Packaged Coffee Losing Its Buzz?
Is the packaged coffee category encountering some “steep” declines? Recent research from NielsenIQ (NIQ), as reported by Reuters, shows that sales of coffee at grocery have dropped 3.7% on a year-over-year (YoY) basis. Sales are now below pre-pandemic levels.
Several factors may be contributing to the dip. Inflation is a major factor, as coffee prices climbed 9.3% from September 2022 to September 2023. Consumers’ return to offices, in hybrid or full-time schedules, and their propensity to order pods or coffee online directly from suppliers, are impacting the channel performance, too.
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NIQ’s research also showed that value chains continue to siphon sales from traditional grocery stores. In its coffee report, the market insights firm affirmed that coffee brands that align with the value model or have included more value-priced offerings like private label coffee products, have been performing better.
Matthew Berry, insight manager of food and beverage at Euromonitor International, told Reuters that the category trends reflect the overall food retailing climate. “Prices have been on the rise for a long time now and that is causing significant pressure on volumes because consumers are cutting back."
Meanwhile, co-located coffee cafes in the grocery channel continue to meet shopper’s thirst for coffee drinks. In its latest financial report, Starbucks reported that sales at licensed stores – which include but are not limited to grocery – hit more than $1.18 billion last year, up 18.9% from the previous year. Earlier in 2023, Caribou Coffee announced that it had signed several multi-unit development agreements to franchise more than 300 new locations in the United States, including in the grocery channel.
It’s not just partnerships with large coffee chains, either. This month, the Save A Lot operation in Chicago ran by Yellow Banana announced that it is adding a café to its new store in Chicago’s Englewood neighborhood, teaming up with Black-owned vendor I Love My Coffee Black.
