty beverage, but a strong enterprise, able to stand on its own. Most coffeehouses in the U.S. carry a line of syrups and hopefully see profits from it. If not, there are many minor adjustments an owner and his employees can make to reverse the depreciation. And of course, the line between coffee purists who prefer to add nothing to their cuppa and those who are experimenting with flavors will always be there, but it is not a dividing factor. The new wave of specialty coffee and the old school of traditional coffee seem to be in agreement as the progress of the specialty coffee movement surges ahead.

Nick Obourn is Fresh Cup Magazine's Associate Editor. He can be reached at nick@freshcup.com.