Table of Contents
Overview
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- Key issues covered in this Report
- Economic and other assumptions
- Products covered in this Report
- Excluded
Executive Summary
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- Impact of COVID-19 on coffee
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- Figure 1: Short, medium and long term impact of COVID-19 on tea and other hot drinks, 29 September 2020
- The market
- COVID-19 provides temporary boost to coffee market
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- Figure 2: Value sales forecast for coffee, 2015-25
- The recession and long-term boost to homeworking will benefit the market
- Ground coffee and coffee pods grow faster than instant in 2020
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- Figure 3: UK retail value sales of coffee, by segment, 2018-20
- Incomes under pressure as recession hits
- Ageing of the population should boost instant coffee
- Companies and brands
- Nescafé leads on instant coffee sales
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- Figure 4: Leading brands’ share in the UK instant coffee market, by value, 2019/20*
- Own-label leads booming ground coffee segment
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- Figure 5: Leading brands’ sales and shares in the UK ground coffee (excluding coffee pods) and coffee beans market, by value, 2019/20
- Nescafé also leads the coffee pods segment
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- Figure 6: Leading brands’ sales and shares in the UK coffee pods market, by value, 2019/20*
- Coffee pods/bags continue to attract the most NPD activity
- Environmentally friendly packaging claims rose in 2019
- Nestlé leads adspend in 2020
- Nescafé has a strong image, offering good value
- The consumer
- 77% of Brits drink coffee at home; instant is the most popular
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- Figure 7: Types of coffee used at home, July 2020
- Three in five people have a coffee system in the household
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- Figure 8: Types of coffee systems in the household, July 2020
- Supermarkets are the most popular place to buy coffee
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- Figure 9: Where coffee is purchased from, July 2020
- Scope for brands to bolster their links to emotional wellbeing
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- Figure 10: Reasons to drink coffee, July 2020
- Taste is more important than price
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- Figure 11: Factors influencing choice, July 2020
- Opportunities for brand extensions through smaller packs
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- Figure 12: Behaviours related to coffee, July 2020
- Coffee at home is seen to be a good way to save money; sustainability on consumers’ radar
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- Figure 13: Attitudes towards coffee, July 2020
COVID-19 and Coffee
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- Impact on the market
- COVID-19 provides temporary boost to coffee market
- The recession and long-term boost to homeworking will benefit the market
- Impact on consumers
- Pandemic brings health into even sharper focus
- Income squeeze will heighten focus on price
- A sharper focus on planetary health
- Impact on companies and brands
- New Starbucks variants recreate drinks from the brand’s coffee shops
- Costa pushes its “At Home” range in retail through marketing on online stores
Issues and Insights
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- COVID-19 health concerns open up scope for coffee as a more permissible treat
- Links to emotional wellbeing warrant attention
- Opportunities for mail subscription; especially among young people
- Recreating the coffee shop experience should boost sales
The Market – Key Takeaways
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- COVID-19 provides temporary boost to coffee market
- The recession and long-term boost to homeworking will benefit the market
- Ground coffee and coffee pods grow faster than instant in 2020
- Incomes under pressure as recession hits
- Ageing of the population should boost instant coffee
Market Size and Forecast
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- Impact of COVID-19 on coffee
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- Figure 14: Short, medium and long term impact of COVID-19 on tea and other hot drinks, 29 September 2020
- Coffee prices prove volatile over 2015-20
- Volume sales rise in 2020, while prices remain volatile
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- Figure 15: Value and volume retail sales of coffee, 2015-25
- Inflation and slowing volume sales growth expected for 2020-25
- Brexit and ongoing COVID-19 situation to drive price rises in 2021
- Shift towards wider at-home working to provide some, though finite, support to volume sales
- Coffee: Inc Impact of COVID-19 - UK - September 2020 - Market SegmentationAgeing UK population to buoy up volume sales
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- Figure 16: Value sales forecast for coffee, 2015-25
- Figure 17: Volume sales forecast for coffee, 2015-25
- Market drivers and assumptions
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- Figure 18: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared on 29 September 2020)
- Learnings from the last recession
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- Figure 19: Value retail sales of coffee, 2008-12
- Forecast methodology
Market Segmentation
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- Ground coffee and coffee pods grow faster than instant in 2020
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- Figure 20: UK retail value and volume sales of coffee, by segment, 2018-20
- Further volume sales growth for all segments anticipated
Market Drivers
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- Coffee faces some competition from tea and soft drinks
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- Figure 21: Volume retail sales of tea and coffee, 2014-19
- Incomes under pressure as recession hits
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- Figure 22: Annual percentage change in CPI and AWE (regular pay), monthly basis, January 2013-July 2020
- COVID-19 and Brexit could threaten supply chain and push up prices
- Ageing of the population should boost instant coffee
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- Figure 23: Trends in the age structure of the UK population, 2015-20 and 2020-25
Companies and Brands – What You Need to Know
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- Nescafé leads on instant coffee sales
- Own-label leads booming ground coffee segment
- Nescafé also leads the coffee pods segment
- New Starbucks variants recreate drinks from the brand’s coffee shops
- Environmentally friendly packaging claims rose in 2019
- Nestlé leads adspend in 2020 but advertisers cut back in general
Market Share
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- Nescafé leads on instant coffee sales
- Strong growth for Nescafé Gold and speciality variants
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- Figure 24: Leading brands’ sales and share in the UK instant coffee market, by value and volume, 2017/18-2019/20
- Figure 25: Leading brand owners’ sales and share in the UK instant coffee market, by value and volume, 2017/18-2019/20
- Own-label leads booming ground coffee segment
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- Figure 26: Leading brands’ sales and shares in the UK ground coffee (excluding coffee pods) and coffee beans market, by value and volume, 2017/18-2019/20
- Advertising and increased distribution boosts Taylors
- ‘Coffee shop experience at home’ message boosts Starbucks and Costa sales
- Nescafé also leads the coffee pods segment
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- Figure 27: Leading brands’ sales and shares in the UK coffee pods market, by value and volume, 2017/18-2019/20
Launch Activity and Innovation
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- Coffee pods/bags continue to attract the most NPD activity
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- Figure 28: New product launches in the UK coffee market, by format, 2016-20
- Nestlé leads on launch activity in 2019
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- Figure 29: New product launches in the UK coffee market, by top ten brands, 2016-20 (sorted by 2019)
- New Starbucks variants recreate drinks from the brand’s coffee shops
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- Figure 30: Examples of new launches in Nestlé’s Starbucks range, 2019-20
- Nescafé Black Roast emphasises care taken in production
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- Figure 31: Nescafé Black Roast, 2020
- Costa moves into instant
- Tassimo taps into seasonal trends with Iced Latte launch
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- Figure 32: Seasonal product launches in coffee, 2019-20
- Environmentally friendly packaging claims rose in 2019
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- Figure 33: New product launches in the UK coffee market, by top 10 claims, 2016-20 (sorted by 2019)
- Activity in recyclable/compostable pods continues into 2020
- Some launches provide additional proofs of their environmental commitments
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- Figure 34: Examples of recyclable/compostable coffee pod launches, 2020
- Further activity in compostable coffee bags
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- Figure 35: Raw Bean Striking EL Salvador Bean Bags, 2020
- Figure 36: Lyons No.4 coffee bags, before and after, 2017-20
- References to charity links used to strengthen ethical image
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- Figure 37: Examples of compostable coffee bag launches highlighting charity links, 2020
- Tesco redesigns its coffee capsules with 27% less packaging
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- Figure 38: Tesco Finest Ristretto Coffee Capsules with close-up of label signalling packaging reduction, 2020
- Brands look to make their good relations with farmers tangible
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- Figure 39: Examples of coffee launches giving details of good farmer relations on-pack, 2020
- Own-label launches make efforts to explain Fairtrade
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- Figure 40: Examples of coffee launches giving an explanation of Fairtrade, 2019
- Highlighting female involvement in production process
- Taking cues from wine to describe how conditions affect flavour
- Pushing the energy-boosting/anti-tiredness properties of coffee
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- Figure 41: Examples of coffee launches which call out energy/tiredness, 2019-20
- CBD coffee could tap into relaxation
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- Figure 42: Coffee launches containing CBD, 2020
- Half and half coffee comes to the UK
- Detailing the decaffeination process
- Leading and niche brands explore spirit/liqueur flavours
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- Figure 43: Examples of coffee launches with spirit/liqueur flavours, 2019-20
- RTD coffee looks to plant-based trend
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- Figure 44: Examples of RTD coffee launches that use plant-based milks, 2019
- Figure 45: Examples of new launches in RTD coffee, 2019
Advertising and Marketing Activity
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- Nestlé leads spend in 2020
- Azera continues to focus on curiosity
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- Figure 46: Total above-the-line, online display and direct mail advertising expenditure on coffee, by leading advertisers (sorted by 2019), 2019 and 2020
- Figure 47: Total above-the-line, online display and direct mail advertising expenditure on coffee, by leading brands, 2019 and 2020 (sorted by total of 2019 and 2020)
- JDE supports Kenco Duo launch
- Taylors of Harrogate continues focus on coffee bags
- Lavazza cuts spend
- Costa pushes its At Home range in retail
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 48: Attitudes towards and usage of selected brands, July 2020
- Key brand metrics
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- Figure 49: Key metrics for selected brands, July 2020
- Brand attitudes: Nescafé is seen to offer good value
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- Figure 50: Attitudes, by brand, July 2020
- Brand personality: Nescafé leads on accessibility, Taylors on exclusivity
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- Figure 51: Brand personality – macro image, July 2020
- Nescafé leads on tradition
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- Figure 52: Brand personality – micro image, July 2020
- Brand analysis
- Taylors of Harrogate is seen to be a connoisseur brand
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- Figure 53: User profile of Taylors of Harrogate, July 2020
- Nespresso is seen to be stylish by 24% of those familiar with it
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- Figure 54: User profile of Nespresso, July 2020
- Costa is seen to be delicious by 29% but overrated by 23%
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- Figure 55: User profile of Costa, July 2020
- Nescafé has a strong all-round image
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- Figure 56: User profile of Nescafé, July 2020
- Lavazza seen to be stylish by 24% and authentic by 24%
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- Figure 57: User profile of Lavazza, July 2020
- Kenco is accessible to more than half
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- Figure 58: User profile of Kenco, July 2020
The Consumer – Key Takeaways
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- Lockdown provides a boost to coffee at retail
- Health will become an even bigger concern due to pandemic
- Income squeeze will heighten focus on price
- Opportunities for brand extensions through smaller packs
- Recreating the coffee shop experience offers opportunities
Impact of COVID-19 on Consumer Behaviour
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- Lockdown provides a boost to coffee at retail
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- Figure 59: Intentions of visiting coffee shop over the next three months, September 2020
- Wariness over busy public indoors spaces remains apparent
- More cautious spending presents another barrier for coffee shops
- Concerns on healthy eating and weight gain open up scope for coffee as a more permissible treat
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- Figure 60: Consumers concerned about putting on weight and unhealthy eating as a result of the coronavirus outbreak, by gender and age, 23 April–7 May 2020
- A sharper focus on planetary health
Usage of Coffee
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- 77% of Brits drink coffee at home; instant is the most popular
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- Figure 61: Types of coffee used at home, July 2020
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- Figure 62: Frequency of usage of coffee, July 2020
- 17% use coffee pods; 45% using them daily
- Consumers have a low repertoire, 39% drinking just one type of coffee
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- Figure 63: Repertoire of usage of coffee, July 2020
Ownership of Coffee Systems
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- COVID-19 lockdown boosts demand for coffee systems
- Three in five people have a coffee system in the household
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- Figure 64: Types of coffee systems in the household, July 2020
Where Coffee is Bought
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- Supermarkets are the most popular place to buy coffee
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- Figure 65: Where coffee is purchased from, July 2020
- COVID-19 provides an opportunity for DTC services
Reasons to Drink Coffee
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- Scope for brands to bolster their links to emotional wellbeing
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- Figure 66: Reasons to drink coffee, July 2020
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- Figure 67: NPD in coffee containing cannabidiol, 2020
- Coffee as a treat is a motivator for one in four young coffee drinkers
- Strong interest in indulgent coffees
Factors Influencing Choice
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- Taste is more important than price
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- Figure 68: Factors influencing choice, July 2020
- Income squeeze will heighten focus on price
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- Figure 69: Nescafe calls out the number of mugs per pack, 2020
- Premium coffee is widely seen as an affordable treat
- Ethical and environmental factors have little influence
- Tangibility can set claims apart
- COVID-19 will fuel long-term spotlight on the environment
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- Figure 70: Taylors highlights carbon neutrality, 2020
- Opportunities to improve the healthiness of coffee
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- Figure 71: NPD from Starbucks, 2020
Behaviours Related to Coffee
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- Opportunities for brand extensions through smaller packs
- Coffee bags warrant for NPD
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- Figure 72: Behaviours related to coffee, July 2020
- 21% research new coffee brands online
- Opportunities for mail subscription; especially among young people
- Subscription services build a foothold in coffee
- Subscription model can benefit smaller players
- DTC must deliver on convenience and price to compete with supermarkets
Attitudes towards Coffee
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- Coffee at home is seen to be a good way to save money
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- Figure 73: Attitudes towards coffee, July 2020
- Recreating the coffee shop experience offers opportunities
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- Figure 74: “Making coffee shop-style drinks at home is appealing” – CHAID – Tree output, July 2020
- Premium coffee can capitalise on affordable luxury image
- Packaging sustainability is on consumers’ radars
- Coffee pod brands take action
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- Figure 75: Sustainable packaging launches in coffee, 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID Methodology
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- Figure76: Coffee – CHAID – Table output, July 2020
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