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Coffee - UK - August 2016

Published By :

Mintel

Published Date : Aug 2016

Category :

Beverages

No. of Pages : N/A

Growth in the coffee market in 2015 was helped by strong sales of coffee pods, which was in contrast to a continuation of the decline seen in recent years in sales of instant coffee. Coffee pods offer further opportunities for growth, while premiumisation is helping to support sales of instant coffee.

Overview

What you need to know
Products covered in this Report

Executive Summary

The market
Strong growth in coffee pods boosts coffee sales
Figure 1: UK retail value sales of coffee*, 2011-21
Microground helps reduce decline in instant coffee
Ageing population who drink more coffee made at home
Companies and brands
Nestlé maintains big lead in instant coffee
Figure 2: Leading manufacturers’ shares in the UK retail instant coffee market, by value, 2015/16
Taylors and Lavazza leading brands in ground coffee
Figure 3: Leading brands’ value shares in the UK ground coffee/coffee beans market*, 2015/16
The consumer
Nearly eight in 10 people drink coffee made at home
Figure 4: Types of coffee drunk at home, overall use and at least once a day, July 2016
Strong brand loyalty among coffee buyers
Figure 5: Prompts that would encourage people to buy a different coffee type/brand, July 2016
Room for more flavours and cold-brew coffee
Figure 6: Interest in trying different coffee products, July 2016
Coffee shop culture influencing consumer tastes
Figure 7: Attitudes towards coffee, July 2016
Room for more growth in coffee pod sales
What we think

Issues and Insights

New flavours can help bolster the appeal of instant coffee to a younger audience
The facts
The implications
Potential for more growth in coffee pods
The facts
The implications
Brands and retailers can add value through encouraging more experimentation
The facts
The implications

The Market – What You Need to Know

Coffee sales boosted by strong growth in coffee pods
Pods and coffee shop-style drinks offer more growth potential
Microground slows decline in instant coffee sales
Coffee pod sales show strong growth
Ageing population who are more likely to make more coffee at home
Coffee shop competition and strong sales of coffee makers

Market Size and Forecast

Ground coffee and pods boost total sales
Figure 8: UK retail value and volume sales of coffee*, 2011-21
Room for more growth in coffee sales
Figure 9: Best- and worst-case forecast of UK retail value sales of coffee*, 2011-21
Forecast methodology

Segment Performance

Microground helps reduce rate of decline in instant coffee sales
Figure 10: UK retail value and volume sales of instant coffee, 2011-21
Figure 11: Best- and worst-case forecast of UK retail value sales of instant coffee, 2011-21
Ground coffee sees small increase in sales
Figure 12: UK retail value and volume sales of ground coffee/coffee beans, 2011-21
Figure 13: Best- and worst-case forecast of UK retail value sales of ground coffee/coffee beans, 2011-21
Coffee pod sales growing strongly
Figure 14: UK retail value and volume sales of coffee pods, 2011-21
Figure 15: Best- and worst-case forecast of UK retail value sales of coffee pods, 2011-21

Market Drivers

Ageing population could benefit in-home coffee consumption
Figure 16: Trends in the age structure of the UK population, 2010-20
Competition from coffee shops
Coffee consumption steadily increasing
Figure 17: UK household purchases of tea, coffee and cocoa, hot chocolate and malt drinks, 2001-14
Strong sales of coffee makers

Key Players – What You Need to Know

Nestlé maintains big lead in instant coffee market
Taylors and Lavazza leading brands in ground coffee
Pods grow share of NPD activity
Nescafé launches Azera Coffee to Go
Tassimo launches more co-branded products
Increase in spending on coffee advertising
Nescafé most advertised and trusted coffee brand
Stronger association with social responsibility for Kenco

Market Share

Nestlé continues to dominate instant coffee market
Figure 18: Leading manufacturers’ sales and shares in the UK retail instant coffee market, by value, 2014/15 and 2015/16
Figure 19: Leading manufacturers’ sales and shares in the UK retail instant coffee market, by volume, 2014/15 and 2015/16
Azera fuels Nescafé’s sales
Figure 20: Leading brands’ sales and shares in the UK retail instant coffee market, by value, 2014/15 and 2015/16
Figure 21: Leading brands’ sales and shares in the UK retail instant coffee market, by volume, 2014/15 and 2015/16
Taylors and Lavazza biggest brands in ground coffee
Figure 22: Leading brands’ sales and shares in the UK retail ground coffee/coffee beans market (excluding coffee pods), by value, 2014/15 and 2015/16
Figure 23: Leading brands’ sales and shares in the UK retail ground coffee/coffee beans market (excluding coffee pods), by volume, 2014/15 and 2015/16

Launch Activity and Innovation

Pods grow share of NPD activity
Figure 24: New product launches in the UK coffee market, by format type, 2012-16
Branded launches increasingly dominant
Figure 25: New product launches in the UK coffee market, by branded vs. private label, 2012-16
Nestlé puts focus on new flavours for pods and café-style coffees
Figure 26: Examples of launches in the UK coffee market by Nestlé, 2016
Jacobs Douwe Egberts focuses on Tassimo
Figure 27: New product launches in the UK coffee market, by company (top 12)*, 2012-16
Taylors launches Nespresso-compatible pods range
Figure 28: Examples of launches in the UK coffee market by Taylors of Harrogate and Lavazza, 2015
Own-label activity focuses on coffee mixes
Ethical and time-saving claims on the increase
Limited editions taking a small but growing share of launch activity
Figure 29: New product launches in the UK coffee market, by claim (top 15)*, 2012-16

Brand Communication and Promotion

Increase in 2015 advertising for coffee
Figure 30: Recorded above-the-line, online display and direct mail total advertising expenditure on coffee, 2012-16
Nestlé top advertiser but share of spending down
Figure 31: Recorded above-the-line, online display and direct mail total advertising expenditure on coffee, by advertiser, 2012-16
Emotive campaign for Nescafé Gold Blend
Kenco message focuses on Coffee vs. Gangs project
Lavazza sees big increase in advertising
Figure 32: Recorded above-the-line, online display and direct mail total advertising expenditure on coffee, by 10 highest-spending brands, 2015
2016 push for new Azera Coffee to Go
Nielsen Ad Intel coverage

Brand Research

What you need to know
Brand map
Figure 33: Attitudes towards and usage of selected brands, July 2016
Key brand metrics
Figure 34: Key metrics for selected brands, July 2016
Brand attitudes: Kenco seen as most socially responsible brand
Figure 35: Attitudes, by brand, July 2016
Brand personality: Taylors seen as more exclusive than other brands
Figure 36: Brand personality – Macro image, July 2016
Nescafé seen as the most reassuring brand
Figure 37: Brand personality – Micro image, July 2016
Brand analysis
Authenticity a key strength for Taylors of Harrogate
Figure 38: User profile of Taylors of Harrogate, July 2016
Lavazza seen as a vibrant, stylish and fun brand
Figure 39: User profile of Lavazza, July 2016
Douwe Egberts’ strengths are quality and taste
Figure 40: User profile of Douwe Egberts, July 2016
Nescafé the most trusted coffee brand
Figure 41: User profile of Nescafé, July 2016
Kenco socially responsible but needs more product differentiation
Figure 42: User profile of Kenco, July 2016

The Consumer – What You Need to Know

Nearly eight in 10 people drink coffee made at home
Strong brand loyalty among coffee buyers
Free samples most likely to encourage experimentation
Room for more added flavours and on-the-go convenience
Cold-brew coffees can go beyond being niche
Time-saving appeal of instant coffee but quality important
Coffee shop culture influencing consumer tastes
Competition from more refreshing drinks
Room for more growth in coffee pod sales
Breaking down barriers to owning pod machines

Frequency of Drinking Coffee Made at Home

Nearly eight in 10 people drink coffee made at home
Figure 43: Types of coffee drunk at home, overall use and at least once a day, July 2016
Microground coffee bridging gap between instant and ground
Three in 10 people using pods for making coffee
Standard instant coffee drunk the most frequently
Figure 44: Frequency of drinking coffee at home, by type, July 2016
Younger people more likely to drink a variety of coffee types
Figure 45: Repertoire of different types of coffee drunk in the last month, July 2016

Factors Influencing Choice

Most buyers of coffee are loyal to one product
Figure 46: Buying one coffee product vs. buying different coffee products, July 2016
Free samples can help encourage experimentation
Getting people talking about new coffees
Figure 47: Prompts that would encourage people to buy a different coffee type/brand, July 2016
Promotional activity has a big influence on choice of coffee
Figure 48: Most important factors influencing choice when buying one coffee type/brand over another, July 2016

Interest in Trying New Product Concepts

Room for more added flavours in instant coffee
Figure 49: Interest in trying different coffee products, July 2016
Concentrated products and flavours for adding to coffee appeal
Nearly a fifth interested in on-the-go coffee mixes in a cup
Cold-brew coffees can help brands win over 16-34s
Functional benefits can add to the appeal of coffee

Attitudes towards Coffee

Instant coffee appeals when consumers are pressed for time
Figure 50: Attitudes towards coffee, July 2016
Coffee shop culture influencing consumer coffee tastes
Coffee competes against more refreshing drinks

Ownership of Coffee Pod Machines and Barriers to Buying

Three in 10 households have a pod machine
Figure 51: Ownership of coffee pod machines, July 2016
Price of pod machines and pods still a barrier to buying
Figure 52: Reasons for not currently owning a coffee pod machine, July 2016
Persuading people to have more hot drinks
Convincing people of the convenience of pod machines

Appendix – Data Sources, Abbreviations and Supporting Information

Abbreviations
Consumer research methodology

Appendix – Market Size and Forecast

Figure 53: Best- and worst-case forecast of total UK retail value sales of coffee*, 2011-21
Figure 54: Best- and worst-case forecast of total UK retail volume sales of coffee*, 2011-21
Figure 55: Best- and worst-case forecast of total UK retail volume sales of coffee*, 2011-21
Fan chart forecast

Appendix – Segment Performance

Figure 56: Best- and worst-case forecast of UK retail value sales of instant coffee, 2011-21
Figure 57: Best- and worst-case forecast of UK retail volume sales of instant coffee, 2011-21
Figure 58: Best- and worst-case forecast of UK retail volume sales of instant coffee, 2011-21
Figure 59: Best- and worst-case forecast of UK retail value sales of ground coffee/coffee beans, 2011-21
Figure 60: Best- and worst-case forecast of UK retail volume sales of ground coffee/coffee beans, 2011-21
Figure 61: Best- and worst-case forecast of UK retail volume sales of ground coffee/coffee beans, 2011-21
Figure 62: Best- and worst-case forecast of UK retail value sales of coffee pods, 2011-21
Figure 63: Best- and worst-case forecast of UK retail volume sales of coffee pods, 2011-21
Figure 64: Best- and worst-case forecast of UK retail volume sales of coffee pods, 2011-21

Appendix – Launch Activity and Innovation

Figure 65: New soluble/instant coffee product launches, by branded vs. private label, 2012-16
Figure 66: New ground coffee product launches, by branded vs. private label, 2012-16
Figure 67: New product launches of coffee bags, pods and pre-filled filters, by branded vs. private label, 2012-16
Figure 68: New coffee mixes product launches, by branded vs. private label, 2012-16

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