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COFFEE - US - JULY 2018

Published By :

Mintel

Published Date : Jul 2018

Category :

Non-Alcoholic Drinks

No. of Pages : N/A

The $14.4 billion coffee market continues on a positive path in 2018, buoyed by a thriving RTD (ready-to-drink) coffee segment and sustained growth in single-serve formats. Millennials show strong category engagement, consuming a range of coffee products and show strong interest in innovative offerings, including RTD coffees with new ingredients and added functionality. There are challenges in the evolving landscape for more traditional roasted coffee providers and well-established national brands to remain relevant. Suppliers also need to help consumers navigate the sundry of hot and cold beverage options.

Table of contents
OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
Continued growth in 2018 expected to continue through 2023
Figure 1: Total US sales and fan chart forecast of coffee, at current prices, 2012-22
The issues
Traditional roasted coffee offers little growth, and instant sees sales and share decline
Figure 2: Percent market share of coffee market, by segment, 2016 and 2018
National brands struggling to keep pace with innovation
Figure 3: Types of brands purchased, by type of coffee, May 2018
Competitive drink space gets energetic
Figure 4: Other drinks used for energy other than energy drinks/ shots, March 2018
The opportunities
Young consumers consume range of formats and are energized by new RTD coffees
Figure 5: Consumption of coffee, by age, May 2018
Opportunity to engage and cross-market with foodservice offerings
Figure 6: interest in RTD coffee innovations, May 2018
Interest in enhanced RTD coffee, especially BFY benefits, is high
Figure 7: Attributes in ideal RTD coffee drinks, May 2018
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Coffee market grows in 2018 and positive forecast seen through 2023
RTD coffee stands out as dynamic, fast-growing segment
Creamer market’s fairly stable trajectory projected to continue
Foodservice competes, but also shapes demand and innovation
Tea, soda and sports drinks widely used as energizing beverages
MARKET SIZE AND FORECAST
Growth climbs in 2018 and is forecast to continue through 2023
Figure 8: Total US sales and fan chart forecast of coffee, at current prices, 2012-22
Figure 9: Total US retail sales and forecast of coffee, at current prices, 2012-22
MARKET BREAKDOWN
RTD coffee drives category growth
Figure 10: Percent market share of coffee market, by segment, 2016 and 2018
Roasted coffee dominates segment, but growth is stagnant
Single-cup continues to draw consumers and posts 6% two-year growth
Dynamic RTD segment propels market forward as sales drop for instant
Figure 11: Total US retail sales of coffee, by segment, at current prices, 2016 and 2018
RTD coffee and single-serve forecast to drive market, build share through 2023
Figure 12: Total US retail sales and forecast of coffee by segment, at current prices, 2012-22
Supermarkets remain single-largest channel for coffee sales
“Other” retailers are growing share and expanding private label presence
Figure 13: Total US retail sales of coffee, by channel, at current prices, 2016 and 2018
MARKET PERSPECTIVE
Creamer market posts stable growth, increases projected through 2023
Figure 14: Total US retail sales and forecast of cream and creamers, at current prices, 2013-23
Food service competes, but also shapes demand and innovation
Competition from energy drinks, including coffee-flavored options
Tea, soda and sports drinks widely used as energizing beverages
Figure 15: Other drinks used for energy other than energy drinks/shots, March 2018
MARKET FACTORS
Consumer economic confidence shapes discretionary expenditures on beverages
Figure 16: Consumer confidence and unemployment, 2000-may 2018
Younger consumers are shifting category leaders
Figure 17: Type of coffee consumed most often, for grounds, by age, May 2018
Figure 18: Type of coffee consumed most often, for RTD, by age, May 2018
Figure 19: US Population aged 18+, by age, 2013-23
Multicultural growth
Figure 20: Distribution of population, by age race and Hispanic origin, 2018
Studies suggest coffee’s benefits to health and longevity
KEY PLAYERS – WHAT YOU NEED TO KNOW
Market leader JM Smucker loses share, Starbucks posts growth
“Other” suppliers build share, especially in RTD segment
Private label build share, especially with premium offerings
RTD segment grows, with many strong performers, especially in cold brew
Forward-looking innovation widespread in the RTD segment
BRAND SALES OF COFFEE
In fragmented landscape, JM Smucker struggles, as Starbucks rises
Three major medium sized players also lose share
“Other” suppliers – including many niche brands – are fastest growing
Figure 21: Multi-outlet sales of coffee, by leading companies, rolling 52 weeks 2016 and 2017
WHAT’S WORKING?
Restaurant and coffee shop branded roast and pods
Figure 22: K-cup Original Donut Shop Coffee Ad, 2018
Private label gains share, especially in single-serve pod and RTD segments
RTD coffee grows, with many strong performers, especially in cold brew
North American Coffee Partnership grows sales from leading segment position
Figure 23: Starbucks Mocha Frappuccino bottle – flavor like no other Ad, 2018
Range of food & beverage suppliers expand their reach into RTD segment
Smaller players build share and drive innovation, especially in cold brew
WHAT’S STRUGGLING?
Legacy brands struggle, especially in roasted coffee and single serve
Instant coffee loses appeal and continues to see sales tumble
WHAT’S NEXT?
More RTD choices made with nut-based milks and oils
Hybrid cold brew coffees
Functional coffee: added caffeine, protein, vitamins and other benefits
Figure 24: Starbucks Plus Coffee single serve pods Ad, 2018
Attention to ethical sourcing, already widespread, may go further
Figure 25: Green Mountain Coffee Ad, 2018
THE CONSUMER – WHAT YOU NEED TO KNOW
Grounds are most widely used, followed by pods and RTD offerings
Age shapes consumption, with users 18-34 using wider range
Consumers define premium coffee by superior taste first
Interest high in foodservice branded RTD choices
RTD coffee consumers eager for additives that can provide BFY benefits
Vanilla, hazelnut and chocolate top flavor interest
National, foodservice and premium private label are all widely used
COFFEE CONSUMPTION
Grounds are most widely used, followed by pods and RTD offerings
Figure 26: Consumption of coffee – by type of coffee, May 2018
Caffeinated and brewed more popular than decaf or espresso
Figure 27: Consumption of coffee - grounds, pods and instant, May 2018
Flavored RTD coffees are most popular
Figure 28: Consumption of RTD coffee, May 2018
Older consumers stick to grounds, youth experiment and seeks RTD coffee
Figure 29: Consumption of coffee, by age, May 2018
More affluent HHs show preference grounds and pods
Figure 30: Consumption of coffee, by household income, May 2018
Hispanics show strong engagement, including high usage of RTD
Figure 31: Consumption of coffee, by Hispanic origin, May 2018
QUALITIES OF PREMIUM COFFEE
Consumers define premium coffee by superior taste first
Figure 32: Premium coffee qualities, May 2018
Figure 33: TURF Analysis – Defining premium coffee, May 2018
Figure 34: Table - TURF Analysis – Defining premium coffee, May 2018
Younger consumers expect premium to have more natural, green profile
Figure 35: Premium coffee qualities, by age, May 2018
Affluent consumers may prioritize taste, seek small batch products
Figure 36: Premium coffee qualities, by household income, May 2018
Hispanic consumers value more natural, eco-friendly qualities in premium
Figure 37: Premium coffee qualities, by Hispanic origin, May 2018
QUALITIES SOUGHT IN RTD COFFEE
Interest high in coffee shop/restaurant RTD creations
Figure 38: interest in RTD coffee innovations, May 2018
RTD coffee users 45+ especially interested in coffee shop, restaurant brands
Figure 39: interest in RTD coffee innovations, by age, May 2018
RTD coffee consumers eager for BFY benefits
Figure 40: Attributes in ideal RTD coffee drink, May 2018
RTD coffee with health/wellness additives build appeal to those 45+
Figure 41: Attributes in ideal RTD coffee drink, by age, May 2018
RTD coffee with high caffeine and protein likely to appeal to men
Figure 42: Attributes in ideal RTD coffee drink, by gender, May 2018
Hispanic consumers seek RTD coffee drinks with a health halo
Figure 43: Attributes in ideal RTD coffee drink, by Hispanic origin, May 2018
FLAVORS OF COFFEE
Vanilla, hazelnut and chocolate engage most interest
Figure 44: Coffee flavors interested in trying, May 2018
Interest high in flavors, except among those aged 55+
Figure 45: Coffee flavors interested in trying, by Age, May 2018
Hazelnut, banana and alcohol flavored coffees appeal to
Figure 46: Coffee flavors interested in trying, by Hispanic origin, May 2018
BRANDS
National, foodservice and premium private label are all widely used
Figure 47: Types of brands purchased, by type of coffee, May 2018
Usage of national brands highest in grounds and instant
Figure 48: Types of brands purchased, by type of coffee, May 2018
Figure 49: Correspondence Analysis – Coffee/tea brand type purchase, May 2018
Figure 50: Coffee/tea brand type purchase, May 2018
National brands used more exclusively by those aged 55+
Figure 51: Types of brands purchased, by age, May 2018
Income shapes brand choice, but is not necessarily dominant factor
Figure 52: Types of brands purchased, by household income, May 2018
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Fan chart forecast
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations
TURF methodology
Correspondence Analysis Methodology
APPENDIX – MARKET
Figure 53: Total US retail sales and forecast of coffee, at inflation-adjusted prices, 2013-23
Figure 54: Total US retail sales and forecast of roasted coffee, at inflation-adjusted prices, 2013-23
Figure 55: Total US retail sales and forecast of single-cup coffee, at inflation-adjusted prices, 2013-23
Figure 56: Total US retail sales and forecast of instant coffee, at inflation-adjusted prices, 2013-23
Figure 57: Total US retail sales and forecast of ready-to-drink coffee, at inflation-adjusted prices, 2013-23
Figure 58: Total US retail sales of coffee, by retail channel, at current prices, 2013-18
APPENDIX – KEY PLAYERS
Figure 59: MULO sales of roasted coffee by leading companies and brands, rolling 52 weeks 2017 and 2018
Figure 60: MULO sales of single-cup coffee by leading companies and brands, rolling 52 weeks 2017 and 2018
Figure 61: MULO sales of instant coffee by leading companies and brands, rolling 52 weeks 2017 and 2018
Figure 62: MULO sales of ready-to-drink coffee by leading companies and brands, rolling 52 weeks 2017 and 2018

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