What do Mocca Mandarino, grocery checkout lines, and Delta Hotels have in common? They’re all part of The Second Cup’s corporate growth strategy for the new millennium.

Formally, the plan, dubbed Vision 2000, focuses on ‘creating new opportunities to deliver the Second Cup brand to Canadians wherever they work, play, shop and live.’ Informally, it’s how one coffee retailer plans to create and maintain a point of difference in an increasingly crowded and competitive marketplace.

Second Cup ceo Randy Powell says Vision 2000 – which he played a key role in shaping – includes a commitment to strengthening Second Cup’s brands and introducing new premium products in its 355 outlets across the country.

As evidence that the plan is on track, Second Cup has been busy of late rolling out a bevy of marketing initiatives which include the introduction of new espresso-based beverages (yes, including Mocca Mandarino), putting its product onto grocery store shelves (see ‘Second Cup expands to grocery stores’, Strategy, Aug. 3), and securing distribution agreements with travel and hotel partners such as Via Rail, Air Canada and Delta.

The strategy seems to be working. For the year ended June 27, 1998, Second Cup reported Canadian system-wide sales of $130 million, up 20% over the previous year. Same-store sales grew 4.7%.

Powell, a graduate of the Campbell Soup school of marketing (see sidebar) says he began shaping – ‘crystallizing’, as he puts it – the growth activities that were already underway at Second Cup when he joined the company a little more than a year ago.

‘When I joined the organization,’ Powell recalls, ‘I sat down with the management team and said, ‘Teach me about specialty coffee.’ We looked at market trends and at consumer research and saw the specialty coffee category growing at double-digits. It was a trend that saw our company double its size in the last two-and-a-half years and the opportunity looked like it was holding its percentage growth.’

After gathering enough market intelligence, Powell says his next steps were to: ‘One, define what the opportunity was and what the consumer proposition was so we understood it, and two, define how to maximize our brand’s presence within that growing opportunity.’

Company-conducted research, he says, showed consumers wanted more than just a high-quality coffee product, that they were looking for a feeling that ‘appealed to all five senses’ – The Ultimate Coffee Experience.

So how does The Second Cup intend to deliver the uce? Through Vision 2000, of course. According to Powell, the plan includes four ‘pillars’, specifically:

Pillar One: ‘Exceptional

people’

Powell stresses that ‘having the best people to deliver the vision’ is key. To that end, the company has recruited packaged goods marketers with solid research backgrounds to help better understand customers, says Powell. In the field, he adds, the company continuously offers training and development programs to its franchisees so they can run their businesses better.

Pillar Two: ‘Our brand.’

With almost boyish enthusiasm, Powell says, ‘We think we have the right product but we have to make people more aware of it.’ Currently, he says, the specialty coffee segment has room to grow. He cites a recent eight-week period where the category had a less than 10% household penetration. Even as a market leader, Second Cup captures just over 6% of the total coffee drinking market.

In order to broaden its penetration and reach that majority of coffee drinkers who don’t visit specialty coffee shops, Second Cup has placed its brand in some high-traffic, high-visibility areas. For instance, Air Canada, Via Rail, and Delta Hotels and Resorts now serve Second Cup coffee. And pre-ground, pre-packaged coffee and beans are now available on a test basis in a dozen Canadian supermarkets, as well as in non-traditional outlets such as university and airport kiosks.

Pillar Three: ‘Product

superiority.’

Simply, Vision 2000 mandates that Second Cup not only deliver, according to Powell, ‘blind-taste-test consumer-preferred’ coffee, but that the company continue to be innovators in the category. The latest activity on this front is the introduction of three new hot European drinks: ‘Crème Brûlée Ristretto’, ‘Caramel Corretto’, and ‘Mocca Mandarino’, designed to entice new users into the category.

Pillar Four: ‘World-class

operations.’

Falling in step with Second Cup’s research-directed mandate of delivering The Ultimate Coffee Experience, the company’s cafés are cornerstones in the company’s strategy. Powell calls it the ‘non-alcoholic bar’ concept. Each store’s design reflects the surrounding community.

And what’s next at Second Cup? ‘We’ve planted a lot of seeds,’ says Powell. ‘If the tests continue to show the results that they are, the next step is to take the tests right across Canada.’ And after that? New products are already lined up for spring and fall of 1999, he says.

Sidebar: The evolution of Randy Powell, President and CEO, Second Cup

Birth date: March 27, 1961

Hometown: Mississauga, Ont.

Education: Bachelor of Administrative Studies (bas), York University, 1989.

Background:

‘I started my career as a sales rep for what is now Procter & Gamble but was then Facelle.

After two years, I started my own promotions company, not that I knew anything about promotions. My partner and I built it from nothing to $1.8 million in billings in two years. But I realized I had a lot of learning to do and that I really should, in essence, go back to school in packaged goods.

That’s when I went to Campbell Soup. I grew up there. I started as a junior brand manager and worked my way up until I cross-trained as vice-president of sales. Then I went to S.C. Johnson Wax as president for a little over three years. I wanted to come back to an entrepreneurial environment and that’s when I became partners with Michael Bregman [chairman and ceo] here at Second Cup.’

Career highlight:

‘Joining this company was the high point. The Second Cup, in so many ways, is the ideal job that I’ve always wanted. I’ve married that $2-million company that I started, with the big monster that I’d worked for in packaged goods. I really feel that I’m at home with Second Cup.’

Time well spent:

‘My wife and I have a five- and a seven-year-old which is probably where I spend most of my free time.’

Why I get up in the

morning:

‘Absolutely the same thing that drives me in my personal life; the opportunity to make a difference.’