UCC Coffee Europe CEO Paul Molyneux on why resilience and flexibility have helped reposition one of the world’s largest independent coffee companies as a force to be reckoned with.
Paul Molyneux has worked for Japanese companies over the past 30 years. First came electronics companies Sony, then Sharp Corporation, but when Molyneux flew to Tokyo in 2018 to meet with the senior team at leading Japanese roaster Ueshima Coffee Company (UCC), he connected on a more personal level.
“UCC is a family-owned business with family values, which is pretty unique in Japanese culture,” Molyneux tells Global Coffee Report. “UCC is positioned as the fifth largest player in the global coffee market. There are some big names – Nestlé, Starbucks, Jacobs Douwe Egberts – who aren’t necessarily purely coffee focused, nor do they come from a family background like we do. We’ve got a slightly more personal approach with a longer time horizon and a real focus on people, who are our biggest asset.”
In 2012, UCC acquired United Coffee – a collection of coffee businesses valued at nearly half a billion euro – and established UCC Europe as its own entity. Six years on, Molyneux joined UCC to help finalise the integration. Molyneux says it was his ambition to explore and optimise the scale of UCC Europe and look at strategic opportunities.
“It’s my role to connect and support our team across Europe, to bring them clarity and vision to the journey we’re on, and provide the resources to make UCC Europe as one,” Molyneux says.
To do that, UCC Europe is divided into Northern, Central, and Southern regions with three regional directors to help lead the business transformation and move away from the ‘single country model’ that was previously in place.
“It’s fundamental we try to develop a core thought process of leading and not following. The three core values we use to leverage ourselves in Europe are courage, unity and respect, which frames our approach as a business and will help us develop our strategy and ambition for the future,” Molyneux says.
Identified as one of the world’s largest independent roasters, producing about 70,000 tonnes of coffee each year, in Europe alone, UCC has earned its reputation through the growth of its out-of-home, private label and retail products. But in an era of transition, Molyneux says it’s time UCC emerges from behind the scenes and into the forefront.
To do that, UCC Europe launched its own coffee brand, Ueshima Coffee Company, in January 2021, with the mission to pioneer Japanese coffee culture across Europe. The brand is available on shelf in major retailers in the UK. It boasts a line-up of unique, sustainable coffees that represents an authentic taste of Japan. Ueshima Coffee Company will help rebalance and reposition UCC Europe to a new customer base.
“We’re really excited by the potential for the future. In Japan, UCC is a strong-branded business but in Europe its known more as a private label roaster. The pandemic has accelerated this project and will now allow us to look at new product categories,” Molyneux says.
UCC Europe will also launch its new To Go project in Q3 2021, a premium vending coffee solution that is touchless and cashless. The new product feeds off increased premiumisation of the self-serve market and increased consumer demand for a quality and personalised product delivered at speed. UCC is in talks with large out-of-home, food service and quick service restaurant providers about using the automated machine to provide a slick, digitally seamless consumer experience, and to expand their brand solutions.
“This product will really hit a sweet spot. We’ve seen throughout COVID-19 how important consumer buying power is. Strategically, we think there’s huge potential in the market for a product like this that is flexible, customisable, and still gives people their desired coffee experience – where they want it, when they want it,” Molyneux says.
“The key for UCC Europe as a business is that we continue to provide the consumer with a great quality coffee experience. For us, delivering a ‘total coffee solution’ and consistent coffee quality is at the heart of what we try to achieve across the market, whether it be for the retail or out-of-home sector. This focus has allowed us to look at new business models coming through, like the Ueshima Coffee Company brand and To Go.”
Since its founding in Kobe, Japan in 1933, UCC has been proactive about new product development and technologies. It is said to have created the world’s first canned coffee beverage in 1969, completed the first fully-automated Japanese plant packing ground coffee in 1970, developed the Super Aroma System to avoid air exposure to packed coffee in 1996, and created the Aroma Freezing Process in 2003.
UCC continues to heavily invest in new products and technologies that promotes innovation. For the bulk of its business, Molyneux says UCC provides what customers need, but behind the scenes its R&D team is devoted to new solutions to ensure it’s fit for purpose in the future.
COVID-19 has not spared even the largest of global companies. UCC saw roasting numbers dip slightly in 2020, with a 50 per cent decline in demand for its out-of-home coffee products. Molyneux says the impact has been “severe” but is hopeful the market will make a quick recovery as lockdown eases in Europe and strengthens in the second half of the year.
“People, fundamentally, are social animals. Coffee is a service and form of interaction people will absolutely want to get back to. We assume there will be a spike [in sales] as lockdown eases, but what we don’t know is how many [coffee venues] will survive,” Molyneux says.
Thankfully, UCC’s retail volume has somewhat offset its out-of-home deficit. Molyneux says some UCC customers experienced a 20 per cent increase in business. This is a result of consumer stockpiling, increase in home consumption, demand for value, and a rise in coffee machine ownership thanks to omnichannel marketing. He expects retail growth to continue between 4 to 5 per cent with capsule consumption cementing a strong hold in the market, and ready to drink coffee products offering big growth potential.
“COVID-19 has been a pretty difficult time. We have 1500 employees across Europe, and overnight, we had to transition from a traditional way of working to a remote one that minimised risk. Our first reaction was one of safety and wellbeing for our employees and their families. Good communication was important, as was having solid support networks. Then you’ve got to think about keeping coffee flowing to the customers who still need it, and at the same time address the areas where markets were closing down. Our people have been truly amazing and its thanks to them that we could adapt, refocus and deliver great service to our customers.”
UCC Coffee Europe used the pandemic to accelerate organisational change. It strengthened its central functions, added new product innovation and marketing roles, and has created new business units to allow fresh business models to come through.
“This is a business that is prepared to invest in the coffee market. We’ve built new capabilities and new product offerings that will take us into new markets and diversify our business long-term,” Molyneux says.
“The big aim for UCC Europe is to become a one-billion-euro business by 2030. Today, we’re a half-a-billion-company, but we want to double our business in the next 10 years.”
Molyneux identifies market potential in large sectors such as Italy, Germany, and Eastern Europe, areas where UCC is not yet present.
“There is so much potential. We are a €2.5-billion-company worldwide, we employee more than 5000 staff, have over 30 factories globally, operate in 22 countries, got established in 1933, have nearly 90 years of heritage, yet there’s still many people who don’t know about us,” Molyneux says.
“We’re a big player in the coffee market, but we’re an independent player. We’re one of biggest independent coffee companies in the world, supplying great coffee to our partners in the background, but consumers don’t know our name in Europe yet.
“There’s a quiet confidence about UCC. It’s got real coffee heritage. It’s been in the market a long time, and it’s not trying to be something else. It is fundamentally a coffee company. That’s who we are. That’s what we do. All our knowledge and experience are focused on delivering the best coffee experience for our customers. We say UCC also stands for ‘unique coffee company’ because we live or die on the quality of our coffee.”
The conscious consumer
As the world slowly emerges out of lockdown, post-pandemic, Molyneux says coffee businesses will need to be aware of evolving consumer trends and have the ability to fulfil them or at least provide a solution.
“I think coffee companies have to look at market trends to make sure they have the ability to adapt. What we’ve looked at, is how to build resilience and flexibility into our business model, which is why we’ve made a slight rebalancing of our portfolio. That’s where there’s real opportunities for growth,” Molyneux says.
“We’ve seen a big change in people’s willingness to access their products in a different way, away from traditional methods, such as via eCommerce and coffee-to-go solutions, which we think are here to stay.”
What is also clear are the needs of today’s conscious consumer, which includes a demand for traceable and sustainable products from sustainably-focused companies.
“We’re really starting to accelerate how we look at sustainability. We’re aware of our responsibilities in the market and the greater need for impact. We know that the purpose of a company is becoming defined in a new way and our commitment to sustainability is a large part,” Molyneux says.
As such, Molyneux appointed a Director of Sustainability to the European Leadership Team to hold the company accountable on sustainable goals and projects as it moves forward. This includes strengthening environmental actions, and investing in packaging solutions and brand-led partnerships. With a strong European sustainability framework that outlines pathways for creating shared value, this role will also collaborate with Japan on defining a global approach to key issues.
With lots of markets becoming ubiquitous, now is a great time to support independent businesses – large and small. Molyneux is confidence UCC’s family values are the backbone it needs to position itself in today’s competitive landscape and is certainly up for the challenge:
“If we can really leverage the power of the company – its heritage, knowledge and people – in the marketplace, take our great message and skillset and apply it into some of the new business models we’re focused on and ignite our ambition, then the opportunity and potential for growth is huge – for our partners and for UCC Europe in its own right. And that’s what I’m massively excited about.”
For more information, visit ucc-europe.com
Image Credit: Onur Pinar