* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *
Although it is virtually unknown outside North America, Folgers is nonetheless the biggest single coffee brand in the United States, worth around $2bn a year in sales. It has a clear lead over rivals Maxwell House and Nestle. In fact, Folgers almost single-handedly created the US coffee industry just over 150 years ago. But consumer tastes are changing fast, and Folgers has come under threat from a whole rash of specialist blends and hybrid coffee spin-offs, as well as the all-conquering force of Starbucks. For many years the brand was one of the biggest products in the portfolio of consumer giant Procter & Gamble. However it became an increasingly uncomfortable fit with the rest of that business, and in 2008 P&G announced plans to divest it. Folgers was acquired by food company JM Smucker, which already owned other ex-P&G products including Jif peanut butter and the country's best-selling fruit preserves. Smucker has since expanded into pet foods as well with a 2015 deal to acquire Big Heart Pet Brands.
Who handles Folgers' advertising? Click here for agency account assignments.
See Non-Alcoholic Drinks Index for competitive companies
Folgers still dominates the US coffee industry; careful management by original owner P&G gave the brand overall leadership of the market despite Kraft's broader portfolio of rival products. However food and beverages had become a marginal business within P&G by the 2000s, fitting ever more uncomfortably with the group's other lines. The group announced plans to spin it off to shareholders as a separate unit in January 2008. Shortly afterwards, the standalone company was acquired by food company JM Smucker, which had previously acquired other P&G products including Jif peanut butter and Crisco cooking fat. Effective value of the transaction was around $3.7bn. The deal completed in November 2008.
The US is the world's biggest coffee market, and is still growing in size. According to figures from the US National Coffee Association in 2014, 61% of American adults drink coffee every day, a third more than those who consume soft drinks daily. Average consumption is around 3 cups a day. As a result, coffee is the second most consumed beverage on the planet after water, and the US market is the biggest market by far. Smucker's own research estimated the retail value of the "at home" coffee category at $6.4bn in 2010. According to Euromonitor figures for 2013, Folgers remains the single biggest coffee brand in the US, with 12.5% share of the retail coffee market. However it was overtaken in overall sales by the Keurig K-Cups system, now with 18.4%. Kraft's Maxwell House was the #2 coffee brand (7.7%), followed by Starbucks (7.6%). On a global basis, Smucker ranked #6 with 2.3% share.
For 2015, JM Smucker estimated its own share of the US retail coffee market at 27%, with its biggest branded competitor (presumably Kraft) at 15%. The market as a whole was worth $9.6bn, putting Smucker's share at almost $2.6bn. It claimed a 57% share of the core mainstream roast and ground segment.
The market has been altered dramatically by the rise of fast-moving specialist companies. Leading these changes is Starbucks, the ubiquitous coffee-house brand. Though still comparatively small, Starbucks' range of packaged own-brand ground, whole-bean and powdered coffee is still the fastest-growing traditional brand in the market. The gourmet sector is also rocketing. In 2007, only 17% of Americans were daily drinkers of "gourmet" coffee, including specialist or imported beans, as well as espresso and cappuccino. By 2015, that proportion had doubled to 34%. Folgers has diversified accordingly to cover these new markets. In its main segment of ready-ground coffee, the brand offers a variety of caffeine strengths as well as flavours (Hazelnut, Cinnamon Swirl or Chocolate Silk), as well as the Coffee House range of specialist blends and premium Folgers Gourmet Selections (including Peanut Butter Cookie and Coconut Cream Pie). There is also a line in instant coffee (Folgers Crystals and Cappuccino mix), Folgers Singles coffee bags that brew direct into the cup, and a range of liquid flavour enhancers introduced in 2014. The whole range was relaunched in 2004 with an emphasis on added freshness, emphasised by the introduction of easy-open and resealable AromaSeal canisters to replace the traditional flip top can. Among recent variants is Folgers Simply Smooth, launched in 2006, which promises the same taste and caffeine strength, but claims to be less acidic and "gentler on your stomach".
In 2004, P&G moved into a new area, with the launch of a single-cup home-brewing coffee system, named Home Cafe. In a bid to shut out rivals, the group signed up four different manufacturers - Applica, Krups, Sunbeam and Hamilton Beach - to make the machines, cobranded to Folgers and Millstone. That business did not perform well however, and was discontinued during 2007. However, Smucker still markets coffee pods for existing machines, and also now produces branded Folgers and Millstone pods for the Keurig K-Cups coffeemaker system launched in 2010. In fact it is the #2 producer of single-coffee capsules behind main Keurig supplier Green Mountain, with almost 20% of a $1.7bn-plus sector.
In 2007, P&G forged an alliance with the Dunkin' Brands quick-serve group to introduce Dunkin' Donuts branded packaged coffee through supermarkets and other traditional retail outlets. That arrangement was inherited by new owner Smuckers, and has continues to carve out a presence in the premium segment, alongside the group's specialist gourmet brand Millstone. The group also markets Dunkin-branded K-Cups. Euromonitor estimated 2.9% retail share for Dunkin Donuts packaged brand in 2013. During 2011 the group also acquired leading Hispanic brands Cafe Bustelo and Cafe Pilon. In 2015, it took a minority stake in organic fairtrade tea brand Numi.
In traditional retail channels, Smucker still leads the market, according to data from IRI. For 2016 (52 weeks to Jan 2017, all retail channels, Grocery HQ), Smucker had an overall 37% share of regular ground coffee sales, equivalent to almost $1.6bn. Of this, $1.3bn came from the main Folgers franchise with $315m from Dunkin. In the single cup market, Smucker was #4 behind Keurig, Starbucks and Kraft Heinz with 8% share ($307m in sales).
For the year to April 2017, JM Smucker reported net sales from retail coffee of $2.11bn, down 6% on the year before. However it remains the group's most profitable business by some distance, with an operating margin of 32%, and operating profit of $682m. Mainstream roast & ground coffee accounted for 57% of sales, K-Cups for 21%, premium roast for 14% and instant for the remaining 8%.
In the gold rush of the late 1840s, Nantucket-born James Folger was one of thousands of prospective miners who headed West hoping to strike it rich in the gold seams which had been discovered around 100 miles inland in Northern California. But mining was hard work and Folger soon moved on to the coast in search of better prospects. San Francisco was then little more than a staging post for the gold fields. (Within two years between 1848 and 1850, the town's population grew from just 800 people to more than 40,000). Folger settled there, finding work as a carpenter with one William Bovee, a small-time coffee roaster.
At the time, coffee was sold almost exclusively in pure whole bean form for buyers to roast and grind for themselves at home. Realizing (like the founder of Levi's) that there was more money to be made supplying miners than in mining itself, Bovee had established the Pioneer Steam Coffee & Spice Mills, devising a cheap way of roasting, grinding and packaging coffee in tins for sale to panhandlers. The company became the first commercial coffee operation in San Francisco, taking full advantage of the ships bringing ever-increasing supplies of the bean up from Latin America. Having built Bovee's mill, Folger then worked for the company as a sales manager, becoming a partner in the business in 1865, and eventually buying out the business in 1872, at which point he renamed it JA Folger & Co.
Gradually the US coffee industry boomed, and San Francisco became one of North America's three major coffee centres (along with New Orleans, serving the mid-West, and New York, serving the East coast). By 1890, the San Francisco directory listed 27 coffee and spice mills, 24 importers and more than 100 "coffee saloons". There were countless more small-time roasters, working out of small convenience stores. However Pioneer/ Steam Coffee had been the first in the market and Folger ensured that it remained the biggest, despite intense competition from Austin and Reuben Hills, the Hills Brothers, who set up their Arabian Coffee & Spice Mills in 1878. By the late 1920s, coffee was officially San Francisco's largest industry, and in 1929 Folger & Co sold its spice mills to Schilling & Co to concentrate on its core product.
The company continued to thrive throughout the mid-20th century. In 1958 it introduced its first instant coffee. But by the end of that decade, Folger was beginning to outgrow its San Francisco base. In 1960, the company opened a massive new plant in New Orleans to take hold of the mid-West coffee market. Three years later, the business was acquired by Procter & Gamble. The group poured substantial investment into the New Orleans plant, and closed down the increasingly old-fashioned San Francisco roasting operation. By 1965 the Folgers factory in New Orleans was the world's biggest coffee roasting plant. However, the addition of the Folgers business to P&G's portfolio created friction with government regulators because of the increasing power it gave the group over grocery retailers. In 1966, P&G was ordered to sell the business, but eventually agreed a compromise under which it was allowed to keep Folgers provided it made no further acquisitions of major grocery products for seven years.
Also in 1966, the brand launch a new TV ad campaign that went on to run for more than 20 years, in which its benefits were explained by the character of "Mrs Olson", a friendly Swedish neighbour who regularly dropped round to various neighbours, often newlweds, to introduce them to the joy of Folgers coffee. This campaign was gradually phased out in the mid-1980s by a new series of ads, which showed grown-up children returning home from their travels abroad to enjoy a cup of Folgers. The slogan "The best part of waking up is Folgers in your cup!" was introduced at the same time.
In the mid-1970s the coffee industry received a significant boost from the introduction of drip-method coffee machines, which gave a big lift to domestic home brewing. In 1976, Folgers launched a specialist flaked blend designed for percolators. The next new wave in the industry came at the start of the 1980s. With domestic coffee consumption soaring, a number of small operations had begun to spring up to sell hand-roasted luxury coffee or specialist blends. One such entrepreneur was Phil Johnson who built up a successful business selling sacks of whole bean Arabica coffee to gourmet shops in the Seattle area. Gradually he expanded the business into supermarkets around the Northwest US under the brandname The Millstone Coffee Company. Keen to take their own cut of this growing specialty market, P&G acquired Millstone in 1995, placing it under the Folgers umbrella, although the business operates from separate premises in New Orleans.
Effectively proving Folgers' iconic status in the US, P&G met a storm of protest at the end of 2003 when it announced plans to stop supplying the coffee in the metal cans it had used for 150 years in favour of more efficient AromaSeal plastic containers. "Forget the coffee for now," wailed one newspaper columnist. "It's the empty cans we can't do without. Can any American household function without a dozen or so? It's practically a Norman Rockwell imperative to have a collection of beat-up coffee cans sitting in the garage, full of stuff you probably won't use but 'might someday'."
In 2005, P&G's coffee manufacturing facility in New Orleans was badly damaged by the effects of Hurricane Katrina, causing a temporary interruption to normal production.
Last full revision 16th June 2017
* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *
All rights reserved © Mind Advertising Ltd 1998-2021