Coffee capsules and ESE pods

Capsules and Pods are different

Have you ever wondered how coffee capsules and pods became so popular ?

Single serve portion control coffee (individual capsules and pods) continue to grow at incredible rates in Australia since a major shift in domestic appliances occurred around 2011.

Now before we continue, it's important to clarify not all capsules and pods are the same (physically).

Of course the objective for both a pod and a capsule is identical. They are designed for producing a cup of brewed coffee.

But there are in fact many different types of pods and capsules. Each type has been designed and manufactured to slightly different specifications.

When we refer to pods and capsules in our article, we are talking about the concept of portion control coffee solutions and not any specific type.

How it all started

Some of the earliest domestic coffee consumption in Australia involved jars of instant. In more elaborate places they used a basic bulk brew system with pre-ground coffees. Think percolators, drip, filter, stove top moka pots (or sometimes called cafetera), etc.

Coffee was generally consumed "piping hot" with a dash of milk with sugar to combat bitterness.

The traditional European espresso culture (e.g. short black) had not really taken off in Australia at either cafes or domestic home segments.

Australian coffee drinkers preferred a "large" cup or mug with added dairy (or dairy alternatives) - think cappuccino, latte, flat white, rather than the small, intense espresso extraction.

We generally refer to this type of coffee beverage as a "milk-based espresso". It's become so popular in our Australian culture, consumed by more than 90% of coffee drinkers (whether at home or in the cafe).

Australia has also become a global leader in the preparation of high quality milk-based espresso beverages. Our standard is high and often coffee experts from other countries visit Australia to study and learn about our excellent milk-based espresso drinks.

Bulk brew culture (hot drip batch brews) that have been popular in the US for decades failed to take off in Australia, except at event or catering instances where the need to a large number of coffees served quickly is required.

Australian drinkers developed a discerning taste for sweeter coffee flavors and the textures of their milk-based coffee beverages.

Although the specialty coffee segment has been growing cold brew, drip and alternative brewing styles using lighter roasted coffees, it's only in warmer climates where these are more popular.

The rise in specialty coffee

With the rapid transformation to better quality cafes from 2007 through to 2013, called the 3rd wave specialty coffee movement, the Australian coffee industry created something rather amazing that continues to evolve and improve.

Specialty coffee conditioned our palates (the ways in which we taste) to prefer higher quality coffee types and at the same time generated an almost zero-tolerance for bad coffees.

Coffee is now ubiquitously available in Australia and the standard so high that poor quality coffees are no longer viable, unless it's a captive audience like a closed venue with limited choices.

MasterChef effect

Ironically, a few years after the growth of specialty coffee in Australia, there was something else happening - a boom in cooking and home renovation shows on our TVs.

All of a sudden, everyone wanted a brand new kitchen with the latest European appliances so they could practice and show case their cooking skills.

It's often said that shows like "The Block" and "Masterchef" were responsible for an eventual death in fine dining establishments as those new kitchens spawned a new type of "restaurant quality at home" generation. (the rise in better cafe offerings was also a factor)

So these new kitchens became a space where the corner was proudly assigned to the coffee "station"- a shiny stainless espresso machine and equally impressive grinder.

The coffee station became a shrine to a new breed of home barista. Soon it was evident that people at home were pumping out better coffee than their local cafe and forcing cafes to "lift their game".

Instant Coffee shrinks - Quality Coffee surges

This new spectrum of the coffee market in Australia (quality at home) began to widen like never before whilst traditional instant coffee segment began contracting at a rapid rate (until the pandemic-induced lockdowns when it became popular again for a period). 

With the specialty coffee bean market growing at phenomenal rates to feed the hungry demands of coffee lovers with aspirational tastes, cafes became more concerned about competitive quality and stepped up their game against a home consumer dreaming of creating their own superior cafe experience in their kitchen.

Coffee drinkers want great taste but simple preparation

Not everyone wants to be a skilled barista at home.

The resources required to produce cafe quality coffee at home are not lost on those who don't want to fork out big money for equipment, are impatient or time-poor. Sometimes people also don't like the mess of making freshly ground espresso coffees.

For those that think producing a manual espresso coffee is just too much effort, mess and time - or the equipment takes up too much valuable bench space, these folks just want a caffeine hit at the press of a button but their palate will not accept an instant coffee. They want better than instant coffee.

Yearning for an easy solution without fiddling with grind adjustments, precise dosage, tamping and then extraction and the dreaded reality that many badly executed espresso extractions can be frustrating.

Automation

Enter the automatic espresso machine - think Jura, DeLonghi, etc.

The concept is challenging (and still is) - fully automating the tasks of a skilled barista to grind, dose, tamp, extract, clean, texture milk to perfecting standards......BUT.....it must also come with a small footprint, low noise, fast heat-up, no mess and remain ultra reliable at all times.

Automatic espresso machines for the domestic market reached their peak in popularity between 2009 and 2014. They are certainly not cheap and what's worse, they are not reliable and expensive to service or repair with mostly plastic components and a requirement for regular cleaning and user initiated maintenance cycles.

We also have to deal with the fact these automatic machines will only achieve about 85% of the cup quality compared to a decent manual espresso machine and grinder in the hands of a good operator.

Portion Control Coffee takes off

From around 2012, the portion control market (pods and capsules) started to grow considerably faster.

Ironically, during the period around 2010 - 2012 it was the 2 big Australian appliance brands at the time - Breville and Sunbeam - who both invested heavily into their coffee equipment portfolio to counter the increased market share of Jura and the Italian-branded, Chinese-made autos from Saeco, Gaggia, DeLonghi, etc.

Both Breville and Sunbeam declared a "war" on the imported espresso machines and grinder by producing Chinese made equipment loaded with features for barely half the price of quality European gear.

Unfortunately, Breville and Sunbeam had both lost the plot in our opinion as they both suffered a case of tunnel vision and delusional grandeur thinking they could build a $2K Italian espresso machine for $600 (at the time), they basically ignored the pod and capsule segments.

Whilst some of the market innovation they introduced was indeed admirable, they remained blind to the primary market signals of a growing capsule segment whilst pursuing their own lofty goals of espresso supremacy.

What Sunbeam and Breville failed to notice at the time was a market turning towards portion control - thanks to that successful man-god George Clooney and his deep-pocketed sponsor Nespresso (Nestle).

You see, right under the nose of Breville and Sunbeam was an existing portion control system that was perfectly suited to the Australian market and really popular in Europe - the simple and highly effective Easy Serving Espresso (E.S.E) system. Alas, both Sunbeam and Breville failed to see the big opportunity in front of them.

Sure, both of them would throw in a basic single E.S.E. filter in some of their machines (but not all) and it seemed at the time a terrible after-thought when both Breville and Sunbeam failed to leverage the competitive edge that E.S.E. had over the classic Nespresso capsules - a higher dose of coffee, 5.2g in a Nespresso capsule versus 7.2 grams in an ESE pod.

In the world of coffee flavor, dose is absolutely everything. That extra ~38 to 40% makes a huge difference when extracted properly.

Sure enough, sales of Nespresso-compatible capsule machines started to skyrocket.

It was simple really - a cheap appliance, made by 3rd party companies (Nestle did not wish to be bogged down with equipment manufacturing, they are a food and marketing behemoth). These basic capsule machines were far more reliable than domestic grade, plastic automatic machine that broke down after 6 months and took another 3 months to be repaired.

Of course, there were many other advantages of these capsule machines - very small foot print and super-fast heat up and brew times. Ideal you would say !

On the topic of fast brewing, capsules are defying the laws of quality coffee extraction. Making espresso in 14 seconds is not real......neither was the taste ! You could argue that with such a small dosage of 5+grams that fast extraction is sufficient, but the contact time of water with coffee is quicker and that's going to result in a lower volume of coffee oils extracted.

Nespresso also made some great inroads towards feeding a fundamental need of the fussy Australian coffee drinking palate - textured milk.

More than 92% of brewed coffee in Australia has milk (or dairy alternative) added. It's become such a critical component that the Europeans were in denial of this fact until 2015 when the big European coffee companies that export their product to Australia started to roast and supply locally (that's a different discussion about freshness and quality).

The number of capsule machines being sold outstrips espresso machines by a factor of 8:1.

Why our capsules and pods are different

We have worked in this market for the last 13 years, providing specially prepared coffee beans that are converted in Australia to either ESE pods or capsules.

We are also the only supplier that uses 100% Arabica in our pods and capsules.

Most use anywhere from 20 - 60% robusta, we have deliberately taken a different path.

Creating coffee for the single serve portion control market is not easy or simple.

The dosage levels are very low in comparison to what is served in a quality cafe - think half or less. There is also expectation that the coffee from a pod or capsule will be good (well, that's the hope of those folks who own such machines).

Quality, premium coffees do not essentially result in an improved coffee experience when converted to pods or capsules. We wish it was that simple and in fact the opposite is often true.

Generally speaking, quality coffees are cleaner and therefore have less "bite" that translates into a smoother and richer cup of coffee when dosed correctly, however, when it comes to 5g capsules and 7g pods, this very low dosage means a quality, clean coffee may taste weak at those dosage levels.

How to get improved flavor in the cup without resorting to harsh, rubber-tasting, chemical-infused robusta is a big challenge.

Our experience in developing various portion control single serve coffee consumables can be leveraged to provide you with an improved level of quality and freshness.

We specialize in custom roasted coffees with a range of over 40 premium grade coffees we can create something unique for you.

The majority of ESE Pods and Nespresso compatible capsules sold in Australia are imported.

Even 90% of the Australian-brand coffee companies that sell pods and capsules are not even selling a product that was roasted by them.

There are only a small handful of converters in Australia and the largest converters prefer to roast the coffee themselves and then brand the output in the company's livery.

Some of Australia's most celebrated coffee brands are marketing capsule products they don't even roast - pretending to link their popular coffee products to the capsule when in fact the ingredients are entirely different qualities, untraced and not roasted by the company.

We think the only way to control quality is to be fully vertically integrated.

This means, we source the raw coffee, we roast it, we grind it, we de-gas it, we convert it to pods or capsule, we store it under a controlled environment, we sell it and we ship it.

There are just 5 coffee brands doing it all themselves - we are one of them.

We offer a locally roasted quality product that is also converted in Australia so there are clear competitive advantages to our fresh product compared to those that have spent up to 2 months in hot containers in ports and on ships, or roasted in a sausage factory by mass-produced commodity packers under private label agreements.

Heat degrades the quality of roasted coffee very quickly - in fact it can ruin coffee in a matter of hours. Can you imagine what is happening to those imported coffee capsules that are sitting in 70 degrees C containers for weeks at a time ?

We have a specially constructed storage system for the finished product that preserves the quality in temperature controlled environment.

Currently supported formats are the 7g ESE pods and Nespresso "classic" capsules.

To see some examples of our quality portion control single serve coffee products you can see our capsules on the mycuppa.com.au site - for Nespresso compatible classic capsules click here and our ESE pods click here.