Category Spotlight: Coffee

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Category Spotlight: Coffee

07/23/2018

Traditional is tops in the coffee category, with ready-to-brew roasted coffee consumed at least occasionally by three-quarters of U.S. adults, according to the July 2017 “Coffee - US” report from Chicago-based market research firm Mintel. Roasted coffee also commands the majority of dollar sales in the coffee market (40 percent), as ground and whole-bean coffee are the most traditional coffee formats and remain staples in American homes.

In the ground-coffee segment, Folgers and Maxwell House are the top brands, although both experienced dollar and unit sales declines during the 52 weeks ended May 20. Brands that did see double-digit dollar and unit sales growth, though, include Peet’s, McCafé and private brands.

But single-cup coffee — the kind you’ll find available for brewing in Keurig and similar systems — continues to gain traction, as more than half of adults report consumption of this kind of coffee, according to Mintel. This splits into half of adults using single-cup drip-coffee pods, while one-third use single-cup espresso pods — a more niche audience using Nespresso and Nespresso-compatible specialty systems. Overall, one-third of dollars spent in coffee go to single-cup products, combining with roasted-coffee sales to equal nearly three-quarters’ share (ready-to-drink and instant offerings make up just more than one-quarter).

Among single-cup brands, private label continues to see double-digit growth in both dollar and unit sales, according to Chicago-based IRI. Dunkin’ Donuts also continues to be a bright point in the segment, similarly boasting double-digit dollar and unit sales during the period.

Market penetration for single-cup is particularly sizeable, given that the requirements for equipment can be a costly upfront investment, Mintel notes. However, equipment requirements could place limitations on the segment, as could negative perceptions such as high cost per cup and environmental impact from used single-cup offerings.

Download the 2018 Consumer Expenditures Study Data
Data provided via Nielsen’s Total Food View, an inclusive data universe of UPC and non-UPC products (includes fresh random-weight retailer-assigned PLU and system 2 sales volume).

“While eco-friendly claims are making their way into the single-cup segment, potentially addressing environmental concerns, negative perceptions suggest that a ceiling does exist for market penetration, making it likely that usage will eventually hit its peak,” Mintel observes in the report.

Turning to attributes, consumer desire for premium products and experiences is in vogue, says Chicago-based market research firm Euromonitor in its February report, “Coffee in the US.” Coffee origin in particular has increasingly become a significant criterion by which consumers choose their coffee. Roasters that feature the region in which beans are cultivated are associating coffee with terms typically reserved for wine, such as “terroir.”

Premium brewing methods that highlight the natural flavor of beans are also growing in popularity, Euromonitor notes in its report. Still, the fresh whole-bean segment appears to be slowing in terms of volume growth, suggesting that while consumers are “hungry for methods” that produce higher-quality coffee, there remains a limit to the amount of time and effort they’ll spend in preparing and brewing coffee.