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Coffee and Ready-to-Drink Coffee in the U.S.: Retail & Food Service, 8th Edition by Packaged Facts

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Make no mistake, coffee is big business: Packaged Facts forecasts that retail and foodservice sales of coffee will top $48 billion in 2014. Of this amount, we expect $11.2 billion (or 23%) to come from retail sales and $37 billion (or 77%) to come from sales at foodservice establishments.

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Coffee and Ready-to-Drink Coffee in the U.S.: Retail & Food Service, 8th Edition by Packaged Facts

  1. 1. Packaged Facts New Publication Brochure Coffee and Ready-to-Drink Coffee in the U.S.: Retail and Food Service, 8th Edition Brought to you by:
  2. 2. REPORT ABSTRACT Coffee is a big and hotly contested business, as evident by Mondelez International’s recent acquisition of D.E Master Blenders 1753 BV, which closes the sales gap between Nestle SA and Mondelez as world’s first- and second-ranked coffee manufacturers by sales. For the U.S. market, Packaged Facts forecasts that retail and foodservice sales of coffee will top $48 billion in 2014. Of this amount, we expect $1.2 billion (or 23%) to come from retail sales and $39.1 billion (or 77%) to come from sales at foodservice establishments. For coffeehouse and quick-service restaurant operators, attaching food to the purchase of coffee is more important than ever. Brands are aggressively innovating on both the beverage and food side of the menu to provide customers the ammunition needed for more pairing firepower. But more and more of these players are also branching into other beverages, which has the potential to dampen coffee sales growth. And, yet despite all the variety, hot coffee is still the go-to beverage, with 75% of coffee/coffee drink users saying that among 10 choices “hot coffee” is the coffee/coffee drink they drink most often. As restaurant operators race to launch loyalty programs, coffeehouse chains are fertile ground for programs that blend and harness social media, mobile technology and rewards. Our research suggests that coffeehouse users are receptive to social media and brand interplay, and when it comes to adapting to technology, these consumers are also ahead of curve. On the retail side, the rise of single-serve is changing the retail coffee landscape—and if Green Mountain Coffee Roasters has its way—single serve will also change away-from-home coffee consumption. But coffee co- branding is also moving beyond coffee shop brands to align with other indulgent brands. Building off coffeehouse expectations for a wide variety of options, retail coffee manufacturers are also embracing variety, and sourcing has become a key element in coffee premiumization. And innovation abounds: To combat attrition, instant coffee marketers are trying to breathe life into the category focusing on quality products underscored by variety, functional, and value positioning.
  3. 3. REPORT ABSTRACT And this only scratches the surface. Coffee and Ready-to-Drink Coffee in the U.S.: Retail and Food Service provides industry participants with valuable insight on trends shaping this the highly competitive U.S. coffee market. Sales content includes: 1) a market size and forecast for coffee sales at retail and foodservice, along with retail sales analysis by coffee segment and by distribution channel; and 2) detailed company analysis of the retail coffee market, by market segment (ground/whole bean, instant, instant flavored, espresso/cappuccino, and ready-to-drink coffee) and by brand; and 3) detailed company analysis of leading foodservice participants, including Dunkin’ Donuts, Green Mountain Coffee Roasters, McDonald’s, Starbucks, Caribou Coffee and Tim Hortons, with a focus on how coffee fits into each companies’ competitive and growth strategies. The report also: • Identifies key marketing opportunities for coffee, supported by consumer survey data, product examples and other metrics. In particular, we focus on food and beverage pairing, organic growth opportunities, growing sales of iconic retail brands, and harnessing loyalty programs. • Using proprietary survey results, assesses the degree which consumers get different coffee types for home use from different retail distribution channels; similarly, we assess the degree they get coffee for “immediate consumption” from a variety of foodservice channels. Comparative analysis is included. • Explores coffee retail product trends centered on bringing the coffee shop experience into the consumers’ home (with an emphasis on co-branding); sourcing; convenience; and instant coffee, liquid concentrate and single-serve pod innovation. • Assesses coffee menu trends, focusing on menu item penetration by restaurant segment, including beverage varieties, coffee flavors/types and coffee brands.
  4. 4. REPORT ABSTRACT • Assesses household and personal coffee usage and usage frequency trends, including ground, whole bean, single-serve/pod, instant and RTD coffee; and household and personal coffee brand usage and trends, ground, whole bean, single-serve/pod, instant and RTD coffee. To help gauge brand loyalty, we also trend brands’ “usage preference ratios,” the ratio that consumers drink that brand “most” over drinking that brand “also.” • Using proprietary survey results, provides comparative analysis on the degree to which consumers drink different flavors and types of coffee at home and at restaurants, as well as identifying which coffee types/ flavors consumers drink most often. • Drawing from consumer survey “ranking” responses, identifies the relative importance consumers place on factors such as taste, getting a specific brand, low price, and time of day when deciding to order coffee at a restaurant.
  5. 5. SAMPLE INSIGHTS & HIGHLIGHTS • The grocery channel continues to reign as the retail coffee sales champion, with an estimated $5.26 billion in 2013 sales. • In 2013, total IRI-based multi-channel sales of coffee were up 6% from 2012. • We expect coffee sales at foodservice establishments to increase steadily during 2014-2016, driving incremental growth in foodservice establishment visits, continued breakfast platform build outs and improvements where coffee continues to play a central role, and pricing increases driven by further transition to “premium” coffee as well as increasing coffee drink variety. • Nearly 61% of all households use ground or whole bean coffee in 2013. • While innovation is an integral factor in keeping consumers engaged, opportunities for organic growth will be achieved by increasing replenishment cycles, developing new usage opportunities, and increasing price per cup. In this regard, marketers can leverage the social experience that goes along with coffee as a lifestyle beverage. The industry can also continue to expand beyond the morning daypart to develop new usage opportunities, as well as harness coffee’s positive health attributes in tandem with functional positioning. • A driving factor in retail coffee innovation and marketing is bringing the coffee shop experience into the consumers’ home by utilizing familiar brands, an abundance of variety, and high-quality retail products. • Co-branding of retail coffee goes beyond coffee shop brands to align with other indulgent brands. Such partnerships create brand recognition and cross-merchandising opportunities. The bold, rich flavor of coffee provides a natural balance to indulgent sweet notes—making partnerships with decadent, palette-pleasing brands a natural fit.
  6. 6. SAMPLE INSIGHTS & HIGHLIGHTS Coffee Drunk Most, by Coffee Typle/Flavor Which type of coffee do you drink most often? Hot Coffee 0% 10% 20% 30% 40% 50% 60% 70% 80% 75% 15% 15% 13% 10% 7% 5% 3% 6% Base: 1,468 adults age 18+ who have drunk coffee in the past month; respondents were allowed to pick up to three of the listed choices. Source: Packaged Facts, based on data from February 2014 Packaged Facts proprietary survey results Iced Coffee Latte Cappuccino Blended Ice Coffee Drink Espresso Macchiatto Cafe au Lait Other
  7. 7. SAMPLE INSIGHTS & HIGHLIGHTS Factors Influencing Decision to Order Type of Coffee at Restaurant, Ranked by Importance When deciding what kind of coffee/coffee drink to get at a restaurant, which of the following infuence your decision? For each response, please use a scale of 1 to 5, where 1 = “not at all important” and 5 = “very important.”) Great Taste Time of Day Specific Flavor Meal Time Caffeine/Energy Low Price Pairs with Food Speedy Service Specific Brand Trying Something New Healthfulness 2.5 3.0 3.5 4.0 4.5 4.52 3.67 3.63 3.62 3.54 3.34 3.26 3.24 2.99 2.97 2.96
  8. 8. SAMPLE INSIGHTS & HIGHLIGHTS • The premiumization trend is alive and well as evident in the significant growth of organic, house blend, premium, fair trade, and Ethiopia coffees from 2009-2013. These types of coffees are gaining traction because they communicate “quality.” • Sourcing has become a key element in coffee premiumization. • Ready-to-drink coffee beverages exploit the convenience factor by simply removing the need for a brewer. These grab-and-go beverages capture impulse and immediate consumption opportunities with single-serve product placement at beverage coolers, but also allow for multiple-serve product usage at home. • Instant coffee marketers are trying to breathe life into the category with innovations that focus on quality products underscored by variety, functional, and value positioning. Liquid concentrates are emerging in the category. • Iced coffee is most prevalent among midscale restaurant operators. Iced coffee beverages offer a good opportunity for these operators to broaden coffee beverage consumption across all dayparts. Moreover, there’s opportunity to communicate premium quality with customized flavor opportunities. • The 18-29 demographic shows a preference for coffeehouse brands, such as Starbucks. This youngest set of coffee drinkers also over index in use of Gevalia ground/whole bean coffee, which could be due to the company’s strong Internet presence and direct-to-consumer home delivery service. • Hispanic households are 11% more likely than average to drink coffee. • Some 9% of monthly coffee drinkers use the mail/Internet to purchase single-serve/pod coffee, where they can shop most conveniently to obtain competitive pricing on an easy-to-ship and easy-to-receive single-serve/pod coffee brands.
  9. 9. SAMPLE INSIGHTS & HIGHLIGHTS Daily Coffee Drinkers: Cups of Coffee Drunk per Day How many 8 oz. cups of coffee/coffee drinks do you usually drink per day? 4+ cups per day 3 cups per day 2 cups per day 1 cups per day 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 19% 34% 20% 26%
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  11. 11. For More Information on this Report & Additional Research Visit MarketResearch.com or Call 800.298.5699 Brought to you by:

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