Starbucks is “widely outpacing” the competition in the US coffee pods market, says Wells Fargo

By Elaine Watson contact

- Last updated on GMT

More than four out of every 10 dollars (43.4%) spent on ground coffee in the US is now spent on single-serve pods such as K-Cups
More than four out of every 10 dollars (43.4%) spent on ground coffee in the US is now spent on single-serve pods such as K-Cups

Related tags: Starbucks, Marketing

Starbucks is “widely outpacing” the competition in the US coffee pods market, delivering “robust unit growth and ongoing pod share gains”, while market leader Keurig Green Mountain’s share continues to decline owing to “persistently weak dollar sales”, according to Wells Fargo.

In a note analyzing Nielsen data on the coffee market, Wells Fargo senior analyst Bonnie Herzog and associate analyst Adam Scott noted that while overall growth in the US coffee pod category is decelerating, more than four out of every 10 dollars (43.4%) spent on ground coffee in the US is now spent on single-serve pods.

In the four weeks to August 8, 2015, Starbucks’ pod sales surged 35.6% vs the same four-week period last year, whereas the overall pod category grew a more modest 16.4% YoY.

Starbucks’ dollar share of the pod market rose to 16.3% in August 2015 vs 14% in August 2014, whereas Keurig Green Mountain saw its share slip from 36% to 27% over the same period, with some of the slack being picked up by Kraft and private label as well as Starbucks.  

Starbucks is also outpacing rivals in the packaged ground coffee market (excluding pods), generating dollar sales growth of 13.4% in the four weeks to August 8 vs overall category growth of 3.3%.

Finally, sales of Starbucks’ liquid coffee products such as Frappuccino and Doubleshot were also extremely robust, added Well Fargo, which said Starbucks has the potential to become an “international powerhouse in consumer packaged goods and retail” ​owing to its “solid execution, strong pricing power, a compelling loyalty program, and premium brand equity”.

Is the coffee pod market losing its luster? Read what Euromonitor thinks HERE.

Related topics: Markets, Beverage, Manufacturers

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