In its new report, ‘Coffee and Ready-to-Drink Coffee in the U.S.’ Packaged Facts says: “18- to 24-year olds emerge as the least engaged age demographic” and are “most likely to exhibit infrequent coffee consumption”.
It notes: “It is often assumed that young adults are immersed in the coffeehouse culture... [But] the picture of college students pulling all-nighters thanks to an endless cup coffee is clearly not the norm that it’s portrayed to be. In fact, compared to employed adults, homemakers and retirees, the student cohort is the least likely to drink coffee in the past month.
“Marketers must do more to court this young demographic and encourage the onset of the coffee habit at earlier ages. In particular, attracting younger consumers with unique coffee formats (i.e., liquid concentrates) or even functional attributes may add value to coffee as a beverage choice.
“Liquid concentrate flavor mixes could be one avenue of exploration—bringing novelty back to the category and playing off successful innovation in other instant mix categories, much like MiO or Dasani Drops.”
26% of coffee drinkers consume more than four cups a day
More than a quarter (26%) of coffee drinkers consume more than four cups per day, while another 20% drink at least three cups per day, says Packaged Facts, “evidence that the market is supported by a strong constituent of very high frequency users”.
And while people in wealthier households are more likely than average to drink coffee, “the most avid coffee drinkers [in terms of volume] are those from less affluent households. Among daily coffee drinkers, those with household incomes of less than $50K over index in drinking four or more cups of coffee per day.”
As for coffee types, women are more likely than men to drink a range of coffee-based drinks such as lattes and blended coffees, says the report, although regular hot coffee is still the most popular choice, with 75% of coffee drinkers saying they consume it most often.
Iced coffee is next with a 15% response rate, tied with latte at 15%, followed by cappuccino at 13%, blended iced coffee drinks (10%), espresso (7%), macchiato (5%) and café au lait (3%).
The shifting landscape: Single serve pods and RTD coffee
Looking at market size and growth, Packaged Facts predicts coffee sales will top $48bn in 2014, with $11.2bn to come from retail sales and $37bn to come from foodservice sales. Retail sales are predicted to grow at just over 5% a year in the next couple of years while foodservice sales are expected to grow slightly faster.
Meanwhile, the shift in delivery formats at retail will continue, with ready to drink (RTD) coffee accounting for 7.3% of sales in 2013 and single serve pods accounting for 28% of dollar sales (NOTE - Nielsen data for the four weeks to April 12, 2014, shows that pods now have a 41.2% share - click HERE ).
Joh. A. Benckiser has emerged as a darling in the retail coffee market
The top players in the retail coffee market in 2013 were JM Smucker with a 28% market share, followed by Green Mountain Coffee Roasters with a 15.1% share, Starbucks with a 13.7% share, and Kraft with a 13.1% share of IRI-measured retail sales.
However, some of the biggest brands in the market - notably Folgers (owned by Smucker) and Maxwell House (owned by Kraft) - have experienced large declines in household usage, says Packaged Facts (although Folgers Gourmet Selections and the Maxwell House Café Collection in single cups have been a success).
Meanwhile, Kraft’s Gevalia brand has been performing very well (+27% in 2013) and is also popular among younger coffee drinkers, notes Packaged Facts.
And finally, “Joh. A. Benckiser [which owns the Peets, Caribou and Douwe Egbert brands] has emerged as a darling in the retail coffee market, producing growth of 18.6% compared to overall market growth of 6%.
"Perhaps even more impressive is the fact that the company’s ground/whole bean category has grown 6.9% compared to a 5.9% decline in total category.”
Click HERE to read more about the latest Packaged Facts reports.