CPG Playbook   //   January 30, 2024

As part of a wellness focus, Target brings on new superlatte brands

After months of tweaking the look and cost of their products, two better-for-you coffee brands are ready for their first major U.S. retail launches.

Clevr, which makes instant-drink mixes of plant-based lattes, is bringing four of its most popular flavors (Matcha, Chai, Coffee and Sleeptime) to 500 Target locations across the U.S. this week. Blume, a Canadian brand, is entering 90 Targets in the U.S. this week with four plant-based latte powders (Blue Lavender, Salted Caramel, Matcha Coconut and Reishi Hot Cacao). Both will sell their products — which customers make by mixing in water — on Target.com, as well.

Clevr and Blume are part of the emerging better-for-you coffee movement, which emphasizes vegan, organic drinks as an alternative to sugary, over-caffeinated drinks. So-called “superlattes” are a large part of this market and tend to contain probiotics, inflammatories or adaptogens (herbs, roots and other plant products like mushrooms that help the body respond to stress). Not all contain caffeine, although three of Clevr’s new Target blends do.

Several years ago, products such as these were considered highly-niche and needed to be purchased in health food stores. Now, more major big-box retailers are putting coffee alternatives on shelves. In the U.S., Target is seemingly leading the way, giving the category an extra boost with its newly-announced focus on wellness products.

Testing and trialing to get into Target

Clevr, which was founded in 2019, began as a direct-to-consumer brand but now also sells through Amazon and 10 Erewhon supermarkets. Today, some 90% of Clevr’s business comes from DTC, although the brand is now focused on expanding to more retail partners, CEO and co-founder Hannah Mendoza told Modern Retail.

To help with this, Clevr spent the past 12 months making its packaging more straightforward. Clevr’s Target products will be the first to include this updated look, which Clevr will then roll out to all of its products. Whereas previous packaging did not list the ingredients on the front, the new packaging does. It also includes a picture of the finished latte, lists the amount of sugar and explains that the drinks can be made hot or iced. Clevr tested this branding with seven rounds of Target customers, making changes in between.

“It was amazing how much wasn’t clear that we thought it was clear,” Mendoza said. “You can’t assume anything in terms of what people are getting from your product.”

The Target products are different from the rest of Clevr’s new lineup in a key way. Clevr’s versions for Target have a smaller pack size (eight lattes instead of 14) and a cheaper price point ($17.99 instead of $28). Clevr made these changes, Mendoza said, to better fit in with coffee competitors sitting in the $16 to $19 price range in Target’s coffee aisle. “It was really important to us to have something that was sub-$20,” she said. As a result, the new packaging is approximately 6.8 ounces by weight, instead of 12 ounces.

Target approached Clevr about the expansion last January when working to build its wellness portfolio, Mendoza said. Clevr will sit in the coffee aisle at Target, alongside others that include more sugars or preservatives. It’s those brands, not other wellness ones, that Clevr sees as competition.

“What we’re asking people to do is disrupt a centuries-old ritual and routine with coffee… look at our rising stress and anxiety levels as a nation and try something new,” Mendoza said. “It’s a really big task. And so, to have one of the biggest retailers in the nation [Target] behind us and that mission is really helpful.”

Blume, meanwhile, was founded in 2017 as a direct-to-consumer company but is in 4,000 stores across North America today. The majority of these are in Canada, like Loblaws and Real Canadian Superstore. Target is Blume’s first mass-market retail partner in the U.S., co-founder and CEO Karen Danudjaja told Modern Retail. Target contacted Blume last March to discuss working together on a home latte set, she said.

Like Clevr, Blume tweaked its products for its Target launch. Before, it sold its latte powder in a 3.5-ounce pouch for $25. Its new items for Target include eight single-serve packets for easy carrying and retail for $12.99. Target specifically requested smaller packs for this expansion, Danudjaja said. Blume tested the smaller packaging in Canada before bringing it to the U.S.

Blume has a 30% year-over-year growth rate, according to the company, and is now on track for its first eight-figure year. Even so, several years ago, getting into Target was “an aspirational thing,” Danudjaja said. Today, “there’s this proof of where consumers are going and that Blume is headed in the right direction if a retailer like Target wants to take a chance on us,” she said.

A more wellness-minded approach

Both brands’ moves into Target coincide with the retailer’s increased focus on health, nutrition and fitness. Earlier this month, Target announced it was bringing on 1,000 wellness products across food and beverage, apparel, accessories, supplements and hydration. Some brands — like Hum, O Positiv, Sechey and Ghia — are new to Target entirely. Target also launched an online wellness hub on Target.com with ideas, products, meal inspiration and deals for Target customers.

Clevr and Blume are just two of a number of brands selling better-for-you coffee or coffee alternatives. Mudwtr’s drinks contain organic cacao, ayurvedic herbs and mushrooms, while Wunderground sells coffee and tea with mushrooms and filters products by “anxiety,” “brain boost,” “gut refresh” and more.

Today, products with mushrooms and other adaptogens have “[transcended] from the supplement aisle to broader food and beverages,” Sally Lyons Wyatt, global evp & chief advisor, consumer goods & food service insights for Circana, said in an email to Modern Retail. “Retailers… are ensuring they have what consumers are looking for to assist them on their well-being journey,” she said.

Many of these wellness brands sell online or via marketplaces like Amazon. But, for a big retailer like Target, bringing on more niche, DTC companies is “where there’s opportunity,” Joe Feldman, who covers Target for Telsey Advisory Group, told Modern Retail.

“Consumers seem to respond to uniqueness and differentiation, and you don’t want to necessarily have the same product that everybody else carries,” he said. “And it’s a way for Target, which is obviously one of the largest retailers in the U.S., to also support smaller, independent, new companies.”