Table of Contents
Scope and Themes
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- What you need to know
- Definition
- Data sources
- Sales data
- Consumer survey data
- Advertising creative
- Abbreviations and terms
- Abbreviations
- Terms
Executive Summary
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- Market continues to grow, despite recession
- Roasted drives overall growth as additives and RTD decline sharply
- Private label products boost grocery channel sales, while drug stores post declines
- Aging population and growth of Hispanic segment drive market growth
- Brand share—Roasted coffee
- Brand share—Instant coffee
- Brand share—Ready-to-drink coffee
- Brand share—Coffee additive/flavoring, substitutes and concentrates
- Incidence of use remained between 77% and 79% from 2002-09
- Most are not brand loyal but Folgers and Maxwell House dominate market
- Grocery stores, Walmart and coffeehouses are most popular channels
- Desire to relax, gain energy, and improve concentration drive usage
- Hispanics are heavy users and many prefer instant
Insights and Opportunities
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- Target young adults by teaching how to create fun drinks and experiences
- Leverage bulk to target upper-income households and create value
- Coffee as a better-for-you beverage
- A mixed bag?
Inspire Insights
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- Trend: Brand Tribe
- What it’s about: To be successful, a brand doesn’t need a user base. It needs a tribe
- Create community around the brand with stories and gatherings
- Taking it to the streets
- Trend: Customization
- What it’s about: Getting what you want, the way you want it
- Playing with flavor and caffeine to create unique offerings
Market Size and Forecast
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- Key points
- Sales expected to grow in 2009, despite recession
- Coffee sales and forecast
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- Figure 1: Total U.S. retail sales of coffee, at current prices, 2004-14
- Figure 2: Total U.S. retail sales of coffee, at inflation-adjusted prices, 2004-14
- Walmart sales
Competitive Context
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- QSRs positioned to compete more directly with retail
- Energy drinks and shots could undermine future growth
- Natural or “better for you” alternatives to coffee coming online
Segment Performance
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- Key points
- Ground roasted packaged coffee drives category growth
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- Figure 3: FDMx sales of coffee, by segment, 2008 and 2009
Segment Performance—Roasted Coffee
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- Key points
- Roasted category drives overall category growth
- Sales and forecast of roasted coffee
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- Figure 4: Total U.S. sales and forecast of roasted coffee, at current prices, 2004-14
Segment Performance—Instant Coffee
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- Key points
- Sales of instant expected to grow slightly in 2009
- Sales and forecast of instant coffee
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- Figure 5: Total U.S. sales and forecast of instant coffee, at current prices, 2004-14
Segment Performance—Ready-to-Drink (RTD) Coffee
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- Key points
- RTD sales plummet in the face of recession
- Sales and forecast of ready-to-drink coffee beverages
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- Figure 6: Total U.S. sales and forecast of ready-to-drink coffee, at current prices, 2004-14
Segment Performance—Coffee Additive/Flavoring, Substitutes, and Concentrates
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- Key points
- Sales of additives suffer as consumers focus more on value
- Sales and forecast of coffee additive/flavoring, substitutes and concentrates
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- Figure 7: Total U.S. sales and forecast of coffee additive/flavoring, substitutes, and concentrates, at current prices, 2004-14
Retail Channels
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- Food stores gain an edge on Mass in 2009
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- Figure 8: U.S. retail sales of coffee, by channel, 2007 and 2009
Retail Channels—Food Stores
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- Key points
- Grocery wins with premium private label products and convenience
- Food store sales of coffee
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- Figure 9: U.S. food store sales of coffee, at current prices, 2004-09
Retail Channels—Drug Stores
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- Key points
- Growth decelerates as consumers search more for bargains and variety
- Drug store sales of coffee
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- Figure 10: U.S. drug store coffee sales, at current prices, 2004-09
Retail Channels—Mass and Other
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- Key points
- Sale at mass expected to grow in 2009
- Mass merchandiser sales of coffee
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- Figure 11: U.S. mass merchandiser sales of coffee, at current prices, 2004-09
Natural Channel/SPINS
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- Sales of branded items dip but there are still opportunities in bulk
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- Figure 12: Natural product supermarket retail sales of coffee, at current prices, 2007-09
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- Figure 13: Natural product supermarket retail sales of coffee, at inflation-adjusted prices, 2007-09
- Natural channel sales by segment
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- Figure 14: Natural product supermarket retail sales of coffee, by segment, 2007 and 2009
- Brand share
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- Figure 15: Select manufacturer brand natural supermarket sales of coffee, 2007 and 2009
- Organic coffee sales
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- Figure 16: Natural product supermarket retail sales of coffee, by organic/non-organic, 2007 and 2009
Market Drivers
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- Key points
- Rise in number of 55-74s drives growth, for now
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- Figure 17: Population by age, 2004-14
- Rapid growth of Hispanic segment drives growth
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- Figure 18: Population by race and Hispanic origin, 2004-14
- Affinity for coffee and need for energy drive increased consumption
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- Figure 19: Reason for drinking more coffee than last year, September 2009
- Lifestyle changes and other beverages drive down consumption
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- Figure 20: Reason for drinking less coffee than last year, September 2009
- Average retail price declines slightly as consumers embrace value brands
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- Figure 21: Average quarterly retail price paid for roasted and ground coffee in the U.S., Q3 2008-Q2 2009
Leading Companies
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- J.M. Smucker Co. posts strong growth after Folgers merger
- Kraft fends off recession with Maxwell House
- North American Coffee Partnership loses share as RTD sales plummet
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- Figure 22: Select manufacturer FDMx sales of coffee, 2008-09
Brand Share—Roasted Coffee
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- Key points
- Well-known, mid-range brands drive category growth
- Driving category growth: Folgers, Dunkin’ Donuts and Private Label
- Manufacturer and brand sales of roasted coffee
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- Figure 23: Leading FDMx brand sales and market share of roasted coffee, 2008-09
Brand Share—Instant Coffee
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- Key points
- Category growth flat but some established brands post growth
- Manufacturer and brand sales of instant coffee
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- Figure 24: Leading FDMx brand sales and market share of instant coffee, 2008-09
Brand Share—Ready-to-Drink Coffee
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- Key points
- NACP losses ground as Bolthouse gains slightly with wellness position
- Manufacturer and brand sales of ready-to-drink coffee beverages
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- Figure 25: Leading FDMx brand sales and market share of ready-to-drink coffee, 2008-09
Brand Share—Coffee Additive/Flavoring, Substitutes and Concentrates
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- Key points
- Sales of additives decline as consumers focus more on mid-range
- Manufacturer and brand sales of coffee additive/flavoring, substitutes and concentrates
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- Figure 26: Leading FDMx brand sales and market share of coffee additive/flavoring, substitutes and concentrates, 2008-09
Innovation and Innovators
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- Instant coffee goes upscale: Via by Starbucks
- Luigi Lavazza leverages the ethical trend
- Supporting the troops with a Cup: The Coffee Bean and Tea Leaf campaign
- Leveraging the home cocktail trend: A Coffee Martini blend
Brands and the Advertising Landscape
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- Overview of the brand landscape
- Folgers: The power of value, Americana and high awareness
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- Figure 27: Brand analysis of Folgers
- Figure 28: Folgers morning energy ad, 2009
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- Figure 29: Folgers young family ad, 2009
- Folgers Online
- Maxwell House: Freshness and value for the masses
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- Figure 30: Brand analysis of Maxwell House, 2009
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- Figure 31: Maxwell House flavor lock lid ad, 2009
- Figure 32: Maxwell House taste ad, 2009
- Maxwell House Online
- Nescafé
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- Figure 33: Nescafé Hispanic ad, 2009
Consumption
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- Key points
- Incidence of use remains steady
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- Figure 34: Household consumption of coffee, 2002-09
- Continue to appeal to heavy users (aged 45+), but need to reach younger segments too
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- Figure 35: Personal coffee consumption and frequency of consumption, September 2009
- Lifestyle changes and health concerns drive down usage among some
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- Figure 36: Coffee consumption compared to last year, by age, September 2009
- Most drink caffeinated coffee; decaf usage highest among elderly
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- Figure 37: Coffee preferences, caffeinated vs. decaffeinated, by age, September 2009
- Target young adults with sweet drinks and bold names
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- Figure 38: Coffee preferences, cream and sweet coffee drink usage, by age, September 2009
Brand Preferences
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- Key points
- Most drinkers experiment with brands
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- Figure 39: Coffee brand loyalty, by age, September 2009
- National brands far more popular than gourmet and private label
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- Figure 40: Types of coffee brands purchased for at home consumption, 2006-09
- Older Americans tend to prefer national brands
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- Figure 41: Types of coffee brands purchased for at home consumption, by age, September 2009
- Lower-income consumers drive sales of dominant national brands
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- Figure 42: Brands of ground and whole bean coffee used in the household, by HH income, April 2008-June 2009
- Folgers and Maxwell House dominate the instant segment
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- Figure 43: Brands of instant coffee used in the household, by HH income, April 2008-June 2009
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- Figure 44: Flavors of instant flavored coffee used in the household, by HH income, April 2008-June 2009
- Starbucks closely associated with espresso/cappuccino
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- Figure 45: Household consumption of espresso/cappuccino, by HH income, April 2008-June 2009
Purchase Habits
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- Key points
- Many young adults shop coffeehouses and C-stores
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- Figure 46: Coffee purchase locations—at home usage, by age, September 2009
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- Figure 47: Coffee purchase locations—at home usage, by HH income, September 2009
- Fair trade and organic appeal primary to young adults
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- Figure 48: Types of coffee purchased, by age, September 2009
Attitudes and Opinions
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- Key points
- Mature adults more likely to associate drinking coffee with relaxation
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- Figure 49: Positive perceived effects of coffee, by age, September 2009
- Young adults considerably more likely to see coffee as a bad habit
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- Figure 50: Negative attitudes towards coffee, by age, September 2009
- About one in five users view coffee as an element of their social life
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- Figure 51: Coffee as an important part of social life, by age, September 2009
Impact of Race and Hispanic Origin
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- Key points
- Hispanics report the highest incidence of use
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- Figure 52: Coffee consumption, by race/Hispanic origin, April 2008-June 2009
- Whites and Asians more likely to prefer caffeinated and whole bean
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- Figure 53: Use of caffeinated or decaffeinated ground or whole bean coffee, by race/Hispanic origin, April 2008-June 2009
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- Figure 54: Use of ground or whole bean coffee, by race/Hispanic origin, April 2008-June 2009
- Hispanics and blacks somewhat more likely to prefer national brands
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- Figure 55: Ground or whole bean coffee brand use, by race/Hispanic origin, April 2008-June 2009
- Instant popular with Spanish speakers
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- Figure 56: Consumption of instant coffee, by race/Hispanic origin, April 2008-June 2009
- Figure 57: Consumption of instant coffee, by language spoken in the home, April 2008-June 2009
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- Figure 58: Instant coffee brand use, by race/Hispanic origin, April 2008-June 2009
- RTD coffee drinks garner least usage among white consumers
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- Figure 59: Use of RTD coffee drinks, by race/Hispanic origin, April 2008-June 2009
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- Figure 60: Brands of RTD coffee drinks consumed, by race/Hispanic origin, April 2008-June 2009
- Blacks less likely to use ethical products
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- Figure 61: Types of coffee purchased, by race/Hispanic origin, September 2009
- Blacks considerably less likely to recognize benefits of coffee consumption
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- Figure 62: Positive perceived effects of coffee, by race/Hispanic origin, September 2009
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- Figure 63: Preference for sweetened coffee drinks over coffee, by race/Hispanic origin, September 2009
- Blacks and Hispanics flock to value channels
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- Figure 64: Coffee purchase locations, at home usage, by race/Hispanic origin, September 2009
Cluster Analysis
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- Nationalists (44%)
- Premiums (30%)
- Decaffeinators (26%)
- Cluster characteristics
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- Figure 65: Coffee clusters, September 2009
- Figure 66: Coffee consumption and attitudes, by coffee clusters, September 2009
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- Figure 67: Frequency of consumption, by coffee clusters, September 2009
- Figure 68: Brands of coffee purchase, at home usage, by coffee clusters, September 2009
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- Figure 69: Attitudes towards coffee, by coffee clusters, September 2009
- Cluster demographics
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- Figure 70: Coffee clusters, by gender, September 2009
- Figure 71: Coffee clusters, by age, September 2009
- Figure 72: Coffee clusters, by HH income, September 2009
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- Figure 73: Coffee clusters, by race/Hispanic origin, September 2009
- Cluster methodology
Custom Consumer Groups
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- Men and parents tend to be heavy drinkers
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- Figure 74: Custom consumer groups with highest average number of cups consumed on days coffee is consumed, September 2009
- Health concerns have little impact on the likelihood of increasing or decreasing consumption
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- Figure 75: Impact of suffering from or being diagnosed with a health condition on coffee consumption, September 2009
- Working class from rural and suburban areas are heavy users
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- Figure 76: Mosaic segments with highest average consumption of regular/decaf ground or whole bean coffee, April 2008-June 2009
- Working class minorities represent majority of instant drinkers
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- Figure 77: Mosaic segments with the highest average daily consumption of instant coffee, April 2008-June 2009
IRI/Builders Panel Data
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- Overview of coffee
- Ground coffee
- Consumer insights on key purchase measures
- Brand map
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- Figure 78: Brand map, selected brands of ground coffee, buying rate, by household penetration, 2008
- Brand leader characteristics
- Key purchase measures
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- Figure 79: Key purchase measures for the top brands of ground coffee, by household penetration, 2008
- Ground decaffeinated coffee
- Consumer insights on key purchase measures
- Brand map
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- Figure 80: Brand map, selected brands of ground decaffeinated coffee, buying rate, by household penetration, 2008
- Brand leader characteristics
- Key purchase measures
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- Figure 81: Key purchase measures for the top brands of ground decaffeinated coffee, by household penetration, 2008
- Instant coffee
- Consumer insights on key purchase measures
- Brand map
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- Figure 82: Brand map, selected brands of instant coffee, buying rate, by household penetration, 2008
- Brand leader characteristics
- Key purchase measures
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- Figure 83: Key purchase measures for the top brands of instant coffee, by household penetration, 2008
Appendix: Additional Household Income Comparisons
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- Figure 84: Coffee consumption and preferences, by HH income, September 2009
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- Figure 85: Consumption of instant coffee, by HH income, April 2008-June 2009
- Figure 86: Consumption compared to last year, by HH income, September 2009
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- Figure 87: Brands of coffee usually purchased, by HH income, September 2009
- Figure 88: Coffee channels, by HH income, September 2009
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Appendix: Additional Age Comparisons
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- Figure 89: Coffee consumption and preferences, by age, September 2009
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- Figure 90: Consumption compared to last year, by age, September 2009
- Figure 91: Brands of coffee usually purchased, by age, September 2009
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- Figure 92: Coffee purchase locations, at home usage, by age, September 2009
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Appendix: IRI/Builders Panel Data Definitions
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- IRI Consumer Network Metrics
Appendix: Trade Associations
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