Ronco is back on air after a two-year dark period. The direct response marketing company will release infomercials for a new Coffeetime Brew System in hopes of capturing a share of retail coffee sales with the cold-coffee brewer, which promises to deliver gourmet coffee for 20 cents a cup.
New ads, airing next year, show a host named Mark Solley demonstrating how the product functions. The device, which uses a cold filter, works on both coffees and teas. “It’s a cold concentrate of what the coffee itself would be,” and can be kept refrigerated for several weeks, said Larry Nusbaum, Ronco’s new principal and owner.
Ronco—best known for kitchen inventions like Veg-O-Matic and GrillWave—was founded by entrepreneur Ron Popeil, and has been through several ownership changes. In 2007, two years after its purchase by Denver holding company Fi-Tek VII, Ronco went bankrupt in the wake of mismanagement claims. Now, under Nusbaum’s ownership, Ronco will be rolling out the new infomercials, including the one featuring the Coffeetime Brew System. The company is banking on the brew-at-home coffee trend, and weakened national chains like Starbucks, which has publicly announced that it will likely miss analysts’ earnings estimates for the quarter ending Dec. 28.
The 30-minute infomercials include a series of two-minute spots, and will air for six months. Ronco will introduce the cold-water coffee brewer in retail locations, such as K-Mart and Sears, in the latter half of 2009. Chief Media is the media-buying agency.
Nusbaum said the product is appealing to penny-pinched consumers in a recession. “If you get one cup of coffee a day at Starbucks, a gourmet blend, that is, that’s $1,500 a year,” he said. “We’re three cents a day for the exact same cup of coffee . . . We’re a good alternative in a down economy.”
Meanwhile, Starbucks, which currently holds a 34.5 percent share of the packaged coffee market, has taken significant steps to combat the rapid decline in sales. The Starbucks Card Rewards program currently offers consumers a free tall beverage upon purchase of a pound of whole bean coffee. Starbucks has also rolled out a gold card loyalty program that gives frequent patrons 10% off purchases. A Starbucks rep said new product introductions, such as Ronco’s, are not likely to snag shares.
If anything, the value-driven message behind Ronco’s soon-to-debut infomercial will take away retail, not food service coffee sales, said Darren Tristano, evp at market research firm Technomic, Chicago. “It’s hard to imagine that for 20 cents a cup, you can replicate the quality of the coffee, the barista that’s preparing it, as well as the quality of the water, even if it is filtered,” he said, adding that the device will likely appeal to consumers who are already brewing their own coffee at home.
Ronco upped its U.S. ad spend from $70,000 in 2007 to $150,000 from January through September of this year (excluding online), per Nielsen Monitor-Plus. Starbucks, meanwhile, spent $54 million in measured media last year, and $29 million through September of this year.