What you need to know

The pandemic completely changed the nature of employment, resulting in a dramatic increase in remote work, which in turn will reduce morning traffic to foodservice coffee/tea establishments. 45% of remote workers anticipate purchasing coffee/tea away from home less often compared to their prepandemic routines. Furthermore, 26% of consumers upgraded their home coffee/tea options during the pandemic, thus diminishing their need to purchase drinks away from home.

Home beverage options pose a strong competitive threat to the foodservice market and chains that have traditionally relied on commuter traffic (eg c-stores) will need to rethink and revamp their coffee/tea programs. Consumers’ desire for value may result in an increased reliance on home-sourced drinks. 41% of consumers who anticipate purchasing coffee/tea less often say they will visit foodservice coffee/tea establishments less often in order to save money.

Total foodservice coffee/tea traffic will be slow to return to prepandemic levels but the pandemic accelerated consumers’ shift away from regular hot coffee and tea toward cold and specialty beverages. Consumers will increasingly source basic everyday drinks from home but treat themselves to premium foodservice-quality beverages, a trend that benefits the total market. 56% of all consumers and 67% of remote workers agree that foodservice quality drinks can’t be replicated at home, indicating the need for chains to embrace bold beverage innovation to provide consumers unique, premium, flavorful drinks that can’t be created at home.

Rather than compete on price, operators must instead focus on providing consumers premium beverage experiences. The importance of cold coffee drinks to the market will only increase as brands cater to Gen Z consumers, a generation that primarily orders cold coffee beverages. The development of cold flavorful beverages is critical for attracting Gen Z consumers.

Key issues covered in this Report

  • The impact of COVID-19 on consumer behavior and the foodservice coffee/tea market

  • The opportunity for cold coffee beverages

  • Coffee and tea opportunities among Gen Z consumers

  • The impact of remote work on the foodservice coffee/tea market

Definition

This Report focuses on coffee drinks (eg regular hot brewed coffee, iced coffee, specialty espresso-based drinks) and tea drinks (eg regular tea, iced tea, specialty tea drinks) found at foodservice establishments. While special attention is paid to coffeehouses, coffee and tea are found at nearly all foodservice segments, thus coffee and tea found at other locations (eg QSRs, FSRs, convenience stores) are also discussed.

While tea trends are analyzed this Report primarily focuses on the AFH coffee market.

While the retail coffee and tea markets are discussed briefly, this Report excludes any in-depth analysis on the retail coffee and tea markets. For information on retail coffee and tea please see:

Coffee and RTD Coffee – US, 2021

Tea and RTD Tea – US, 2021

COVID-19: US context

The first COVID-19 case was confirmed in the US in January 2020. It was declared a global health pandemic and national emergency in early March 2020. Across the US, various stay-at-home orders were put in place in Spring 2020, and nonessential businesses and school districts closed or shifted to remote operations. The remainder of 2020 saw rolling orders, as states and local governments relaxed and reinforced guidelines according to the spread of the virus in each region.

Vaccine rollout began in December 2020. Mintel anticipates business operations in the US will remain in a state of flux through 2021 as vaccines are widely administered and social distancing restrictions and capacity limitations are relaxed.

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