Research is in our DNA at Star Media Group.

We recently conducted a detailed study looking at where and how our readers spend their disposable income. We did so because we are interested in building business ventures that tie us more directly to consumer revenue, thus reducing our reliance on traditional advertising streams.

Any spending category that indexed above 120% was noted for further analysis.

To create a more manageable list, we then filtered these categories. We were looking at those categories that were consumer-facing, high-spending, and growing, and that over-indexed to our suite of media products, responded well to media, and had a low level of government regulation.

Further refinement was necessary to get us to a point where we could choose a specific product or service to launch as a stand-alone business initiative.

To focus this effort, we identified categories with one or more of the following:

• Revenue possibilities for +US$1 million.
• B2C business model.
• Low utilisation; not at full capacity.
• High fixed costs; low variable costs.
• Limited number of properties and not too many outlets.
• High marketing costs (barrier to growth).
• Profit margin of more than 30%.
• No impact on other Torstar brands, including those within Star Media Group.
• Low/non-existent advertising spend (to avoid cannibalisation).
• Growth potential (scale and region).
• Business decision-makers readily accessible.
• Aligns with Torstar values.

We were then left with a more manageable list of categories and services. Opportunities related to coffee drinkers popped out as quite promising.

Readers consume our content across many devices. But one thing rings true: Whether they relax and read their newspaper at home, clutch it during their commute, enjoy a quick news update on their mobile phone, or swipe through Toronto Star Touch on their tablet, reading the Toronto Star while enjoying a cup of coffee is part of the day for roughly 75% of our readers.

To capitalise on this opportunity, we will take advantage of our content capabilities, mass reach, subscription expertise, and customer service infrastructure to launch a subscription-based coffee programme called Headline Coffee.

The premise is simple: a high-quality, ethically sourced coffee, delivered once a month to the subscriber’s home.

Priced at C$20 a month (about US$15.50), the subscriber can choose from ground or whole bean, with a new interesting coffee delivered each month. Our primary offering will be a re-occurring credit card offering, but we will also make term subscriptions available, especially on a gifting basis.

Like any opportunity, the coffee business is complicated.

While single-serve pods are the largest growing segment for coffee consumption, ethically sourced, high-quality coffee beans remain very popular. Boomers, who represent a large portion of our readership, appreciate a good cup of coffee and have the means to pay. The products we will offer are consistent with the values of the Toronto Star and align perfectly with our readership base.

Why the name? Headline Coffee will be brought to you by the Toronto Star, but gives us expansion opportunities beyond our core reader base.

While there are competitors in this space, they are mostly smaller players who lack the expertise and resources to properly promote their product offerings. By using the print and digital assets of Star Media Group, we will have the product, marketing, and subscription expertise to ensure the word gets out.

We’re launching now, as the weather turns cooler, to capture interest in hot beverages and ensure we are well-established before the Christmas gifting season.

Innovation is essential for media companies. This is just one example of what we have underway at Star Media Group.

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